Back in the late 70's and into the 80's, the norm was that an American worker was covered by a defined benefit pension plan, more or less a guarantee that they would retire with some measure of their current income assured.
But as with personal financial matters, the exact nature of how that was suppose to work got away from the higher-ups. Few noticed that life expectancies started to increase and the workforce started to age. What had began as a promise to a veritable cadre of people at it's inception, morphed into a promise to a massive group of Americans. And as the promise meant more and was made to more; the cost of the promise escalated, till it was in effect, uncontrollable and out of control at the same time.
The shift was made to 401k and other plans that put the onus on the employee to figure it out. As noted in last weeks blog that didn't go well and it continues to not go well today.
When I hope for things, I tend to not hope in colors. I don't hope "Republican" or "Democrat" I just hope. I'm agnostic when it comes to solutions.
But before we get to solutions we have to have a national dialogue about retirement and saving for it. Oh, I'm sure that the public programs, Medicaid, Medicare and Social Security will be the lynch-pin to formulate the starting point, but our problem is really so much more than those things. While there aren't many retirees that at this point that could afford even a modest reduction in their "supplemental" retirement systems as noted, that's because their underlying retirement systems is either wholly inadequate or non-existant. A recent MIT study showed that nearly half, 46% of Americans have less than $10,000 in financial assets when they die. For way too many American's what was meant to be supplemental is in fact primary, and for them today and probably many more in the future, the chameleon like shift will be complete. What had once been "additional" has become "it."
My hope (again, agnostic hope) is that our leaders can focus on these national problems in the hope of a national solution. For all the effort, it seems we spend way too much time worrying about what Greece has in the bank and not worrying about what our citizens do. And that just seems wrong.