1 in 3 teens won't have 401(k) funds

Jesse J. Holland Associated Press

WASHINGTON -- Teenagers flipping burgers, stocking shelves or studying for finals don't think about their retirement. The government does, however, and the prognosis isn't good.

More than one out of every three American workers born in 1990 will have zero dollars in a 401(k)-style plan at retirement, a government report said Tuesday, an ominous sign considering many businesses are dumping pension plans.

The Government Accountability Office report "makes it especially clear precisely how important it is to make sure every American worker has the opportunity to save for their retirement," said David John, a retirement expert at The Heritage Foundation.

The GAO report estimated 36.8 percent of today's 17-year-olds will have no money in a 401(k) or similar plan when they retire. The numbers will be worse for low-income workers: 63 percent of them will have zero dollars in a 401(k)-type account when it comes time for them to retire.

With the reduction of pension plans and the uncertainty of Social Security, that number means millions of Americans will face rough going when it comes time for today's teenagers to retire, lawmakers said.

"Today's workers will more likely struggle to make ends meet during retirement than previous generations," said Rep. George Miller, D-Calif., who is chairman of the House Education and Labor Committee.

Part of the problem is because people withdraw part or all of their retirement savings, the GAO said, and they don't participate in retirement plans when they're offered.

Only 36 percent of workers in 2004 participated in 401(k)s and similar accounts when offered, the most recent data available, according to the report.

Making it automatic is key, John said, because people freeze up when left on their own.

"They know that this is a really important decision and that if they don't make the right choice, they can look back and really regret it when they reach retirement age," John said. "And what they do, like so many of us who are faced with that, they're paralyzed, inertia takes over, they don't do something."

GAO found that automatically enrolling workers in 401(k)s and similar plans would cut the number of those without money in those plans to 17.7 percent. Automatic enrollment would halve the number of low-income workers with zero retirement dollars from 63 percent to 30 percent.

Defined contribution plans are becoming more important to workers. Social Security provides about 40 percent of preretirement income for current retirees but that's projected to fall by the time today's young adults retire.

And the number of pension plans being offered is dropping fast. In 1980, pension-style plans had 38 million participants and 401(k)- style plans had 20 million participants.

By 1994, 401(k)s and other defined-contribution plans included 64.6 million participants, while pension plan and other defined benefit plans included only 41.7 million participants.

Another problem is availability, John said.

The GAO report noted that in 2004, only 62 percent of active workers were offered any kind of retirement plan -- pensions or 401(k) style -- by their employer. John and others advocate an "automatic IRA," which would allow employers to transfer money into an individual retirement arrangement for the 75 million employees who don't have a 401(k) option.

Automatic 401(k) investments mean employees who freeze up on retirement decisions still have some type of plan, John said. "What we've got to do now is take the same sort of thing and apply to the workers who don't work for a company that offers a 401(k)."

Mr Smith goes to Washington. A Posting From Our Brothers At FedxMx...

Tuesday, December 18, 2007

I would just like everyone to know that FedEx corp has taken a real liking to our blog. I have traced their ip address back to the emerald empire on hacks cross road(like we didn't expect this).
the language change on the senate bill will keep everyone under the railway act. The senates version takes out the language and the house's version keeps it in. It's not like we did not expect this. Even if it was passed with the language, President Bush would have vetoed it anyway.It is so funny how this company always says change is good yet they standby a law passed in the 1800's
The reason I do not care about this is because the more united we all are the more power we have. Since you are keeping up with us in the Purple Palace let me tell you this! We are coming and the little cookie you tossed our way did not work. You have been trying to divide and conquer us for so long we expected this tactic. I feel you have only brought us more together and have pissed off the other class and crafts you screwed on the last raise. What have we ever done to be treated so bad. I believe that FedEx express employee's worked their butts off to help build this corporation so that you could start FedEx ground, Kinko's and Freight. What is the thanks we get for this effort? Our retirement cut and this cash balance joke put in its place!
Then you hire a VP that reputation precedes him by taking our jobs and farming them out.
We have kept your pilots safe and your company profitable and this is the thanks we get. TEAMSTERS ARE COMING, AND YOU HAVE NO ONE TO THANK BUT YOUR MANAGEMENT TEAM FOR SCREWING US OVER. We where the leaders in aviation maintenance and what do you do? You manage to hire every upper management from every failing airline and bring them to our house and you expect us not to fight for our jobs!
We love this company and we work weekends, nights, holidays, rainy& icy days, in the freezing rain and the scorching days of summer and this is what we get for it. I was the most purple guy you could have ever Hired when this was Federal Express. I remember when you said change is good and we became FedEx. Follow the arrow was the slogan but what you did not do correct was point the arrow down because that's what we have seen our benefits and pay go. But as long as the shareholders and Board get their Dividends and bonus's(it is public information, we are not that dumb as you think)I guess things are going great. Well take a look at how ups takes care of their employees. Why must we pay $260.00 a month plus deductibles($3000.00 per family) and prescriptions while they pay Nothing, zero, Nada? Why must our retiree's pay close to $800.00 a month for medical while ups pays only $50.00? Because being self insured and using cigna to make money off your employees is sad sad sad. I have only scratched the surface. TEAMSTERS ARE COMING YOU CAN REST ASSURE. YOU HAVE THE LAW AND THE RAILWAY ACT IN YOUR FAVOR BUT WE HAVE THE RESOLVE TO BE TREATED FAIR AND EQUAL AND WE EARNED IT.
Keep on checking on us we are not going anywhere but are doing it together!!
tducksoup1 director of communications Memphis core committee

From X-Man,Southern Regional Manager ...

Original comment from "Change To Win Archives":

Xman,
10/12/2006, 02:38
Question 3-YOUR WRONG-You have 4 chances per year to talk to an Executive or A Regional Director during your employee meeting week.

Could someone from this website ask for Joe to respond to this question? Maybe he's too scared to sit down and really find out the REAL FACTS about our Company and that HE can look forward to a pension--It's not the best...but it's something.

Well X-man we do want the best, it's the Western Conference Pension Fund.

Joe.

Must Read Infromation ...

FedxMX Organizing Committee Newsletter
We would like to take this time to highlight some of the changes that are going to take effect in the near future here at FedEx Express. All of these changes will affect everyone differently but they are important to your financial future.
Pension Changes-
The pension plan is changing, effective June ’08, from the Traditional Pension Plan to a Portable Pension Account. You have no choice in this matter and this change affects each employee differently and is hard to forecast how this change will affect your retirement security.

Continues on comments: