7 ms·

The moral of the story is that governments and businesses should just abolish all pension, superannuation, 401K plans, etc... and let people manage their own re

The moral of the story is that governments and businesses should just abolish all pension, superannuation, 401K plans, etc... and let people manage their own retirement. Big centralized retirement funds are scams and they always will be. Wherever there is a giant pile of other people's money managed by a bunch of bureaucrats, some suits will come along and find a way to profit from that pile of money in the most wasteful way possible. Now all these retirement funds invest straight into low-yielding corporate stocks; so the money essentially ends up going into the pockets of corporate executives. And the worst part is that the government makes this compulsory. I know superannuation is a scam but I'm forced to pay it anyway and I can't take the money out until I'm 65... I wouldn't be surprised if by that time, the retirement fund stock bubble will probably have popped and my retirement account will be worth $0... And all the fund managers and corporate executives will be rich.

pjmorris 7y ago
It seems likely that US social security is linked with this: "Elderly poverty in the U.S. decreased dramatically during the twentieth century. Between 1960 and 1995, the official poverty rate of those aged 65 and above fell from 35 percent to 10 percent, and research has documented similarly steep declines dating back to at least 1939." [0] [0] - https://www.nber.org/aginghealth/summer04/w10466.html https://www.nber.org/aginghealth/summer04/w10466.html
- Spooky23 7y ago
  Elderly poverty was once a massive a tragic problem that both impacted the elderly as their ability to work waned, the families of the elderly who attempted to provide care, and the employment market as elderly employees tried to hang on as long as possible. The conservative and libertarian trains of thought value individual agency above public welfare, which is a convenient point of view for people with the means to sustain themselves.
- Richard_East 7y ago
  At the same time as we have seen decreases in income, wealth and home ownership for younger cohorts when measured at the same age. Its just a transfer of wealth from young to old.
  - pjmorris 7y ago
    For reasons of both bias and curiosity, can you point to your sources for this? Philosophically, even if there is no greater effect than transfer of wealth from young to old, pretty much everyone who is now young will one day be old. "Among the savage nations of hunters and fishers, every individual who is able to work is more or less employed in useful labour, and endeavours to provide, as well as he can, the necessaries and conveniencies of life, for himself, and such of his family or tribe as are either too old, or too young, or too infirm, to go a-hunting and fishing. Such nations, however, are so miserably poor, that, from mere want, they are frequently reduced, or at least think themselves reduced, to the necessity sometimes of directly destroying, and sometimes of abandoning their infants, their old people, and those afflicted with lingering diseases, to perish with hunger, or to be devoured by wild beasts. Among civilized and thriving nations, on the contrary, though a great number of people do not labour at all, many of whom consume the produce of ten times, frequently of a hundred times, more labour than the greater part of those who work; yet the produce of the whole labour of the society is so great, that all are often abundantly supplied; and a workman, even of the lowest and poorest order, if he is frugal and industrious, may enjoy a greater share of the necessaries and conveniencies of life than it is possible for any savage to acquire." [0] [0] Adam Smith, "An Inquiry into the Nature and Causes of the Wealth of Nations", intro.
    - Gunax 7y ago
      No generation of social security workers has ever funded itself--each generation has taken out more than it put in. SS is solvent because each subsequent generation has been larger and wealthier than the past. What we have done is voted in politicians who have promised us SS pensions, but not actually funded those pensions. Instead the debt is going to fall upon young adults who were kids/unborn when said promises were made. Yes, everyone gets old. That doesn't entitle us to puts debts on people who had no say in the matter. It's really not much different from me borrowing money and promising my child's future earnings to pay it off.
  - zarriak 7y ago
    lol Social security has reduced poverty in every age group. https://www.cbpp.org/research/social-security-keeps-22-million-americans-out-of-poverty-a-state-by-state-analysis?fa=view&id=4037 https://www.cbpp.org/research/social-security-keeps-22-milli... Also if you want to go even further, you should redistribute from 40-60 to 0-25 and 65+ to enable people to properly raise children and the like.
enraged_camel 7y ago
>>> The moral of the story is that governments and businesses should just abolish all pension, superannuation, 401K plans, etc... and let people manage their own retirement. That is definitely not the moral of the story. Aside from that, what exactly do you think a 401k is, if not a vehicle for people to manage their own retirement? The only government involvement in a 401k is non-involvement in the form of allowing you to contribute pre-tax money. And the broker won't be involved either if you're smart and elect to invest in indexes, rather than mutual funds (which can have high fees).
- teej 7y ago
  Workers do not have control over the fund choices they have in their 401k. Often, low cost index funds aren’t available. This can be fixed by working with HR and the 401k manager but it’s often an uphill battle and isn’t guaranteed to work. Despite all that I agree that GP’s comment to abolish 401ks is throwing the baby out with the bath water.
  - ClutchBand 7y ago
    Im certainly living in a bubble, but I've always had the option through my 401k provider to adjust my allocations among a very broad range of options.
    - Gunax 7y ago
      You probably work for a sane private corporation. From what I hear, lots of employers get royally screwed. Namely school districts and other small-gov employers. There is something about public schools that just love buying into high-fee 403b.
  - cryptica 7y ago
    In every country there is intentionally a lot of friction if you want to manage your own retirement fund. Often you need to have a minimum amount and you are limited in the kinds of investments that you can make.
cerberusss 7y ago
Maybe in your part of the world. In my part (The Netherlands) we have a decently working system. It's not perfect, but it's one of the best.
nine_k 7y ago
Another lesson is to only take any obligations on your business if you're running an LLC. The plumber boss in question ran unincorporated, so his business's debts are his personal debt. Were he running an LLC, the debt would be on the company only.
- justin66 7y ago
  I had the same thought. Can anyone in the UK confirm this would have provided sufficient protection there?
  - leoedin 7y ago
    The other cases discussed are plumbing firms which were limited companies. The fact they complain that its a problem because they can't sell on the business or pass it to their children tells you that the liability is with the business, not the individual. That's actually a pretty good situation to be in. Plumbing strikes me as a very easy business to walk away from - just take your contact list with you and you'll be back in business in no time.
  - matthewheath 7y ago
    Yes - limited liability would shield the owners of those businesses. A personal guarantee would usually be required for something like a bank loan or a line of credit, but not normally for pensions given there are now state-mandated requirements to provide one.
- rolltiide 7y ago
  LLC (and LP)’s are great, when there is any outside capital including debt: all the profits go to you Yours and other people’s money that you used to pay for things becomes a tax deductions for you the worst thing that will happen is that the world’s most prestigious reporters will report that you “lost” a billion dollars and nobody will be the wiser that your personal balance sheet contains free and clear money and assets
- learc83 7y ago
  Creditors are onto this however, and in many cases they will make you sign a personal guarantee.
legulere 7y ago
People are bad at managing retirement money. It is better to have a mandatory distributive model like in Germany. That way retirement grows with the economy, everyone has a retirement and nobody can just misappropiate the money.
- Proziam 7y ago
  Disagree, governments on average are terrible at financial management. The U.S. government has raided such coffers before.
  - legulere 7y ago
    There’s just a small buffer, but not much money lying around in such a system. The redistribution is immediate.
Ididntdothis 7y ago
And how is the little guy who is not a financial wizard supposed to manage their retirement funds? A lot of people will be easy prey for banks and financial advisors.
- rjkennedy98 7y ago
  I hate this response. It comes up for everything. Someone always says we need government to be there for people who can't make good decisions. Where do we draw the line? A certain percentage of people will be too incompetent to function in a free society.
  - Ididntdothis 7y ago
    I hate this response :). Should we also get rid of food safety, airplane safety or health regulations? Considering how long feedback loops are financial decisions a developed society should define a baseline for long term decisions where the individual can rely on some standards. If you make individuals solely responsible for their retirement you will see a lot of people who will be poor in age and a lot of scammers getting rich. I bet already many less people will be able to retire since the move from pensions to 401k.
  - oblio 7y ago
    The thing is, it's not moral to get rid of them. And many of them are in higher places than you'd expect: https://en.wikipedia.org/wiki/Harry_S._Truman#Financial_problems https://en.wikipedia.org/wiki/Harry_S._Truman#Financial_prob... > The former president told House Majority Leader John McCormack in 1957, "Had it not been for the fact that I was able to sell some property that my brother, sister, and I inherited from our mother, I would practically be on relief, but with the sale of that property I am not financially embarrassed."[264] The following year, Congress passed the Former Presidents Act, offering a $25,000 yearly pension to each former president, and it is likely that Truman's financial status played a role in the law's enactment.[265] The only other living former president at the time, Herbert Hoover, also took the pension, even though he did not need the money; reportedly, he did so to avoid embarrassing Truman.[266] If a former US president is dumb enough to go bankrupt repeatedly post-presidency, what hope do you think the average Joe Sixpack has?
jariel 7y ago
No, social security is one of the most important things ever created. Remember it's not so much the 'investing' that matters but the 'saving'. FYI financial services do offer value, the issue is price. 'Big Funds' do the work of investigating and analysing companies etc. also, people have the opportunity to have more 'self managed' retirement as well. The 'big issue' with social security is that it's not properly funded: retirees today are taking money from younger people putting money in, thereby creating a Ponzi-scheme like situation whereby if the population ever shrinks, there's huge unfunded liabilities. Some balancing of that generational issue, some balancing of personal direction would be ideal. The other big issue with retirement is mortgages and housing - people with greater access to financial leverage do much better over time. As long as housing holds out, the bigger mortgage you can take, probably the better you'll be. The 'housing boom' is really just the middle class leveraging over the working class, or people with 'very stable employment' leveraging over those with more volatile employment.

pjmorris 7y ago

It seems likely that US social security is linked with this: "Elderly poverty in the U.S. decreased dramatically during the twentieth century. Between 1960 and 1995, the official poverty rate of those aged 65 and above fell from 35 percent to 10 percent, and research has documented similarly steep declines dating back to at least 1939." [0] [0] - https://www.nber.org/aginghealth/summer04/w10466.html https://www.nber.org/aginghealth/summer04/w10466.html

Spooky23 7y ago
Elderly poverty was once a massive a tragic problem that both impacted the elderly as their ability to work waned, the families of the elderly who attempted to provide care, and the employment market as elderly employees tried to hang on as long as possible. The conservative and libertarian trains of thought value individual agency above public welfare, which is a convenient point of view for people with the means to sustain themselves.
Richard_East 7y ago
At the same time as we have seen decreases in income, wealth and home ownership for younger cohorts when measured at the same age. Its just a transfer of wealth from young to old.
- pjmorris 7y ago
  For reasons of both bias and curiosity, can you point to your sources for this? Philosophically, even if there is no greater effect than transfer of wealth from young to old, pretty much everyone who is now young will one day be old. "Among the savage nations of hunters and fishers, every individual who is able to work is more or less employed in useful labour, and endeavours to provide, as well as he can, the necessaries and conveniencies of life, for himself, and such of his family or tribe as are either too old, or too young, or too infirm, to go a-hunting and fishing. Such nations, however, are so miserably poor, that, from mere want, they are frequently reduced, or at least think themselves reduced, to the necessity sometimes of directly destroying, and sometimes of abandoning their infants, their old people, and those afflicted with lingering diseases, to perish with hunger, or to be devoured by wild beasts. Among civilized and thriving nations, on the contrary, though a great number of people do not labour at all, many of whom consume the produce of ten times, frequently of a hundred times, more labour than the greater part of those who work; yet the produce of the whole labour of the society is so great, that all are often abundantly supplied; and a workman, even of the lowest and poorest order, if he is frugal and industrious, may enjoy a greater share of the necessaries and conveniencies of life than it is possible for any savage to acquire." [0] [0] Adam Smith, "An Inquiry into the Nature and Causes of the Wealth of Nations", intro.
  - Gunax 7y ago
    No generation of social security workers has ever funded itself--each generation has taken out more than it put in. SS is solvent because each subsequent generation has been larger and wealthier than the past. What we have done is voted in politicians who have promised us SS pensions, but not actually funded those pensions. Instead the debt is going to fall upon young adults who were kids/unborn when said promises were made. Yes, everyone gets old. That doesn't entitle us to puts debts on people who had no say in the matter. It's really not much different from me borrowing money and promising my child's future earnings to pay it off.
- zarriak 7y ago
  lol Social security has reduced poverty in every age group. https://www.cbpp.org/research/social-security-keeps-22-million-americans-out-of-poverty-a-state-by-state-analysis?fa=view&id=4037 https://www.cbpp.org/research/social-security-keeps-22-milli... Also if you want to go even further, you should redistribute from 40-60 to 0-25 and 65+ to enable people to properly raise children and the like.

enraged_camel 7y ago

>>> The moral of the story is that governments and businesses should just abolish all pension, superannuation, 401K plans, etc... and let people manage their own retirement. That is definitely not the moral of the story. Aside from that, what exactly do you think a 401k is, if not a vehicle for people to manage their own retirement? The only government involvement in a 401k is non-involvement in the form of allowing you to contribute pre-tax money. And the broker won't be involved either if you're smart and elect to invest in indexes, rather than mutual funds (which can have high fees).

teej 7y ago
Workers do not have control over the fund choices they have in their 401k. Often, low cost index funds aren’t available. This can be fixed by working with HR and the 401k manager but it’s often an uphill battle and isn’t guaranteed to work. Despite all that I agree that GP’s comment to abolish 401ks is throwing the baby out with the bath water.
- ClutchBand 7y ago
  Im certainly living in a bubble, but I've always had the option through my 401k provider to adjust my allocations among a very broad range of options.
  - Gunax 7y ago
    You probably work for a sane private corporation. From what I hear, lots of employers get royally screwed. Namely school districts and other small-gov employers. There is something about public schools that just love buying into high-fee 403b.
- cryptica 7y ago
  In every country there is intentionally a lot of friction if you want to manage your own retirement fund. Often you need to have a minimum amount and you are limited in the kinds of investments that you can make.

cerberusss 7y ago

Maybe in your part of the world. In my part (The Netherlands) we have a decently working system. It's not perfect, but it's one of the best.

nine_k 7y ago

Another lesson is to only take any obligations on your business if you're running an LLC. The plumber boss in question ran unincorporated, so his business's debts are his personal debt. Were he running an LLC, the debt would be on the company only.

justin66 7y ago
I had the same thought. Can anyone in the UK confirm this would have provided sufficient protection there?
- leoedin 7y ago
  The other cases discussed are plumbing firms which were limited companies. The fact they complain that its a problem because they can't sell on the business or pass it to their children tells you that the liability is with the business, not the individual. That's actually a pretty good situation to be in. Plumbing strikes me as a very easy business to walk away from - just take your contact list with you and you'll be back in business in no time.
- matthewheath 7y ago
  Yes - limited liability would shield the owners of those businesses. A personal guarantee would usually be required for something like a bank loan or a line of credit, but not normally for pensions given there are now state-mandated requirements to provide one.
rolltiide 7y ago
LLC (and LP)’s are great, when there is any outside capital including debt: all the profits go to you Yours and other people’s money that you used to pay for things becomes a tax deductions for you the worst thing that will happen is that the world’s most prestigious reporters will report that you “lost” a billion dollars and nobody will be the wiser that your personal balance sheet contains free and clear money and assets
learc83 7y ago
Creditors are onto this however, and in many cases they will make you sign a personal guarantee.

legulere 7y ago

People are bad at managing retirement money. It is better to have a mandatory distributive model like in Germany. That way retirement grows with the economy, everyone has a retirement and nobody can just misappropiate the money.

Proziam 7y ago
Disagree, governments on average are terrible at financial management. The U.S. government has raided such coffers before.
- legulere 7y ago
  There’s just a small buffer, but not much money lying around in such a system. The redistribution is immediate.

Ididntdothis 7y ago

And how is the little guy who is not a financial wizard supposed to manage their retirement funds? A lot of people will be easy prey for banks and financial advisors.

rjkennedy98 7y ago
I hate this response. It comes up for everything. Someone always says we need government to be there for people who can't make good decisions. Where do we draw the line? A certain percentage of people will be too incompetent to function in a free society.
- Ididntdothis 7y ago
  I hate this response :). Should we also get rid of food safety, airplane safety or health regulations? Considering how long feedback loops are financial decisions a developed society should define a baseline for long term decisions where the individual can rely on some standards. If you make individuals solely responsible for their retirement you will see a lot of people who will be poor in age and a lot of scammers getting rich. I bet already many less people will be able to retire since the move from pensions to 401k.
- oblio 7y ago
  The thing is, it's not moral to get rid of them. And many of them are in higher places than you'd expect: https://en.wikipedia.org/wiki/Harry_S._Truman#Financial_problems https://en.wikipedia.org/wiki/Harry_S._Truman#Financial_prob... > The former president told House Majority Leader John McCormack in 1957, "Had it not been for the fact that I was able to sell some property that my brother, sister, and I inherited from our mother, I would practically be on relief, but with the sale of that property I am not financially embarrassed."[264] The following year, Congress passed the Former Presidents Act, offering a $25,000 yearly pension to each former president, and it is likely that Truman's financial status played a role in the law's enactment.[265] The only other living former president at the time, Herbert Hoover, also took the pension, even though he did not need the money; reportedly, he did so to avoid embarrassing Truman.[266] If a former US president is dumb enough to go bankrupt repeatedly post-presidency, what hope do you think the average Joe Sixpack has?

jariel 7y ago

No, social security is one of the most important things ever created. Remember it's not so much the 'investing' that matters but the 'saving'. FYI financial services do offer value, the issue is price. 'Big Funds' do the work of investigating and analysing companies etc. also, people have the opportunity to have more 'self managed' retirement as well. The 'big issue' with social security is that it's not properly funded: retirees today are taking money from younger people putting money in, thereby creating a Ponzi-scheme like situation whereby if the population ever shrinks, there's huge unfunded liabilities. Some balancing of that generational issue, some balancing of personal direction would be ideal. The other big issue with retirement is mortgages and housing - people with greater access to financial leverage do much better over time. As long as housing holds out, the bigger mortgage you can take, probably the better you'll be. The 'housing boom' is really just the middle class leveraging over the working class, or people with 'very stable employment' leveraging over those with more volatile employment.