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By David Brandolph
Pension Rights Center Executive Director Karen Friedman was recently interviewed on the Ralph Nader Radio Hour (the interview begins at 27:48) about current retirement issues.
Referring to the protests over retirement issues in France, Friedman started the interview by telling Nader and co-hosts Steve Skovran and David Feldman that “Retirement issues are so important that people should be hitting the streets here, too,” demanding a system that offers them adequate income in their post-work life.
She noted that French workers have been protesting their government’s decision to set back the national retirement age from 62 to 64, an age still much earlier than the full-retirement age of 67 for Americans born in 1960 or later. She pointed out that we need to be watchful about policy changes in this country. “We must be vigilant to ensure that changes aren’t made that would privatize, cut or postpone Social Security eligibility, and instead demand that its benefits be strengthened,” she said. Social Security is the most universal, efficient, secure and fair source of retirement income that we have. “Its one shortcoming is that its benefits are too low, averaging about $1,700 per month,” she added.
Friedman pointed out that the PRC is committed to an improved private retirement system on top of a strengthened Social Security system. “Without pensions and other retirement income to supplement Social Security, people won’t have enough to live on,” she told listeners during the nationally syndicated radio interview.
Nader said that Americans should understand that Social Security’s financial problems can be solved by raising the $160,000 annual Social Security-tax income limit so that those earning millions of dollars per year pay fully into the system.
He said that people should get a “sense of solidarity with the workers in France and pick it up here.” The workers in France are ready to shut down the economy to stop any degradation of their retirement system and almost 60 percent of the French people support them, he said. “I can’t imagine the same happening here [in the U.S].”
Friedman also talked about the shortcomings of the retirement system.
In the U.S., the federal government has conferred more than $200 billion per year in preferential tax treatment on retirement plans to encourage employers to offer such vehicles and employees to use them to save their money, particularly low- and moderate-income workers. These subsidies have largely failed to accomplish that goal, as “they have ended up disproportionately benefiting the nation’s most affluent,” Friedman said.
She explained that more than 50 percent of private-sector workers have no pension or retirement savings, and this “has been a stubborn fact for more than a quarter century.” Even for people who have retirement savings plans, a majority will enter retirement with woefully inadequate savings.
In recent decades, employers have gradually abandoned their defined benefit plans that gave workers a guaranteed retirement income, moving to defined contribution 401(k)-type plans.
However, she pointed out that 401(k) plans haven’t worked for most people because they are essentially do-it-yourself savings plans, where employees who are lucky enough to be offered one must decide whether to join, how much money to contribute, where to invest their contributions, and how to make their savings last once they begin to take withdrawals. Most employees don’t have the time or skill to do that effectively.
Friedman said that we can do better and should be raising our voices to demand improved pensions and savings and a strengthened Social Security system to ensure everyone has adequate income in retirement.
More episodes of the Ralph Nader Radio Hour can be heard here.
