A Terrible Time to Cut Public Retirement Programs
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The real problem with Medicare and Social Security is not that they are too generous, but that they are too stingy. There is currently a slowly unfolding retirement crisis. The move away from defined pension programs to 401(k)s is now starting to bear fruit in the form of a generation of older Americans who lack sufficient money for their old age. From Yahoo Finance:
Among Fortune 1000 companies, only 11 percent still offer a traditional pension plan to newly hired salaried workers, down from 14 percent in 2011 and continuing a long slide from 90 percent in 1985. Conversely, in 1985 only 10 percent of those companies offered only a defined contribution plan to salaried workers — today that figure stands at 70 percent.
But this trend has its consequences in the workplace, as large numbers of baby boomers have 401(k) balances that are inadequate to fund a traditional retirement. To make matters worse, most retiring workers don’t know how to turn their nest eggs into reliable retirement income. Employers also haven’t provided much help by offering retirement income options in their defined contribution plans.
The break down of the private retirement system is going to leave millions older Americans struggling to make ends meet. Any plan that cuts Social Security benefits and forces more health care cost shift on to seniors, like the deal Obama offered Boehner last year, would make this steadily growing problem much worse. At this time Congress could be focusing on how to improve Social Security benefits to make up for the loss of private pensions, not how to cut them.