Carol Johnson, 80, works out on a treadmill at a recreation center in Sun City, Arizona, January 5, 2013. Sun City was built in 1959 by entrepreneur Del
Carol Johnson, 80, works out on a treadmill at a recreation center in Sun City, Arizona, January 5, 2013. Sun City was built in 1959 by entrepreneur Del Webb as America s first active retirement community for the over-55's. Del Webb predicted that retirees would flock to a community where they were given more than just a house with a rocking chair in which to sit and wait to die. Today s residents keep their minds and bodies active by socializing at over 120 clubs with activities such as square dancing, ceramics, roller skating, computers, cheerleading, racquetball and yoga. There are 38,500 residents in the community with an average age 72.4 years. Picture taken January 5, 2013. REUTERS/Lucy Nicholson (UNITED STATES - Tags: SOCIETY) ATTENTION EDITORS - PICTURE 27 OF 30 FOR PACKAGE 'THE SPORTY SENIORS OF SUN CITY' SEARCH 'SUN CITY' FOR ALL IMAGES (LUCY NICHOLSON)

The dream of retiring is fading away for many households.

That dream meant relaxing after a lifetime of hard work, spending time with family or volunteering for a good cause. Now many middle-class Americans are waking up and realizing we are facing the gravest retirement crisis in at least a generation.

That's because the dream requires savings beyond Social Security — money that many households simply do not have. Without adequate savings or a defined benefit retirement plan, an entire generation of workers will delay retirement for as long as possible or work until they die.

The Center for Retirement Research at Boston College estimates that 53 percent of households did not have enough money to maintain their standard of living in retirement in 2010 (the last year for which data is available). Even 44 percent of high-income households did not have enough saved. For low-income families, it was 61 percent.

This means that many households have to put off retirement indefinitely or accept that some things like paying doctor's bills, eating three square meals a day and heating their homes are not always going to be possible.

The solution to the crisis is getting more people to save in new and better ways, unlike risky and often costly 401(k) strategies that have left so many workers in the lurch.


Similar proposals being worked on nationally and in several states are a good steps in this direction. California's would offer an estimated 6.3 million private-sector workers who have no retirement plans at work the opportunity to build secure retirement savings. Many people who would benefit work in low-wage jobs or for small employers who do not offer retirement plans.

Workers eligible to participate in this savings plan would contribute three percent of their paychecks toward their retirement. These contributions would be pooled into one large fund to keep costs and fees as low as possible. Since voluntary employee contributions would fund the plan, there are no employer or government moneys involved.

The fund would be managed professionally to achieve a high level of security for the savings, while generating a reasonable rate of return. The professional managers would be chosen by the state through a bid process. The plan would be monitored by a board of public- and private-sector individuals to ensure that people's contributions are handled responsibly. Workers could choose to opt out. And finally, the plan would pay out a guaranteed retirement benefit.

This program will work because it builds on what works in achieving retirement security. The plan automatically enrolls employees, which increases the number of people who will save. It keeps costs low and strives for maximum security, so that people can count on the money being there when they retire. They know they will not run out of money in retirement.

Everyone deserves a secure retirement after a lifetime of hard work. It's time Californians — and Americans — work together to rebuild retirement security for all, not just the few.

Christian E. Weller is a professor of public policy at the McCormack Graduate School of Policy and Global Studies, University of Massachusetts Boston, and senior fellow at the Center for American Progress, Washington, D.C.