Retirement on the Rocks: Why Americans Can’t Get Ahead and How New Savings Policies Can Help

233 Pages·2016·1.43 MB·English

by  Christian E. Weller (auth.)

Retirement on the Rocks

Retirement on the Rocks
Why Americans Can’t Get Ahead and
How New Savings Policies Can Help
Christian E. Weller
RETIREMENT ON THE ROCKS
Copyright © Christian E. Weller 2016
Softcover reprint of the hardcover 1st edition 2016 978-1-137-39562-7
All rights reserved. No reproduction, copy or transmission of this
publication may be made without written permission. No portion of this
publication may be reproduced, copied or transmitted save with written
permission. In accordance with the provisions of the Copyright, Designs
and Patents Act 1988, or under the terms of any licence permitting limited
copying issued by the Copyright Licensing Agency, Saffron House, 6-10
Kirby Street, London EC1N 8TS.
Quotes leading each chapter taken from Retirement Security 2015: Roadmap
for Policy Makers: Americans’ Views of the Retirement Crisis. Biennial public
opinion research conducted by the National Institute on Retirement Security
and Greenwald & Associates, March 2015.
Any person who does any unauthorized act in relation to this publication
may be liable to criminal prosecution and civil claims for damages.
First published 2016 by
PALGRAVE MACMILLAN
The author has asserted their right to be identifi ed as the author of this
work in accordance with the Copyright, Designs and Patents Act 1988.
Palgrave Macmillan in the UK is an imprint of Macmillan Publishers
Limited, registered in England, company number 785998, of Houndmills,
Basingstoke, Hampshire, RG21 6XS.
Palgrave Macmillan in the US is a division of Nature America, Inc., One
New York Plaza, Suite 4500, New York, NY 10004-1562.
Palgrave Macmillan is the global academic imprint of the above companies
and has companies and representatives throughout the world.
ISBN: 978–1–349–57138–3
E-PDF ISBN: 978–1–137–57514–2
DOI: 10.1057/9781137575142
Distribution in the UK, Europe and the rest of the world is by Palgrave
Macmillan®, a division of Macmillan Publishers Limited, registered in
England, company number 785998, of Houndmills, Basingstoke,
Hampshire RG21 6XS.
Library of Congress Cataloging-in-Publication Data
Weller, Christian E., 1966–
Retirement on the rocks : why Americans can't get ahead and how new
savings policies can help / Christian E. Weller.
pages cm
Includes bibliographical references and index.
1. Retirement income—United States. 2. Pensions—United States.
3. Social security—United States. 4. Finance, Personal—United States. I. Title.
HD7125.W44 2015
332.024(cid:2)0140973—dc23 2015021871
A catalogue record for the book is available from the British Library.
To Beth, Henry, and Georgina

C O N T E N T S
List of Illustrations ix
Acknowledgments xi
One The Elusive Goal of a Secure Retirement 1
Two Americans’ Growing Risk Exposure 13
Three More Risk, Greater Wealth Inequality 27
Four The Looming Retirement Shipwreck 4 1
Five Social Security: The Leaky Lifeboat 57
Six Sink-or-Swim Retirement Plans 7 3
Seven A Perfect Storm: Labor and Financial
Market Risks Feed on Each Other 89
Eight The Pitfalls of Employer-Sponsored Retirement 101
Nine Upside-Down Tax Incentives 119
Ten Sidelined: The Millions Who Are Left Out 137
Eleven Charting a New Course 151
Notes 165
Bibliography 199
Index 215

I L L U S T R A T I O N S
Figures
3.1 Select ratios of average wealth, by income quintiles and year 28
3.2 Median wealth-to-income ratios for near-retiree households
in 2013 by number of cumulative high labor market risk
exposure episodes 38
4.1 Median wealth-to-income ratios, by age group and year 45
4.2 Share of working-age households at risk of not being able
to maintain their standard of living in retirement, by year 46
5.1 Workers’ retirement confi dence, 1993–2014 68
6.1 High fi nancial market risk exposure, by type of retirement plan
coverage and year 85
7.1 Unemployment rates and real stock prices in the 1980s 91
7.2 Private sector workers with employer-sponsored retirement
plan at work, select years from 1987 to 2013 94
8.1 Private sector wage and salary workers with employer-sponsored
retirement plan at work, select years from 1987 to 2012 106
8.2 Private sector employer contributions to retirement plans
as a share of wages and salaries, 1975–2013 107
8.3 Employer contributions to DC plans per active participant,
adjusted for wages or prices, 1988–2012 111
8.4 Financial risk tolerance and risk exposure of nonretired
households 50 years and older, 1989–2013 115
9.1 Net pension contributions and earnings and mortgage
interest deduction as a share of after-tax income,
by income percentile, 2013 128
10.1 Share of nonretired households without any
tax-advantaged savings 140