Thanksgiving Isn’t Just a Time for Grownups: Invest in the Generations Behind You

Thanksgiving is a time for family and good cheer. But while Americans lean on their families to help them through stressful moments, according to America’s largest private pension plan, don’t forget about the generations of workers who make shopping possible.

“We should be thanking workers for what they do,” said Guy A. Baran, CEO of the Plan Sponsor Council of America (PSCA), an alliance of 260 benefit plan sponsors with over $3.4 trillion in combined assets. “Year after year, employers lose millions of dollars in retirement income thanks to poor investment management practices. Companies should recognize that workers are their most important asset, and their investment plan must have protections to protect them from the fallout.”

The PSCA is among those who believe that in order to be strong, a retirement system must reflect the contributions and risks of workers’ families.

With that in mind, the PSCA recently unveiled a new service designed to hold employers accountable for the retirement benefits accrued by their workers. This service helps plan sponsors ensure their retirement plans are sound, and it gives workers a quick and easy means to notify employers of a plan shortfall.

Retirement is hard for most people to predict. Even considering that fact, it can be easy to think someone would pay attention when it comes to their workplace retirement plans.

For retirees, the potential fallout of not having the retirement income they need can be disastrous.

Economists suggest that when a worker’s nest egg drops by one-third, a retiree’s annual income falls by 50 percent. Retirement also represents huge costs to the working person’s health. A study of employees age 66 to 72 showed the condition of their hearts, as measured by a device used to measure arterial plaque, more than doubled between 2015 and 2016 when a single-digit percent growth rate of wages would have led to the same enlargement. And this means retirees will need to spend a lot more of their income on health care.

And these economic issues are particularly critical for the middle class.

The National Poverty Center estimates that roughly half of all U.S. workers live in poverty. If the retirement security problem continues to worsen, middle-class workers are at risk of falling below the poverty line when they retire. The extreme imbalance in the costs and benefits of retirement security that often results in “retirement insecurity” is particularly acute among low-wage earners—those earning the minimum wage or less.

As recent data from Social Security Administration show, there are approximately 55 million women and approximately 15 million men in America who haven’t taken advantage of the retirement security they earned. Working Americans are also taking massive risks by forgoing retirement savings during the middle years of their careers.

Exposure to the penalties associated with early withdrawals from retirement accounts are especially likely to reduce funds that can be used for retirement. Recent data by Transamerica Center for Retirement Studies show that four in ten savers surveyed in mid-2014 would have a bigger retirement savings balance if they had saved more money while employed.

This Black Friday, take a minute to consider what we’re giving our family members. Be proud of who you are. Know that your retirement security depends on your self-respect and the dignity of working Americans like yours.

America’s largest private pension plan recognizes the contributions workers make and the challenges they face, and recognizes that early retirement is a real issue. From access to retirement savings accounts and affordable retirement advice to protection for workers when they are struggling, a secure retirement for retirees is more important than ever.

Gerhard Atteberry is a managing director at Towpath LLC, a fee-only financial planning and advisory firm in Philadelphia. Mr. Atteberry is on the Board of Trustees for the TPCA and a director of the American Society of Pension Professionals and Actuaries.

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