Peter Woriskey, a Washington DC reporter for The Washington Post wrote “‘I hope I can quit working in a few years’: A preview of the U.S. without pensions” this week.
The article is a sobering look at the lives of 998 former McDonnell Douglas employees from a plant in Tulsa, Oklahoma. In a move to cut retirement costs the company closed down the plant in 1994 and with the closing went the jobs and pension plans for the workers.
even though most of them found new jobs, they could never replace their lost pension benefits and many are facing financial struggles in their old age: 1 in 7 has in their retirement years filed for bankruptcy, faced liens for delinquent bills, or both, according to public records.
Many are working well into their 70’s to supplement Social Security payments, which is lacking for much beyond the very essentials. The jobs don’t pay much or sometimes the extra money is stitched together from self-employment or income under the table.
Pensions, which were a common perk for employees well into the 90s, were just another expensive proposition for companies under pressure to have continuous bottom line improvements. Started in 1875 by American Express, pensions became increasingly popular and peaked in the 1980s, leaving a generation of retirees in better shape than ever. Those days are long gone except for government employees.
With a longer lifespan for today’s retirees, the plans were also costing more when the payments continued years beyond the original assumptions. Likewise longer lives means savings and investments have to last longer too.
In replacing pensions with employer sponsored retirement accounts, the truth is less than 50% of American workers participate. The Governement Accountability Office said in an October report, “If no action is taken, a retirement crisis could be looming.”
When the McDonnell Douglas employees eventually sued they received settlements of $30,000. on average. The settlements were hardly equivalent to what the pensions would have been if the employees had continued working there until retirement.
The days of dependable employment and a steadily growing pension seem to have passed on for now. What will those heading into retirement territory now do to account for the difference?
Link to the full article: ‘I hope I can quit working in a few years’: A preview of the U.S. without pensions
Photo by: Nick Oxford for The Washington Post