Most Americans never had a pension and up until 1980 there was no 401k

This is not a big deal, but facts are relevant. What we read and hear is not always fact or complete.

Fact is in 1950 only 25% of the private-sector workforce had a pension. By 1970 it was 45%, and then started declining, in part as the result of requirements imposed by ERISA.

In the meantime “most state and local government employees (83 percent of those working full time) participated in a defined benefit (DB) pension plan in 2018, and nearly all (94 percent) had access to such plans.”

Note too that frequently the terms pension and retirement plan are inaccurately used interchangeably. They are not the same. A “retirement plan” frequently includes a defined contribution type plan such as a 401k plan, a true pension plan is a defined benefit plan.

As for the three-legged stool, yup we used to tell people that long before the takeover by the 401k, but legs were a pension, Social Security and personal savings.

Nobody wants to retire broke, but it’s an unfortunate reality many Americans will face. Today’s workers face a unique struggle in that the majority of their retirement income will need to come from their personal savings. Previous generations were able to receive the bulk of their income from pensions and Social Security benefits.

Today, though, few employers still offer pensions, and Social Security benefits are only designed to replace around 40% of your pre-retirement income. That means most retirees will need to lean heavily on their savings to make it through retirement, yet many workers are woefully unprepared financially. And there’s one group in particular that may struggle more than most.

Some retirees are more at risk than others To ensure you’re as financially comfortable as possible in retirement, some experts recommend thinking of your finances as a “three-legged stool.” In other words, that means you should have income from a defined benefit plan (such as a pension), a defined contribution plan (like a 401(k)) and Social Security benefits

Source: Retirement savings: Unmarried women have toughest time, study says


  1. If only people would take advantage of this opportunity. I started a employer offered 401K when it was first offered to me, probably in the early 80’s. I contributed the maximum percentage even though I was a single mom of 3 children still in high school and paying an approximately 15% interest mortgage, I was making $3.00 per hour which in today’s world would be equal to the Federal Minimum wage now. Yes, I scrimped and to this day my children will not eat hot dogs or beans as this was a staple in our household. (They do still like pasta though). No, it is not easy to forgo the extra’s in life. I wouldn’t even call them luxuries. After leaving that job of 18 years in 1992, I could not contribute for a few years, but I did contribute the maximum to a Roth IRA. Eventually I started working for myself (1997) and opened a SEP to help lower the tax liability as well as forced saving. The stock market goes up and down. If you contribute every year possible, watch your spending and live frugally, you can come out ahead in life.


    1. It may be different where you live Mik. But here in Montana with just $19,000 in retirement income in 2017 my wife and I qualified for zero government aid. That is one of the reasons I started SS at age 62 in 2018. Maybe in a higher cost of living area there may be some benefits, but I do not think it is the great windfall most people think it is.


      1. Tell the government you’re an illegal democrat…that may qualify you for food stamps, free medical care, education and an ACLU lawyer.


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