Seems like the game has changed for people that are in their 20-30s today. Someone planning for retirement in the 1970s had the "three legged stool" of SS, pension, and whatever investments they made. So if the investments didn't pan out (stocks -30%) they might have to reduce their standard of living a little, but they weren't going to be eating cat food.
My new job has a decent pension, but will I be there long enough for it to vest and become anything substantial? Maybe, but I'm not counting on that. Over 20 years, the cumulative probability of layoffs or voluntary job changes is just too high.
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While I can obviously relate to the frustration anyone in or planning on retirement is feeling. It seems that each light at the end of the tunnel is actually a train creating further destruction as it wrecks spectacularly.
Still it is important not to view the past through golden gilded glasses.
Here is a condensed version of my book The History of Work and Retirement in America.
Chapter 1: The Pioneer Age 1783-1935.
"You can always spot pioneers by the arrows in their back"
Work from sunup to dawn do back breaking chores for 6 1/2 days a week under filthy, dangerous conditions conditions. Get sick, have your blood sucked out by quack doctors and leeches. Get taken care of your family, and then die (generally) young.
Chapter 2: The Dawn of Social Security 1935-1954
"Living Large on a $1 a day in America in your Golden Years"
Perform mind numbing tedious task for 5 1/2 days a week. Get sick, die; collect Social security. The brilliance behind the Social Security system was when it was first implemented on average men died before collecting. The typical black or Hispanic men got diddly even if he lived to 65 because agricultural and service jobs were exempt from SS. Needless to say the checks barely covered cat food. The first check being for 22.54 a month.
Chapter 3: The (fools) Golden Age of Pensions 1954-1984
"We are the borg you will be assimilated resistance is futile"
Put on a uniform every day (suit for white collar workers, dungaree for blue collars) learn the fine art of brown-nosing boss/union leaders. Spend your life working for one employer, after 30 years collect watch and a pension. Enjoy fishing for a few years, die.
But here is the rub. "The previous generations had a pension", is mostly an urban myth. I don't claim to be an expert, but I have researched the subject of pension several times over the last few years.
As far as I can tell at no time in America history were more more than 1/3 of private sector workers covered by a pension. While pension plans have been around since the 1920s they really only started getting popular in the 1950s and probably reached a peak of popularity in the 1980s before gradually being phased out through out the 1990s and this century.
In general to be covered by a defined benefit pension plan you needed to fall into one of these categories.
- Work for the government
- Be a member of skilled trades union
- Work for a Fortune 500 company, that had a large skilled work force. Examples 3M, and IBM had pension plans Walmart, McDonald didn't.
Finally, and most importantly you typically had to work for 20 years+ to qualify. Since the majority of Americans work for smaller firms they never were eligible for pension plans. In addition people change not only companies but career field far more than they did a generation ago, so in this respect. Pension are pretty outmoded.
Nor were private pension generally every particularly generous or super secure. Prior to the establishment of the Pension Guarantee Corp in 1974, many retirees pensions were wiped out when their old employers went under. This is especially true of auto, steel, railroads, and airlines companies. My dad worked for more than 25 years for the same company,my mom's survivor pension is ~$500 month, not exactly a windfall (Although to be fair he did start taking the pension at 55 and she has been collecting for almost 30 years...)
Chapter 4: The IRA/401K multi[-]millionaires[/-]thousandaires 1984-2008
"How I day traded my IRA into billions"
Spend 40+ hour in air conditioned office chatting with loved ones and friends. Learn to hot-tab from Tetris to a spreadsheet. For some commute consists of putting on robe and moving from bedroom to home office.
After a couple of decades of presenting hockey stick graphs of your future billions and overwhelming employees with choices, Companies finally got smart and just started deducting pay and sticking into index funds.
Sadly the promise of future millions; lost to the lure of big screen TVs, and exotic vacations in the present. Quack financial doctors, annuity salesman and other leaches sucked many old folks dry. For many IRA got depleted and that was before the great recession of 2008.
However, a small but diligent group of savers paid attention to compound interest and prospered.
Chapter 5: The Future (2009-...)
"It is always darkest before midnight."
Faced with a per capita public debt load of 40K, and many times that in private debt. Americans went back to future and adopted their ancestors retirement philosophy die young.
but
