"Retirement": The New American Elite? (June 2005)
I just returned from a weekend in Los Angeles, attending the retirement party of my cousin Larry HasBrouck. A dedicated and much-respected teacher for 37 years, he accepted an early retirement package (he is 63 years old) and is now facing the void (or let's say "opportunity") created by the ending of a well-loved lifelong career. It is a life's work worth celebrating.
Being self-employed certainly colors my perception of a pension of $60,000 a year--a pension which cannot be decimated by the bankruptcy of the employer (in this case, a school district which is part of the vast California Public Employees Retirement System, PERS, one of the largest investment entities in the world). Last time I looked at my annual "benefits" statement from Social Security, I am slotted to receive between $700 and $1,000 a month, depending on when I "retire" (not a word in the vocabulary of the self-employed).
With the bankruptcy of United Airlines and the potential bankruptcy even of General Motors on the horizon, the end of private pensions seems close at hand. A new elite is forming in the U.S.--those with unassailable pensions which include medical benefits for life. The rest of us will be left shifting for ourselves, buying expensive supplemental health insurance if we have the money, and getting by on Social Security. Those with generous 401K plans may be able to set aside enough money for a more comfortable retirement, but then again, if the stock and bond markets collapse (as seems likely within the next 5-6 years), then that implosion will strip away much of any 401Ks holding stocks, bonds or mutual funds.
Some 10 million people work for government agencies in the U.S. while another 12.7 million work in the education industry. While some of these workers may not covered by an ironclad pension, the vast majority work for government agencies (school districts, university systems, etc.) Another million or so work for government hospitals and health care agencies, and then there's some two million people in the Armed Forces.
Bottom line: about 26 million workers (out of a workforce of about 132 million) are in line to receive an "old style" pension of generous monthly checks and substantive medical benefits. Another few million may have a union-funded pension plan, and a few companies like IBM may have pension plans which will survive the coming depression. But as health care spirals ever farther beyond the budgets of private employers and workers, perhaps these workers with generous pensions will be recognized as a new elite in American society; protected by their government service from the rising winds which threaten to strip away whatever assets or "pension" those employed in the private sector may have accumulated, they will prosper even in the coming lean years.
* * *
copyright © 2005 Charles Hugh Smith. All rights reserved in all media.
I would be honored if you linked this wEssay to your site, or printed a copy for your own use.
* * *