Secure Retirement Eluding More and More Americans

Few Americans have suffered more from U.S. economic policies favoring corporations and the rich — compounded by the current economic slump — than retirees.

Relying on limited income from Social Security and private pensions and savings — if any — the 35 million Americans who are 65 and older have a median household income of just $26,036. That's 44 percent less than the median household income for working Americans ($46,326). Yet retirees have the same expenses as everyone else — for housing, groceries and transportation, and even greater expenses generally for prescriptions and medical care.

Social Security makes the difference between poverty and making ends meet for millions — even those who are lucky enough to have a traditional pension. CWA retiree Bobby Sparks, former member of Local 3060, Winston Salem, N.C., has a pension after 37 years at AT&T, but without his Social Security annuity of $1,204 a month, which gets annual adjustments, he would be in trouble. His pension, $1,397 a month, has risen by less than $50 since he retired in 1989. Since then, the cost of living has grown more than 70 percent.

"Thanks to my union, I'm luckier than most," said Sparks. "People on a fixed income with fewer resources than me are in a real fix, especially with the sharp increases we've had in the cost of gasoline and groceries," he said adding, "Luckily, we paid off our mortgage." Sparks' wife of 44 years, herself an AT&T pensioner, died last year.

Few private employers provide any meaningful increases to retirees' pensions. The last pension hike AT&T provided retirees was in 1999. Verizon hasn't given retirees an increase in 14 years. It also froze the pension plan of its management employees in 2005. While CWA and other unions can and do advocate for retirees, the law does not require employers to bargain with unions for workers who have already retired. Corporations take full advantage of this, generally refusing to even discuss retirees' benefits during bargaining.

As a whole, less than a third of all retirement age workers — some 11 million Americans — are covered by a traditional pension which is a direct result of the sharp decline in the number of workers with collective bargaining rights. The average private pension is $7,692, not much to tide retirees over during their "golden years."

Many more retirement age Americans are continuing to work, or returning to work, these days because they can't afford to retire. The number of Americans who remain in the workforce at age 65 and older has grown by nearly 30 percent since 2000.

Health Care:
Retirees' Chief Concern

Health care is the most pressing issue for retirees, according to a 2008 survey by the Employee Benefit Research Institute. "Health care costs have really shot up for most airline retirees," said retired United Airlines flight attendant Jan Heistermann of Fountain Valley, Calif., who retired as an AFA-CWA Local 29012 member after nearly 40 years in 2003.

"United said there would be no changes to our retiree health care if we retired by June 2003 so many of us retired before the cutoff date. It took only 6 months for the airline to go back on its word." Heitermann's out-of-pocket expenses have climbed from $200 to $1,500, and now that she is Medicare-eligible, United is charging her $300 a month for supplemental coverage for herself and her husband. Family coverage for post-June 2003 retirees now often exceeds $600 a month.

Future retirees at United face greater obstacles. The airline used the protections of the bankruptcy laws to terminate its pension plan. It also tried to make it virtually impossible for retirees to afford health care by making the cost of coverage prohibitive. AFA succeeded in brokering an agreement with the airline to establish a replacement retirement plan and to protect retirees' access to more affordable health care.

CWA is now fighting to protect the health benefits for present and future retirees at Embarq. The company unilaterally terminated retiree health benefits for employees hired after Jan. 1, 2008, and slashed health benefits for current, Medicare-eligible retirees. CWA filed unfair labor practice charges against the company which are now before the NLRB. CWA has launched a mobilization campaign to bring pressure on the company to restore retirees' health benefits.

Bankruptcy Abuse

The retirement security of millions of Americans has been devastated by companies that have taken advantage of U.S. bankruptcy laws to reduce their labor costs and drastically cut back or eliminate pension and health care obligations. At the same time, companies have also enhanced executives' compensation, awarding large bonuses and stock grants.

To prevent further abuses, CWA is working for passage of legislation ("Protecting Employees and Retirees in Business Bankruptcies Act") to increase the value of employees' claims for pension losses during bankruptcies and toughening procedures by which a company can reduce retiree health benefits.

Until the nation's economic policies change dramatically, the outlook for America's future retirees looks more grim as the number of workers with a pension or retiree health care continues to decline. Only 18 percent of private workers have a traditional pension (down from nearly 80 percent 25 years ago), and fewer than 13 percent of private employers offer health benefits to Medicare-eligible retirees.