Males, government employees, and workers covered under collective bargaining agreements fared best; women, lower-income workers, and those working for smaller firms were hardest-pressed to replace previous income or receive health benefits.
For example, 66% of government retirees received pension benefits compared to 42% of their private sector peers, while nearly half (49%) of government vs. less than a quarter (24%) of private sector retirees had lifetime employment based health coverage.
The report shows Social Security and private pension benefits are replacing about 60% of nomimal earnings for America?s retirees. But in terms of real replacement rates, this is less than half the purchasing power of their prior earnings, as only a small percentage of those receiving annuity payments had received any cost of living adjustments, according to the report.
Benefit disparities were correlated to working life income levels, firm size, and gender-related workforce roles. Only 12% of workers earning less than $10,000 received a pension, while over two-thirds of those earning over $40,000 a year did.
Retiree health benefits show a marked decline in employment-based benefits. Between 1988 and 1994, there was a 23% decline in the rate of coverage for retirees 55 and over. Part of this decline is due to a lower rate of pre-retirement coverage (69% of workers in 1988 had such benefits; only 65% had them in 1994).
Another factor is that retirees themselves chose not to elect health coverage for cost reasons, while in 1988 42% of retiree health premiums were paid fully by former employers, in 1994 that was true only 37% of the time.
High rollers, big spenders
During this same period, lump sum distributions doubled from 9% to 18% as a result of the increase in 401(k) plan coverage. Not all lump sums are saved for retirement – among workers over 40 who received lump sum distributions:
- 32% rolled over the entire amount into retirement savings
- 14% put it all into other savings or investments
- 16% put it into a business, house, or paid off debts
- 20% spent the distribution
The full report is at: www.dol.gov/dol/pwba/public/programs/opr/redbook/contents.htm
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