Gonna retire? Don’t bet on it

Willie Sells hoped to finish out his 30 years of employment with McDonnell Douglas in Tulsa, Oklahoma and retire with full pension benefits but the company shut down when he had less than a year to go.

“I thought McDonnell Douglas was a blue-chip company — that’s what I used to tell people,” Sells, 74, tells The Washington Post.  “They’re a hip company and they’re not going to close.  But then they left town — and here I am still working.”

Sells, who cuts hair now, was not alone when the aircraft manufacturing company shutdown its Tulsa operations and left 988 workers without jobs.  Tom Coomer is 79 and now works as a greeter at Wal-Mart.  He was close to hitting that magic retirement age.

Same for Ruby Oakley, now a crossing guard at 74; Charles Glover, 70, now a cashier at a Dollar General Store and Leon Ray, 76, who buys and sells junk to make ends meet.

They and others were close to 30 years at the plant and now make far less than what they could have earned in retirement is they could have made it just a few more months.

The pension at McDonnell Douglas was a “30 and out” plan that paid full pensions if an employee hit 65 and had three full decades on the job but the company, like too many companies in today’s “stock prices first” started cutting or eliminating retirement programs as a way to cut expenses.

In December of 1993, McDonnell Douglas, without warning, told employees the plant was closing.  In 2001, a federal judge ruled the company tracked the number of employee nearing full retirement controlled the decision to close, but settlements from the case only amounted to about $30,000.

Those with accrued years short of the full retirement stage received a small fraction of what they could have earned.

The employees in Tulsa are not alone.  The Post reports:

As late as the early 1990s, about 60 percent of full-time workers at medium and large companies had pension coverage, according to the government figures. But today, only about 24 percent of workers at midsize and large companies have pension coverage, according to the data, and that number is expected to continue to fall as older workers exit the workforce.
In place of pensions, companies and investment advisers urge employees to open retirement accounts. The basic idea is workers will manage their own retirement funds, sometimes with a little help from their employers, sometimes not. Once they reach retirement age, those accounts are supposed to supplement whatever Social Security might pay. (Today, Social Security provides only enough for a bare-bones budget, about $14,000 a year on average.)
The trouble with expecting workers to save on their own is that almost half of U.S. families have no such retirement account, according the Federal Reserve’s 2016 Survey of Consumer ­Finances.

American Express began what became private company pension plans in 1875 when it started offering them to employees of what then was their stagecoach delivery service but such plans took hold in the middle of last century from pressure by unions and full-time employees of middle and large companies began getting pensions as part of their fringe benefits.

But when union memberships dropped and pressure stepped up to concentrate more on stock prices and dividends than employee morale, pensions became a target of cost cuttings.

Americans living longer added that pressure.  A 65-year-old man lived, on average, to about 78 in 1950.  Today, the average age to die is 84 and later.

Living longer means higher costs for pensions and — unlike death and taxes — pensions no longer last forever in America.

At age 70, I still work 40-60 hours a week in the profession I love — partially because I have done so since age 17 and really can’t do much else and because the 401K retirement account we originally established to take care of retirement went for taking care of the health of loved ones.

The combined benefits from Social Security for me and my wife is more than the average amount for most Americans and I have some pension and disability help from my various services to Uncle Sam.  Still, I plan to work full-time for as long as I can in my chosen profession.

I’ve joked that my retirement will arrive when they zip up my body bag.  For too many senior citizens, that’s not a joke but a necessary way of life.

© 2004-2022 Blue Ridge Muse

© 2021 Blue Ridge Muse