Our Ridiculous Approach to Retirement … Seventy-five percent of Americans nearing retirement age in 2010 had less than $30,000 in their retirement accounts. The specter of downward mobility in retirement is a looming reality for both middle- and higher- income workers. Almost half of middle-class workers, 49 percent, will be poor or near poor in retirement, living on a food budget of about $5 a day … To maintain living standards into old age we need roughly 20 times our annual income in financial wealth. If you earn $100,000 at retirement, you need about $2 million beyond what you will receive from Social Security. If you have an income-producing partner and a paid-off house, you need less. This number is startling in light of the stone-cold fact that most people aged 50 to 64 have nothing or next to nothing in retirement accounts and thus will rely solely on Social Security. – NYTimes
Dominant Social Theme: A waste of time?
Free-Market Analysis: Teresa Ghilarducci, a professor of economics at the New School for Social Research, has written an article for theNew York Times (excerpted above) that suggests the solution to the US retirement dilemma is a vast new government program.
Apparently, she wants the FedGov to take over the savings efforts of American citizens. Apparently, the American government has done such a good job with Social Security that she is now ready to entrust it with "the whole enchilada."
She doesn't quite come out and write this (she's a bit coy), but she gets within an inch of it, proposing that … "Although humans may be bad at some behaviors, we are good at others, including coming together and finding common solutions that protect all of us from risk. Surely we can find a way to help people save – adequately and with little risk – for their old age."
In fact, there is so much wrong with this from the standpoint of reality that it is difficult to know where to start. Certainly the implication that government – especially the US FedGov – can create new and credible programs is difficult to digest. If what we call the Internet Reformation has taught us anything over the past decade, it is the utter futility of government to produce credible, ongoing value.
Ms. Ghilarducci is not apparently a consumer of history. What governments did in the 20th century seems to escape her. Apparently, the New York Times editors did not see fit to remind her. Perhaps they are not aware, either.
To begin with, the famous Black Book of Communism tells us of 150 million dead. But what we call the Internet Reformation shows us clearly, if we are willing to look, that Western governments in the 20th century were far more culpable than we used to understand.
Why doesn't she simply go online and read about what took place in the 20th century? She would find a wealth of history! She could start with The Creature From Jekyll Island that shows Western governments were behind the formation of the USSR.
She could investigate Austrian economics and realize that government solutions are inevitably price fixes. Thus, large government programs are inevitably doomed to failure because they distort economies to the breaking point and then beyond.
In fact, why isn't she aware of free-market economics? She gives no indication of being aware of it at all. How can this be in the 21st century? Even if she discounts it, she should give us a sense that she has considered it.
Free-market economics provides us with the concept of marginal utility, which is the dividing line between classical and neoclassical economics – the economics of modernity. Before the advent of the Internet, there was perhaps an excuse not to know about free-market economics. But in the 21st century there is none. Nonetheless, Ms. Ghilarducci carries on blithely, as if the world has not changed at all. Here's some more from the article:
At dinner one night, a friend told me how much he has in retirement assets and said he didn't think he had saved enough. I mentally calculated his mortality, figured he would die sooner than he predicted, and told him cheerfully that he shouldn't worry. ("Congratulations!") But dying early is not the basis of a retirement plan …
It's not surprising that denial dominates my dinner conversations, but it is irresponsible for Congress to deny that regardless of how much you throw 401(k) advertising, pension cuts, financial education and tax breaks at Americans, the retirement system simply defies human behavior. Basing a system on people's voluntarily saving for 40 years and evaluating the relevant information for sound investment choices is like asking the family pet to dance on two legs …
As we all know, these abilities are not common for our species. The current model for retirement savings, which forces individuals to figure out a plan for their retirement years, whether through a "guy" or by individual decision making, will always fall short. My friends are afraid, and they are not alone. In March, according to the Employee Benefit Research Institute, only 52 percent of Americans expressed confidence that they will be comfortable in retirement. Twenty years ago, that number was close to 75 percent.
… Get real. Just as a voluntary Social Security system would have been a disaster, a voluntary retirement account plan is a disaster. It is now more than 30 years since the 401(k)/Individual Retirement Account model appeared on the scene. This do-it-yourself pension system has failed. It has failed because it expects individuals without investment expertise to reap the same results as professional investors and money managers.
Just as we wonder how the author can ignore 100 years of bloody government history and 150 years of economic history, so we wonder how she mislays the modern-era financial narrative. Is she not aware of the recent track record of "professional investors"? It is no better than that of many private investors, which means it is bad, indeed.
Since she doesn't consider it, this considerable fact doesn't slow her down much. The solution she is inevitably headed toward (this being the New York Times) is one of mandatory retirement savings. She is convinced, obviously, of the worth of Platonic technocrats. The world must be run by "experts" who can do a much better job of navigating life's difficulties than can normal people.
When do these sorts of proposals cease to be floated? Never, of course, because the point of these articles is not to create livable societies but to generate governmental dependence. The power elite that wants to run the world is constantly implementing dominant social themes that are intended to frighten people into accepting globalist solutions.
It is impossible for most people to save for retirement … not because they are profligate or stupid but because the boom/bust nature of monopoly central banking gives them no opportunity to do what needs to be done.
When people lived in smaller, agrarian-oriented communities, issues like retirement simply didn't occur. Parents lived within the context of extended families and this benefited the larger family unit in any case as grandparents could take on some of the role of childcare provider.
All of this has been tossed out by modern day "public" or "social" planning that has been partially responsible for creating the sterile adult communities that increasingly blight the Western world.
The elites have done their best to fashion enormously expensive retirement expectations and it is no wonder that most cannot afford them. It costs little more for six to live in a house than four but this seems to escape many families.
Instead, intricate retirement formulations are the norm, along with trips around the world and houses and apartments in several cities (see "snow birds") etc.
As economies gradually collapse, these overwrought ideas of "retirement" are revealed as impractical. But unfortunately, the larger, sensible elements inherent in extended-family living are not resuscitated. Instead, people are encouraged to continue in their quest for a "modern retirement." As parents inevitably grow frailer in old age, further expensive and sterile facilities are proposed … hostels and "retirement homes."
There is not to be any consideration of the idea that an intergenerational family unit can provide a perfectly adequate alternative, as it did for endless generations. No. We are being informed that the weary, predictable solution is to petition the government for "professional" money management and mandatory retirement savings.
It is not enough that government taxes, spends and inflates your money away, leaving you in penury by life's end, or sooner. Now we are informed that government needs to confiscate even more so as to create "retirement savings."
Inevitably, to entrust one's old age to the tender mercies of 21st century Leviathan is simply a mad idea. Historically, bureaucrats tend to spend the money to which they have access. Retirement money-pools will vanish and, having vanished, the alternatives will make themselves known: Those impoverished aged would be encouraged to "self-terminate."
Genocide lies at the end of this article, no matter how well intentioned.