Retirement

Today's workers face more retirement insecurity than their parents did, the first such reversal in modern US history. The problem is not with Social Security, a government program originally designed to supplement retirement funds that is doing fine and will be for decades with only minor changes. Instead, the new insecurity stems mainly from the disappearance of traditional pension plans that large employers once routinely provided to their workers.

For various reasons, including federal tax incentives, many employers have switched to 401(k)s and other individual accounts that may require employee contributions, are generally invested in the stock market and offer no guaranteed payouts. This switch, touted for several decades by free marketeers who promised individuals were better off controlling retirement funds themselves, put workers at risk of having to withdraw funds during a market downturn -- a possibility that has now materialized, creating sudden, severe problems for aging Americans. The system is also unfair and inefficient, since the lion's share of 401(k) tax breaks goes to wealthy households, while high fees erode savings.

Other employers simply eliminated retirement plans for their workers, and still more never offered them in the first place. Fully half of all workers do not have a workplace retirement plan of any sort.

All workers should be able to look forward to a safe and secure retirement. That's why EPI is looking beyond 401(k)s to new policies, including the Guaranteed Retirement Account plan developed as part of EPI's Agenda for Shared Prosperity by retirement expert Teresa Ghilarducci.