Social Security

The first leg was Social Security — benefits paid by the government to workers with a minimum of 10 years employment. At its inception in 1940, maximum monthly payments were $41 per person with one out of every 600 people receiving benefits.

Today, one out of six retired workers receives an average of $804 per month. Overall standards of living have risen as has life expectancy. More money will be needed to ensure a comfortable retirement.


The second leg of that three-legged stool was company pension benefits, specifically defined benefits that were calculated using a formula that incorporated annual salary and length of service. That leg was sturdy when the U.S. economy was dominated by big industries manufacturing airlines, automobiles and appliances. With the shift out of the industrial age and into the age of technology and the expansion of global competition, service industries replaced manufacturing. This forced many old-line companies into bankruptcy, causing them to default on pension obligations to their retirees.

Today many corporations, pressured to enhance shareholder value, have abandoned or eliminated pension promises to their employees. Old reliables such as GM and IBM have frozen their plans, while new-wave tech giants have followed suit. Whether caused by globalization or free-market forces, the results are the same. Many employees who were depending on company pensions or health care benefits will be sorely disappointed and left with little, if any, retirement money.

Personal Savings

The third leg of the retirement stool was personal savings. This was considered the amount needed to augment social security payments and pension benefits in order to maintain current lifestyles. The Greatest Generation, stung by the devastating effects of the Great Depression, saved religiously, often foregoing the satisfaction of instant gratification in favor of financial security in their old age.

But subsequent generations — boomers, Gen-X and Gen-Y – are abysmal savers, choosing instead to conspicuously consume anything and everything. According to the Commerce Department, which calculates data on personal income and spending, the national savings rate has fallen from an average of 13% of income in 1960 to zero today. That’s the lowest level since the 1930s and points to a painfully rude awakening facing many in what once were called “the golden years.”