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Friday, March 8, 2013

Losing America

On December 14, 2012 we said, in Unions - some thoughts, that:  If people who work hard for a living can't make a decent life, then we have lost America.  Jon Stewart raised another aspect of this problem the other night.  

His point was:  Since we are abandoning fixed benefit retirement plans (pensions) the everyday guy is more and more facing the necessity of dealing with a 401 K (a retirement plan in which you put in money and your employer  puts in money and the account belongs to you.)  If the account runs out before you do, then you do without.  Stewart's point and concern was that this makes it incumbent upon regular folks to become acquainted with long term financial instruments (other than home mortgages) and that is unfortunate.

Perhaps we could create an independent agency which could operate for the government and the people a collection of relatively safe invesment tools.


  1. Before you read my remarks below just remember that things in writing sound much more harsh that they do in conversation.

    1. WRT – “If people who work hard for a living can’t make a decent life” – I believe the assertion that this might be true is, for the most part, an argumentative straw man. Or to put it more strongly I do not consider it is a given.
    2. WRT “become acquainted with long term financial instruments and that is unfortunate”. I would suggest that is no only NOT unfortunate it is as it should be.
    3. WRT to “If the account runs out before you do” - Then you saving plan was inadequate or you did not budget properly during retirement. I strongly feel that primary responsibility for an individual’s retirement rest with the individual.
    4. WRT to “If the account runs out before you do, then you do without”. The social net in the US is robust enough that no individual need go without food, clothing, shelter and medical care. If “do without” means someone does not have internet access on their cell phone I am fine with that.
    5. WRT to “If the account runs out before you do, then you do without” – But if you run out before the money does your heirs get the money.
    6. WRT the last paragraph - The financial world is full of conservative investment options now. To have a realistic chance of changing individual savings patterns the use of a quasi-governmental investment entity would probably have to be mandatory. To which I am not totally opposed since it protects me (as a member of society) from those who would not save responsibly otherwise. P.s. while I find compulsory savings onerous I find the lack of savings (for retirement) even more so. And we already have SS.
    7. WRT the last paragraph - Are you and/or Stewart suggesting that my retirement is the government’s responsibility?

  2. I think that I didn't make myself very clear.

    A. I did not intend to argue against the decline of pensions. I think that that decline is a fact of life and the reason for it is the irresponsibility of those who were responsible for setting pension benefits in both the public and private sphere. They did not properly fund what they promised.

    B. My very brief description of a 401K was intended for those who know nothing at all about them so that they would have at least some idea of what I was talking about. As Tom points out there are positives.

    C. I did not suggest that the govt. put any money in these accounts. The idea was that the government establish an independent agency that would hold those 401Ks in a way that had low fees and good conservative advice. My two experiences with Valid left me feeling very ripped off and employers are not well known for their adept handling of their employees retirement money e.g. General Motors.

    D. I don't know whether Stewart thinks of retirement as a government responsibility. I was thinking of the government's role as more like a guaranteeing of quality. A function of government much like that of the SEC, FDA, or FAA. I don't ask them to feed me, but I do like it that they check the food.