The Retirement Divide

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By GREGORY N. HEIRES

As traditional pensions disappear and millions of Americans worry about being unable to enjoy a comfortable retirement, the typical CEO has a nest egg of nearly $49.3 million.

The largest 100 CEO retirement packages were worth a total of $4.9 billion in 2014. That means the combined nest eggs of 100 individuals equal the retirement savings of 50 million families, or 41 percent of American families.

The country’s growing retirement divide is the subject of a recent report by the Institute for Policy Studies and the Center for Effective Government.

“The retirement divide is not the result of natural law, but rather the rules established that disproportionately reward company executives far more than ordinary workers,” according to the report, “A Tale of Two Retirements.”

In other words, corporations have changed the rules to take care of their CEOs at the expensive of millions of Americans.

After President Ronald Reagan broke the air traffic controllers strike in 1981, corporations began cutting employee benefits and smashing unions. They did this to boost earnings and stock prices.

Corporations have frozen defined benefit plans (which guarantee a pension based on years of service and salary), closed the plans to new workers and shifted employees into risky 401(k) plans.

But the 401(k) experiment has failed: In 2013, the median balance of 401(k) plans was $18,433, enough to provide a monthly retirement payment of only $104. Meanwhile, CEOs may make unlimited contributions to tax-deferred compensation plans, in addition to investing in their 401(k) accounts.

Nearly 50 percent of American workers don’t even have access to a retirement plan at work. Thirty-seven percent of working age whites, 62 percent of African Americans, and 69 percent of Latinos have no retirement savings.

We need to fight the retirement divide by demanding an end to unlimited tax-deferred compensation for corporate executives, an expansion of Social Security benefits, and legislation to make union organizing easier.

Meanwhile, as public employees, we must be very vigilant about protecting our defined benefit pensions by ensuring that our plans are properly funded and not converted into 401(k) accounts, which Wall Street vultures would love to manage for excessive fees.

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