401(k)-style retirement plans are the new normal; Illinois should get on board
401(k)-style retirement plans have become America’s primary retirement vehicle. In 1985, only one in 10 Fortune 100 companies offered 401(k)-style retirement plans to their employees. Today, seven in 10 Fortune 100 companies provide only defined-contribution, 401(k)-style retirement plans to new employees. This trend is in line with the private sector overall, where nearly 85 percent of...
401(k)-style retirement plans have become America’s primary retirement vehicle.
In 1985, only one in 10 Fortune 100 companies offered 401(k)-style retirement plans to their employees. Today, seven in 10 Fortune 100 companies provide only defined-contribution, 401(k)-style retirement plans to new employees.
This trend is in line with the private sector overall, where nearly 85 percent of employees are enrolled in 401(k)-style retirement plans.
But public employees in Illinois, unlike their private-sector counterparts (and public employees in many other states), have not been given the opportunity to change with the times. They continue to be stuck in a broken pension system.
According to Bloomberg, the number of people participating in 401(k) retirement plans has increased by more than 53 million people since the 1980s:
“Created by federal legislation in 1978 as a supplement to traditional pensions, 401(k)s instead have supplanted them as corporate America’s primary retirement vehicle. Participants increased to 61 million in 2011 from 7.5 million in 1984, according to Labor Department data. Americans held $4.3 trillion in 401(k) plans as of March 31, according to the Investment Company Institute, a trade association for the fund industry.”
Bloomberg recently released a first-of-its kind ranking of 401(k)-style retirement plans at 250 of the nation’s largest companies. Although the structure of retirement plans differs between companies, the findings show that 401(k)s provide comfortable and secure retirements for workers today.
Workers at some companies are able to retire with nearly $4 million in their 401(k):
“ConocoPhillips estimates that an employee could retire at 60 after 35 years of service with savings of $3.8 million, adjusted for inflation, assuming a starting salary of $75,000 and increases of 4 percent a year. ‘Our goal is to help employees replace at least 80 percent of their incomes in retirement by providing two-thirds of what they need while they save one-third,’ said Lynn Tramel, a benefits manager at ConocoPhillips. ‘It’s a partnership.’”
There are, of course, a number of factors that can impact the amount an individual has at retirement.
But regardless of the differences between companies, the important point is that 401(k)s provide comfortable and secure retirements for private-sector workers. Unfortunately, these retirement plans aren’t an option for most government workers in Illinois – instead, these workers are forced to participate in pension systems that are controlled by some of the nation’s most corrupt politicians.
It’s time to take politicians out of the retirement business and give workers control and ownership over their own retirement futures with the same 401(k)-style retirement plans that provide comfortable and secure retirements for private-sector workers.