38 • RUBY, WILDING & SWANSBURG worked to make money until they simply couldn’t work anymore. Once Americans started planning for a true retirement— th at is , once they st opped work ing whil e still young enough and health y enough to kee p living—retirement income came int o pl a y. At first, it wasn’t an urgent issue for many Americans. That’s because of something called pensions. Romans are credited with conceiving the idea o f p ensions whe n they paid retiri ng soldiers for their pas t service i n the first century A.D. Several centuries later, in 1875, American Express introduced the firs t pr ivate pens ion plan in the U.S. Fro m there, the concept began to grow. A pension is essentially an employer-provided income you can’t outlive. Once you retire, the company where you worked will keep sending you a paycheck, every month, until you die. By the 1970s in America, nearly 45 percent of private sector workers had a pension. And that meant, for many sa vers, think ing long-ter m on income wasn’t an issue. In fact, it wasn’t something they had to do at all. Their former employer did it for them. 21 That all cha nged in 1978 w hen Congress pa ssed The Revenue Act of 1978, which added sectio n 401(k) to the Inter nal Revenue C od e. Does that section sound familiar? It should. The year 1978 was the birth of the 401(k), and the pathway to the IR A several yea rs later. Under these new plans, it was up to the employee— not the employer—to thi nk long-ter m about income. A company 21 Liz Davidson. Workforce. June 21, 2016. “The History o f Retiremen t Benefits. ” https://www.workforce.com/news/the-history-of-retirement-benefits
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