Friday, January 9, 2009

The End of Retirement

My husband and I have been discussing his retirement. We had planned for him to retire in 2010. Now we are unsure of the future. We followed the “three-legged stool” plan that so many retirement counselors have touted over the last 30 years: part pension, part Social Security, and part savings (for the extra things we may want). But will our state pensions be there for us in 10, 20, 30 years? Will Social Security be there? What about Medicare? Now our retirement savings account is starting to look like it may not be nearly enough. We are thinking that maybe my husband should continue teaching for several more years. At least he has a job – unlike the 7.2% who do not. (This unemployment figure does not include the 1.6 million long-term unemployed or the nearly 8 million who have been underemployed in part-time jobs or low paying jobs for years.)

Unless things change in the next few years, unless the Obama administration is able to turn things around, history will show that “retirement” was limited to one generation. European and Japanese economies stood in tatters after WWII. With little foreign competition, American capitalism could fulfill the American dream. For the first time ever, workers were promised that they would be able to securely retire. This was true ... for one generation.

The baby boomers are having to face a new reality. Last year, 2008, was supposed to be the year that the first baby boomers turned 62, beginning a retirement frenzy because people could begin to draw on their social security benefits. However, the economy has nosedived, and studies show that many are delaying their retirement by many years. The unfortunate reality is that those who had an investment plan for retirement will now join the millions of other baby boomers who were never able to save and have to work until the grave.

This is a perfect storm. Everything that could go wrong is going wrong. This storm was created by the coordinated effort of big-business and their ‘bought and paid for’ politicians. This was done by the deliberate destruction of defined benefit pension systems and its replacement with the 401(k). Now that the economic crisis has emerged, we're beginning to see just how ruinous the effects are. At the end of September 2008, it was discovered that in the previous year the value of stocks in 401(k) accounts had fallen by nearly $2 trillion with stocks having lost nearly half their value for the year. This is especially devastating since almost one-third of 401(k) participants who are now in their 60s had 80 percent of their money in stocks. People over 60 years of age should have 60 percent of their money in bonds, but investment brokers lured them from safe investments with stories of getting rich with stocks.

The 401(k) was the scam of the century. Corporations offloaded their "burdensome" pensions and used the combined forces of the media and politicians to sell the ruse to the public, to the great benefit of Wall Street. Workers were told that stocks were a sure thing. There were additional factors that pushed people to invest in stocks: interest rates were so low on bonds and other low risk instruments offered only tiny returns; and since employers stopped contributing to retirement funds, a bigger return was required.

Every "safe bet" for investing has been proven unsafe. The recession has left nothing untouched. After the dotcom bubble burst -- taking with it millions of people's 401(k) savings -- the housing market became the place to invest. Now the safest possible investment, too, has turned sour. Millions of people bought very large homes as an investment. They had planned to sell and move into a smaller place once the kids were gone, but now, due to the crash in the housing market, this will not happen for many of them. They are stuck in homes that are too large and expensive to maintain if they retire. So, they must keep working.

U.S. citizens are between a rock and a hard place because corporations have been allowed to move a large part of their companies overseas to take advantage of cheaper labor. And foreign auto companies have moved into the southeast U.S. where labor is cheap and benefits are non-existent. These foreign companies were given huge tax breaks by the state governments basically allowing them to function in this country with little to no tax “burden.” This enabled the corporations to drive down real wages for U.S. workers. At the same time the cost of living rose exponentially, causing most workers to have to spend more of their paychecks to just live. There was little to no money left to save for retirement.

Rep. Robert Andrews (D-NJ), who chairs the House subcommittee on health, employment, labor and pensions, said that in retirement, “some will have very little, some will have almost nothing, and some will have nothing.” People who have little to nothing do not retire.

This process is being accelerated by the newest scam of big business: declaring bankruptcy just to destroy pension and healthcare obligations. This destruction of benefits also applies to workers who are already retired because their pensions are slashed in half, forcing them out of retirement at a very old age. The threat of bankruptcy is now used in union contract negotiations to scare workers into concessions, since after achieving bankruptcy labor agreements are torn up and benefits are lost.

Worker benefits were at the center of the debate about whether or not to help the Detroit car companies. The Republicans in Congress, who are mostly corporate politicians, wanted the companies to declare bankruptcy – a proven method to destroy pensions and healthcare benefits. Of course the media, owned by large corporations, also attack the pension and health care benefits of the "spoiled" auto workers. Yet, at the same time, we the people, can only dream of the kind of retirement and health benefits these hypocrites have.

These Congressional Republicans would also like to see the end of Social Security. Just think what would have happened if they had been able to achieve their goal of privatizing Social Security. Everyone under 55 years of age would have been required to put part or all of their Social Security into the stock market. Where would that money be today? Non-existent.

A business going under and closing it’s doors forever is one thing. The corporate strategy of “re-organizing” through the use of bankruptcy is another thing altogether. This tactic will increase in number as the crisis deepens and companies strive to restore profitability by drastically lowering the wages and gutting the benefits of U.S. workers.

Equally important is the emerging struggle for maintaining pensions of public employees, the last stronghold of workers who receive them. Public employees will find their pensions under immense attack as the economic crisis intensifies and government budgets are depleted. Those state workers who have a strong union or professional organizations that work with state legislatures in their name are the ones who still have decent wages, pension, and health benefits – so far.

The ultimate goal of big business and their puppet politicians is to destroy the unions, destroy benefits, and push the wages of U.S. workers down even further so that business can achieve ever higher profits and line the pockets of the wealthy with more and more and more.

A battle must be waged against the destruction of pension and health benefits. It must be done by uniting both seriously determined retired and active workers with new levels of organizing and solidarity. Workers can no longer rely on the promises of Democratic politicians (although if they fail, it won’t be from lack of trying). Workers must rely on their own collective strength. Otherwise, we will see the end of retirement for everyone except the very wealthy – and the politicians.

That’s the way it used to be – one hundred years ago.