A new report by the Institute for Policy Studies and the Center for Effective Government reveals a tremendous gap in retirement savings between the economic elite and the average American family, finding that “The company-sponsored retirement assets of just 100 CEOs add up to as much as the entire retirement account savings of 41% of American families (50 million families in total).”
The retirement accounts of those 100 corporate CEOs have a combined worth of $4.9 billion, with the average account being worth more than $49.3 million. That amount of savings is estimated to be enough to generate a $277,686 monthly retirement check for each CEO for the rest of the their lives. [PDF]
According to the Employee Benefit Research Institute, the median 401(k) account balance at the end of 2013 was $18,433 [PDF], quite a far cry from an average of more than $49 million.
And, of course, many lower class workers have no retirement savings at all. According to a recent study, roughly one-third of workers have less than $1,000 in savings and investments for retirement. If not for Social Security and Medicare many retirees would already live in poverty.
Like Social Security recipients, the CEOs are also the beneficiaries of government policy. Many of the CEOs use a retirement savings method called elective deferred compensation for their retirement accounts. Funds put into accounts using that method can grow tax free until the CEO retires or the funds are paid out. But unlike 401(k)s, which have an annual cap on contributions, there is no limit on the amount of money CEOs can save using deferred compensation.
The justification for allowing this system that gives CEOs an arguably bigger tax break than their employees is that deferring compensation supposedly aligns the CEO’s interest with company performance. In theory, a CEO should be more responsible if they are using deferred compensation because he or she would lose on the back end if the company crashes.
Then again, AIG was able to pay out its deferred compensation to executives who oversaw a complete collapse so massive that AIG required one of the biggest government bailouts in US history to stay alive. So there goes that theory.
In reality, we are watching a slow-motion looting of the economy and planet by an increasingly kleptocratic elite. Very little value is being created by the corporate system, yet a lot of claims on resources are being siphoned to corporate executives. The 99%, on the other hand, are being discarded and left to survive on the system’s scraps at the bottom of an awfully tall pyramid.