Americans are woefully unprepared for retirement. 

It’s not a fact that’s comfortable to face, but the truth is evident. As we continue to observe National Retirement Security Month, today we’ll explore the stark reality of retirement insecurity for countless hard-working folks across the country. In this land of the free, how brave does one have to be to admit that we’ve got a problem? 

In the past, Americans had access to reliable investment opportunities that could help them earn and retain wealth into retirement, but a decades-long financial evolution has taken its toll on younger generations’ ability to look forward to secure, dependable retirement income. Unsurprisingly, the National Institute on Retirement Security (NIRS) reports that Millennials and Gen Xers are more worried about retirement than older generations. Enduring years of market turbulence and significant events such as the Great Recession and the COVID-19 pandemic has intensified anxiety about the future in younger, still-working generations. Sixty-four percent of Millennials and 54% of Generation X have greater concerns about their retirement security than their parents and grandparents. 

This generational apprehension is not unwarranted. Earlier this year, NIRS released a comprehensive study detailing the fiscal unpreparedness of Generation X, the next group of Americans with retirement on the horizon. The Forgotten Generation: Generation X Approaches Retirement takes an in-depth look at the very real financial insecurities facing those born between 1965 and 1980. As of 2020, Gen X represented almost 64 million Americans–close to 20% of the U.S. population. The first generation to enter the workforce after the migration away from defined-benefit pensions in favor of 401(k)-style investment plans, Gen Xers have served as unwilling guinea pigs in a great financial experiment. When the 1978 Revenue Act was passed by the United States Congress, a caveat created a prime opportunity for employers to shift all retirement fund management and fees to individual workers through the 401(k). This took the pressure off of businesses of all sizes and placed it directly onto the shoulders of the working class, while simultaneously lining the pockets of Wall Street investors. It was never intended to be a primary retirement savings vehicle, and its creator Ted Benna has even qualified the 401(k) as a “monster” because its overuse has exploited everyday workers. 

The use of 401(k)-style retirement plans by Generation X has created a large divide between those who are building wealth and those who are not. The NIRS report finds that the bottom half of wage earners have less than $10,000 saved for retirement, and the median household maintains only about $40,000. Retirement savings are highly concentrated among the highest earners–an obvious result as higher wages make saving for the future far more feasible. In addition, Black and Hispanic Gen Xers have substantially lower savings and access to retirement plans than their white counterparts. 

There is good news, though: Working-age Americans can still find retirement security through public pensions. While the corporate world left pensions behind with the shag carpet and the pet rock, state and local governments still largely offer defined-benefit pensions to their employees, meaning that while pensions are increasingly rare, they are not unreachable. Considering that most public pension plans have a vesting period between five and ten years, the chance for individuals to secure at least a portion of their retirement income most certainly exists, even for workers in their late 40s and 50s. Mid-life career changes are pretty common, and with severe staffing shortages affecting public service delivery across the country, enticing more middle-aged workers into state and local government employment could help alleviate both problems; worker shortages AND retirement insecurity. As Gen X barrels toward retirement age, spending the last of their working years in the public sector could set them up for financial success. 

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