Older Nonprofit Workers: Retirement Concerns

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August 5, 2014; Seattle Times (Associated Press)

While this article from the Seattle Times highlights a bevy of research on how the widening income gap will affect retirement in the near future, it also looks at the particular retirement challenges of William Kistler, a Colorado resident who works at a nonprofit. Kistler states that he has built a small nest egg from a decade of 401(k) savings, but views retirement “like someone tied to the tracks and watching a train coming. It’s looming and threatening, but there’s little he can do.” Kistler concludes, “There is not enough to retire with. It’s completely frightening, to tell you the truth. And I, like a lot of people, try not to think about it too much, which is actually a problem.”

NPQ knows that Kistler is not at all alone in this position, and we would like to get some conversation going about the sector’s responsibility to its older workers.

As is stated in this article, a group of researchers have outlined troubling data relating to income inequality, showing that the widening gap between top incomes and the rest extends far into Americans’ senior years. The following studies from different efforts throughout the country emphasize the troubling numbers in the income inequality discussion:

  • Income Inequality Continues to Rise. According to Emmanuel Saez, an economist at University of California-Berkeley, incomes for the highest-earning one percent of Americans increased by 31 percent from 2009 through 2012. For the other 99 percent, incomes increased by just 0.4 percent, on average.
  • Education, Health and Other Factors are Additional Inequality Culprits. According to Karen Smith, a senior fellow at the Urban Institute, as quoted in a Seattle Times article, “Highly educated, dual-income couples tend to do better under this system. The future looks bleaker for people with less education, lower incomes or health issues, as well as for single parents.”
  • Saving for Retirement also Widens. The Economic Policy Institute states that “households in the top fifth of income saw median retirement savings increase from $45,539 in 1989 to $160,000 in 2010” where in “households in the bottom fifth, median retirement savings were down from $8,433 in 1989 to $8,000 in 2010.”
  • That Widening is Rapid. In the same article, the research director of the Employment Benefit Research Institute found that in “households where annual income is less than $25,000, nine in 10 saved less than $10,000” and in “households with six-figure incomes, 42 percent saved at least $250,000, up from 34 percent five years earlier.”

—John Brothers