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PBGC Blog: Retirement Matters

Ladies enjoying wine and each others company.

Every March we celebrate the profound impact women continue to have on American and world history. While Women's History Month is usually the designated time of year to robustly commemorate the contributions women have made to society, we also think it's a good time to take a look at the state of women's retirement security. After all, life after retirement is very important to "women's history."

First, let's be clear, the retirement picture is dismal for both men and women. But compared to men, women's retirement security is often less than adequate.

The United States Department of Labor reports married women tend to outlive their spouses by two years once they reach age 65 — that's two whole years of additional savings needed to cover the cost of living expenses that some do not factor in. Women also tend to take a more conservative approach when it comes to saving for retirement. Simply put, women do not invest in high-risk stocks because of the volatility of the stock market.

Another factor contributing to the bleak retirement outlook is women often delay saving for retirement. The Department of Labor also reports only 45 percent of the 62 million salaried women working in the United States contribute to a retirement plan.

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United We Stand at No. 19

  |   February 27, 2014

The United States maintained its retirement security ranking at 19th — the same from last year — among 150 nations analyzed by Natixis Global Retirement Index.

For overall retirement security, the U.S. remains behind the majority of countries in Western Europe and Canada, and ahead only of Israel on the list of the top 20 nations.

Natixis measures the quality of life for people in their retirement years based on 20 measures of health, wealth, quality of life, and material well-being that affect people's retirement security.

Read the full Natixis report: 2014 Global Retirement Index.

President Barack Obama gives his State of the Union address on Capitol Hill in Washington, Tuesday Jan. 28, 2014.

President Barack Obama gives his State of the Union address on Capitol Hill in Washington, Tuesday Jan. 28, 2014. (AP Photo/Charles Dharapak)

In his fifth State of the Union address, President Barack Obama urged Congress to help restore opportunity for Americans, but pledged to take action himself.

In an effort to bolster retirement security, he announced that he will use his executive authority to direct the Department of the Treasury to create "myRA," a starter savings account to help people prepare for retirement.

In case you missed it, here's an excerpt from his speech:

"Let's do more to help Americans save for retirement. Today, most workers don't have a pension.  A Social Security check often isn't enough on its own.  And while the stock market has doubled over the last five years, that doesn't help folks who don't have 401ks. That's why, tomorrow, I will direct the Treasury to create a new way for working Americans to start their own retirement savings: MyRA. It's a new savings bond that encourages folks to build a nest egg.  MyRA guarantees a decent return with no risk of losing what you put in..."

For a more in-depth explanation of "MyRA," read the White House issued FACT SHEET: Opportunity for All: Securing a Dignified Retirement for All Americans.  

Race and Retirement Insecurity in the United StatesNew research from the National Institute on Retirement Security (NIRS) examines racial disparities in retirement readiness among working-age Americans and households.

The new report calculates the severity of the U.S. retirement security racial divide. The analysis finds that every racial group faces significant risks, but people of color face particularly severe challenges in preparing for retirement. Americans of color are significantly less likely than whites to have an employer-sponsored retirement plan or an individual retirement account (IRA), which substantially drives down the level of retirement savings.

Some of the key findings include:

1. Workers of color, in particular Latinos, are significantly less likely than White workers to be covered by an employer-sponsored retirement plan—whether a 401(k) or defined benefit (DB) pension.

2. Households of color are far less likely to have dedicated retirement savings than White households of the same age. At the same time, coverage appears to be positively associated with the existence of dedicated household retirement savings in both groups. 

3. Households of color have substantially lower retirement savings than White households, even after controlling for age and income.

Race and Retirement Insecurity in the United States serves as a companion to NIRS' July 2013 study, The Retirement Savings Crisis: Is It Worse Than We Think?, which documented a significant retirement savings gap among working-age households in the U.S.

Read the full NIRS report, Race and Retirement Insecurity in the United States.

Elizabeth Warren (AP Photo/Steven Senne)The retirement crisis is real and growing as millions of workers have less access to employer-sponsored plans and are saving less money. As a result, the opportunity of living a secure and comfortable retirement among many workers is gradually decreasing.

This crisis has not gone unnoticed. On Monday, Senator Elizabeth Warren (D-MA) spoke on the Senate floor about the need to address issues of retirement and social security. Throughout the speech, Warren reaffirmed the fact that the nation does face a retirement crisis, contrary to the belief of the Washington Post's recent editorial. Warren also called on Congress to strengthen Social Security rather than to cut benefits that many retirees depend on for their retirement.

As Warren said, "the conversation about retirement and Social Security benefits is not just a conversation about math. At its core, this is a conversation about our values."

Read the full text of the speech.

Line chart: ACSI Index. Retiree Results from 2009 to 2013: 89, 87, 90, 89 and 90. Federal Government Aggregate from 2009 to 2012: 69, 65, 67 and 68.PBGC's FY2013 Annual Report, released Friday, provides a detailed summary of our year — both successes and areas for improvement.

The 125-page review of the agency covers the period beginning Oct. 1, 2012 and ending Sept. 30, 2013.

PBGC's deficit increased to about $36 billion in FY2013, up from about $34 billion last year.

Opening with messages from PBGC Board Chair, Secretary of Labor, Thomas E. Perez and PBGC Director Josh Gotbaum, the report examines ways to improve the agency's financial health and highlights our great scores in customer service.

Retirees receiving benefits continue to rate PBGC as one of the best in government for its commitment to customer service. The agency ranks in the top 3 percent in a survey measuring 154 categories of customer responsiveness. Retirees gave PBGC a score of 90 on the American Customer Satisfaction Index (ACSI), more than 20 points above the government average. A score of 80 or higher is considered excellent, whether for a government agency or a private business.

Aside from our distinguished customer service, the report also discusses three overarching goals:

  • Preserve plans and protect pensioners
  • Pay pension benefits on time and accurately, and
  • Maintain high standards of stewardship and accountability

Since you're a Retirement Matters subscriber, you've been kept abreast of PBGC news as it happens. This report can give you further insight on the year in review at PBGC.

See the full FY2013 Annual Report (PDF).