What's Wrong With Our Retirement System And What We Can Do About It

What’s wrong? As the Baby Boom moves into retirement, confidence in our retirement system is waning, for good reason. Plan sponsors, including public and private employers, are rapidly freezing their defined benefit plans—those that promise a guaranteed level of income in retirement—by closing the plans to new hires or stopping current employees from earning additional benefits.

When legally permitted to do so, some plan sponsors are even cutting back benefits employees have already earned. Municipal pension cutbacks growing out of the Detroit bankruptcy offer one recent example where previously earned benefits already have been cut. Congress provided another example late last year when it authorized severely underfunded multiemployer pension plans to reduce previously earned benefits of collectively-bargained employees. Meanwhile, Washington is awash in proposals to cut back, tax away, or means test Social Security old-age benefits whenever a political opening makes that feasible.

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Damian Sylvia

Retirement Income Solutions

220 Monmouth Road

Oakhurst, NJ 07755