We need a new way to fully fund retirements (55, pension plan, grandparents)
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Pensions were intended to fully fund retirements. They are pretty much going away.
If you check the history of SS, 401k and IRA accounts, you will find that none of them were ever intended to fully fund retirement. Medicare is not intended to completely pay all your medical bills. People are failing at stitching together the available resources to create a secure, comfortable retirement. Not everyone, but a huge chunk of the population.
We need to either re-invent SS/Medicare so that it is intended to fully fund retirement or come up with something new or different. The crisis is already here; there are a significant percentage of seniors living in poverty and getting by with a hodgepodge of government and private assistance programs and/or help from family. many seniors don't get the care they need. Lifespan and means are so directly correlated that it is embarrassing to see that we allow this to happen to so many.
I am not sure what the answer is. But I really think a fundamental problem is that we have no single vehicle to fully fund even a basic retirement.
I can't agree that Pensions were ever intended to fully fund retirement. Sure, some workers enjoyed very lucrative pension plans but others were far more meager and 'assumed' the workers would save also. Even during the 1960's thru 1970's heyday of private pensions many workers were not provided this benefit. Anyone working for themselves or for a small employer was still expected to fund their own future retirement. And where did the money come from that funded the Pension Plans? It came from employer profits that were funneled into Pensions rather than paid out to the workers in wages - and unfortunately some creative book-keeping contributed too. The Government Pensions paid out by many other countries are funded from income taxes, collected via tax rates that make US rates look miserly.
I believe that any savings vehicle, be it a 401(k), an IRA, or even the old fashioned Passbook Savings Account and Savings Bonds, can properly fund a person's retirement IF the savings vehicle is properly funded during a person's working career.
The problem is that our expectations need to return to that of our Grandparents, who were the last of the generations who were required to self-fund their retirements, and who continued working until that need was satisfied. No more hiring into a major employer at 18 years of age with no specialized skills, spend every dime you make and save nothing, work for thirty years, then retire at age 48 and receive a guaranteed pension for the next 40+ years till death.
The problem is that our expectations need to return to that of our Grandparents, who were the last of the generations who were required to self-fund their retirements, and who continued working until that need was satisfied.
You mean when we had poorhouses and poverty was considered a moral failing?
I think we have to define a lot of issues. first retirement itself as we think of it (where you stop working and live la vida loca) is a fairly modern thing. Before social security, people sort of got old and relatives moved in with them.
If you did not have some type of family to assist you and you were old, life was pretty much always bleak.
there are so many issues now today also effecting ones ability to save. where you live, what type of work you do, debt all influence your ability to save.
now my pension probably was meant to give me a very standard level of living. that along with ss ensures I won't starve or be homeless.
My company had a pension for which I am very grateful. I would receive periodic updates on how much I would receive when I retired.
Unfortunately, same company started laying off/downsizing before a lot of people reached the required "number"...... not sure what the formula was ...... but in my case I had 26 years of service but was 52 when I lost my job. If I had made it to 55 years of age, I would have been "good."
That was 1994. In the 1980s, many close to retirement age were given the "golden handshake", a wonderful retirement pension.
I think the OP also needs to explain some of his assumptions, like why people are entitled to a "comfortable" retirement (rather than subsistence) if they have not used the 45 years prior to age 65 to save for it.
You mean when we had poorhouses and poverty was considered a moral failing?
Of my four grandparents, the three immigrants settled it by dying young because there was no effective treatment at the time for cancer, heart attack and one of pneumonia before antibiotics. The fourth lived in poverty, had some help from her three daughters, and spent the last 30 years in a county home, mentally ill.
Before Social Security and certainly before Medicare, there was dramatically more elder poverty. Real basic poverty, and not from spending too much on luxuries.
No plans were ready for the current longevity. We still don't know what to do.
I think the OP also needs to explain some of his assumptions, like why people are entitled to a "comfortable" retirement (rather than subsistence) if they have not used the 45 years prior to age 65 to save for it.
Right now, median wages will not fund a retirement. Not everyone is able to save for it. There isn't room at the top for everyone to advance, either. Some people save only to see it wiped out. Even for those with income in the upper half, it isn't working to expect them all to provide for themselves. Either you let them starve or we help provide for all. We are doing that very inefficiently now, with a hodgepodge of programs and some people fall through the cracks and literally die.
By comfortable, I don't mean luxurious. I mean having a decent place to live. Things to do besides just sit on the couch. Yes, I do mean more than just subsistence.
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