Last month, Financial Times published a wide-ranging article titled “Legacy of Lehman Brothers is a global pensions mess.” Among other things, it contended that “the evidence from the U.S.” on defined-contribution retirement plans, such as 401(k)s, has been “alarming.” The FT advocated that countries with traditional pension systems continue doing so, lest by switching to 401(k)s they create “even greater problems.”
One would think, per the FT’s comments, that the American elderly have become poorer. Not so. For Americans aged 65 years and higher, the 50-year trend in the U.S. poverty rate, as provided by the U.S. Census Bureau, has been down, down, down. The current rate is less than half of when Richard Nixon took office and about 40% lower than on the date of Ronald Reagan’s inauguration.