Politicians and pundits have been caught off-balance in recent weeks by the strong public support for state government workers fighting to protect their pensions in Wisconsin and elsewhere. They seem to have expected that taxpayers would back efforts to cut spending by squeezing pension benefits.
But something else is occurring. Americans not involved in the state government wars are worried deeply about their own retirement security -- and they have a growing sense that the traditional pensions enjoyed by most public sector workers just might be worth protecting. Call it a healthy case of pension envy -- but a healthy case.
A new national poll shows Americans are in a state of near panic about retirement security. The research was commissioned by the National Institute on Retirement Security (NIRS), and covered a representative sample of all age groups. The poll shows that expectations for retirements have been diminished to the point where most Americans now equate retirement security with mere survival.
Quoting from the study: "Generally, Americans consider a secure retirement simply surviving or living comfortably (34 percent), paying their bills (17 percent), maintaining their pre-retirement lifestyle (11 percent), and paying healthcare and health insurance costs (8 percent). Only 11 percent expect retirement to include leisure, travel, restaurants, and/or hobbies."
Meanwhile, 84 percent said workers with traditional pensions are more likely to have a secure retirement, and 77 percent believe the disappearance of pensions has made it harder to achieve the "American Dream."
Nearly 80 percent said leaders in Washington don't understand how hard it is to prepare for retirement in this economy, and 80 percent say Washington leaders need to give a higher priority to improving retirement security.
The NIRS findings are confirmed by another new study suggesting Americans are adjusting to a "new normal" where retirement security is concerned -- and the new normal isn't good.
The annual Retirement Confidence Survey (RCS) from the Employee Benefit Research Institute finds that Americans' confidence in their ability to afford a comfortable retirement has hit a new low. The percentage of workers who say they are "not at all confident" about having enough money for a comfortable retirement grew from 22 percent in 2010 to 27 percent, the highest level measured in the study's 21-year-history.
Planning experts like to talk about the three-legged stool that supports retirement security. The legs of the stool are Social Security, individual retirement savings and a pension. But all three legs look wobbly.
The value of Social Security benefits already has been reduced by the higher retirement age enacted in 1983 reforms, and by rising Medicare Part B premiums, which are deducted from Social Security benefits. Social Security's value could fall further if the current misbegotten reform efforts push the retirement age higher still.
Meanwhile, individual retirement savings have fallen far short of goals, and defined benefit pensions have evaporated in the private sector as more employers shift to defined contribution programs, mainly 401(k) plans.
So, the public understands what's at stake in the battles being fought by public sector unions in states like Wisconsin and Ohio, and doesn't seem inclined to endorse a state-by-state race to the bottom. And what's at stake is the value of guaranteed income in retirement.
I don't mean to minimize the serious problems facing government-sponsored pension plans in some states. Some of these plans have been grossly underfunded over the last several decades as a result of political and governmental malpractice. It seems inevitable that we will see some changes in some plan designs, such as higher retirement ages for workers outside of public safety jobs, and shifts to 401(k)-style defined contribution systems.
But at the same time, some of the headlines about unfunded liabilities are over-stated, and confuse cyclical economics with the way pension plans actually work. A significant portion of unfunded liabilities stem from the 2008 market crash and will evaporate over time.
"The idea that there is this huge crisis and states will start defaulting on debt payments or won't make pension payments is over-blown," argues Elizabeth McNichol, a senior fellow at the Center on Budget Planning and Priorities (CBPP) who specializes in state fiscal issues.
"People are taking current fiscal problems caused by the recession's impact on state revenues and adding in an exaggerated view of the debt and unpaid pension obligations. That makes the problems seem much larger than they are."
Read more: Learning from Japan and Other Shocks and Retirement Fears at All-Time High
© 2011 TRIBUNE MEDIA SERVICES, INC.
Comments:
An employer has to match what an employee pays into Social Security & Medicare - so instead of getting that money it goes to the government so in reality the employee is the one paying it.
As for health care those in retirement pay $115.40 a month for Medicare Part B, they have a $1,100 deductible for Part A.
They pay on average $200 a month for a MediGap Plan and other $35 a month for Part D.
Dental, Vision, Hearing, Walkers/Canes & Podiatry are NOT covered.
And with Obama Care he just cut subsidies by 20% to that system & Part B Premiums are going up 5% a year each year for the next 5 years
Teachers everywhere have better benefits at a cheaper rate than the private work force.
WAKE UP WE ARE THRU PAYING FOR YOU!
http://www.hvsfinancial.com/20...
If you pay 12% into Social Security you must be self-employed. For wages paid in 2011, employees pay 4.2 percent into Social Security (less than half of the 9.4% that teachers pay) and employers pay 6.2 percent. Retired teachers in Illinois pay as much or more for their health care insurance than most other retired people. http://www.cms.illinois.gov/download/pdfs_benefits/FY09_FY10_trip_rates.pdf
Ruby, Try getting a job or start a company please - Private sector pays 12.048% into Social Security on the first $106,700 they make. They pay 1.45% into Medicare, their employers get to match them along with paying for Unemployment Insurance as well. You are right they will come after all of our assets so they will be able to pay for Gov't benefits
And I pay 12% in Social Security big deal - I also pay roughly 3% into Medicare which is getting cut with Obama Care by 20% and when I turn 65 I get to pay even more for premiums You don't
Teacher tenure does not make a teacher's job secure no matter how they perform. Teachers are evaluated each year and given a chance to correct any problems. Teachers pay for health insurance. They also contribute to their pensions at a higher rate than others do for Social Security (9.4% in Illinois with the school districts paying 0.58%.) First they are going after the teachers and other public employees benefits. Then they will come after your Social Security, Medicare, and retirement accounts. Who will take your side then?
Retired teachers pay for their health care and pay 9% of their salary into their pension plan.
I'm confused. The government workers are jealous of private sector workers?!! Are you serious?! What are they jealous of, exactly? The fact that we have to actually perform well or might lose our job? I know it's rough to put in 2 whole years as a teacher before you know you're locked into a job for the rest of your life no matter how you perform. Or are they jealous of how we have to pay for our health insurance? Oh I know, it must be how we have to pay into our own retirement or we don't have one. It's hard to tell, there are so many things for them to complain about. They get jobs making more money now than private jobs average for the same work and get insane retirement packages that everyone else pays for via our taxes that they're crying about finally having to pay into at all. Please. Cry me a river. It used to be that government employees were offered cush benefits because they were being compensated for being paid less than private workers but now that's not true anymore and their benefits are outrageous. Politicians and Unions have been the ones in bed together for ages, yet somehow it's the private worker getting screwed.
Politicans apparently are not in touch with reality. Obviously most of them pass laws to make their benefits, pensions untouchable and above scrutiny of the public. Howeveer they seem to think the pubic, ALL OF THE PUBLIC is fair game for the politicans to raid their pensions whether it be social security, government retirements, state and local governments. Plus regular pension by business now is subject being raided by THE BUSINESS that is responsible to give the pensions, they are just taking the governments lead. Also, with politicans help Wall Street is already poised legally to steal penison money that is invested on Wall Street, they are breathing really hard and getting extremely excited at the thought of their lobbyist writing enough BILLS for these crooked politicans and paying enough money to privitize social security and then they will be the theft of the century, but it will be TOTALLY LEGAL and the crooks who steal this money will slither off with their billions while Wall Street is bailed out again for their petty losses 10 times over. The American working class is sick and tired of corrupt politicans using their corrupt system to abuse and steal from them - This will be evident in the upcoming elections in 2012.
How about Health Care? The state employee will get health care for practically free for their whole retirement along with their spouse too. What does the private sector get? Medicare, which isn't free and only covers about 50% of the bills. And to top it off with the new health care bill passed Medicare will get cut by another 20% in 2014. So do people have pension envy, I'm not sure bit when you are looking at your spouse of you find yourself at 80 or 90 dying a miserable death due to high costs & lack of care just remember not to be envious of that 3rd Grade Teacher who has it made in retirement