01/16/2012 09:05 am ET Updated Mar 17, 2012

Help Me Save Your Retirement

Okay, guys I know the topic of retirement is boring, but so is oxygen. Unfortunately, while our supply of breathing air is adequate, our retirement assets aren't.

With very few exceptions unless you are: a long-serving member of Congress, a Fortune 500 executive, an employee at one of the 17 Fortune 100 companies that offers pensions to new hires or a tenured professor you are out of luck. Employers switched to 401(k) plans for a reason. They're cheap. Because your employer only contributes the equivalent of 3% of your pay, versus 8% for regular pensions, you foot most of the cost of your retirement.

Unfortunately, in the rare instances when there's been any media attention to the topic of pensions, it's about the allegedly too-generous pensions for the public sector. In reality 70% of these workers get less than $30,000 a year, according to the SEIU.

What's more, 30% of public sector workers don't collect Social Security, according to the Center for Retirement Research. So when you compare the retirement paychecks for those in the public and private sector, they are equally puny, given that the typical 60-something Boomer has only accumulated around $100,000 in 401(k) savings, translating into a meager annual income of about $4,000 on top of a pretty paltry $25,000 or so in Social Security payments -- a big drop from the median wage for that age group of around $65,000. So instead of the Tea Party's divide-and-conquer approach that pits private and public sector workers against each other, workers should team up to demand a decent living standard in their golden years for the "other 99%."

The prospect of aging Boomers having to work into their 80s isn't just going to wreak havoc on the viability of Florida's retirement communities but the job prospects for scores of recent college grads. And that's assuming that their employers will let Boomers stay on their jobs, given that companies would rather save money on lower-wage inexperienced 20-somethings than higher-wage 60-somethings. Most likely, Boomers will get laid off and have to find minimum-wage, minimum benefit jobs instead. We're not the only nation facing pension poverty: Europe's Boomers are in a pickle as well, as a result of rising life expectancies and low birthrates.

I've been trying to get the media to cover this crisis for ten years, along with rallying Beltway insiders who claim to champion the cause of average Americans but in reality couldn't be bothered, with the exception of the SEIU. So I'm reaching out to you, "the 99%" to get the Senate, where the Democrats hold the majority for now, to hold hearings on this crisis. (Unfortunately, while the Senate Finance Committee held hearings in 2011, apparently the only people who testified were affiliated with the employer lobby, which contended that 401(k) plans are working just fine.) In a logical world, retirement reform would be Obama's reelection campaign promise given that retirement inadequacy affects 80% of the population. But as you can see from the lunatic fringe that comprise most of the Republican candidates, we are no longer living in a logical world. Even if the topic of retirement were brought up, the candidates would insist that an adequate nest egg is your "personal responsibility" and any mandates would be job-killers -- despite the fact that virtually every other first-world country has more generous government/ private pensions than we do.

I've created a retirement reform proposal with the input of leading pension actuaries that makes 401(k) plans walk, talk and quack like pensions by making them more generous, immediate and portable. Complete details of my proposal are here:

  1. We need to require Fortune 500 companies to contribute three times the amount they typically make to employee accounts, equal to 9% of pay, which is the case in Australia. Think this mandate would be bad timing because of the recession? The fat cats are laughing all the way to the bank -- profits for the Fortune 500 jumped 81% in 2011. What's more, these companies are hiring plenty of people, they'd just prefer to recruit low-wage overseas workers. As I pointed out in a previous blog, according to the Wall Street Journal, Fortune 100 companies alone have killed 2.9 million American jobs in the past decade while adding 2.4 million jobs abroad. If we assume that the rest of the Fortune 500 are also outsourcing that accounts for a significant chunk of the 14 million people who are currently unemployed.
  2. Oh, yeah -- and employer contributions to 401(k) accounts must be in cash, not the "play money" known as company stock.

    You think that the Enron scandal led to legislation prohibiting company stock as a 401(k) match? Incredibly, 11 million of the nation's more than 52 million 401(k) participants currently have more than 20% of their assets in it. Why? The so-called Pension Protection Act put no limits on company stock holdings. The only measure employers are required to take is to warn employees that their savings "may not be diversified" if they have more than 20% of 401(k) assets in the stock -- a totally watered down requirement that no doubt came about as a result of campaign contributions from the employer lobby.

  3. Require employers to communicate to employees that if they haven't saved the equivalent of AT LEAST ten times their salary in their current and rollover accounts that they can't afford to retire so they won't be duped into buying an annuity, which can't make an empty nest egg full.

Agree we need reform? Please go to the page on my website where you can find a PDF of my reform proposal and forward the link to your local Congressperson -- along with forwarding it to your friends, colleagues and relatives, recommending that they do the same. Ask your Congressperson to forward the link to Michael Kreps, the legislative aide to Senator Tom Harkin, Chairman of the Senate Health, Education, Labor and Pensions Committee, which should hold the hearings. (Please do not send the link directly to Harkin's aide unless you are a resident of Iowa because politicians only respond to constituents.

Look at it this way: this effort won't take that much time and you've got nothing to lose and a better retirement to gain.