Has It Really Been Forty Years?

By: David I Gensler, MSPA, MAAA, EA

Madison Pension Services first opened its doors on July 1, 1978. Being an actuary, it is not hard to figure out that July 1, 2018 will represent our fortieth year in business. Forty years is a long time and it has gone by in the blink of an eye. For you millennials and Gen Xers, let’s take a look back at what life was like in 1978.

What Did Things Cost Back in 1978?

  • A gallon of gas cost 63
  • The average yearly income was $17,000.
  • The average price of a house was $13,650.
  • The Radio Shack Tandy TRS80 Computer cost $399.
  • Star Wars family pajamas cost $11.99 (mine still look good!).
  • An 8 track player (remember those?) cost $169.


Popular Films in 1978

  • Saturday Night Fever
  • The Deer Hunter
  • Animal House
  • Grease


Popular TV Programs in 1978

  • Happy Days
  • Charlie’s Angels
  • The Rockford Files
  • The Love Boat


Top Recording Artists

  • The Bee Gees (Saturday Night Fever, Stayin’ Alive, How Deep Is Your Love)
  • Billy Joel (Just The Way You Are)
  • Barry Manilow (Can’t Smile Without You)
  • Donna Summer (Last Dance)
  • Queen (We Will Rock You/We Are The Champions)


Notable Events

  • The Son of Sam was sentenced to 25 years to life in prison
  • The United States stopped production of the Neutron Bomb (it killed people but left buildings and infrastructure standing – It also gave rise to Jack Welch’s nickname of “Neutron Jack.” [He laid people off en masse but the buildings where they worked were still intact])
  • The Nobel Peace Prize was awarded to Egyptian President Anwar al-Sadat and Israeli Prime Minister Menachem Begin
  • Jim Jones commanded his followers to drink poisoned punch in Guyana
  • ADEA was amended to prohibit discrimination against individuals up to age 70 (which means that previously individuals over age 70 could be discriminated against)
  • The Dow Jones Industrial average closed at 805
  • Disco and bell bottoms were in


What about retirement plans in 1978 vs. 2018?

  • Defined benefit pension plans represented over 60% of all private retirement plans. People could safely plan their retirement knowing that they would receive a monthly check from their employer’s pension plan plus their benefits from Social Security. Profit- Sharing plans and these things called Money Purchase Pension plans made up most of the balance of all of the retirement plans in the private sector.
  • Private pension plans were funded exclusively by your employer. Only corporations could offer private retirement plans to their employees. Non-corporate entities (sole proprietors and partnerships) could only sponsor retirement plans called Keogh plans that provided for significantly lower benefits than corporate retirement plans.
  • Congress passed the Revenue Act of 1978 which included an obscure provision that became Internal Revenue Code Section 401(k). Before that employee contributions were limited to voluntary (after tax) contribution to a profit-sharing plan (if your firm even had one).
  • In 1978, the concept of the “three legged stool” was alive and well. The three legged stool was the foundation of a safe and secure retirement. It came from your private pension plan, your own personal savings and Social Security. I have not heard of anyone mentioning the three legged stool in 30 years.


So in terms of retirement plans, what has happened? Companies have shifted the risk and the responsibility of an employee’s retirement from the company to the individual employee. So what to do? Set up a budget and save, save, save. Be disciplined. Set annual savings goals.

Save in your company’s retirement plan and save some of your after tax salary. But like 63 cents gas and eight track players, the days of relying on your employer to provide for your retirement are gone and they are never coming back.

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