More than seven million people—over one-fifth of California’s population—work without a path to retirement. They have neither a 401(k) — the so-called “roller-coaster plan” tied to the stock market — nor a traditional pension that was once considered a worker’s right and which is now a rare species outside of government employment or the public education system.
There is nothing that legally compels a typical American employer to offer any kind of retirement plan to employees. But the average Social Security recipient earns about $15,600 per year in retirement benefits — a near-poverty income in the 21st century.
That could change for Californians when state Senate President Pro Tem Kevin de Leon’s “California Secure Choice’’ retirement savings plan takes effect. Meanwhile, as one union official put it, “Many employers’ retirement plan for their workers is that they work until they die.” Or, if they earn enough, to save for their retirement.
But most don’t earn enough to do this.
Take, for example, Blanca Rodriguez, a San Jose resident and single parent. Rodriguez, 41, is lucky to live above the poverty line. She has two jobs: Full-time clerking at a gas station for $11 an hour and part time at McDonald’s for $10.75. She has three grown children — two in college, one working; they all live with her in her $1,600 a month, two-bedroom apartment. The rent is well under the market rate in one of America’s most housing-short cities.
Rodriguez is also lucky because, although she can’t afford a car, she’s only 10 minutes from work.
Even with a 60-plus-hour work week, she says, “after taxes and deductions there just isn’t that much left out of my pay check. There’s almost nothing left to save, once I pay my expenses.”
In particular, she notes, “I have no [medical] insurance, so every visit to the doctor costs $40. So we’re more likely to spend $7 on Tylenol and just hope that we get better.”
Rodriguez expects that her daughters will get jobs once they finish college, “But I think they’ll still want to live here with me.” And thereby, perhaps, spare themselves the difficult chore of finding affordable housing in costly San Jose, the capital of Silicon Valley.
At 53, Petra Reynaga is in tougher straits. She’s worked for a San Leandro McDonald’s for 11 years. Last year she was cut from a 40-hour week to a part-time 30 hours. She earns $10 an hour and has no other income. “It’s simply not enough to live on,” she says. Let alone put aside for the future.
Out of her $1,200 monthly earnings, minus taxes, she sends $100 to her mother in Mexico. She also helps support a brother and her husband.
Reynaga lives with her daughter and granddaughter in Oakland, and buses to her job. Her daughter has recently been too ill to work. Reynaga has testified in favor of the California Secure Choice plan at an Oakland hearing.
At 50, Inglewood resident Tim Maddox has worked at Los Angeles International Airport for 20 years. He’s in passenger services, which can mean anything from assisting the elderly to crowd control and baggage handling. You’ve probably been assisted by Tim or his fellow workers while dashing through LAX. He’s a board member and VP of his union, United Service Workers West. But he makes just $14 an hour. He says he’s lucky to have medical coverage and a union contract that requires that 85 percent of the workers be full time—which of course means full benefits for those employees. But he sees future problems for workers like him.
“The California cost of living is so high, and Social Security is not adequate…I’ve seen some health-care workers who are so underpaid that when they retire they’ll have nothing. I suspect that some of them will end up homeless.”
Maddox says that he’s considering getting himself into a personal or individual retirement program. He’s also planning to get married. It would certainly help him and his bride’s future if he had a formal retirement plan that minimized his tax costs.
Ultimately, he says, he’d like to be able retire to his wife’s Philippine homeland “and just sit on the beach.”
Most people without retirement paths are manual workers. But not all; Ralph (not his real name) is a licensed attorney who’s worked over 20 years for a small downtown business with no retirement benefits. Ralph’s tried to set aside what he can from his salary, but is unsure about what his future needs will be. Meanwhile, though, he continues to partake of what he calls his “SIS retirement plan.”
What does SIS stand for?
“Save it, stupid,” Ralph explains.