Inflation continues to ravage Americans’ savings, making them nostalgic for a retirement benefit of yesteryear: the pension.
Ninety percent of Americans saving in a company retirement plan, such as a 401(k), worry it doesn’t provide a reliable stream of income that can withstand the financial strains posed by inflation, which hit a 40-year high in 2022, according to a survey of 1,003 plan participants last fall by Greenwald Research. Seventy-six percent, up six percentage points from a year ago, worry they’ll run out of money, and 83% percent now want guaranteed lifetime income, the poll by the independent researcher said.
Until about the 1980s, the pension, or defined benefit plan, “was a very, very successful program for people,” said Phil Maffei, head of corporate retirement solutions at insurance company TIAA. “You would get a portion of your income delivered as income for life when you retired.”
What happened to pensions?
Pensions can be expensive and risky for companies. Companies fund pensions and decide how to invest and grow them to keep them fully funded. It’s also tricky to predict how much an employer will need to meet their retirees’ pension obligations, especially with people living longer.
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Pensions also siphon away money that companies otherwise could use for investments that enhance the bottom line.
Pensions are still common in the public sector, with 86% of government…
