Tuesday, September 3, 2013

401(k)s Replacing Pensions, Increasing Inequality & CHARTS: 401(k) Effect on Inequality

From Think Progress:

CHARTS: How The Increase Of 401(k)s Has Created Lots Of Inequality: The shift to saving for retirement in 401(k)s instead of pensions hurts low-income and minority workers.

The article pulls a number of charts from the Economic Policy Institute report, by Monique Morrissey and Natalie Sabadish, "Retirement Inequality Chartbook: How the 401(k) revolution created a few big winners and many losers"

Think Progress' story on the charts and the EPI report ends with this note:
"And if many wealthy CEOs get their way, workers won’t be able to rely on Social Security benefits either, leaving those who aren’t wealthy or white with few ways to get by in old age."

The Washington Post story on the EPI report emphasized how the 401(k)s are replacing traditional pensions:
The once-dominant defined benefit pension plan–which pays out a fixed amount after an employee retires–is on its way to becoming an historical artifact. More and more employers are offering 401(k) plans instead, which require employees to pay into their own accounts, sometimes with and sometimes without a matching contribution. And according to a new analysis from the labor-oriented Economic Policy Institute, the effect has been a stratification of retirement savings by education, income, and race–which could deepen inequality among the elderly as the population ages.

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