Teresa Ghilarducci first came on Marketplace to declare 401(k) accounts a “failed experiment” back in 2012. Since then, they’ve gotten even worse.
“Now I have the benefit of seeing if my forecasts were correct, and they’re actually a little bit worse,” said Ghilarducci, a labor economist and director of the Schwartz Center for Economic Policy Analysis at the New School. “We’ve now had two recessions, and the last recession caused interest rates to probably permanently fall. So if anybody wants a portion of their pension plan to be in a safe asset, they’re going to get much lower returns than they got in the 1980s.”
The vast majority of Americans lacked enough retirement savings even before the COVID-19 pandemic. Now, some older Americans are leaving the workforce and others have stopped contributing to retirement accounts because they can’t afford to. Just half of workers participated in a retirement plan at work in the first place, partly because employers are not required to offer 401(k)s or other retirement plans. So, where did these plans come from? And, are they actually helping people save?
Today, Ghilarducci is back on the show to walk us through the 40-year decline of retirement in this country, the incentive structures setting up Americans for failure and why there’s some reason for hope in the new presidential administration.
After that, we’ll hear from listeners about heading back to the classroom, canceling Thanksgiving plans and working on Black Friday. Plus, looking back at the last pandemic ignored for too long by the federal government.
When you’re done listening, tell your Echo device to “make me smart” for our daily explainers. This week we’ll cover bubble wrap, the marshmallow test and Giving Tuesday (which is today. Donate to Marketplace here). Also, don’t forget to subscribe to our newsletter! You can find the latest issue here.
Here’s everything we talked about today:
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