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the future of retirement
Schools Aren’t Preparing Students for a Post-Blue World

Blue model education systems were built on the assumption that most middle-class Americans didn’t have to be especially proactive about their retirement planning. In the blue heyday, it was often the norm for Americans to work at the same company for their entire careers and retire with a defined-benefit pension. But in today’s economy, where most people switch employers every few years and depend on 401(k)s for retirement security, it’s increasingly important that public education systems equip students to take charge of their own financial fate. Unfortunately, according to a recent report, schools don’t appear to be making much progress on this front. CNBC reports:

The number of states that require high school students to complete a course in economics has dropped over the last two years, and mandates for personal finance education in the upper grades remain stagnant, a new survey shows.

The biennial Survey of the States by the Council for Economic Education, released exclusively to CNBC.com, found 20 states currently mandate that high school students take economics — two fewer than in 2014.

… At the same time, the Council for Economic Education survey found the number of states that require high school students to take a course in personal finance has remained unchanged at 17 since 2014.

America is currently in the midst of a transition from an employer-driven retirement model to a self-driven retirement model. This transition must be managed in part by individual workers, who will need to become more proactive in their financial planning, and in part by corporations, many of which should auto-enroll more workers in retirement plans (as some already are), matching employee contributions more generously. But there’s also a role for the government: Financial services firms that deal with 401(k)-type accounts will need to be regulated and overseen with these broader social trends in mind. And even more critically, schools must prepare students for the economic landscape that awaits them. Policymakers who are interested in facilitating the post-blue economic transition should make beefing up financial education a priority.

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  • Boritz

    Such preparation would necessarily be an advanced class with prerequisites such as Life Isn’t Fair, Self Reliance 101, Personal Responsibility 201, and What You Are Owed: It’s less than you think. Few would make it through the program.

    • qet

      “What You Are Owed: It’s less than you think.”

      Ha! Excellent. I had this class. Failed it the first time and had to repeat it.

      • f1b0nacc1

        Same here….the tuition was the real problem!

      • JR

        I, for one, am still enrolled in this class and probably will be for life.

        • Tony White

          Get back on your meds, Gloomy Gus. You’ll feel better, Putz!

          • JR

            Bark again doggie. You’re a good doggie.

  • Anthony

    Post brings to mind a macro-economy concern: improving the skills of the workforce (thereby enhancing retirement options),preparing for quality of working life with foresight towards retirement, and proper functioning of secondary education going forward. Within that view, one cannot dismiss the very real fact that the education gradient is steep as most Americans can agree that the bottom has fallen out of the labor market for high school (low skill) graduates (workers). So during transition inferred by post, will basic economic classes in high school alone have practical benefit without some market/labor adjustments?

    Surely, a class or two of basic high school economics (though reasonable) may have negligible effect without a long-term jobs strategy incorporating said graduates into a viable market economy (however driven). That is, a functional aspect of both educational attainment and skill formation to some extent at the secondary level ought to have “preparedness” for making a living as a core curriculum consideration. On top of that perhaps, a goal of universal high school completion (quality instruction, inclusive of economics) will certainly provide a basis to help American kids navigate the impending landscape for next forty years – in line with long-term inference of Post. In the meantime, analysis is always simpler than solution; so, how and where do we begin to bolster.

  • Fat_Man

    Economics? Heck, they aren’t even teaching the 3Rs.

    • f1b0nacc1

      They cannot even spell the 3 Rs

  • Pete

    To teach the kiddies how to balance a checkbook would take time away from the multicultural propaganda.

  • CapitalHawk

    So, you want a unionized workforce of teachers, who generally have gold plated pensions, to teach their students about 401(k)s and such? Don’t teachers usually have to understand the subjects they are teaching?

  • rheddles

    America is currently in the midst of a transition from an employer-driven retirement model to a self-driven retirement model.

    Surely you’re joking, Mr. Feynman. I recall preparing the slides for our Bank’s introduction of the IRA in 1975. That’s 41 years ago! The transition is complete for all but government employees.

  • FriendlyGoat

    1) We should be asking WHY, exactly, Americans cannot work at a single company for all or most of a career and retire with a defined-benefit pension. “Oh, you just can’t. The world has changed.” But the unanswered question again is why?

    2) Glad TAI included: “But there’s also a role for the government: Financial services firms that deal with 401(k)-type accounts will need to be regulated and overseen with these broader social trends in mind.” Even the libertarians admit we should not let the screw-over just be blatant and unlimited, eh?

    3) If schools actually taught the preparedness you mention here with any clarity about the dim prospects of the lower and lower-middle classes, the business community would have a fit about “making all those kids into socialists”. That’s one reason it isn’t done much.

    • Jim__L

      1) I know, I know! The answer is, “high-end tax cuts”! (Don’t ask me to show my work, I’m just quoting from the bumper sticker.)

      2) No, 401(k)s should be disintermediated, to avoid handing money to useless / parasitic brokers.

      3) The real solution here is to reform our schools’ “How Not to Have Children” classes. (These are currently misnamed, “sex ed” — I mean really, is anyone better at sex because of these classes? Like anything else, attentive independent study and lots of practice are far more important than anything you’ll learn in school.)

      Anyway, these classes should at least mention that a healthy (non-greying) society requires people to have kids at a replacement rate, and that one way or another, everything you need once you retire will be provided by children that someone or other has raised. Point being, you should do your bit to have and raise these kids. Paying taxes for schools is a pittance compared to the investment of time, attention, and money required to have and raise kids yourself, so it doesn’t count for much.

      These kids are your social security. Always have been, always will be.

      • FriendlyGoat

        Good grief, Jim. There is no bumper sticker announcing that high-end tax cuts destroy jobs (although there probably should be). #2 and #3 are so far off the wall, I’ll just assume you didn’t get any sleep overnight.

        • Jim__L

          I’m curious when we’ll start to get treated to TAI articles on “Can China recover before its working-age population gets too old to work?”

          And I’m a little surprised that you’re not more in favor of disintermediation to trim our bloated financial sector and keep them from skimming so much from trivial financial transactions.

          Care to engage, if you can forgive my waggish tone? I’m not sure we’re too far apart on any of these except the first one.

          • FriendlyGoat

            On population, there is a case you can make that a surge of oldsters is difficult for any nation to deal with. There is also a case to be made that the world population of humans has been growing very fast in a short 200 years from 1850 (one billion) to 2050 (perhaps nine billion). That kind of growth projected forward seems to suggest a problem with both resources and peace. More immediately, there is a case to be considered right now by young couples whether they can afford children, especially lots of children.

            On disintermediation, the devil is in the details. Tell me what you’re talking about exactly and we might agree. The Vanguard index funds have accomplished a reduction of the take by middlemen. But where do you want to go from there? (As an aside, can we conclude that the land of negative interest rates for savers is not the desired destination?)

            On the relationship between people and incorporated entities, we really ought be asking where went the mutual obligations of loyalty. It’s not enough to say it just “happened” that employee citizens have given corporations the moon in return for a new slap in the face every day.

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