Welcome to the latest edition of This Week in Pensions! We have gathered the best stories about pensions and retirement security from the previous week. This is the news you need to know in the fight for a secure retirement.
Before you dive into our top stories from this week, make sure you check out stories of public employees helping their communities.
Here are our top stories:
The Problem with Education’s Problems – Part 1 – The Teacher Shortage by Leilani Cauthen. While the lack of educators predates the pandemic, its economic impact and pre-existing workforce issues caused widespread burnout amongst public educators. Classrooms across the country are now experiencing severe shortages in this period, which Cauthen calls the “Great Resignation window of time,” where the majority of Baby Boomers are leaving or have left the workforce. According to the report, “Boomer-aged educators are retiring at a rate of 10,000 a day, and that accelerated in 2022. Yet it’s not just the Boomers leaving, it could additionally be from any age group.” In November 2021, there were 3.6 million Americans that left the labor force. The problem? Many existing teachers are part of the Baby Boomer age group, and there is no one to replace them once they retire. Position openings continue to grow while the number of graduating teachers continues to shrink. In 2021, college students studying to become teachers “was just 70,000, less than 10% of need against retirements or growth needs of schools.” Pensions are a great way to attract and recruit Millennials and Gen Z to the teaching profession and guarantee a modest lifetime retirement benefit after their service.
America’s age tipping point is approaching – we’re totally unprepared by Joseph Chamie. In his Op-ed for Belleville News-Democrat, Joseph Chamie highlights the challenges as America faces “mounting old age.” The number of Americans ages 65 and older has increased to 56 million–approximately 17% of the population, which is “nearly double the 1960 level of 9 percent.” By 2030, America will experience a “demographic turning point” where all baby boomers will be older than 65, equalling “one out of five Americans.” By 2034, “those older than 65 are expected to outnumber children for the first time in U.S. history.” However, retirement security is still a problem for most of this population. According to the U.S. Government Accountability Office (GAO), “nearly half of American households headed by someone 55 years and older lack some form of retirement savings.” It also reports that “close to 30 percent of those who are retired or nearing retirement do not have retirement savings or a defined benefit plan.” The Economic Policy Institute found that lack of retirement security disproportionately plagues Black and Hispanic families, with 60% of Black families and 65% of Hispanic families lacking savings in a 401(k) or IRA account, while this affects only one-third of white families. Pensions have served as a reliable wealth equalizer tool and provide a stable lifetime benefit in retirement.
Be sure to check back next Friday for the latest news in the fight for a secure retirement!