Much of President Obama’s State of the Union address focused on the theme of income inequality in America, an issue omitted from many presidential speeches since Lyndon B. Johnson first announced a War on Poverty.
Just as youth traveled to the Deep South to register voters and educate other young people on how to organize their communities in 1964, America’s youth must take an active role in addressing income inequality. The Millennial generation has much to lose if it doesn’t improve current economic conditions, shield itself from predatory student loans, and preserve its right to one day have a dignified retirement.
Under current policies, retirement has become one of the greatest examples of income inequality in America. People can spend their lives working hard and playing by the rules and still retire in poverty in today’s economy.
According to the Economic Policy Institute, the shift from traditional pension coverage to 401(k)-style defined contribution plans in the private sector helped fuel retirement income inequality in America, with plan access and contributions dependent on income levels.
The majority of our most affluent workers have savings sitting in a 401(k) or similar retirement savings account, which averaged $308,674 in 2010. In contrast, only 52% of middle class Americans have savings in retirement accounts, and for those who did the average balance was only $34,981.
Retirement savings options and balances are severely low for America’s poorest workers, who are less likely to have access to a retirement plan at work. It is also likely these same workers cannot afford to contribute enough out of their own stagnant wages, leaving them more reliant on Social Security, which is constantly under attack.
For Millennials, these startling facts reinforce the prediction that our generation will retire later and poorer than previous generations without significant policy intervention.
Sadly, retirement savings options aren’t the only obstacles in preparing for retirement. The Millennial generation faces an unprecedented mix of underemployment and student loan debt threatening to follow it into the golden years.
Personal finance website NerdWallet estimates today’s college graduates will not be able to retire until age 73 because of student loan debt. The median student debt load of $23,300 will cost students more than $115,000 by the time they retire. So instead of saving for retirement, many will continue paying student loans or risk having Social Security checks garnished. It will be decades before my generation can reasonably consider retiring, but the work to fight for retirement security must start now. This battle isn’t only about protecting our retirement; it’s about the near future for our parents. As Baby Boomer parents grow older and enter a less secure retirement, many Millennials will have to support them financially. Less retirement security for our parents means adding more obligations to the growing list of housing, child care and education expenses. If we want greater access to the American Dream that allowed generations before us to obtain good jobs, buy houses, raise families and enjoy a dignified retirement, we have to hold our lawmakers more accountable. We have to organize around efforts to create more affordable secure retirement options and lower student loan interest rates. Most importantly, we have to be ready to ride for a cause this summer. Austin Thompson is the Millennial Coordinator for the Service Employees International Union.
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