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the future of retirement
Retirement Challenges Are Worse Than People Thought
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  • Ritchie Emmons

    Maybe also providing the opportunity to purchase life insurance rather than just 401k style retirement accounts would be a good idea. I think a lot of people are skeptical of the stock market and would feel a whole lot safer financially if they could have a surer thing like a life insurance policy rather than (or in addition to) putting their money in the market. Making the life insurance premium payments pre-tax expenditures like with the 401k programs would be an equitable way to treat the two options. For my money, I’d much prefer a 401k, but I think a life insurance option would resonate with many millions of Americans.

  • Beauceron

    I save my full amount in my 401(k).

    But I am saving with the assumption that by the time I retire, the Dems will have their permanent majority and will confiscate or otherwise take over the accounts of everyone who has bothered to save to pay for those that have not.

  • seattleoutcast

    There used to be a time when one could put their savings into CDs and accumulate quite the retirement package. Those days disappeared when Greenspan and his Keynesian quackademics decided to destroy the financial system by printing cheap fiat federal reserve notes. Not only did this cause inflation that destroyed the poor and middle class, but it took away the one means that a working family could use to have a healthy retirement income.

    The onus of this devastation lies completely on modern financial voodoo, brought about by the democrats and republicans alike.

    And, as mentioned in the post, this is one big reason Trump got elected.

    • Angel Martin

      Totally agree. And we haven’t yet got to negative interest rates in NA like much of europe.

    • FriendlyGoat

      Have you ever wondered whether high-end tax cuts blew up the financial world so badly by 2008 that nothing but zero interest rates could mitigate the damage? I have—–as you might imagine.

      Of course the financial world is not supposed to penalize the frugal savers—–the REAL conservatives—–in this manner for years on end. So why is it? (If you mention Obama, I swear I will murder you through this computer. No, of course not. Just kidding. BUT, Obama did NOT do this, okay?)

      • seattleoutcast

        High end tax cuts did not blow up the financial world. It was the mortgage debacle that did it, followed by derivatives, credit default swaps and other fraudulent activities that subsequently fell apart. These were lauded by Greenspan as wonderful new financial technologies…or some other nonsense. True conservatives would end this farce of centralized banking.

        I would say that Obama was responsible only in the same way other presidents have been: they have allowed the Fed to ruin this country. If a Fed audit bill actually makes it through Congress (I doubt the spineless republicans will do it. The spineless democrats didn’t in 2008-9 either) we will see just how much our children’s future has been sold out.

        • FriendlyGoat

          I’m of the opinion we actually need central banks to manage world economies in ways that politicians cannot be trusted to do—–politics being volatile and mercurial. That’s why we have them. We have nincompoops in Congress of the past which think just defaulting the country would be okey-dokey for an issue like Planned Parenthood. We probably have more of those nincompoops right now than ever before. When the Fed is OUT of their hands, we are all better off.

          Back to tax cuts. Any chance that the lure of under-taxed gains from mortgage trading, derivatives, credit default swaps, and under-taxed CEO pay induced the “fraudulent activities”? I mean, I know that some want to blame loans to poor people for houses——but what about loans to “poor” commercial property owners, eh? The game was big. The atmosphere was casino-like. The victims were savers, and it ain’t even over YET.

  • Disappeared4x

    Age discrimination gets in the way of “…self-driving cars and telework are going to make it easier for older people to stay in the workforce longer. …”

    • Boritz

      Yes. You might as well believe that these older workers will also be able to take fabulous luxury vacations at posh resorts were they will arrive by flying car and be greeted by a staff and other vacationers who all speak Esperanto.

      • Disappeared4x

        If I had NOT used some of my IRA savings to pay for the master’s degree to teach as I retrained at 50, only to discover too late “you’re too smart to be a teacher” was code for “we don’t want any more 50-something …
        Never mind. I was also the ‘wrong’ Identity Group.

  • Anthony

    “…we’re living in a world being shaped by vast accelerations in technology, globalization, etc. In this age, leaders have to challenge citizens to understand that ‘more is required of them’ if they want to remain in the middle class – that they have to be lifelong learners.” Also:

  • Fat_Man

    Megan McArdle, who is an economics and politics columnist for Bloomberg explained the underlying problem very well.

    “The 401(k) Problem We Refuse to Solve” By Megan McArdle on Jan 3, 2017:

    “The great lie is that the 401(k) was capable of replacing the old system of pensions,” former American Society of Pension Actuaries head Gerald Facciani told the Journal. “It was oversold.” This is true. On the other hand, so was Social Security oversold. As was that good ol’ defined benefit pension, so beloved of editorial writers, which was available to only a minority of workers when the 401(k) sprang into being. …

    “The funny thing is that, for all the people arguing that some dire problem in one of these three retirement systems urgently requires that we switch to another kind at once, the major problem with all three is exactly the same. … because in all three cases, the only flaw that actually matters is that they’re badly underfunded.

    “… If productivity is growing quickly, then it is easier to maintain our pre-retirement lifestyles with a smaller pool of savings, because that savings will buy more.

    “Alternatively, we can have a lot of kids. No matter how you manage your retirement system, you are ultimately expecting to depend on the labor of people younger than you. … The more workers there are relative to retirees, the smaller the fraction of their income each worker has to give up to support each retiree, and the easier it will be to get them to do so.

    “Unfortunately, productivity isn’t growing rapidly, and we didn’t have a lot of kids. That leaves plowing a great deal of money into savings and investment, in the hopes that productivity will start to grow again. There is no substitute, no neat transformation we can enact to make that fundamental problem go away. …

    “So why do we spend so much time complaining about some side problem with one of the systems, instead of the major problem with all three? Because none of the experts know how to get people to actually do this: to save 15 to 20 percent of their income, or sit still for a law that would make them. …

    “The 401(k) was not the miracle cure for our retirement problems that was promised by some of its more zealous advocates. But it wasn’t a mistake, either, or at least not the important one. The important mistake was deciding that we could spend our first 25 years in school, and our last 25 years in retirement, without cutting our consumption in between. And, at least to date, that’s one mistake we don’t seem to be able to learn from.

    • seattleoutcast

      We don’t learn from the overconsumption mistake because everybody thinks that they are entitled to expensive vacations, expensive cars, expensive houses and the right to go out and eat every night. Then, when they don’t have any money left at retirement, they whine about how unfair life is. The truth is, there is much less disposable income now than there was twenty years ago, but the average American thinks that they can have it all and not cut expenses.

      • Fat_Man

        Don’t worry we will pay for it all by taxing the rich.

    • Eurydice

      It’s not just consumption, it’s also about access to income. The reason why people are in economic storage for half of their lives is because there aren’t enough jobs to go around. And it would be interesting to see what would happen to our consumer-driven low-population growth economy if everybody started saving instead of spending.

  • Boritz

    “More than that, or more urgently than that, we need a political elite that understand how good leaders think.”

    That’s asking too much out of the gate. Incremental improvements are more than welcome in this place to to which we’ve been brought. Can we just have a Henry.

    “the ablest soldier of an able time. He led men well, he cared for justice when he could” –Henry II, The Lion in Winter

  • Andrew Allison

    As I’ve commented previously on this topic, the problem is not the availability of pension plans but the unwillingness of Americans to save for the future. Everybody has access to an IRA, everybody with a high-deductible health insurance plan (essentially all of them) to an HSA (which is, essentially, an additional IRA deduction), and apparently close to 80% have access to a 401(k). The problem is that the people who typically find smartphones, cable TV and a late model car in the driveway indispensable choose not to save for retirement. This despite the fact that Uncle Sugar will pay half of the first $2000 annually for low-income taxpayers. The socialist, er nanny-state, approach to solving this problem would be to significantly increase Social Security taxes and benefits. Since Americans refuse to save, this may, in fact be the only responsible course. Meanwhile, as long as people are not taking advantage of them, the chatter about pension plan availability is just that.

  • Gerald

    It would be more effective if we could return to the concept of personal responsibility, coupled with the requirement that everyone should pass a rigorous course in personal finance in order to graduate from high school. No “elites” or “central planners” are going to design a policy that will take care of people who do not have the skill or willpower to provide for themselves. We will always have to have some welfare program such as social security for those who will not or can not provide for themselves, but other than that we would be much better off if the government would stay out of it. I have used defined contribution plans when available, 401K’s especially when the corporation provided matching funds up to a limit, IRA’s, Annuities, etc. Each had their good and bad points, but the best approach I ever found was the simplest – never spend as much as you make, and save the rest.

  • lukelea

    On future of retirement, here is one at least conceivable solution taken from the cover of my Notes Towards a New Way of Life in America:

    “In this 21st century capitalist utopia, Luke Lea explores a world of New Country Towns in which the people work part-time outside the home and in their free time build their own houses, cultivate gardens, cook and care for their children and grandchildren, and pursue hobbies and other outside interests. They live on small family homesteads grouped around neighborhood greens and get around town in glorified golf-carts. So thoroughly are work and leisure integrated into the fabric of their everyday lives that they don’t feel the need to retire, and they die at home in their beds as a rule, surrounded by loved ones.

    For those who would like to move to this world he provides a map with some directions for how to get there from here.”

    It simultaneously addresses the (currently prohibitively expensive) problems of childcare and eldercare. Does anybody have a better idea? How about just another idea, better or worse?

  • rpabate

    Maybe, if we had private retirement accounts and were required by law to contribute to them, like Singapore, people might not object so strongly, because it’s their money to do with as they want, once they retire, or to use it before retirement for the purchase of a house or help during a serious illness. Should they die before retirement, the money would go to their spouse and/or children. Obviously, there would be limitations on what investment selections could be made. An investment in a broad index of stocks like the S&P is a bet on the U.S. economy. Maybe, if more people had their retirement tied to the health of the U.S. economy, Other approved investments would be in government bonds, or investment grade corporate bonds. Corporations could compete by offering to contribute into these accounts as part of a compensation package. Unfortunately, the Left will never go for such a scheme, so it will never happen.

    • FriendlyGoat

      What the left and right should have gone for was the investment of the Social Security Trust Fund into a total market index fund starting in the eighties. The annual excesses of payroll tax over SS payouts should have been growing as a collective 401K with stock market returns and none of it loaned to the government for other uses. This might have enabled all the SS pension payments to be substantially larger than at present. In other words, for citizens to have market returns did NOT require individual accounts with the “management” obligation of those accounts on individuals citizens.
      But, we didn’t have enough sense to demand it of Reagan and O’Neill at the time.

  • Social “Security” has poisoned this well (with a little help from Medicare), by creating a myth that the government will take care of your retirement. When Bush tried to push a radical change to SS, he found that the votes for his proposals were lacking. Washington has learned that lesson and not forgotten it.

    Comparing retirement to who pees where is disingenuous. The total amount of urine stays the same, and no new bathrooms need be built; the only money that has to be found is legal fees for a few test cases. The total number of retirees grows and grows, and they all want more money.

  • Gene

    The same people who saw no problem with forcing people to buy a commercial product–health insurance–can simply try to force people to fund the government by buying Treasuries within their IRAs or 401(k)s. Nice nest egg you’ve got there; it would be shame if something were to happen to it. Convert 20% of your retirement plan to Treasuries and you won’t get hurt …

  • K. E.

    Self-employed people of the world, start a SEP-IRA immediately! I have had one since I started my one-person business in 2011 and have put money in it (as much as I could afford) every year. I’d rather have something saved for retirement…no matter how small…than nothing.

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