Retirement benefits over the years

Enactment of Social Security marked the start of a long period of improvement in the lives of the nation’s elderly. But that progress is in jeopardy as traditional pensions continue to disappear and many Americans fail to save enough for retirement. Meanwhile, federal policymakers are considering trimming old-age benefits to reduce the nation’s debt.

1935

Social Security is enacted.

1938

Pension trusts are made irrevocable and for the exclusive benefit of employees and beneficiaries.

1962

Qualified pension plans are made available for self-employed persons, unincorporated small businesses, farmers, professionals and their employees.

1965

Medicare and Medicaid are enacted.

1974

The Pension Benefit Guaranty Corp. is established, helping to protect benefits of participants in private pension plans. Individual retirement accounts are established for people not covered by pensions.

1978

401(k)s are established.

1980

Funding requirements are strengthened for private multiemployer pension plans.

1981

IRAs are opened to everyone younger than 70½.

1983

Social Security retirement age is gradually increased.

1986

Faster minimum vesting schedules are established for private pension plans. 401(k) salary-reduction contributions are restricted and nondiscrimination rules are tightened. An excise tax on lump-sum distributions received before age 59½.

1996

ANon-working spouses are allowed to contribute up to $2,000 to an IRA.

1997

Roth IRAs are established.

2006

Rules governing how companies fund their pension plans are tightened, and automatic enrollment in 401(k) plans is encouraged.

2013

401(k) contribution limits are raised to $17,500 ($23,000 if 50 or older).


National retirement risk index

Percentage of households at risk of being unable to maintain their pre-retirement standard of living during retirement.

Note: The national retirement risk index compares projected retirement income as a percentage of pre-retirement income of working households with target rates that would allow them to maintain their standard of living. It is the percentage at risk of falling more than 10 percent short of this target, based on data from the triennial Federal Reserve Survey of Consumer Finances.

53%

’83

’86

’89

’92

’95

’98

’01

’04

’07

’10

60%

50

40

30

20

10

0

Sources: Employee Benefits Research Institute; Alice H. Munnell, Anthony Webb and Francesca Golub-Sass, Center for Retirement Research at Boston College. Graphic: The Washington Post. Published Feb. 16, 2013.