7 ms·

Here's a fun game for everyone. If you don't save, and your company doesn't save, and your government doesn't save then how the hell do you figure you're going

Here's a fun game for everyone. If you don't save, and your company doesn't save, and your government doesn't save then how the hell do you figure you're going to retire?

busterarm 9y ago
Stock up on bullets and get comfortable firing them.
hkmurakami 9y ago
the current plan around the world seems to be that the next generation props you up I guess?
cinquemb 9y ago
It seems like in this monetary environment solutions are thus: Individuals can get lines of credit issued against their homes or reverse mortgages. Also there's a plethora of subprime debt individuals can acquire and default on ranging from autos to ones education. Companies can keep issuing bonds so that on some end of the food chain, central banks can keep purchasing them. Governments can keep issuing bonds, even at negative interest rates, central banks can keep purchasing them. If it isn't clear, this can go on forever and will always end well.
konschubert 9y ago
You can have a "contract of the generations", where the younger generation finances the pensions of the older generation through social security payments. Many countries do it like that.
- user5994461 9y ago
  That's a ponzi scheme. That's what many countries in Europe do and that is currently collapsing. It takes something like 4 active workers to pay the pension of 1 current retiree. The proportion was fine after the baby boom, it's not anymore and it's getting worse.
  - Joeri 9y ago
    It's not a ponzi scheme, it's a numbers game. Basically the formula is: X * Y = A * B, where X is the number of retirees, Y the number of years they live past retirement on average, A the number of people who work, and B the number of years an average career lasts. What is happening in europe is that the right-hand side of the equation is producing a lower number (due to later career starts and less actively working population), which requires reducing the left-hand side accordingly (by increasing retirement age or cutting pensions). The system cannot collapse (there's always a right-hand side), but it can require severe adjustments.
    - user5994461 9y ago
      The base is a ponzi scheme. Promise to pay people over 65 a guaranteed sum per month and hope that the taxes on working people can fund it. You're right that it doesn't have to be a ponzi scheme. The government could increase the age of retirement and/or lower the pensions. However that's not possible in practice, it doesn't get you elected and it'd provoke massive strikes for months. The government would rather accumulate debt for 20 years than cut any pension. Then the next generation has to deal with unfunded pensions and trillions of debt. It's actually possible to go beyond recoverable and collapse because of the non elasticity, this has happened before historically.
      - RobertoG 9y ago
        >"Then the next generation has to deal with unfunded pensions and trillions of debt" That doesn't make any sense. The next generation could have enough real resources or not. If they have they will be OK, if they don't they will have a problem. Real resources in the future come from investment now, not from "saving money". Saving money makes sense in a personal perspective, but not as a nation.
        user5994461 9y ago
        You can't save money personally. The nation takes 20% of your gross salary to pay retirees. You don't have a choice. In exchange, the nation promises to give you 80% of your last average salaries as a monthly income after you retire (in half a century) until the end of your life. These numbers are not linked to real resources and are not adjusted periodically.
- zzleeper 9y ago
  To double down on what user5994461 said, that's indeed a ponzi scheme and quite stupid if you know current population trends. It also creates quite perverse incentives, as older folks want to reduce their retirement age (even as they live way longer) and raise the contributions of younger people (to pay for the extra costs).
  - ineedasername 9y ago
    Except that retirement age has been gradually extended, and there is no significant lobying effort by AARP or anyone else to go back in that trend.
- hkmurakami 9y ago
  Basically only works when you have a growing economy and a growing population. Both things are sort of not true anymore in developed nations.
  - alkonaut 9y ago
    A declining/aging population is problematic but a stable one isn’t. And you need some buffers in the system to manage the variations in birth rates. I thought this type of system was the most common these days?
    - hkmurakami 9y ago
      Most nations have been set up with growth assumptions. I think you're right that in theory a nation with stable numbers for both can sustain itself. However, we'd have to redo much of the infrastructure assumptions in place today [1], and currently I don't see any nations that are ready to take that plunge. [1] The only systems I see are either underfunded due to growth assumptions they haven't been able to hit, or are funded through natural resources that the country just happened to have. If there are exceptions I would genuinely like to know.
    - RobertoG 9y ago
      A declining/aging population could be not a problem if there is an increasing in productivity at the same time.
      - MisterBastahrd 9y ago
        If wages were tied to productivity, that'd make sense. Workers today are vastly more productive yet lag behind when comparing wages to cost of living.
  - ineedasername 9y ago
    Except the US has positive average Gdp growth in the range of 2%, and positive population growth as well.
wusch 9y ago
Government solves this for you by removing access to healthcare, so the old poor die faster. Lower life expectancy solves the pension issue easy peasy....
tibbetts 9y ago
If your economy isn’t growing then why would anyone want the resources you have “saved”.
- rukittenme 9y ago
  You don't save "resources" you save wealth which can be a fractional share of someone else's growing economy. Not that a growing economy is required for ROI.

Here's a fun game for everyone. If you don't save, and your company doesn't save, and your government doesn't save then how the hell do you figure you're going to retire?

busterarm 9y ago

Stock up on bullets and get comfortable firing them.

hkmurakami 9y ago

the current plan around the world seems to be that the next generation props you up I guess?

cinquemb 9y ago

It seems like in this monetary environment solutions are thus: Individuals can get lines of credit issued against their homes or reverse mortgages. Also there's a plethora of subprime debt individuals can acquire and default on ranging from autos to ones education. Companies can keep issuing bonds so that on some end of the food chain, central banks can keep purchasing them. Governments can keep issuing bonds, even at negative interest rates, central banks can keep purchasing them. If it isn't clear, this can go on forever and will always end well.

konschubert 9y ago

You can have a "contract of the generations", where the younger generation finances the pensions of the older generation through social security payments. Many countries do it like that.

user5994461 9y ago
That's a ponzi scheme. That's what many countries in Europe do and that is currently collapsing. It takes something like 4 active workers to pay the pension of 1 current retiree. The proportion was fine after the baby boom, it's not anymore and it's getting worse.
- Joeri 9y ago
  It's not a ponzi scheme, it's a numbers game. Basically the formula is: X * Y = A * B, where X is the number of retirees, Y the number of years they live past retirement on average, A the number of people who work, and B the number of years an average career lasts. What is happening in europe is that the right-hand side of the equation is producing a lower number (due to later career starts and less actively working population), which requires reducing the left-hand side accordingly (by increasing retirement age or cutting pensions). The system cannot collapse (there's always a right-hand side), but it can require severe adjustments.
  - user5994461 9y ago
    The base is a ponzi scheme. Promise to pay people over 65 a guaranteed sum per month and hope that the taxes on working people can fund it. You're right that it doesn't have to be a ponzi scheme. The government could increase the age of retirement and/or lower the pensions. However that's not possible in practice, it doesn't get you elected and it'd provoke massive strikes for months. The government would rather accumulate debt for 20 years than cut any pension. Then the next generation has to deal with unfunded pensions and trillions of debt. It's actually possible to go beyond recoverable and collapse because of the non elasticity, this has happened before historically.
    - RobertoG 9y ago
      >"Then the next generation has to deal with unfunded pensions and trillions of debt" That doesn't make any sense. The next generation could have enough real resources or not. If they have they will be OK, if they don't they will have a problem. Real resources in the future come from investment now, not from "saving money". Saving money makes sense in a personal perspective, but not as a nation.
      - user5994461 9y ago
        You can't save money personally. The nation takes 20% of your gross salary to pay retirees. You don't have a choice. In exchange, the nation promises to give you 80% of your last average salaries as a monthly income after you retire (in half a century) until the end of your life. These numbers are not linked to real resources and are not adjusted periodically.
zzleeper 9y ago
To double down on what user5994461 said, that's indeed a ponzi scheme and quite stupid if you know current population trends. It also creates quite perverse incentives, as older folks want to reduce their retirement age (even as they live way longer) and raise the contributions of younger people (to pay for the extra costs).
- ineedasername 9y ago
  Except that retirement age has been gradually extended, and there is no significant lobying effort by AARP or anyone else to go back in that trend.
hkmurakami 9y ago
Basically only works when you have a growing economy and a growing population. Both things are sort of not true anymore in developed nations.
- alkonaut 9y ago
  A declining/aging population is problematic but a stable one isn’t. And you need some buffers in the system to manage the variations in birth rates. I thought this type of system was the most common these days?
  - hkmurakami 9y ago
    Most nations have been set up with growth assumptions. I think you're right that in theory a nation with stable numbers for both can sustain itself. However, we'd have to redo much of the infrastructure assumptions in place today [1], and currently I don't see any nations that are ready to take that plunge. [1] The only systems I see are either underfunded due to growth assumptions they haven't been able to hit, or are funded through natural resources that the country just happened to have. If there are exceptions I would genuinely like to know.
  - RobertoG 9y ago
    A declining/aging population could be not a problem if there is an increasing in productivity at the same time.
    - MisterBastahrd 9y ago
      If wages were tied to productivity, that'd make sense. Workers today are vastly more productive yet lag behind when comparing wages to cost of living.
- ineedasername 9y ago
  Except the US has positive average Gdp growth in the range of 2%, and positive population growth as well.

wusch 9y ago

Government solves this for you by removing access to healthcare, so the old poor die faster. Lower life expectancy solves the pension issue easy peasy....

tibbetts 9y ago

If your economy isn’t growing then why would anyone want the resources you have “saved”.

rukittenme 9y ago
You don't save "resources" you save wealth which can be a fractional share of someone else's growing economy. Not that a growing economy is required for ROI.