We all know about the enormous gap between CEO salaries and worker’s pay.* Well, as it turns out, there’s an even larger gap when it comes to their respective retirement packages.
According to Aimee Picchi [ht: ja], based on a study by the Center for Effective Government and the Institute for Policy Studies,
The 100 largest CEO retirement funds are valued at a combined $4.9 billion, or the entire retirement account savings of 41 percent of American families. . .
That means that 100 CEOs have more retirement assets socked away than a combined 50 million U.S. families, or more than 116 million people.
That’s because CEOs, first, are provided generous cuts of the surplus in their current pay and, then, are able to take advantage of extraordinary tax loopholes, which allow them to invest unlimited amounts of compensation into tax-deferred accounts set up by their employers.**
Meanwhile, last year, only 18 percent of private sector workers were covered by a defined-benefit pension, which guarantees monthly payments, down from 35 percent in the early 1990s. Nearly half of all working-age Americans have no access to any retirement plan at work. The median balance in a 401(k) plan at the end of 2013 was only $18,433, enough to generate a monthly retirement check of $104. Of workers aged 50 to 64, 29 percent have no defined benefit pension or retirement savings in a 401(k) or IRA. These workers will be wholly dependent on Social Security, which pays an average benefit of $1,223 per month.
*In 2014, the CEO-to-worker pay ratio was 373:1. (To be clear, that’s not 373 percent of average workers’ pay; it’s 373 TIMES workers’ pay.)
**The 50 percent of Americans who are offered a 401(k) plan at their workplace face strict limits on how much they can set aside tax-free each year toward their retirement. Workers 50 and older can contribute $24,000 each year, while younger workers can contribute $18,000 tax-free into their 401(k) accounts.