A Tale of Two Retirements: The Great Divide Between CEOs and Everyone Else
A Tale of Two Retirements: The Great Divide Between CEOs and Everyone Else
Jerri-Lynn Scofield
Naked Capitalism
The Institute for Policy Studies (IPS) earlier this month released its second annual report on the CEO-worker retirement benefit gap. A Tale of Two Retirements analyzes how CEOs are provided with colossal nest eggs– monthly retirement checks ranging from more than $100,000 to more than $1,000,000– while at the same time many of their companies pursue strategies that erode retirement security for their employees.
As the IPS study summarizes:
The sum of the 100 largest CEO company retirement funds — $4.7 billion — is equal to the entire retirement account savings of the 41 percent of American families that have the least amount of retirement savings (this represents 50 million families and 116 million people).
On average, the CEOs’ nest eggs are worth nearly $47.5 million. If converted to an annuity at age 65, this would be enough to generate a $253,088 monthly retirement check for the rest of their lives. Contrast that with the situation for ordinary workers. For those lucky enough to have a 401(k) plan, the median balance at the end of 2013 was just $18,433, enough for a monthly retirement check of just $101 (IPS report, p. 5)
Over the last several decades, the trend has been for retirement plans for ordinary US workers to shift from defined benefit to defined contribution plans (for those workers lucky enough to have any retirement plan). The IPS study notes that according to the Economic Policy Institute, the share of prime working age families covered by a defined benefit pension plan plummeted from 41 percent in 1989 to 21 percent in 2013. Even worse, among the baby boomer generation, 39 percent of workers aged 56-61 years old have no employer-sponsored retirement plan whatsoever, leaving them dependent on Social Security, which pays out average benefits of $1,239 per month per beneficiary (IPS report p. 5).
