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This week in the war on workers: Republicans take aim at retirement savings program

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The United States is heading for a major retirement crisis, with the shift from pensions to 401(k)s leaving at least half of households in danger of running short of money in retirement. There are a lot of possible solutions to that, and one of them doesn’t even involve employers paying their workers more:

What if people who wait tables, wash cars, take care of children, or perform other low-wage jobs for small businesses—which often don’t offer 401(k) savings plans—could have money taken out of every paycheck and deposited into a low-cost retirement savings account operated through the state government? Five states have enacted plans that are making this possible, and 28 states are at various stages of considering such plans. If all of these states did enact these laws, 63 million people could have access to retirement savings options.

This was the goal of the Obama administration, which put in place regulations to help states that wanted to provide retirement savings options. Though some states had set out on this path before, this new policy that made it easier and safer for states to offer these plans, paved the way for this positive development in the states. This was great news for millions of workers! Make it easy for people whose employers don’t offer retirement savings option to do the responsible thing: put away money every month toward their retirement in a way that limits the amount of their savings that is lost to fees and commissions. It helps people prepare for their old age. It chips away at a looming retirement crisis. What’s not to like?

You know where this is going, right? Of course you do. Republicans don’t like it because of this part: “in a way that limits the amount of their savings that is lost to fees and commissions.” Those fees and commissions don’t vanish into thin air, they go into the bank accounts of rich people. Plus, letting workers save their own money toward retirement creates a little extra work for employers, and there are a lot of crappy bosses out there who’d rather not bother, even if it means their workers will suffer in retirement. So the regulation helping states offer this retirement option is one more regulation being slashed by congressional Republicans.

This article originally appeared at DailyKOS.com on February 25, 2017. Reprinted with permission.

Laura Clawson is a Daily Kos contributing editor since December 2006. Labor editor since 2011.


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Saving for retirement isn’t simple when earning poverty wages: The old adage of spend less and save more doesn’t cut it for adjuncts

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It’s National Save for Retirement Week, a time when financial services industry experts offer Americans conventional advice for preparing for their golden years. However, saving for retirement isn’t as simple as these people would have you believe.

A growing number of Americans are struggling just to get by—let alone save for retirement. I should know; I’m one of them. There’s no such thing as a retirement for me.

As an adjunct professor, my wages are so low that I haven’t been saving for retirement.  I’ll be working until they carry me out of my job. That’s what makes retirement terrifying for me.

Many of my colleagues around the country share my fears and retirement prospects.

Nearly a third of part-time faculty at our nation’s colleges and universities are living near, at or below the poverty line.

The old adage of spend less and save more doesn’t apply to us.

Although I’ve been teaching writing and literature at small Vermont colleges for more than 35 years, this year I will only earn $10,000. This makes it difficult to save for retirement or anything else. With the help of my modest Social Security income (which is about $900 a month) I just purchased my first home—a mobile home—last year. I’m 67 years old.

You see, saving for retirement isn’t as simple as opening an IRA at your local bank or diversifying your portfolio when you’re an adjunct instructor. In fact, this advice isn’t applicable to many working Americans in today’s economy.

Wealthy corporations have pushed down employee wages and benefits making it harder for the average person to save for retirement. They have also eliminated the pension plans that our parents and grandparents fought for decades ago.

As a result, the availability of retirement savings is often tied to income for today’s workers who have fewer savings options than previous generations. Nearly half of working-age households do not own any retirement account assets. Those of us who aren’t earning the big bucks are unlikely to have a retirement account. Those who do have retirement accounts have virtually no money in them.

According to the National Institute on Retirement Security, the median retirement account balance is $2,500 for all working-age households and $14,500 for near-retirement households.

If the financial services industry wants to help more working families prepare for retirement, it should acknowledge the old advice isn’t working.

Times are changing and so is my profession. Adjuncts around the country are standing together and forming unions to get better pay and benefits. We’re even winning retirement benefits for adjuncts, including those at my job, who didn’t have access to our employer’s plan.

I’m also hopeful that our approach to retirement planning will change too.  Several states around the country have begun to address the retirement security crisis faced by low income families by creating plans for people who don’t have access to one at work.

Plans like the California Secure Choice Retirement Savings Program would help many adjuncts around the country achieve a simple, dignified retirement after lifetime of hard work and playing by the rules. Hopefully, Vermont lawmakers will pass a similar bill soon.

Also, more lawmakers need to do more to make it easier for our nation’s educators to retire by expanding Social Security to increase benefits.  After all, teachers do very important work.

This article was originally printed on SEIU.org in October 2016.  Reprinted with permission.

Sharyn Layfield is an adjunct professor at St Michael’s College in Vermont.


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House Republicans Have A Temper Tantrum Over Rule That Bans Financial Advisers From Scamming Retirees

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Bryce CovertThe Department of Labor (DOL) has finalized rules that require financial advisers who help people make investments for retirement to put their clients’ interests ahead of their own. But House Republicans aren’t letting the rule go into effect without a fight.

On Thursday, the House voted on a resolution that would effectively block the new rules, which require advisers to adhere to a “fiduciary standard,” that passed along strict party lines, with 234 Republicans voting yes and 183 Democrats voting no. Republicans claim that the rule will make investment advice more expensive, with Rep. Phil Roe (R-TN), a sponsor of the legislation, saying it would “protect access to affordable retirement advice.” They’ve also characterized the rules as government overreach, with House Speaker Paul Ryan (R-WI) calling them “Obamacare for financial planning.”

Their position mirrors that of the financial industry, which has fought the rules with claims about the impact they could have on their businesses that Sen. Elizabeth Warren (D-MA) has questioned as being disingenuous. Ahead of the House vote on the resolution, eight big financial industry trade groups sent a letter to lawmakers urging them to vote in favor of the resolution.

The vote, however, is a largely symbolic move. For the resolution to have any power, it would have to be taken up and passed by the Senate, and President Obama would have to sign it. But he’s already threatened to veto the measure. DOL Secretary Thomas Perez called Thursday’s vote “a waste of time.”

Before the new standard, advisers were only required to give “suitable” advice, which left the door open for them to steer clients into products that made the advisers more money but weren’t the best option. That practice was costing Americans an estimated$17 billion a year in conflicted advice, according to the White House. Some people say their finances, particularly their chances of retiring comfortably, have been destroyed by bad advice and that they would have simply been better off without it.

Americans have little wiggle room for losing money when it comes to saving enough for retirement. Pensions, which guarantee payments in old age, have beenoverwhelmingly replaced with 401(k)s, which require individual workers to make smart investment choices in order to have enough to live off of when they stop working. And by and large workers aren’t putting enough aside. The gap between what they should have saved up and what they’ve actually put away is $6.6 trillion. Meanwhile, about 60 percent of working age people have no retirement savings at all.

This blog originally appeared on Thinkprogress.org on April 29, 2016. Reprinted with permission.

Bryce Covert Bryce Covert is the Economic Policy Editor for ThinkProgress. Her writing has appeared in the New York Times, The New York Daily News, New York Magazine, Slate, The New Republic, and others. She has appeared on ABC, CBS, MSNBC, and other outlets.


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401(k) Retirement Plans Amplify Income Inequality and Racial Disparities

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Isaiah J. Poole

It’s bad enough that the move toward individual retirement plans has been a massive failure when it comes to providing average working Americans retirement security. But now there’s research that shows that our dependence on individual retirement plans adds fuel to the fire of racial and class inequities in ways that the pension plans that used to be common did not.

The Economic Policy Institute presented that research Thursday in its “State of American Retirement” report. The report underscores the need to keep up the fight for strengthening Social Security and increasing its benefits, rather than cutting them.

“We’re moving toward a retirement system that magnifies inequality,” said Monique Morrissey, the EPI economist who wrote the report. That happened, she said, as the percentage of workers who received a pension (a “defined benefit plan”) declined from 35 percent of private-sector workers in the early 1990s to less than 20 percent today. (In the early 1980s, the percentage of private-sector workers in large companies that had a pension exceeded 80 percent.)

Pension plans were surprisingly egalitarian, Morrissey said, in the sense that once you got a job with a pension, what you received in retirement was affected only by your wages and years with the company. With “defined contribution plans” – like 401(k)s and individual retirement accounts (IRAs) – differences widen by race and class.

According to the report, among the people in the top 20 percent of income, nine out of 10 have retirement account savings; among those in the bottom 20 percent, it’s worse than totally flipped; fewer than one in 10 have any retirement account at all. The workers at the top fifth of the income scale accounted for 63 percent of total income, but have 74 percent of the total stashed in personal retirement accounts.

Only 41 percent of black families and 26 percent of Hispanic families had retirement account savings in 2013; 61 percent of white households do. The average retirement account among African-American and Hispanic workers contains about $22,000; for whites, the average account contains $73,000. On top of that, research shows that African Americans are disproportionately in jobs where retirement plans are simply not offered. “401(k)s have really been a disaster for African Americans,” Morrissey said.

In fact, for all ordinary workers, “401(k)s were never designed to be a primary retirement plan,” Morrissey said. Yet they filled that role at the same time President Ronald Reagan and Congress cut a deal to improve the solvency of Social Security that pushed back the retirement age over time from 65 to 67 – and at the same time worker wages stopped keeping pace with productivity and with income gains for corporate executives.

The result is that today fewer Americans than ever will have a financially secure retirement. The Government Accountability Office in 2014 found that half of all households age 55 and older have no retirement savings at all; close to 30 percent also do not have a pension to rely on, either. Of those who do have a 401(k) or IRA-type plan who were between the ages of 55 and 64, their retirement savings would yield a monthly check upon retirement of about $310 a month.

Morrissey said these realities reinforce the case for expanding Social Security benefits. “That’s the number one thing we need to be doing,” she said. (To support the call for strengthening Social Security benefits, add your name to this petition.)

She added that while waiting for action at the federal level, states can play a role. For example, the California Secure Choice Retirement Plan would opt workers into making regular contributions to a state-managed plan if they did not have a retirement plan available in their job. The state plan would invest in a balanced portfolio of assets that would not be driven by the kinds of management fee incentives that often drive retirement plan investments.

This blog originally appeared at OurFuture.org on March 3, 2016. Reprinted with permission.

Isaiah J. Poole worked at Campaign for America’s Future. He attended Pennsylvania State University and lives in Washington, DC.


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Read our lips: Americans want to expand Social Security – not to raise the retirement age

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The recent presidential debates reminds us that Democrats and Republicans are polar opposites when it comes to Social Security.

While many of the Democratic candidates want to bolster the program and increase benefits, GOP candidates Chris Christie, Ben Carson, Jeb Bush and Marco Rubio have all called for cutting Social Security’s modest benefits by raising the retirement age.

Raising the retirement age may not be a big deal for the wealthy Americans who finance political campaigns or even politicians proposing these cuts. However, it would have a devastating impact on Americans who live paycheck to paycheck, including Patricia Walker of Tampa, Fla.

“For me as a home care worker, I couldn’t work until 70. I already have problems with my knees. I’m already trying to make it,” says Walker, who’s in her early 50s.

Although she works long hours, Walker’s low wages prevent her from being able to purchase a car let alone save money for her golden years. Social Security will be her only plan for retirement.

If Walker and other working Americans apply for Social Security’s retirement benefits before they reach the full retirement age, their benefits will be permanently reduced. For example, when someone retires at age 62, their benefit would be about 25 percent lower than it would be if they waited until they reach full retirement age.

This is a Social Security cut Republican presidential contenders seemingly want to avoid discussing while on the campaign trail.

These same candidates also seem to be ignoring the voices of voters who want lawmakers to expand Social Security; not cut its already modest benefits.

A 2014 poll from the National Academy of Social Insurance found 69 percent of Republicans, 84 percent of Democrats and 76 percent of independent voters support Social Security and they don’t mind paying higher taxes to preserve benefits for future generations. The poll also found 71 percent of Republicans, 79 percent of Democrats and 70 percent of independent voters oppose raising the full retirement age to 70.

Republicans calling for raising the retirement age may be willing to ignore the fact that income levels and life-expectancy rates remain stagnant for the poor as well as the needs of nurses, home care providers, construction workers and others with strenuous jobs that would suffer under their proposal.

One thing any presidential candidate can’t ignore is the retirement crisis looming over the United States. Our country’s next president must be willing to put ideology aside and focus on policies to deliver retirement security to more workers. That includes increasing Social Security benefits, especially for low- and middle-income workers.

Wonder what your full retirement age will be or how your monthly benefits may be reduced if you retire before your full retirement age? Click here.

This article was originally printed on SEIU in October, 2015.  Reprinted with permission.


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The “What Ifs” of a Woman’s Retirement

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seiu-org-logoWhat if I don’t get a promotion? What if I take time off to raise my children? What if I can’t find another job with benefits? The phrase “what if” seems to be a constant part of life for American women as they navigate their careers.

A recent article from CNN Money reporter Melanie Hickin shows how these “what if” questions continue to follow women even after they’ve exited the workforce.

“Gender inequality doesn’t end at the workplace. For many women, the gender gap haunts them well into their retirement years, when far more women find themselves living in poverty,” writes Hickin.

What if we work for unequal pay?
It’s no secret gender inequality still exists in today’s workforce. Women earn significantly less than men and are less likely to have access to an employer-sponsored retirement savings plan. These differences add up to less retirement income for women. On average, women 65 years and older rely on a median income of around $16,000 a year compared to nearly $28,000 for men, according to a Congressional analysis of 2012 Census data.

What if I get married and have kids? 
Women also spend less time in the workforce and take on more family obligations than their male counterparts. While married women tend to do better in retirement, many elderly women are living on their own. Since women live longer than men, they face higher medical costs in retirement, according to the AARP Public Policy Institute.

What if I can’t afford retirement?
Disparities in pay and savings leave many women working past retirement age. However, many are wondering if they’ll ever be able to retire. And if they do what if they can’t maintain a decent standard of living?

This is a question 69-year-old Gaylord Weston of Belgrade, Maine often asks herself since she retired from her public sector job as an administrative worker. Her pension and Social Security benefits combined provide her with $1,700 a month along with a small inheritance from her mother.

But that money is tightly stretched as she pays for auto and homeowner’s insurance, property taxes, a $6,000 annual heating bill and home repairs for her old farmhouse.

“I know I’m very fortunate. But if my car goes, if I need to put a new roof on the house or (buy) a new furnace for the house, these kinds of expenses would put me under the bridge,” Weston told CNN.

What if there’s a solution?
Efforts to address gender inequality (in retirement) received a boost recently in one state as lawmakers passed the Minnesota Women’s Economic Security Act of 2014. This bold legislative package includes provisions to close the gender pay gap, expand family leave and sick leave, and study and create new private sector retirement savings models for workers.

Although the act hasn’t been fully implemented yet, what if more states followed this model? And what if a similar bill were introduced in Congress?

Last week US Senator Patty Murray (D-WA) called on lawmakers to address retirement insecurity for women with an approach that considers all these factors.

“I think sometimes we don’t connect all of the policies that we talk about today, that we think are so important, whether it is making sure you have childcare so that you can stay at work, whether it is pay equity, how that impacts your finances, both today and when you retire,” said Murray.

What if our government took concrete steps to help women eliminate all of these “what ifs” that seem to define our working lives and prospects for a secure retirement? Let’s work together to make that “what if” a reality!

This article was originally posted on SEIU on May 29, 2014.  Reprinted with permission.

Author: Keiana Greene-Page


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A New Approach (and Attitude) Needed for Social Security

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seiu-org-logoA recent study from the National Institute on Retirement Security (NIRS) finds while the retirement crisis affects all, it is particularly dire for households of color. Fewer than half of blacks and Latino workers have retirement plans on the job, leaving the vast majority with no retirement savings and more likely to depend on Social Security’s modest benefits.

What’s equally as disturbing as the findings of this study is the position toward Social Security taken by Charles Blahous, research fellow with the Hoover Institution and one of the trustees appointed to oversee Social Security and Medicare.

In an email interview with the Washington Post, Blahous argued that Social Security has the perverse effect of discouraging cash-strapped people from making a priority of retirement savings.

“A true answer to the problem would mean decreasing our society’s dependence on income transfer programs as a source of retirement income, and increasing the net amount of saving that we do,” he said.

As someone appointed to oversee Social Security, he should know this program remains the foundation of retirement security for almost all Americans as it is the only portable defined benefit retirement plan available to virtually all workers. The problem with Social Security is that alone it doesn’t provide retirees with adequate income as the program was never meant to be the sole source of retirement savings.

More than 65 percent of single and married seniors depended on Social Security for the majority of their income in 2010. We can only expect our reliance on this program to increase as private employers freeze pension plans and cut retirement contributions of all types.

According to the National Academy of Social Insurance, 87 percent of Americans? including 71 percent of Republicans, 97 percent of Democrats, and 86 percent of independents? agree it is critical to preserve Social Security for future generations even if it means increasing taxes paid by wealthier Americans. It’s time for lawmakers and those who help to shape policies to listen to their constituencies who want an opportunity to retire with dignity after a lifetime of hard work and playing by the rules.

This article was originally printed on SEIU on January 6, 2014.  Reprinted with permission.

Author: Eileen Kirlin, SEIU Executive Vice President


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Bold Policies Will Solve Retirement Inequality

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seiu-org-logoRondell Johnson is a 23-year-old baggage handler at the Philadelphia International Airport. He aspires to one day attend business school and prepare for a career as a real estate entrepreneur. But he, like many other low-wage workers who work full time for minimum wages, brings in “just over $15,000 a year before taxes.”

The poverty line for one person who lives alone is $11,490.

The latest Census Bureau data on poverty is a sobering reminder of America’s need to address income inequality. It’s also a wake-up call for lawmakers to create bold policies to strengthen our nation’s retirement system.

Under our current policies, retirement has become one of the greatest examples of income inequality in America. The availability of retirement savings is often tied to income for today’s workers who have fewer savings options than previous generations.

For low-wage workers such as Johnson, obtaining a secure job with decent wages feels difficult, and achieving a secure retirement is virtually impossible.

“I don’t want to retire where I started,” he says. “I started broke. I started in poverty. I’m going to retire into poverty, too? Then what has my life been about at that point?”

A recent report from the Economic Policy Institute shows Rondell’s story is more common today than it was 20 years ago. Our shift from traditional pensions to more individualized savings plans such as the 401(k) has helped spur retirement income inequality in America.

The majority of our most affluent workers have savings sitting in a 401(k) or similar retirement savings account which averaged $308,674 in 2010.

In contrast, only 52 percent of middle-class Americans have savings in retirement accounts where the average balance was only $34,981.

Retirement savings options and balances are severely low for America’s poorest workers who are less likely to have access to a retirement plan at work or cannot afford to contribute enough out of their own stagnant wages. Only 11 percent of workers, representing the lowest quartile, have any 401(k) savings. Their average savings balance is just $7,543.

The rise of the 401(k) has also helped lead to a greater reliance on Social Security. Although Social Security benefits were never intended to be a stand-alone retirement plan, it is the primary source of income for 65.3 percent of retirees.

Perhaps one of the boldest, income gap closing policies lawmakers can implement is strengthening Social Security by making everyone pay their fair share.

If wealthy bankers, CEOs, athletes and celebrities contributed the same percentage of their income to fund Social Security as the 99%, we would also be able to significantly improve benefits for current low-income retirees receiving $1,200 or less a month, deliver retirement security to more workers, and help close the wealth gap.

This article was originally printed on SEIU on September 27, 2013.  Reprinted with permission.

Author: KEIANA GREENE-PAGE.

 


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Same-sex spouse gets ERISA death benefit

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Sarah Farley had worked at a law firm where she participated in the firm’s Profit Sharing Plan – a plan qualified under the Employee Retirement Income Security Act (ERISA). The Plan provides that death benefits be paid to the participant’s “surviving Spouse.”

Sarah then married Jean Tobits in Canada. When Sarah died, both Jean and Sarah’s parents claimed the death benefits.

The dispute went to federal district court in Pennsylvania (Cozen O’Connor PC v. Tobits) where the judge had no trouble deciding that Jean was Sarah’s surviving spouse.

In United States v. Windsor (US Supreme Court 06/26/2013) the Supreme Court held that Section 3 of the Defense of Marriage Act (DOMA) – defining “spouse” as a person of the opposite sex – is unconstitutional. Therefore, since Sarah and Jean were lawfully married, and that marriage is recognized by the laws of Illinois, ERISA has to be interpreted as meaning Jean was Sarah’s spouse. And thus the law firm’s ERISA plan has to be interpreted as meaning Jean was Sarah’s spouse.

This leaves me with one huge question: Will you get the same result in every state? That seems doubtful to me. The opinion in Windsor (a 5-4 decision) relied heavily on the fact that Windsor’s same-sex marriage was recognized by the State of New York (and the Tobits marriage was recognized by the State of Illinois). As Justice Kennedy put it, “DOMA’s principal effect is to identify a subset of state-sanctioned marriages and make them unequal.” So, if you’re in a state where same-sex marriages are not recognized, it may be difficult to apply the logic of the Windsor case.

Hat Tip to Mike Reilly at Lane Powell, who writes Boom: The ERISA Law Blog.

This article originally appeared on Ross Runkel Report on August 13, 2013.  Reprinted with permission

About the Author: Ross Runkel Ross Runkel is a full-time labor-management arbitrator, professor of law emeritus, and former editor of Employment Law Memo.


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Millennials Want the American Dream, Too

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austin-thompson-1Although our way of life is constantly changing in America, members of the class of 2013 have the same aspirations as generations before them.

They want to find good jobs, buy homes, raise families and later enjoy a decent retirement.

It will be decades before these young adults reach retirement age, but recent research from the National Institute on Retirement Security (NIRS) finds Millennials are already concerned about their ability to retire.

“I think it’s in the back of everyone’s mind. It’s the elephant in the back of room no one’s talking about,” says 29-year- old Oakland, Calif., resident Ebony Young.

Although it’s been several years since Young graduated from Oregon State University, she is still underemployed making it hard to prepare for her future.

“I worry about my retirement because I don’t have a plan. Right now, I don’t qualify for my employer’s plan,” says the temporary warehouse worker.

Like Young, much of the Millennial generation is suffering from stagnant or decreasing earnings, as well as high debt from student loans, credit cards and medical bills. More than half of bachelor’s degree-holders under the age of 25 last year were jobless or underemployed.

Millennials are also less likely to have access to the three-legged stool of retirement? Traditional pensions, Social Security and personal savings? that provided retirement security to previous generations, according to NIRS researchers.

The NIRS study also finds Millennials want lawmakers to repair America’s broken retirement system by strengthening Social Security and creating a new pension system that would be portable and provide a reliable, monthly check to all those who contribute.

“The only thing I ever asked for in life is options. I would like to have a plan that I could pay into,” says Young.

Luckily, this Millennial, however, has an option. Last year, due in part to efforts of SEIU members,California Gov. Jerry Brown signed into law a bill to create the California Secure Choice Retirement Savings Plan. The new hybrid savings plan would act as a supplement to Social Security and build on positive attributes of traditional pensions and defined contribution plans.

Young describes Secure Choice as a “breath of fresh air.” Wouldn’t it be great if more Millennials were able to breathe easier knowing they could still pursue that part of the American Dream that allows you to retire with dignity after a lifetime of hard work and playing by the rules?

This article was originally printed on SEIU on May 20, 2013.  Reprinted with permission.

About the Author: Austin Thompson is the SEIU Millennial Coordinator.


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