Fact of the Week: 100 CEOs Have As Much in Retirement Assets As 41 Percent of American Families
A new report from the Center for Effective Government and the Institute for Policy Studies found that the 100 largest CEO retirement funds are worth a combined $4.9 billion – an amount equal to the entire retirement account savings of 41 percent of American families. A Tale of Two Retirements provides detailed statistics on the staggering gap between the retirement assets of Fortune 500 CEOs and the rest of America (including those who work for said CEOs).
Among the other shocking findings highlighted in the report:
- Nearly half of all working age Americans have no access to any retirement plan at work. The median balance in a 401(k) plan at the end of 2013 was $18,433, enough to generate a monthly retirement check of $104.
- 29 percent of Americans nearing retirement (aged 50-65) have no retirement savings at all.
- Fortune 500 CEOs saved $78 million on their 2014 tax bills by putting $197 million more in special tax-deferred accounts than they could have if they were subject to the same rules as other workers. These special accounts grow tax-free until the executives retire and begin to withdraw the funds.
- Nearly 50 percent of the retirement assets held by Fortune 500 executives are in tax-deferred compensation plans that are not available to most of their employees.
With these and other findings, the report shows how the rising inequity in retirement security is the result of rules that are intentionally tipped to reward those on the highest rungs of the ladder. Thankfully, the report also discusses what we can do about it. Several recommendations are included to rebalance the scales and ensure a secure retirement for all workers, not just those at the top. These policy changes include ending tax-deferred compensation for corporate executives, eliminating tax breaks for companies that increase worker retirement insecurity, expanding Social Security by requiring CEOs to pay their fair share, strengthening the ability of workers to unionize, and supporting universal retirement funds, among others.
The Center for American Progress and the Schwartz Center for Economic Policy Analysis at the New School recently held an event focusing on how tax reform could address the coming retirement crisis. At it, they noted that the top 20 percent of earners reap 60 percent of the benefits of retirement tax expenditures, while the bottom 40 percent of earners see only 3 percent. Some of the recommendations from the conference included refundable tax credits for retirement savings, reforms at the state level, and guaranteed retirement accounts, a sort of hybrid between a pension and a 401(k)-type contribution plan.
According to all of these sources, if current trends continue, an increasing number of workers, including middle-class workers, will face downward mobility in retirement. More than half of all working-age households are in danger of having to make severe and painful cuts to their standard of living as they age. Policymakers should be looking at the recommendations from these organizations and acting to ensure that a safe and secure retirement can be available to all Americans, not just CEOs.