Look almost anywhere in the world and you will see a growing retirement crisis. Pensions are underfunded, retirement ages are too young and the population supporting seniors collecting benefits is dwindling. The United States is no exception. Social Security is headed for a crisis in revenue versus promised benefits, private defined benefit pensions are no more and workers with unrealistic expectations of an early retirement do not understand the realities of the future they face.
Perhaps more than in other countries there is a great imbalance in the US. The US has two systems for government pensions, Social Security and other broad federal programs such railroad retirement and pensions for government workers in the fifty states. Until recent months the state systems were largely ignored even while they were underfunded in many cases and promised benefits not seen in the private sector for decades, if ever.
While states ignored the growing liabilities, underfunding and unrealistic expectations of workers, private companies were eliminating or greatly cutting defined benefit pensions. The burden and risk for funding retirement has largely been placed on employees. The average person is not up to this challenge either in resources, temperament or knowledge. Just as state officials ignored the reality of their promises and operated with overly optimistic assumptions for costs and funding, the average person faced with his own retirement challenge is doing the same.
The great imbalance comes now that states are addressing past sins. They must do so in large measure by requiring the citizens of the state to bail them out through various taxes, budget cuts and higher fees. Just when the average citizen is being required more and more to finance her future, she is also being asked to help preserve the generous promises to state workers. Current retirees are also faced with this additional tax burden.
If both public and private retirement systems had stayed in balance and both were prudently funded, we would not be facing these issues, but with politics on one side and corporate profits on the other driving short-sighted decisions we are left with this imbalance and cost-shifting that places citizens in an intolerable and dangerous situation.
We are past the time for rationalizing the benefits deserved by government workers or breaking of “promises” by corporations. The fact is that America’s expectations for a long, secure retirement are fast disappearing.
“Live long and prosper” is now a dichotomy. What are you doing to change that for your future?
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