Pensions Aren’t the Only Way to a Secure Retirement

Americans are increasingly concerned that it’s harder to secure the things that once represented economic progress and achievement — homeownership, a college education, a well-paying job and a decent retirement. This economic uncertainty is making many feel left out and left behind. People are casting a wide net for solutions, and policymakers should be ready with big, creative, new ideas.

One place for leaders in the public and private sectors to start is by fixing a problem we have solutions for: retirement insecurity. For decades, our nation has emphasized the importance of saving for retirement. But we’ve lost focus on an equally critical part of the equation: turning a lifetime of savings into lifelong retirement income.

Many Americans retire without knowing how long they will live or how long their savings will really last. Even people with generous retirement plans at large companies often don’t have the security that comes with knowing they’ll have a monthly income that will last the rest of their lives. As a result, about 45 percent of American households will run short of money in retirement, according to a projection from Morningstar, an investment research firm. Americans urgently need to put secure lifetime income back at the center of retirement planning.

This is a personal issue for me. Soon after I graduated from college, I had to tell my father that he wouldn’t have enough money to retire when he wanted to. He had worked hard all his life in a warehouse and always provided for our family. He had access to a 401(k), but he never thought it was for workers like him, so he didn’t contribute to it. His pension and Social Security wouldn’t support the retirement he hoped for. That was a hard conversation, and it’s one American families are having every day.

Pensions, which provide guaranteed monthly income in retirement, used to be common for American workers; in the mid-1970s, about 70 percent of private-sector employees participating in a retirement plan had pensions. They offered security for those workers but were expensive for companies and could leave out people who didn’t spend the bulk of their careers with one employer. In 2022 only about 11 percent of private-sector workers had access to a pension.

Social Security is the only form of guaranteed income most Americans have access to. Reinforcing the program will be crucial for future retirees, but even a fully solvent Social Security won’t provide the retirement security Americans need. It provides only about 40 percent of the average worker’s preretirement earnings.