Can You Afford to Retire?

Can You Afford to Retire?

Vanishing pensions and inadequate 401(k) savings may force baby boomers to keep working into old age, just to survive.

As American companies have gradually shifted away from traditional lifetime pensions in favor of 401(k) plans, employees find themselves carrying much more of the cost and risk of retirement savings. In 1978, companies chipped in 89 percent of total contributions towards retirement and employees put in 11 percent, according to the Department of Labor. In 2000, the company share had fallen to 49 percent and the employee share had leapt to 51 percent. Half of the country’s private sector workforce has no employer-sponsored retirement plan at all.

Further, 401(k) plans were intended to supplement, not replace, pension plans – and we discover here how that ended up not being the case.

As this Frontline program reports, the baby boomer generation is headed for a shock as it hits retirement, as many will be long on life expectancy but short on savings. The report looks at the corporate bankruptcy strategy that enables companies to terminate lifetime pension plans through Chapter 11 bankruptcy, as in the case of United Airlines which dumped its pension plans when it filed for bankruptcy in 2002.

Experts say Americans will need to save 10 times their annual pay in 401(k)s by the time they retire, or 15-18 percent of their salary every year of their career. Clearly most people are not saving enough.

This sobering report includes an hour of videos as well as extensive articles, advice from experts and workers’ personal stories. The videos are divided into four chapters: Chapter One explains the transition from pensions to 401(k)s. Chapter Two examines corporate bankruptcy laws that endanger retirement plans, and the specific case of United Airlines. Chapter Three is a study of 401(k)s and what it means to save enough. In Chapter Four experts say 401(k) programs desperately need reforming.

Conclusion? Retirees find they are having to go back to work to make ends meet. Many Americans will never be able to afford retirement, and the concept will soon lose all meaning, as the only way most of us will be able to survive “retirement” is to keep working forever.

LENGTH: 56:00

Correspondent and Senior Producer: Hedrick Smith
Produced and Directed by Rick Young
Written by Hedrick Smith and Rick Young
Editor: David Ewing
Principal Camera: Peter Pearce
Field Producer: Corey Ford