By Eileen L. Griffin
A recent Wall Street
Journal column attempted to dispel the myth of an impending retirement crisis
in the United States. It said most private sector employees are well prepared
for retirement, having saved and invested for many years with both
employer-sponsored plans and Individual Retirement Accounts. Recent data
indicates 61 percent of workers and 80 percent of married couples now
participate in a defined benefit plan. Employer-sponsored plans and IRA
accounts have been growing at record levels, according to the column. Employers
have played a role in the improved overall retirement picture, as many have
become more generous in their support of their defined benefit programs for their
employees. With unemployment rates at historical lows, this trend is expected
to continue as retirement programs have become significant influencers on
recruitment and retention strategies for many employers. If this positive
assessment is true, then why the hysteria about retirement?
World Economic Forum reports that 85 percent of the retirement gap in the U.S.
is due to government underfunding public pensions. While Americans in the
private sector have continued to increase savings and employers have expanded
their support of 401(k) and other private retirement plans, the
government-managed retirement plans are in disarray. While private sector
employers have encouraged and trained their employees to use the 401(k)
benefit, many public employees are not offered the same level of communication
on saving and investing for retirement. They are expecting that their needs
will be met through their government pension plan.
As a result of the
contrasting philosophies, we are expanding into two entirely different
employment cultures where those employed by the public sector anticipate the
“promise” of a pension and those used to managing their own retirement planning
are positioned to support themselves in retirement. This different mindset
begins early and could result in different perspectives and expectations of
One might question
how employers became involved in the retirement of their employees, a point in
time after they leave their jobs. What level of responsibility does an employer
have to prepare their people for retirement?
market shifts from defined contribution to defined benefit, many employers
accepted a role in offering retirement programs, but rather than providing an
income, they have become the educator and trainer, leading employees toward
conscientious retirement planning and building good habits along the way.
wide-ranging industries often will offer training or access to financial and
retirement planning information to guide their employees into making good
finance and retirement decisions. They do this, not because it is mandated, but
because it makes sense. It is good business to encourage self-responsibility
and independence, while providing tools to meet that end.
While the private
sector has continued to experiment with benefits that improve the lives of
their employees, the public sector has largely depended on the antiquated, and
unfunded, pension system. The concern this raises, of course, is that the
unfunded liabilities will result in many not being provided with the retirement
they were promised during their career. Alternatively, the private sector may
be “asked” to participate in the support of public sector employees to ensure
that there truly is no “retirement crisis.”
Retirement is the
wild card of the personal life cycle. No one can be certain what those years
hold and there are more potential pitfalls than in the other stage of life. An
evolved civil society should care for the weakest among us, including our
elderly. Those in their earlier years still can recover from lost income or
recoup after a broken promise. They can still go back to work and earn income.
Many elderly people can not and have few options for increasing their income.
While we can hope
that public pensions will become funded at the necessary levels in the future,
it may be wise for all Americans to save and plan for their own retirement.
Small employers, particularly, may find it difficult to provide life skills
training and personal development when taxed with just keeping up with job
skills and job training for their employees. Those employers in the private
sector already leading in this area can be a resource for others who do not
have the expertise or resources to train their employees on retirement basics.
between retirees in the future may be their choice of employer in the past. It
may be that public sector employees will be expected to accept a partial amount
of the income expected or they will need to work longer than planned. All
retirees should have the opportunity to enjoy the fruit of their labors and the
gratification after years of toiling. All retirees should benefit from their
contributions with a safe and secure series of golden years. No one wants to
see elderly people living in poverty.
While no one person
or employer can change the dire situation that the government pension system
seems to find itself in, we can consider self-reliability and individual and
community resources. To some degree, the public sector crisis can be mitigated
by taking ownership of our retirement planning. Regardless of the support we
think we should be getting from a government entity, Social Security included,
it may be best to consider our own accountability and prepare to be responsible
for our own twilight years. That may take some serious discipline during early
The dependence on
government retirement programs may be one of the factors influencing the
population more willing to accept a system of control and dependence, contrary
to our national culture. Before this outlook takes further root in our society,
we should consider reflecting on the importance of independence and nature of
Careful, thoughtful planning and a sense of self-responsibility may be the way individual Americans overcome the potential aggregate crisis. Employers of all sizes can influence the lives of their employees well beyond the years of employment. That employment bond can continue and dividends result in goodwill that can manifest itself in things like recommending the employer to friends, families and neighbors and speaking highly of the company in the community. Beyond the business benefits, just knowing that, as an employer, you guided your employees toward a fulfilling retirement can be gratifying in and of itself.
Eileen L. Griffin has more than 20 years of management experience. She holds a master’s in business administration and is a doctoral student at Gonzaga University, School of Leadership Studies. She serves as the director of wealth management at Gesa Credit Union.
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