Beyond the Days of Labor: Planning a Secure Retirement

Filed in Labor Day 2010, Workplace Rights by on September 8, 2010 4 Comments
Phyllis Borzi

Phyllis Borzi Addressed the National Institute on Retirement Security's Policy Conference in February.

Labor Day is a time when we celebrate the achievements of the American worker.  It also is an opportunity to recognize the important role that the labor movement has played in contributing to the current and future economic security of workers and their families, through their advocacy of workplace health and pension benefits, and to express our gratitude to employers who share this commitment to providing good benefits for their workers.

However, this Labor Day, far too many American workers face an unparalleled degree of financial uncertainty.  Many are facing significant losses in their retirement savings that may take years to regain.  This is truly tragic, since after they spend their careers working, Americans deserve a secure retirement.

Our retirement system has been described as a three-legged stool, comprised of Social Security, employer-based retirement plans, and personal savings.  All three legs remain essential elements of ensuring an adequate retirement.  For many workers, Social Security benefits remain the only form of retirement savings.  However, it is important to supplement Social Security with employer-based retirement income and private savings.

When the Employee Retirement Income Security Act (ERISA) was passed, most workers with access to employer-sponsored retirement plans were in traditional pension plans, called defined benefit plans.  Over time, however, the market has shifted, and defined contribution plans, such as 401(k) plans, have become increasingly popular.  These plans allow employees to save pretax dollars and give employees more control over investment decisions.  The benefits are based on the employee’s account balance at retirement.  A key drawback of these plans is that the employee bears significantly more risk – risk that you haven’t saved enough money to carry you through retirement and that you will outlive your assets; risk that you made poor investment decisions and your assets haven’t grown very much; or, the risk that a market meltdown will decimate your 401(k) account balance as you are nearing retirement.

Those who reach retirement age with an adequate retirement account balance in their 401(k) plans face another difficult decision – what should they do with their retirement distribution when they get it?  401(k) plans usually distribute pension benefits all at once in a lump sum and an increasing number of other retirement plans give employees a choice of taking their retirement as a lump sum – and many employees choose this distribution option.  Cashing out your account in this fashion means that you are solely responsible for managing your assets so they last for the rest of your life.

This very challenging task is one of the reasons that the Department of Labor recently began an initiative, along with the Department of the Treasury, to examine whether there is a need to encourage employers to offer workers the ability to draw some or all of their pension as a lifetime income stream rather than a lump sum and to encourage workers, when given that choice, to select a lifetime income stream if that is appropriate for them.  Our goal is to start a national dialogue on these critically important issues because Secretary Solis’ goal of achieving good jobs for everyone includes the idea that when your working days come to an end, you should be able to enjoy a secure retirement based in part on the pension you earned while you were working.

So on this Labor Day we need to recommit ourselves not only to assuring good jobs for all American workers but that we must also be sure that after our working days end, we will have a secure retirement.  Together, I am confident that we will be able to achieve this goal for all American workers and their families.

Phyllis Borzi is the Assistant Secretary for the Employee Benefits Security Administration (EBSA)

Tags: ,

Comments (4)

Trackback URL | Comments RSS Feed

  1. Beverly Cornell-132124465 says:

    Thank You Ms Borzi for the brave speech given by yourself…but I Beverly Cornell of Las Vegas,Nevada for over twenty years have nothing to show for my Retirement, because on Feb 10 2005, my life changed as a whole. House keeping waxed my chair and posted no sign to bring awareness of the yes I attempted to sit as anyone would to begin their work day. when I slipped to the floor and Bent three discs which presses on my nerves and spine twenty-four,seven and Owcp refuses to Accept my seven conditions that the fall “Injury on the Job” caused..If you must know I’ve seen over twenty doctors per WComp insisted I visit,of which I did and to no doubt ..and Wittnessed the notation documented in the Portal section of ACS. showed A PROMPT PAYMENT of SIX THOUSAND DOLLARS to be put in the account of the Visited doctor PER OWCP AND WCOMP for a REPORT TO BE REDONE DUE TO my CASE WORKER NOT UNDERSTANDING THE REPORT..of which was the TRUTH for me in Laymen condition caused me to not be able to WALK ,SIT,RUN,BEND,LIFT MY LEGS ,SHOWER STANDING such as normal people do on a daily life has been destroyed and my two doctors of five plus years have under OATH spoken on my behalf and explained my Changed Conditions.. Still All my Benefits and Retirement have none EXISTENCE …and Owcp has Closed my case with a C3 notation..I’m living the Life of a Paraplegic only Difference ..I’m forced to FEEL my Pain twenty four seven…I hate the way my mother eyes appear when I catch her trying not to show Pain in her Eyes..See Ms Borzi I wasn’t Born this why is it such a decision as DENIED or TERMINATED..? I’m fighting for my Rights to my Full Benefits..I Deserve them.. if any wrong comes in to this picture..its the fault of the lady of housekeeping who WAXED my chair..and if I wanted to be Prejudice I would say the young lady COULDN’T speak ENGLISH..but thats not what Life is about…..Honesty is Life and I don’t honestly think she fully understood her job as to what she was to wax…so its not fair for Owcp to Deny my rights to my retirements and my Benefits. Ms Borzi continue your speeches and I to will continue my voice for mines.

  2. Unemployed older Americans who are unhappily accepting early retirement typically begin drawing on their Social Security benefits early, which affects both their income and the rest of the economy. The later retirees wait to draw Social Security, the greater their monthly income checks will be, generally within the range of an additional 6-7% for every year between ages 62-70 that they wait.

  3. Very interesting topic , thankyou for putting up.

  4. Unfortunately, this labor day, I must work. Nothing to celebrate there. lol. Hopefully social security doesn’t die. Anyways, nice article.

Leave a Reply

Your email address will not be published. Required fields are marked *