Half of all retirees will be poor. Here's what to do about it.

We're not kidding about the number of poor retirees.

Teresa Ghilarducci recently wrote in The New York Times,

Seventy-five percent of Americans nearing retirement age in 2010 had less than $30,000 in their retirement accounts. The specter of downward mobility in retirement is a looming reality for both middle- and higher-income workers. Almost half of middle-class workers, 49 percent, will be poor or near poor in retirement, living on a food budget of about $5 a day.

If you don't have a pension, you're nine times greater to live in poverty when you retire. The National Institute on Retirement Security issued a report yesterday that said,

Rates of poverty among older households lacking defined benefit (DB) pension income were approximately nine times greater than the rates among older households with DB pension income in 2010, up from six times greater in 2006 a new study calculates.

We're glad he's not retiring.

This is scary, scary stuff. Especially when you consider (a) how few people have pensions these days (b) that 75 million Baby Boomers are beginning to retire and (c) their savings have been eroded by the financial crisis.

Let's face it: America's do-it-yourself pension system is one big fail.

Sen. Tom Harkin thinks so too. Harkin released a plan today to solve the retirement crisis. It has two parts:

1. Rebuild the private pension system by providing universal access to Universal, Secure, and Adaptable (“USA”) Retirement Funds, a new type of private pension plan that would give people the opportunity to earn a secure benefit and would be easy for employers to offer.  
2. Improve Social Security by increasing benefits while strengthening the long-term finances of the trust fund.

Harkin explains anyone without a retirement plan could join USA Retirement Funds through the current payroll withholding systems. The funds would pool risk and have professional asset managers overseen by trustees. The trustees would include retiree, employer and employee representatives. Participants would would earn a benefit over the course of their retirement, with survivor benefits, like a pension.


Read the whole thing here.