Social Insecurity

Zusatztext 91737022 Informationen zum Autor James W. Russell Klappentext How 401(k)s have gutted retirement security! from charging exorbitant hidden fees to failing to replace the income of traditional pensions Named one of PW's Top 10 for Business & Economics A retirement crisis is looming. In 2008! as the 401(k) fallout rippled across the country! horrified holders watched 25 percent of their funds evaporate overnight. Average 401(k) balances for those approaching retirement are too small to generate more than $4!000 in annual retirement income! and experts predict that nearly half of middle-class workers will be poor or near poor in retirement. But long before the recession! signs were mounting that few people would ever be able to accumulate enough wealth on their own to ensure financial security later in life. This hasn't always been the case. Each generation of workers since the nineteenth century has had more retirement security than the previous generation. That is! until 1981! when shaky 401(k) plans began replacing traditional pensions. For the last thirty years! we've been advised that the best way to build one's nest egg is to heavily invest in 401(k)-type programs! even though such plans were originally designed to be a supplement to rather than the basis for retirement. This financial experiment! promoted by neoliberals and aggressively peddled by Wall Street! has now come full circle! with tens of millions of Americans discovering that they would have been better off under traditional pension plans long since replaced. As James W. Russell explains! this do-it-yourself retirement system-in which individuals with modest incomes are expected to invest large sums of capital in order to reap the same rewards as high-end money managers-isn't working. Social Insecurity tells the story of a massive and international retirement robbery-a substantial transfer of wealth from everyday workers to Wall Street financiers via tremendously costly hidden fees. Russell traces what amounts to a perfect swindle! from its ideological origins at Milton Friedman's infamous Chicago School to its implementation in Chile under Pinochet's dictatorship and its adoption in America through Reaganomics. Enraging yet hopeful! Russell offers concrete ideas on how individuals and society can arrest this downward spiral. Preface On my sixty-fifth birthday, instead of looking forward to retirement, I found myself addressing an overflow crowd of a hundred forty people at a university. I had, with a number of other people, organized a group called the Connecticut Committee for Equity in Retirement. We were speaking at forums for state employees throughout the state about the crisis in our 401(k)-like retirement plan. The crisis was that there would not be enough money for any of us to retire without taking severe plunges in our standards of living. We knew that because the previous spring our employer, the State of Connecticut, was having severe budgetary problems and had offered an incentive for high-seniority employees at the top of their pay scales (such as me) to retire. The state assumed it could save money if we retired. We would be replaced by new, lower-salary employeesor not replaced at all. I say that we were in a 401(k)- like plan because technically we were in a 401(a) plan. Both are named after provisions of the Internal Revenue Service code that deal with a common approach to retirement: build up individual stock market investment accounts to finance retirement income. This approach differs radically from that of traditional pensions and Social Security, as we will see. The only difference between a 401(k) plan and the 401(a) we had is that our employer was in the public rather than private sector. There are a number of other 401(k)-like employer-sponsored plans such as 403(b)s and 457s. The 401(k) plans are simply more reco...

“This is the story of how one individual fought bureaucracy—and won.... His campaign is truly a case history to be emulated, one that requires much patience and time.”
—Booklist

“Retirement expert Russell (Double Standard) offers a sobering and persuasive analysis of the gradual shift from more secure defined-benefit plans (pensions) to riskier defined-contribution plans (401(k)s). When he retired at age 65, Russell should have had 70%–100% of his final salary as income, according to conventional wisdom, but despite a frugal lifestyle, he had only 45%–50% of his income, between his 401(k) and projected Social Security. Russell suggests that confusion about retirement saving leads average Americans to become the victims of a swindle perpetrated by think tanks and the financial services industry. He explains how popular economic theory, led by Milton Friedman’s Chicago School, turned against Social Security, and traces changes during the Reagan administration, when more companies switched from pensions to 401(k)s. Russell led a successful movement in his own company to switch back to pensions. As he notes, there’s now an international movement to go back to a plan where most retirement income is bolstered by pensions and Social Security—“the most successful retirement program by far in terms of the number of people who have benefited.” He closes with suggestions for how to put that plan into effect. The book is a hair-raising look at the dire retirement prospects of tens of millions of Americans.” —Publishers Weekly

“Russell (Double Standard) argues that defined-benefit pension plans are substantially better for both employees and employers than defined-contribution 401(k)-type retirement ones. The author's message is that 401(k) plans are essentially scams that mainly benefit the financial services industry through the various fees that are charged. Having led, in Connecticut, one of the first successful employee movements to replace a state's 401(k)-like retirement plan with a pension plan, Russell offers a unique view. In addition to recounting the experiences of the Connecticut Committee for Equity in Retirement, the author covers historical events that brought about changes to retirement policy in the United States. The book is full of statistics and useful tables that help readers to digest this complicated topic. Russell encourages readers to avoid the retirement pitfalls he writes about by learning as much as they can about the different systems, which he admits are confusing for most people, and suggests ways to do so. He argues that education on the topic is key. VERDICT Essential for anyone interested in the evolvement of retirement systems and how these changes affect their own retirement.”
—Library Journal

“Labor educators will welcome his call for advocacy to address the looming economic challenges that confront workers nearing retirement age. Russell shines a light on the real consequences of the transition away from traditional ‘defined benefit’ pensions (funded by employers) to the ‘defined contribution’ model, or 401(k), funded primarily by employees.”
—Labor Studies Journal

“In Russell’s well-researched, well-documented view, 401(k)s are essentially financial snake oil sold to a gullible public on the basis of false promises of steadily rising value...Russell demonstrates the pitfalls of relying on 401(k)s especially ably and succinctly...a valuable primer that provides a useful framework for analysis in a popular, deeply informative form.”
—Science & Society

“Experts and lay people alike will be deeply enlightened by reading Social Insecurity: 401(k)s and the Retirement Crisis, an incisive and compelling account of the harm caused by the disastrous jump into 401(k) plans as a major source of Americans’ retirement income. Professor James W. Russell places the trend towards 40…