When I was in college, my grandpa would tell me, “make sure you work somewhere with a good retirement.” Those words didn’t mean much to me then. I just wanted a job (preferably in my area of study) that paid well.
I was hired to work at a public pension plan right out of college at the age of 23. It was a job, so I was happy. My grandpa asked me, “does this place have a good retirement?” Yes, grandpa it does. “Good.” he said, “That’s worth a lot.”
Twelve years later I am still working with the same public pension plan and my grandpa’s words ring as true as ever. He worked for the state highway department for about 20 years, a job he got after driving a bus for the city. Grandpa was able to retire in his 60s, living off his modest state pension check, social security, and savings, the traditional three-legged stool of retirement security. A man with only an eighth grade education, he is grateful for his monthly pension income. It has enabled him to transition from a middle class worker to a middle class retiree and allowed him to enjoy the same standard of living he had while working. Now in his late 80s, grandpa still lives in his home with my grandma and is financially independent.
Now days it’s getting harder and harder to find a place to work that offers a “good retirement.” About half of workers in the private sector do not even have access to an employer-sponsored retirement plan and if they do, it is likely an unreliable 401(k)-type plan that depends on market returns to build a nest egg. I often think about how my grandpa’s retirement would have been different if he would have had to decide how much to save, when to save, where to invest, when to re-allocate his assets, and when and how much to withdraw so he didn’t outlive his savings. Not to mention trying to endure the ups and downs of the markets throughout his working life.
Everyone who works hard and plays by the rules should be able to retire with dignity. Defined benefit pensions are still the most efficient way to attract quality workers, retain those workers during their most productive years and then allow them to retire at a reasonable age.
Despite all of the good defined benefit pensions can accomplish, they are under constant attack. Wall Street millionaires want to put an end to pensions and switch everyone to a 401(k)-type plan. Why? Not because it will increase Americans’ retirement security, but so they can collect more money in fees by managing individual accounts.
Today, not only do my grandpa’s words mean a lot to me because of my personal financial future, but also the financial futures of 60,000 current and former local government workers that have a defined benefit pension with my employer, the Missouri Local Government Employees Retirement System (LAGERS). We at LAGERS believe strongly in the defined benefit model and the positive effect pensions have on workers, workplaces and the economy. We will continue to work to protect defined benefit pensions in Missouri. How about you?