A number of factors - including a sobered stock market, deficit pressures, and corporate cutbacks - may be putting the retirement security of baby boomers at greater threat than at any time in a quarter century.
This week's provocative call by Federal Reserve chairman Alan Greenspan to scale back future Social Security benefits to help cover a growing federal budget deficit, is just part of the concern.
Evidence is mounting that the other two pillars of retirement security - private-sector pensions and personal savings - are no longer adequate to ensure that most Americans will have enough to live on when then retire.
From United Airlines to General Motors Corp., large companies are struggling to meet their obligations to retirees. The federal plan that guarantees these pensions is $11.2 billion in the red.
And even as the stock market recovers, experts say that 401(k)s and other personal savings aren't nearly big enough.
"Tens of millions of Americans are seriously underprepared to meet their financial needs in retirement," says Benjamin Stein, of the National Retirement Planning Coalition. As many as 40 percent of Americans have saved almost nothing for retirement, he told a congressional panel Wednesday.
At the problem's root is a long-term shift that politicians are reluctant to face: With Americans living longer, the senior population is growing faster than the number of young workers to cover their needs. Benefit levels are getting harder to sustain.
It's a calculus that is as challenging for corporate pension plans as it is for Medicare and Social Security programs.
The defined retirement benefit, the pension that was once a standard perk in a big firm, is a rapidly disappearing option for many Americans. The number of Fortune 100 companies offering a fixed-benefit pension has dropped from 68 percent in 1998 to 50 percent in 2002, according to Watson Wyatt Worldwide. And federal data show a steady fall in private-sector workers who have pensions: from 38 percent in 1980 to 21 percent in 1998.
That decline, in part, reflects the trials of old-line manufacturing industries, airlines, and automakers. Some experts say it also, ironically, stems from a 1978 law intended to keep pensions from going belly up, but which added costs and regulation.
But if the decline of pensions is important, this week's talk of changes to Social Security is generating the biggest buzz. Greenspan's comments set off a flurry of election-year positioning.
Both the White House and leading Democratic candidates quickly distanced themselves from Mr. Greenspan's proposal. Democrats attacked President Bush for wanting to make his tax cuts permanent at a time of growing concern about senior entitlements such as Social Security and Medicare.
"It is defaulting on our promise to our future retirees to cut their benefits to make up for the higher deficits caused by massive tax cuts for the wealthy," says Reps. Charles Rangel (D) of New York, the ranking Democrat on the House Ways and Means Committee.
Even those who criticize Greenspan's comments concede that serious adjustments will be needed both on Capitol Hill and in individual saving and spending patterns to prepare for the spike in baby boomer retirements in the next four years.
"He's right that social security does need to be reformed, but his prescription for cutting benefits for future retirees is inadvisable," says John Rother, policy director for the senior lobby AARP.
"Half of American workers do not have a pension, and most have not saved anything significant for retirement," he adds.
Given the decline of traditional pensions, this is of particular concern. Only 15 percent of working age Americans have an individual retirement account (IRA), and only 22 percent contribute to a 401(k) plan, according to the Employee Benefit Research Institute. Barely 1 in 3 working Americans has saved more than $100,000 for retirement.
Overall, it means that American retirees will have $45 billion less in retirement income in 2030 than they will need to cover basic expenses, according to the EBRI.
For any politician up for reelection in 2004, the prospect of large numbers of angry retirees - who vote at higher levels than other age groups - is unsettling. Social Security reform is an issue rarely engaged during the political cycle.
In 2000, Republican nominee George Bush touched what analysts call the "third rail" of politics when he proposing changes in Social Security. With the stock market still seen as strong, and forecasts for a huge federal surplus, the notion of privatizing a portion Social Security appealed to many voters, especially those who viewed themselves as part of a new "investor class." With IRAs and pensions, some two thirds of voters are directly or indirectly invested in the stock market.
But with the sharp reversals in the stock market after the election and, especially, more recent fears of outsourcing and a jobless recovery, the average American's stock ownership is shrinking.
"We've seen the group of self-identifiers in the investor class drop from 52 percent a year ago to 32 percent, around October and November," says pollster John Zogby of Zogby International.
Curiously, this group stuck through the worst days of the bear market in his poll, but more recent publicity about good, white-collar jobs being shipped overseas has hit this voting group hard. Twenty-one percent say they are afraid of losing their job in the next 12 months, says Mr. Zogby.
"There are still pockets of acceptability for the idea of Social Security reform, but what Greenspan said - that your entitlement is not going to be what you planned - is deadly stuff in politics, especially as the baby boomers get older," he adds.
No one expects Congress or the White House to move on this issue in an election year, but today's discussion could set markers for debate beyond 2004.
"There are going to be a lot of people looking at a bad retirement if they get away with cutting Social Security," says Dean Baker, codirector of the Center for Economic and Policy Research.