A Thank You to America's Workforce and a Reminder to Plan for the Future
By Don Drake, Connelly Law Offices, Ltd.
"Labor Day, which is celebrated on the first Monday of every September, is an annual tribute to the contributions that working Americans have made to the strength, growth, and well-being of the United States," said professional fiduciary and certified elder law Attorney RJ Connelly III. "The first Labor Day recognition occurred at the municipal level in the late 1800s and spread throughout the country. In 1894, Congress passed an act making Labor Day a holiday in the District of Columbia and its territories." So, who was responsible for the first Labor Day?
Peter J. McGuire, who was the leader of the Carpenter's Union and co-founded the American Federation of Labor (AFL), is said to have proposed the idea of a holiday to commemorate the efforts of those who have worked tirelessly to create the magnificent things we behold.
Labor Day's celebration has transformed over time. Its early beginnings were marked by grand parades, political speeches, and large family festivals celebrating the American Dream. Today, the holiday's festivities have become more modest, featuring back-to-school sales, end-of-summer events, and intimate family gatherings.
As we commemorate this day in honor of American employees, it's essential to acknowledge the significant changes that have taken place in the American workplace. With pension plans and other employer-sponsored retirement packages becoming increasingly rare, it's crucial for Americans to recognize the importance of estate planning and retirement planning to secure their future.
Many Baby Boomers believed that retirement would be a time of relaxation and leisure, but today's American economy has shattered that dream. With numerous industrial giants relocating their factories overseas and the workforce transitioning to a service-based economy largely dominated by small businesses, the era of receiving a gold watch and a generous pension upon retirement has ended.
In the early 1980s, more than 50% of American workers were guaranteed a pension by their employers, and almost eight out of ten could expect their pension to be supplemented by their social security payments. However, since then, pensions have rapidly disappeared, leaving city, state, and union pension plans bankrupt and posing a threat to the financial well-being of those who are already retired or approaching retirement age. Company pension plans are no longer available and are instead being replaced by 401(k) plans and other retirement/investment strategies for the American workforce.
Due to inadequate planning and insufficient employer support to help employees understand the current retirement scenario, many retired Americans are forced to work well into their seventies and beyond. This is further compounded by the increasing healthcare costs, low-interest rates for fixed-income investments, and the meager or no returns from traditional savings, leading to a significant reduction in the retirement expectations of several individuals.
The recent changes will affect millennials (people born between 1982 and 2000) most. Therefore, it is crucial that they start planning for their retirement right away. In a recent Employee Benefit Research Institute report, six out of ten employees said they felt confident about their retirement preparedness. However, less than two out of ten of those who felt confident had made any real preparations. Shockingly, four out of ten employees reported having no retirement savings or plans for the future. Many of them even expressed concerns about being able to afford even the necessities of life after they retire.
"As we observe Labor Day 2023, it's important to acknowledge that the landscape of retirement planning has changed," stated Attorney Connelly. "Today, individuals are responsible for their own retirement planning. Whether you're just a few years away from retirement or decades away, there are strategies you can implement to ensure you can enjoy a comfortable retirement. One such strategy is using Estate Planning tools, which can help secure a bright future amidst these new realities."