How to Retire with Enough Money and How to Know What Enough Is
My work as an economist is fueled by the conviction that everyone deserves a dignified retirement. While 1199SEIU members are in a particularly good position regarding retirement planning thanks to your defined pension benefit, all workers need to know some retirement basics. My book, How to Retire with Enough Money and How to Know What Enough Is, seeks to empower people in planning for their retirement.
When it comes to retirement planning, individuals have several sources of power. Power as a saver, as a consumer, as a worker and as a voter. As a saver, you have the power to save what you earn and avoid debt. For example, many people don’t realize that paying off a mortgage is an important step toward a comfortable retirement. When you’re retired, a paid-off house boosts the amount of money you have to spend each month while allowing you to continue to live in the home that you worked so hard for.
As a consumer, you have the power to hold off on buying “wants”—which can help you feel good about satisfying your “needs.” Brain researchers have found people are happier and more satisfied with themselves and their family when they have control over their financial lives, rather than when they splurge on luxuries they really can’t afford. Plan ahead for your children’s expenses and things like home and car repairs, rather than being caught short by “unexpected” expenses.
Last but not least, everyone has power as a voter. As an 1199SEIU member, you know this is vitally important to support and protect workers’ rights. I would add that workers’ rights include access to programs that allow workers to retire after a lifetime of work. Unfortunately, this idea is becoming increasingly rare.
While 1199SEIU members are fortunate to have access to quality retirement savings plans in the form of defined pension benefit plans, the trend in the workplace is going in the opposite direction. There is a decrease in employers offering access to plans, and among those that do offer plans, they are offering less effective defined contribution plans, or 401(k)s. Although a 401(k) is an effective way to supplement a defined benefit pension, it is not a reliable source of income on its own. This means more and more older workers have less to live on in retirement while public programs struggle to step in to care for this growing population. No union member is an island; if members of your community lack pensions, your quality of life is less secure.
One way to make everyone’s quality of life more secure is by supplementing Social Security with individual savings accounts, known as Guaranteed Retirement Accounts, which I have proposed. While some political candidates propose cutting Social Security by raising the retirement age, we need to reform our current retirement savings methods and institutions so that more people will have the added security that 1199ers have. This includes strengthening Social Security and Medicare to fend off both poverty and sickness in old age and by adding Guaranteed Retirement Accounts—on top of Social Security—to ensure that all workers have the income they need to retire when they choose to.
Teresa Ghilarducci is a labor economist and nationally recognized expert in retirement security.