The Elusive Goal of a Secure Retirement



Imagine you are on a sinking ship in a violent storm. Some passengers are outfitted with state-of-the-art survival suits and are directed to sturdy life rafts. But most passengers get tattered life vests and are told to sink or swim. Rather than reaching sunny shores, this latter group is treading water, fending for themselves. That is what retirement savings looks like for most households these days.


Social Security Private Saving Household Saving Retirement Saving Elusive Goal 
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  1. 2.
    Katherine Porter, “The Damage of Debt,” Washington and Lee Law Review 69, no. 2 (2012); Claire M. Renzetti, “Economic Stress and Domestic Violence” (Harrisburg, PA: VAWnet, a project of the National Resource Center on Domestic Violence, September, 2009).Google Scholar
  2. 3.
    Christian E. Weller, “Raising the Retirement Age for Social Security: Implications for Low Wage, Minority, and Female Workers” (Washington, DC: Center for American Progress, 2005);Google Scholar
  3. Monique Morrissey, “Beyond ‘Normal’ Raising the Retirement Age Is the Wrong Approach for Social Security,” EPI Briefing Paper no. 287 (Washington, DC: Economic Policy Institute, 2011);Google Scholar
  4. Maria Heidkamp, William Mabe, and Barbara DeGraaf, “The Public Workforce System: Serving Older Job Seekers and the Disability Implications of an Aging Workforce” (New Brun swick, NJ: NTARL eader ship Center, John J. Heldrich Center for Workforce Development, 2012).Google Scholar
  5. 4.
    There is one corporate governance argument that links rising labor and financial market risks with increasing risk exposure. Addressing the causes of macroeconomic fluctuations in addition to discussing policies to improve household risk protections is beyond the scope of this book. See William Lazonick, “Labor in the Twenty-First Century: The Top 0.1% and the Disappearing Middle Class,” in Christian E. Weller, ed., Inequality, Uncertainty and Opportunity: The Varied and Growing Role of Finance in Labor Relations (Ithaca, NY: Cornell University Press, 2015).Google Scholar
  6. 5.
    See Christian E. Weller and David Madland, “Keep Calm and Muddle Through” (Washington, DC: Center for American Progress, 2014) for a more detailed discussion of the consequences of inadequate retirement savings.Google Scholar
  7. 6.
    For a summary of John Maynard Keynes’s discussion of savings motives, see Martin Browning and Annamaria Lusardi, “Household Saving: Micro Theories and Macro Facts,” Journal of Economic Literature 34, no. 4 (1996): 1797–1855.Google Scholar
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    See Camilo Mondragon-Velez, “How Does Middle-Class Financial Health Affect Entrepreneurship in America?” (Washington, DC: Center for American Progress, May 2015), for some of the relevant literature and for data on the importance of household savings for the growth of entrepreneurship among older households.Google Scholar
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    Joseph E. Stiglitz, The Price of Inequality: How Today’s Divided Society Endangers Our Future (New York, NY: W. W. Norton & Company, Inc., 2013), liv–lv, 45–46, 137.Google Scholar
  10. 17.
    My discussion here only focuses on policy support for households to save not on the policy rationale to support employer interests. Retirement benefits, historically DB pensions, also exist because private and public employers want to recruit and retain the most skilled workers. Public pensions in the United States, for example, date back to 1775 when the Continental Congress offered military pensions to officers in the Revolutionary War as a retention incentive. For an in-depth discussion of the historical development of public pensions in the United States up to the creation of Social Security, see Robert L. Clark, Lee A. Craig, and John Sabelhaus, State and Local Retirement Plans in the United States (Northampton, MA: Edward Elgar Publishing, 2011).CrossRefGoogle Scholar
  11. 20.
    A wide variety of political theories exist that aim to explain the differences in the size of the welfare state as well as the differences of the forms of public policy interventions. For one example, see Nicholas Barr, The Economics of the Welfare State (Oxford, UK: Oxford University Press, 2012), Chapters 3 and 4.Google Scholar
  12. See also Gøsta Esping-Anderson, The Three Worlds of Welfare Capitalism (Princeton, NJ: Princeton University Press, 1990), for a discussion of the foundations of welfare states.Google Scholar

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© Christian E. Weller 2016

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