southtownstar
IMPERFECT 
Weather Updates

Bowyer: How business can help avoid looming retirement crisis

Denise Bowyer is vice president American Income Life Insurance Co. based Waco Texas.

Denise Bowyer is vice president of American Income Life Insurance Co., based in Waco, Texas.

storyidforme: 54947410
tmspicid: 20179687
fileheaderid: 9312513

Updated: October 16, 2013 6:29AM



I’m a business leader, a baby boomer and a consumer. In each of these roles, I’m concerned about retirement security, or should I say the lack of it? But it’s as a business leader that I have the most concern.

Like myself, many hard-working Americans hold a vision of retirement based in financial security and symbolized by a sturdy, three-legged financial stool. For most Americans today, however, that sturdy stool — made up of Social Security, employer pensions and private savings — is broken, missing a leg or two.

Business leaders, working Americans and the policy makers who represent us are faced with a choice. We can either change our vision or fix the problem.

Business is driven by confidence that a consumer will want to, and be able to, purchase a good or service. A recent survey of small-business owners by the American Sustainable Business Council (ASBC) showed that 70 percent believe that the lack of retirement security is a threat to business and the overall economy. They understand that business cannot be sustained unless it has a sustainable customer base, including older Americans.

The solution should be a combination of public policies that strengthen Social Security, make it easier for employers to offer and administer pension plans and that promote personal responsibility and financial literacy. Here’s how to do it one leg a time.

The first leg is Social Security. It touches the lives of most Americans, and today for many working families it is the only leg of their retirement stool.

At its founding, Social Security was not meant to be the sole source of income but to replace about 40 percent of a worker’s income at retirement. That’s little more than half of the 70 percent of pre-retirement income that research suggests is required for a comfortable and sustainable retirement.

The mechanism of Social Security — equal employer and employee contributions coupled with payroll deduction — has been a winning combination for the roughly 57 million Americans now getting its benefits at an average of about $1,200 per month. Strengthening Social Security should be the single issue that all business people agree on.

There is no longer a universal second leg on the retirement stool. Employer-sponsored, defined-benefit pension plans are weak and/or broken. It is in business’ interest to protect the last bastion of these traditional pension systems still in existence.

It’s also in its interest to find cost-effective solutions in implementing employer-sponsored plans. In the ASBC survey, cost, not values, was cited by small-business owners as the single biggest obstacle to offering a retirement plan. We need public policy to reward small businesses that offer a portable and transparent retirement plan for their workers.

The average balance today in a 401(k) retirement account is about $80,000, and half of Americans don’t even have that option. A sound second-leg option would greatly help the 67 percent of small-business owners who do not offer a retirement plan.

The third leg of the retirement stool is personal savings, but for most U.S. workers savings amount to no more than 3 percent of their retirement needs. Today, most workers use savings for emergencies, not retirement. In a time of flat or declining wages, saving for retirement is not realistic for many workers.

The simplest solution to the lack of financial resources for retirement is to work longer. For some, of course, that is not an option. And even those who do plan to work longer can be laid off from career jobs and forced to take lower-paid ones.

Business leaders are some of the best voices offering solutions to real-life issues that affect our communities and impact our bottom line. We should listen to them. A wobbly, one-legged retirement stool cannot support business or our customers for the long haul.

Denise Bowyer is vice president of American Income Life Insurance Co., based in Waco, Texas.



© 2014 Sun-Times Media, LLC. All rights reserved. This material may not be copied or distributed without permission. For more information about reprints and permissions, visit www.suntimesreprints.com. To order a reprint of this article, click here.