Legislating Retirement

"On Oct. 13, the Employee Benefit Research Institute released a study showing that 54.4% of full-time, full-year wage and salary workers participated in a retirement plan in 2009. In 1999, that figure was closer to 60%. And the rate of employer sponsorship of plans dropped to 61.8% in 2009, from 69.4% in 1999." And this has Congress concerned enough to take the drop in retirement planning by individuals and the plans offered by employers seriously.
There are numerous reasons. But one that comes to mind is the future health of Social Security. The fewer folks who direct their own retirement increase the dependency on this plan. Not that I don't believe it will be available for all Americans in some shape or form, no matter how old you are. It is that "shape or form" which has me worried - and apparently Congress as well.

Senate Health, Education, Labor and Pensions Committee, Chairman Tom Harkin, D-Iowa, indicated that he was zeroing in on retirement issues. he remains a fan of defined benefit plans or pensions even as defined contribution plans (or 401(k)s dominate the retirement investing/saving landscape.

According to a statement he made for an article in Investment News, he said: “I am going to make retirement security a priority”. Retirement security has shifted in the last decade and even more recently from accumulation to decumulation(which is a fancy word for knowing what you will get when you retire. Pensions did this; 401(k)s do not. Senator. Harkin, who quite possibly will remain in the chair he leads even if the GOP wins the House made clear that “Over the coming year, I plan to hold a series of hearings examining the crisis in retirement security from a number of different angles, and I look forward to working with my colleagues on comprehensive reforms to help workers save for retirement and ensure that they have a source of retirement income that they cannot outlive.”

This basically portrays the argument about retirement in a wholly new light: Companies want to continue to save money while suggesting that self-directed plans work. Even as employees are realizing that their participation in these plans carries more risk than they previously thought they did.

Paul Petillo is the Managing Editor of Target2025.com/BlueCollarDollar.com and a fellow Boomer

Will More Plan Participants Ruin Your Retirement?

It was often thought that the laws of scale would solve everything.  The more the merrier so to speak.  When applied to your 401(k) plan although, the opposite might be true.


Auto-enrollment in 401(k) retirement plans was mandated in the Pension Protection Act of 2006. The PPA saw the idea as a way to help ensure that employees at least had a jump start at retirement. By enrolling new employees automatically, the theory of getting more workers involved in the plan sooner would them an opportunity to grow their future right from the first day (in some cases). At the time, it was thought to solve the under-use of these plans by a great many workers.

Is a lower company match going to impact your retirement future?  Will you increase your contribution to offset the lower match or do as some have historically done, reduce your contribution in kind?

Read more about the high cost of autoenrollement on your retirement plan.

From Paul Petillo, Managing Editor of Target 2025.com and a fellow Boomer.