Magazine article The American Prospect

Retirement at Risk. (Special Section: Retirement Insecurity)

Magazine article The American Prospect

Retirement at Risk. (Special Section: Retirement Insecurity)

Article excerpt

AMERICANS ARE FACING A retirement crisis, and it comes in three parts. First, there is the Enron-style vulnerability of 401(k) plans. Unlike traditional retirement plans, the worker puts up most of the money and the worker takes most of the risk. When the holdings are concentrated in company stock, as in the Enron case, workers can lose everything.

But this is only the most extreme case. A much broader problem is the erosion of secure pension coverage generally. A generation ago, more than half of America's breadwinners had real ("defined benefit") pension coverage, guaranteeing a set pension check for life; since 1974, these pensions have been insured by the federal government. During the era between 1945 and about 1980, more Americans were retiring earlier and were also benefiting from more generous Social Security benefits.

In two decades, this progress has been thrown into reverse. Private pensions are less generous, less secure and less widespread. More Americans are retiring later, and many retired people are having to go back to work. Social Security is under assault from the privatizers. With the swooning stock market, Republicans in Congress, who only yesterday championed at least partial privatization, are now denying that they ever favored individual accounts at the expense of America's best loved social-insurance program.

This set of issues should be a natural for liberals and Democrats. In the recent past, Democrats were widely accused of "demogoguing" when they warned that Republicans could not be trusted with Social Security. …

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