“Pension plans . . . offer no more security against the big bad wolf of old age than the little piggy’s house of straw.”
— Peter Drucker, Harper’s Magazine, 1950
Last week’s move by beverage giant Diageo to transfer 2.5 million barrels of aging whiskey, valued at $645 million, to help plug the deficit faced by its pension fund is the latest sign of a major company scrambling to shore up its shaky retirement system.
Many others, meanwhile, have announced that they will reduce or suspend matching contributions to their employees’ 401-K plans or scale back their more traditional defined-benefit plans. No wonder that only 16% of workers say they’re very confident about having enough money for a comfortable retirement.
As a student of corporate finance and demographics, Peter Drucker saw such dangers looming a long time ago, warning as early as 1950 that “the security which the new pensions contracts promise the old and aging employee will prove to be mere ‘pie in the sky.’” By 2001, he noted that, “young and middle-aged people at work suspect that there will not be enough pension money to go round when they themselves reach traditional retirement age.”
In this edition of Drucker Apps, we invite you to join our conversation about the future of retirement security. Weighing in will be bestselling author Roger Lowenstein, whose book While America Aged examines the pension crisis; human resources consultant Ed Gubman; former U.S. Treasury official and director of the Center for Retirement Research at Boston College Alicia Munnell; and others with insights into the issue.
We open things up with this question: How confident are you that you will see your full pension—and, if you’re worried about it, how do you think you’ll make ends meet in your old age?