© 2024 Pension Rights Center. This work is licensed under a Creative Commons Attribution-Non Commercial 2.5 Generic License.
During the last few weeks, the Wall Street roller coaster has wreaked havoc on the economy and the retirement assets of the millions of American workers with 401(k) plans.
For workers who, like me, are relatively young and decades away from retiring, the current economic crisis doesn’t make me terribly anxious about my 401(k). While the economic downturn concerns me, I’m not too worried because I have ample time to prepare for retirement. But I do admit that even I am too afraid to look at the balance in my 401(k) account!
But what about people who are closer to retirement age? They have fewer years to make up the money their 401(k) accounts have lost in this volatile stock market. Imagine being only a few years from retirement and losing a big chunk of your expected retirement income because of the current crisis.
One person I’m not worried about is my mom. She’s one of the 44 million private-sector workers and retirees lucky enough to have a traditional pension. She, unlike me, doesn’t have to rely completely on the unpredictable stock market for her retirement security. She is lucky enough to have worked all her life for an employer who made and kept its pension promise to her.
You may be wondering what’s so great about a traditional pension. Well, traditional pensions promise workers a set income for life and income for a worker’s spouse in case of the worker’s death. They’re guaranteed. And when they retire, workers can’t outlive the income they receive from pensions the way they can with 401(k) plans.
In addition, guaranteed pensions are part of the three-legged stool of retirement security, which consists of Social Security, personal savings and employer-provided pensions. The income retirees receive from pensions helps keep them out of poverty and has helped our nation build its middle class.
That’s why I’m not worried about my mom’s financial security in retirement. Her pension will take care of her post-retirement needs. It’s those workers and retirees without the security of guaranteed pensions that I’m worried about.
