I have always had a passion for history. I love researching industries, trends, social concepts, and anything else of historic significance or interest. With Labor Day upon us to mark the unofficial end of summer, I thought this would be a good time to share a little of what I know about Labor Day and how it came to be. It was created by the labor movement in the late 19th century and pays tribute to the contributions and achievements of American workers. But what many folks don’t know is that it originated during one of American labor history’s most dismal chapters.
You see, in the late 1800s, at the height of the Industrial Revolution in the United States, the average American worked 12-hour days and seven-day weeks just to make a basic living. In some cases, children as young as 5 or 6 toiled in mills, factories and mines across the country, earning a fraction of their adult counterparts’ wages. As a result, labor unions grew more prominent and vocal. They began organizing strikes and rallies to protest poor conditions. On September 5, 1882, 10,000 workers took unpaid time off to march from City Hall to Union Square in New York City, holding the first Labor Day parade in U.S. history. The idea of a “workingmen’s holiday,” celebrated on the first Monday in September, caught on in other industrial centers across the country and many states passed legislation recognizing it. Congress followed by recognizing it as a federal holiday 12 years later.
While Labor Day is a federal holiday, it’s actually not really considered by many to be a “patriotic holiday”. But regardless, we see it as an opportunity to celebrate the greatness and perseverance of the American worker. If it seems I’m feeling a little nostalgic, you might be right. You see, my daughter Phoebe recently won a pretty substantial scholarship for an essay she wrote titled, “Why America is Great to Me” featuring my experiences growing up as inspiration. In it she wrote, “America gives people the opportunity to overcome their adversities and flourish in whatever life they dream of…… the home you are raised in does not determine the home you will reside in for your whole life.”
You know something . . . she couldn’t be more right. And while we currently live in a highly divisive political climate, Americans across party lines share many of the same concerns about one thing in particular – their retirement security. In fact, in this regard there’s little difference between Democrats and Republicans in their belief that retirement security is a problem for the country. Reaching a secure retirement isn’t a left or right political consideration, it’s something we’re all reaching for. As Phoebe wrote, we all have the opportunity to flourish in America, but lately our confidence seems to be waning in this regard.
In fact, according to Research from the National Institute on Retirement Security₁, the vast majority of Democrats (70 percent), Independents (70 percent) and Republicans (62 percent) agree that the nation is experiencing a retirement crisis. Let’s take a look at some of the key findings that demonstrate just how similar we are, regardless of political affiliation.
For starters, the research revealed that the COVID-19 pandemic has exacerbated worries about achieving financial security in retirement across party lines: 57 percent among Democrats, 50 percent for Independents and 44 percent for Republicans. Among Americans who have changed or considered changing when they will retire, 67 percent say that because of COVID-19, they plan to retire later than originally planned.
Americans also are united in their frustration that policymakers do not understand their retirement savings struggle. When it comes to Social Security, for example, there’s strong bi-partisan support for protecting the program, but mixed views about expanding it. Most Americans (60 percent) agree that it makes sense to increase the amount that workers and employers contribute to Social Security to ensure it will be around for future generations. And half support expanding Social Security, with 25 percent saying it should be expanded for all Americans and 25 percent saying it should be expanded except for wealthier households.
Some 68 percent say the average worker cannot save enough on their own to guarantee a secure retirement. And 65 percent of current workers say it’s likely they will have to work past retirement age to have enough money to retire.
Retirement plan access is another bipartisan belief, with 91 percent saying that all working Americans should have the ability to participate in a retirement savings plan. Yet only 59 percent do, leaving tens of millions of workers without the tools to establish a savings nest egg. And when it comes to pensions, Americans have highly favorable views about their role in retirement and believe that a guaranteed income stream like this is better than a 401(k) or other market-based account₂.
These findings all point to the need for Congress to take action and create legislation to provide greater support to working Americans who don’t have access to the tools to build wealth and financial security. Enacting retirement policy solutions would be a win-win for policymakers and the country, delivering financial relief for working families on an issue that concerns Americans on both sides of the aisle.
In the meantime, there are steps you can take to help ease your worry. Start by revisiting your retirement system; it is set up to manage significant downside risk? Do you know? What are your goals? While there is no silver bullet for retirement success, understanding where you are now and where you want to be can help you create a plan to reach your destination. As Phoebe wrote, here in America you have the opportunity to overcome adversity and flourish if you’re willing to put in the work. You know, I love this kid.
So as always – be vigilant and stay alert, because you deserve more!
Have a great Labor Day.
Jeff Cutter, CPA/PFS is President of Cutter Financial Group, LLC, an SEC Registered Investment Advisor with offices in Falmouth, Duxbury, and Mansfield, MA. Insurance offered through its affiliate, CutterInsure, Inc. We do not offer tax or legal advice. Jeff can be reached at email@example.com.