Retirement Heist

When I saw the author of this book, Ellen E. Schultz, interviewed on The Daily Show I knew I had to try and get my hands on a copy. It didn't have anything to do with the amount of charisma she showed (very little). I'm just getting to the age that I'm thinking more and more about how to finance our retirement. I was also kind of curious why pensions are no longer very common. It seems like you used to be able to put in 20 years with a company, and be pretty certain that your pension would keep you comfortable. That no longer seems to be the case.

So I checked it out of my local library. (Do you have a library card? You should!)

It's a slow read, and I'm going to confess that some of the math that companies use to turn employees retirement accounts into a revenue stream, goes right over my head. That statement alone, should give you a pretty good idea how companies have exploited loopholes in our benefits system, for their own gain.

I had my original question, "why are pensions no longer common", answered early on in the book. Corporate leaders, mostly in the late 80's and early 90's, misled their shareholders/employees into thinking that the retirement plans could not continue to survive, because they were underfunded based on how many retirees there were expected to be. This was what caused retirement plans to switch from being pensions, which are secure and safe; to 401(k)s, which are tied to the stock market. Anyone with a 401(k) knows how poorly they have been doing.

There is a lot more in this book that will kick your outrage in to high gear. Like the way that retirement plans are used to finance lavish executive exit bonuses. That's one of the worst parts. Corporate execs said that pension plans were under funded, the reason they were saying that is because they couldn't pay top execs huge payouts when THEY retired, while continuing to pay regular retiree pensions.

This book is well written, and has lots of references backing up the claims it contains. It's pretty dry reading, but the author does a great job at the daunting task of addressing the layman. It prompted me to make sure that I keep a closer eye on my 401(k). My employer automatically invests part of my retirement in company stock. In the past year that stock lost 23% of it's value. Since I'm 40 years old, it's time for me to start monitoring that, and making sure that it's not money I'm just pissing away.