3) Own the word "entitlement." As in HELL YES, we are ENTITLED to those funds. It is money we have paid in all our working lives and we are therefore entitled to receive it in our old age.
Currently, Social Security keeps an estimated 20 million people out of poverty, including about a million children. The program will be even more crucial for that task in the coming years. Our other sources of income in old age have already been raided or are under attack by financial elites.
First, they came after our retirement income via the 401(k). As authors William Wolman and Anne Colamosca explain in their 2003 book The Great 401(k) Hoax , for most of the 20th century, worker pensions were administered through defined pension plans, with employers managing the funds and responsible for paying out promised benefits. The 401(k) offered an opportunity for employers to get out from under pension obligations through defined contribution plans, where employees and employers contribute to the funds, and employees are responsible for making their own investments. Wolman and Colamosca write:
In effect, 401(k)s ask American workers to ape the investment behavior of the rich, even though they obviously do not have the resources to ride out bad markets of the kind that we believe will prevail for next decade. By law, working Americans own the money in their 401(k) plans and are free to invest it as they will. But in reality, most companies do not include an adequate range of investment choices to safeguard savings in volatile markets. At their core, the choices available in most 401(k)s represent a sometimes subtle, and sometimes not so subtle, implication that the employee would do best by investing in stocks (p11).
Brooks Hamilton, who designs 401(k) plans for large corporations, concurred with this view in a 2009 60 Minutes interview:
Hamilton says 401(k)s turned out to be so much cheaper than funding pensions, that many companies decided to freeze their pension plans and replace them with 401(k)s. The decision created millions of new employee investors for Wall Street and the financial community. And they pounced on the opportunity"
"The fact is that the typical 401(k) investor is a financial novice. They don't know a stock from a bond. And we give "em a list of 20 or 30 mutual funds with really, really powerful names, you know, they sound like, "Gee, that's where I want to have my money,'" Hamilton said.
The 60 Minutes story focused on the trillions of dollars lost in 401(k) funds after the 2008 financial crisis and quoted Representative George Miller (D-CA):
There clearly has been a raid on these funds by the people of Wall Street. And it's cost the savers and the future retirees a lot of money that would otherwise be in their account, independent of the financial collapse.
Many of the workers who remained in defined benefit plans and out of 401(k)s found their pensions raided in other ways, as Wall Street Journal investigative reporter Ellen Schultz explains in her book Retirement Heist . In a 2011 interview with Thomas Rogers at Salon.com , Schultz discusses how major corporations such as IBM, General Motors, and GE used contractual loopholes, ambiguous regulations, and litigation to raid employees' pensions without workers understanding how they were being fleeced:
There were billions in promises to retirees for pensions and healthcare and death benefits and life insurance, and the companies figured out that if they cut or eliminated them altogether then they could get those billions in profit -- and even use them for executive compensation.
A striking example was Lucent, which inherited about 100,000 retirees when it was spun off from AT&T. From the beginning, Lucent kept saying, "We are crippled by these retirees," but the truth is, they also received more than enough actual money from AT&T to pay every dime of benefits for all the current and future retirees. Bit by bit, they cannibalized these benefits. They eliminated a death benefit, which is a very simple thing that says, if you work for us for 25 or 30 years, and you die, your widow will get $50,000 dollars or whatever per year. Lucent said they couldn't afford that. So they took it away and saved $400 million that had been set aside physically in the pension plan for these folks. At the same time, they awarded more than $400 million in bonuses to executives"
The retirees didn't understand this was being done to them. They just assumed, "Oh well, this company is affected like everyone else by the economy." They didn't see the role the companies played [in deceiving their employees]. The federal courts found Cigna documents that made it clear that the HR executives were discussing how, if the cutting of employees' benefits was handled right, there wouldn't be an employee backlash because the people wouldn't understand what was happening. And it's a pattern that has existed at a number of other companies"
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).