Like so many Gen-Xers, I didn't think much about retirement early in my career.  I just wanted a job in my field that paid enough so I could support myself.  As my career progressed into my 30s, I paid more attention to savings and retirement.

I contributed to my individual savings plans – IRAs and 401(k) plans.  Also, I began to realize that I wasn’t paying enough attention to retirement planning, that I didn’t have adequate financial expertise, and that I probably wasn’t saving nearly enough on my own.

Now that I’m a mother of two young boys, I worry about retirement constantly for two reasons.  First, I don’t want my sons to be burdened with caring for me when I’m old.  And, I want them to live in a country where retirement is an attainable goal for ALL Americans – like it was for my working class grandparents and for my middle class parents.

It turns out I’m not the only woman worried about retirement. A new research brief from NIRS, “Shattering the Retirement Glass Ceiling: Women Need a Three-Legged Stool” finds that nine in ten women are concerned that current economic conditions will affect their ability to retire.

It turns out these concerns are well founded. Women are born with a genetic advantage: we live longer than men. However, this genetic advantage of longevity often turns into a financial disadvantage because it means that we have to save more. But, acquiring enough assets is more difficult because we still have lower wages and less access to retirement plans during our working years as compared to men. 

The research brief reports that a woman with a salary of $50,000 must save $1,000 more per year than her male counterpart to achieve equitable retirement income because of her longer life expectancy.  Yet, full-time female workers in 2007 made just 72.6% of their male counterparts’ wages.

The report also finds that women remain at a higher risk for retirement insecurity as compared to men, and that risk can be reduced by ensuring women have access to all three legs of the retirement stool:  a traditional pension, supplemental 401(k)-type individual savings, and Social Security.

Through my work on retirement issues over that past five years, I’ve come to understand that well-managed group retirement plans – pensions – are the most fiscally responsible way to fund retirement.  Essentially, they’re HALF the cost of individual plans.  Think Costco.  Buy in bulk, you get the cheapest price. 

And unlike individual accounts, pensions are professionally managed, can withstand market ups and downs because of their long investment horizon , and pool longevity risk. 

Pensions also provide peace of mind.  Retirees with a pension know they will get a regular check every month that’s not vulnerable to the wild fluctuations of Wall Street.  And retirees don’t have to worry that they are spending their nest egg too fast and will run out of money when they’re too old to work. 

But for pensions to make a resurgence, they can’t be my grandmother’s pension.  They need to be structured in a way that meets the needs of today’s employers, employees and economic realities.  That means pensions that are:

• A shared responsibility whereby workers, employers and investment returns contribute to the costs.  Traditionally in the private sector, the burden of funding pensions rests squarely on the backs of employer.  In the public sector, employees make significant contributions to their retirement, sharing the responsibility of preparing for retirement.
• Portable.  My grandparents worked at the same factory for pretty much their entire career.  Since graduating from college I’ve changed employers nearly ten times, which is typical in today’s workforce.  But pensions aren’t always easy to take with you when you change jobs.  In the case of multi-employer pensions and for some public sector workers, however, pensions are portable within a profession or state – a model worth expanding.
• Affordable.  Especially given’ today’s economic turmoil, no business or government can offer what it can’t afford.  Pension funding rules require private sector employees to contribute the most to pensions when they can least afford it.  And when times are good, employers can be precluded from socking away extra money into their pension plans. In fact, the Government Accountability Office recently reported that some 26% of plan sponsors would consider forming a new pension plan if the plan funding requirements had less unpredictability and volatility.

In other words, there are sensible solutions policymakers could consider that have the potential to make pensions more widely available.

My husband is taking our sons out shopping for Mother’s Day gifts today.  Standing alongside his baby brother, my older son asked me what I wanted for Mother’s Day.  I told them that I would like retirement security for our family.  Both boys looked at me confused.

Then the five year old asked if they sell that at the bookstore where they were headed to select a gift.  I told them it definitely wasn’t at the bookstore.  They only place they might look is across the river to Washington, D.C., but it’s not available there yet. 

Perhaps for Mother’s Day they could write a letter to policymakers indicating they’d like to “Pre-Order” the retirement security plan for me.….sort of along the lines of how we advance order forthcoming books we want.  

The only problem – the comprehensive retirement security policy blueprint remains unwritten.  Maybe next Mother’s Day?

Posted by:  Kelly Kenneally, NIRS Communications Consultant and working mother of two sons. May 7, 2009

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