For Younger Workers, Creeping Doubts


Once upon a time, there was retirement security... If that sounds like the opening of a fairy tale, it’s not: More and more, it’s the story a new generation of workers is telling their children about a time when a majority of Americans had retirement pensions.

Real pensions are still common in the public sector, even though only 18 percent of private-sector workers are covered by these “defined-benefit” plans. But ever since the Great Recession of 2008, when many state budgets were in the red, pensions in the public sector are under attack.

In cities and states across the nation, corporate-backed politicians would like nothing better than to usher in a new era of uncertainty for the middle class — and big profits for Wall Street — by doing away with real pensions and replacing them with risky “defined-contribution” savings plans, like 401(k)s.

Pensions Are Still Hip

Isaac Harry, AFSCME Local 371

Many employers would like us to believe that pensions are for a bygone generation. They say young people crave the flexibility of a 401(k), taking it with them as they move from job to job.

In fact, the opposite is true. Only 17 percent of workers under 40 say they like their company’s 401(k) plan, according to a 2011 survey by professional services firm Towers Watson. And in a 2013 study by the National Institute on Retirement Security, 95 percent of millennials agreed the retirement system needs repair, with 84 percent in support of a new pension system.

Even as pensions continue to disappear, younger workers increasingly favor them.

As 35-year-old Destiny Dusosky, a general maintenance worker at St. Cloud State University and vice president of AFSCME Local 753 (Council 5), puts it, “If you don’t have a pension, and you just have a pot of money, you won’t be able to draw for life.”

Dusosky, who has two daughters — Scarlet, 15, and Anastasia, 12 — says her pension makes her feel “a lot more secure.”

She says her pension is the main reason she hopes to someday be able to “retire with dignity.”

Union members are four times more likely than nonunion members to have access to the retirement security provided by a real pension. But with attacks against public workers on the rise, many are losing the opportunity to have one.

Pension Security Is Irreplaceable

Rose and Francis McLaughlin

Francis McLaughlin, a city planner and union steward with the Anchorage Municipal Employee Association/AFSCME Local 16, came to work for the city in February 2007. A year earlier, he would have been eligible to participate in a real pension plan. But in mid-2006, that option was closed for new hires, who instead were offered a defined-contribution 401(a) plan. A 401(a) is like a 401(k) for government employees. He also missed out on health insurance for future retirees.

McLaughlin, 39, and his wife of four years, Rose, have a 17-month-old daughter, Agatha, with another baby on the way.

“If I had a pension, we would know exactly how much I’m going to get when I retire,” says Francis, whose father, an electrician, also was a union member and received a defined-benefit pension.

“My father has a very nice retirement,” he adds.

Unlike most of his peers, McLaughlin was lucky to get the right kind of guidance from his parents early on and started planning for retirement at a young age. With their advice, he opened an Individual Retirement Account, or IRA, before he even went to college. He converted that to a Roth IRA when he was just 25. IRA accounts, which use compound interest, are immensely more profitable the sooner you start making deposits.

In addition to a Roth IRA and his employer-sponsored 401(a), McLaughlin and his family are covered by a 457 (a deferred compensation plan for government employees from which he can draw without penalty before he reaches retirement age), a tax-free health savings account that came in handy with the birth of their daughter, and a 529 college savings plan.

But even all these savings accounts and investments, McLaughlin says, cannot substitute for the security a real pension would provide him and his family.

As the world was reminded this past summer, any investment tied to stocks, no matter how long-term, is vulnerable to the unpredictability and volatility of the stock market. When it comes to retirement security, nothing beats a real pension.

Plus, as his family grows, McLaughlin says, it’s harder to save for the future.

“It was easier to save when I was younger,” Francis says. “It’s harder now. When I was younger there was a period I went through trying not to buy new things. I would always bargain shop and use coupons. Now that we’re a family, it’s nice to go out to dinner as a family, take family vacations, buy things for my wife. Those are things that all cost money.”

Hanging on to Your Pension

Destiny Dusosky, Local 753 (Council 5)

Like most public employees, Isaac Harry, 31, has a traditional pension. Harry works for the New York City Department of Social Services as a fraud investigator. He co-chairs AFSCME Local 371’s Next Wave committee, and attended a workshop on retirement security at the Next Wave Assembly in June.

“At my job I pay into a pension and a 401(a) plan,” he says. “I wanted to know where the money was going and how it was being managed, and how it will affect me when I retire.”

Harry also learned about the attacks against public pensions by those who would replace them with defined-contribution plans. John Arnold, a billionaire and former hedge fund manager, is trying to destroy public pension systems across the nation.

Harry says his parents are hard workers but will have to work beyond the age of retirement. Saving for your golden years isn’t easy, he knows, and a majority of Americans aren’t able to save enough to retire with dignity and peace of mind.

Though he feels he’s better off than many workers his age who only have access to a defined-contribution savings plan, Harry says he’s not going to sit back and assume everything’s going to be okay.

“I’m going to do whatever it takes to protect my pension,” he says.