By Ryan Velez
Social security, initially, was never designed to fully support a retired person. Instead, it was intended to complement a pension or retirement savings. However, all three are dwindling, and this leads to a new group of workers that The Week is covering: septuagenarians.
“The way major U.S. companies provide for retiring workers has been shifting for about three decades, with more dropping traditional pensions every year. The first full generation of workers to retire since this turn offers a sobering preview of a labor force more and more dependent on their own savings for retirement,” The Week explains.
For a bit of a case study in action, look to the Tulsa plant of McDonnell-Douglas, the famed airplane maker. In 1994, the company closed its plant in a bid to cut retirement costs. The workers would find new jobs, but without retirements, their coverage for the future was eventually cut out under them. A review of those 998 workers found that 1 in 7 has in their retirement years filed for bankruptcy, faced liens for delinquent bills, or both, according to public records.
“Lavern Combs, 73, works the midnight shift loading trucks for a company that delivers for Amazon. Ruby Oakley, 74, is a crossing guard. Charles Glover, 70, is a cashier at Dollar General. Willie Sells, 74, is a barber. Leon Ray, 76, buys and sells junk,” explains The Week.
“I planned to retire years ago,” Sells says from behind his barber’s chair, where he works five days a week. He once had a job in quality control at the aircraft maker and was employed there 29 years. “I thought McDonnell-Douglas was a blue-chip company. But then they left town — and here I am still working. Thank God I had a couple of clippers.”
Pensions are basically an endangered species. As late as the early 1990s, 60% of full-time workers had them, but that number has dwindled to 24%. Retirement accounts are supposed to be the new replacement for these, except almost half of families don’t have them, and the average account has only $25,000 versus the $1.5 million you need on average.
“The U.S. retirement system, and the workers and retirees it was designed to help, face major challenges,” according to an October report by the Government Accountability Office. “Traditional pensions have become much less common, and individuals are increasingly responsible for planning and managing their own retirement savings accounts.” The GAO further warned that “many households are ill-equipped for this task and have little or no retirement savings.”