100 CEOs' Nest Eggs Worth as Much as Entire Retirement Savings of Bottom 41% of Families

If you think the pay gap in this country is bad, consider the retirement savings gap.

Just 100 CEOs have company retirement assets that are equal to the entire retirement account savings of 41 percent of American families. On average, these 100 CEOs' nest eggs are worth more than $49.3 million. That's enough to generate a $277,686 monthly retirement check for the rest of their lives.

It probably comes as no surprise that the CEO with the largest retirement nest egg in the Fortune 500 presides over a low-wage empire. David Novak, who was CEO of fast food giant YUM Brands in 2014 and is now Executive Chairman, has $234 million in his company retirement fund--enough to deliver a $1.3 million monthly check after he retires. With that kind of dough, in one month Novak could buy a membership to the 10 most expensive golf clubs in the world, with enough left over for a couple kilos of the world's most expensive caviar (it's sprinkled with gold leaf). Meanwhile, hundreds of thousands of Novak's employees who fry chicken and toss pizzas at Taco Bell, Pizza Hut, and KFC have no company retirement assets whatsoever.

These numbers come from a new report I co-authored for the Institute for Policy Studies and the Center for Effective Government that is the first to analyze the gap between the retirement assets of Fortune 500 CEOs and the rest of America. The report tells the tale of "Two Retirements": one for CEOs and the other for the rest of us.

Why have executive nest eggs reached such massive proportions? One major reason is that loopholes in the tax code give executives preferential treatment. Nearly half of all American workers have no retirement plan at work. Those who have a 401(k) or other type of tax-deferred plan face strict limits on how much they can set aside in these accounts for their golden years. Workers 50 and older can contribute $24,000 each year, while younger workers can contribute $18,000.

CEOs have no such limits. While slashing worker pensions, CEOs take advantage of special loopholes that allow them to invest unlimited amounts of compensation into tax-deferred accounts set up by their employers. Seventy-three percent of Fortune 500 firms offer executives deferred compensation plans. As of the end of 2014, CEOs at these firms had accumulated $3.2 billion in these accounts.

Take Glenn Renwick, CEO of the Progressive insurance company, for example. Last year he dropped the biggest wad of cash in his tax-deferred account of any Fortune 500 CEO--$26.2 million. That saved him more than $10 million on his IRS bill last year. And that money can be invested and grow tax-free until he starts spending it, at which point he would owe a one-time tax payment at an ordinary income rate. And if he really suffers from tax-itis, as so many executives do, he has the option of further lowering his liability by moving to a state like Florida, which has no income tax, before he withdraws the funds.

On top of these tax-deferred accounts, more than half of Fortune 500 CEOs have executive pensions that guarantee them a fixed monthly payment for their entire post-retirement life. For workers, that kind of benefit is about as common as the typewriter in today's American workplaces. Last year 18 percent of private sector employees were covered by this type of "defined benefit" pension, down from 35 percent in the early 1990s.

And what few realize is that the lavish retirement packages for executives and growing retirement insecurity for the rest of us are inextricably linked. Executives have huge incentives to slash worker retirement benefits as a way of boosting corporate profits and stock prices. And since more than half of executive compensation is tied to the company's stock price, every dollar not spent on employee retirement security is money in the CEO's pocket.

To reverse the retirement divide, we need to expand Social Security. Unlike corporate retirement plans, these benefits are progressive, favoring low- and middle-income workers. Nearly a third of those approaching retirement will be depending almost solely on Social Security, and the current average monthly benefit check is only about $1,200.

How to pay for this expansion? After slashing employee retirement benefits for so many years, it's time for CEOs and large corporations to step up and pay their fair share of a program that would allow all seniors to live a dignified life. Top executives (and other high-income Americans) should contribute to Social Security on all their income, including stock-based pay. Corporations should no longer get unlimited tax deductions for executive pay and benefits. And there should be just one set of deferred compensation rules for all employees--regardless of whether they work in the executive suite or the fast food line.

Especially with our rapidly aging population, bold action now to narrow the retirement gap is critical if we are to avoid a segregated world for seniors, with unmet basic needs for millions and gold leaf-sprinkled caviar for the privileged few.