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[Commentary] © 2002 Philip Hyde, The Timesizing Wire™, Box 622 Cambridge MA 02143 USA (617) 623-8080

Eroding Retirement, July-Sept/2002


9/22/2002   eroding retirement -

9/19/2002   eroding retirement - 9/16/2002   eroding retirement - 9/13/2002   eroding retirement - 9/10/2002   eroding retirement - 9/08/2002   retirement warnings - 8/22/2002   retirement warnings - 8/16/2002   retirement warnings -
  1. Public pension plans come up short, by Kara Scannell, WSJ, C1.
    Steep stock-market losses are sucking money out of the nation's public pension plans. More than 50% of all public pension funds are underfunded, from from 31% two years ago, a recent study...of 93 pension systems, which will provide pensions to teachers, firefighters and other state and municipal employees..\..shows. The pain will grow, says Wilshire Assocs. Inc., a Santa Monica CA consulting firm that advises public pension plans on investments...to 75%....

  2. Changing fortunes - Market's swoon boosts pensions over 401(k) plans - Once high-flying portfolios now pale beside payouts from old-fashioned funds..., by John Hechinger, WSJ, front page.
    [Funny how the Wall St Journal doesn't mention that the market's swoon also boosts the old-fashioned concept of Social Security over the new-fangled movement to privatize it.]
    ...During the biggest stock-market downturn in a generation, [there is] a telling new feature of the American retirement system. The extended bull market helped popularize 401k plans, which happened to be introduced just as the long boom began in the early 1980s. But this year's stock rout has exposed their risks - and the advantages of [old-fashioned] guaranteed-payout pensions. Old-fashioned pensioners, a vanishing breed, have become unexpected[??] winners compared with the swelling population of workers who rely on 401k's.
    Over the last 20 years, private corporations have been rapidly shifting away from traditional pensions. More than 6 in 10 US workers with retirement coverage rely primarily on 401k's and similar plans for their retirements. Even the federal government has used 401k-like plans as part of the retirement package for new civilian hires since 1987, while longer-standing employees can choose to retain their rich traditional pensions.
    But there have been many notable holdouts. Many unionized workers, including those in state and local governments and the auto and airline industries, stuck with the old approach - an assured payout based on salary and years of service. Now these employees, if they are nearing retirement, can hardly believe their good fortune....
    {But they are a minority (only 14% of the American workforce is still unionized) and as mentioned, they are a "vanishing breed." This is another factor that will reduce the American consumer base in the future and conduce to economic depression. As we've said so many times, the new American pension is dying on the job or dialing 800-KEVORKIAN.]

8/03/2002   retirement warnings - 8/02/2002   retirement warnings - 7/29/2002   retirement warnings from today's Time Magazine - 7/27/2002   retirement warnings from the NY Times (NYT) & Arizona Republic (AR) -
  1. Stock plunge makes retirees nervous, by Seth Hettena, AP via AR, D4. ...The 2½-year Wall Street slide has hit older Americans hard. Retirements are being delayed, big expenses are on hold and some are considering going back to work....

  2. Baby boomers face a future shrunk down and pinched in, op ed by John Balzar, LA Times via AR, B11.
    I'm hearing the same unsettling lament again and again from familly, friends and acquaintances: They were planning for retirement, they explain. No more. Now they'll have to stay on the job until they're 70. Or 75. Or whatever.
    If so, we're heading for a chain reaction collision of generations just around the bend.... Biologists use the phrase "dominant-year class" to define a...bulge in the population of a species of animals. ...The post-World War II [baby] boomers are something of a dominant-year class of living Americans and will be for the next 25 years or so. The first of these 14.2m employed boomers face the retirement age of 65 in less than a decade, hardly enough time to find comfort in that old nostrum about taking the long-range view of the markets. Behind them are an additional 30m workers ages 45 to 54.
    Let's suppose for a moment that a significant number of these graying Americans now hope to [delay] their retirement plans. Will they really be able to keep their jobs? Can employers afford to carry 60-year-old workers for another 10 years, paying high-end salaries, covering their rising health insurance costs, investing in their training? If so, what about the crushing effect on aspirations of younger workers itching to rise. More likely, many boomers will be flushed out of their careers.
    [Did the smart-ass economists who love to sneer at what they misname the "Lump of Labor Fallacy" ever strain their brains to point their ridicule at the concept of sharing the limited employment not just on the workweek basis but on the worklife basis?]
    Corporate reform as now discussed has nothing to do with making companies more paternal...and our laws provide scant protection against age discrimination. So where will these workers go? And how much will they squawk? ...There isn't enough Prozac in the world to prevent a boil-over of social tensions.
    The seeds were planted 20 years ago when employers successfully - and quietly - secured government approval to revolutionize the nation's pension system. Company-paid retirement plans began to be phased out, steadily replaced by 401(k)s and the like as the retirement foundation o fhe wage-and-salary workforce. Recent studies show that workers ended up with the [raw] end of the deal as corporations reduced their pension contributions by about 18% per worker.
    But employees did not complain very much. Their quarterly mutual fund statements spelled out bright futures. [However, the] fallout [now] is unlikely to be quiet at all. Even optimists who foresee a market recovery are realizing that they cannot realistically expect to catch up and attain the savings balances they recently counted on. Quite suddenly, we feel the future pinching in, not opening up.
    We boomers are not practiced at what seems to confront us: a diminished tomorrow. Meanwhile, the immutable rule of the "dominant-year class" ensures that everyone else will suffer too.

7/25/2002   retirement warnings from the NY Times (NYT) & USA Today (USAT) - 7/19/2002   retirement warnings from the NY Times (NYT) & USA Today (USAT) -

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  • June, 2002 & previous.
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