Welcome to this edition of This Week in Pensions! This is the news you need to know in the fight for a secure retirement.
Here are our top stories:
American companies still lack retirement plans: AARP by Gregg Greenberg. A new report from AARP finds that 48% of private-sector employees, nearly 57 million working Americans, are not provided with an employer-sponsored retirement plan. Access to payroll-deduction plans increases retirement security and wealth equity in retirement. AARP’s Executive Vice President Debra Whitman said, “Having access to a retirement plan at work is critical for building financial security later in life. And we know people are much more likely to save for retirement if they can do so automatically through their paycheck.” The study finds that the problem disproportionately impacts Black, Hispanic, and Asian-Americans, as well as workers without college degrees. Brian Severin, executive vice president at Mutual of America, noted that small businesses contribute to the lack of retirement options, saying, “Many of them aren’t fully aware that offering one can benefit both their business and their employees, without being cost-prohibitive… What’s more, plenty of recent studies show that offering a retirement plan can help attract and retain high-quality employees.” While the private-sector struggles to offer any retirement options to workers, pensions are still largely available to public employees, and do indeed improve recruitment and retention as well as lessening racial wealth inequity in retirement.
Public-Sector Pensions Weathered Pandemic by Squared Away. There’s no question that the Covid-19 pandemic wreaked havoc on the US economy, putting workers’ retirement funds at risk, including those public-sector workers who do not have Social Security benefits to fall back on. A new study from the Center for Retirement Research found that public pension funds survived two years of the pandemic with little to no lasting damage. The research included 59 plans whose workers do not receive Social Security, ranging from smaller plans like the Pittsburgh Police Relief and Pension Fund to the largest public pension plan, the California Public Employees Retirement System.
Economic Worries Further Older Americans’ Pandemic-Era Plans to Delay Retirement, Survey Finds by Andrew Osterland. Last year, the financial advisor company, Edward Jones, and financial consultants, Age Wave, surveyed 11,000 older Americans and found that around 30% of participants expected to delay their retirement. But in the aftermath of Covid-19, historic inflation rates, and shaky stock market performances, in 2022 that number rose to 59% – almost doubling the amount of retirement-aged Americans who feel it’s necessary for them to work later into their golden years. The study cited multiple reasons for this trend, including retaining independence, identity, and workforce shortages. However, Age Wave founder Ken Dychtwald says that anxiety over finances is the main factor older Americans consider when they delay retirement. “People are terrified about running out of money in retirement, and this year has taken a lot of money out of nest eggs,” he said. “The overwhelming majority of people don’t have enough resources to retire comfortably, so when they consider the cost of a long retirement, working longer seems like a good idea.” Pensions provide guaranteed lifetime benefits for retirees without a looming zero balance.
Be sure to check back next Friday for the latest news in the fight for a secure retirement!