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I have zero faith the European pension schemes will exist by the time I’m 65 (~30 years). I basically don’t count it towards my retirement planning.

bluGill 5y ago
Nobody should have any faith in anything in life that far in advance. You hedge your bets and save anyway even though you can't know if you will live that long, nor if the political reality will allow what currently looks like the best choice will work out that way. Today in the US the Roth IRA looks like a great investment. I remember when they first came out my dad transfering everything to one even thoguh as he said then "I have to believe they will change the laws and so by the time I retire the tax savings won't happen". So far the laws still make it a good deal, but there is always the risk that the promise gets broken.
- rorykoehler 5y ago
  It's simple maths. The pension fund works similar to a ponzi scheme in that it can only sustain itself if there are enough new workers paying in. We have an aging population with massively declining birthrates (inverted population pyramid [1]). Unless the next gen are unbelievably high earning there is no way it can continue. [1] https://www.worldlifeexpectancy.com/germany-population-pyramid https://www.worldlifeexpectancy.com/germany-population-pyram...
  - bluGill 5y ago
    The simple math is wrong because it doesn't account for the future which might or might not have some other consideration that you don't even know of.
    - rorykoehler 5y ago
      Well yes I kind of eluded to that. It's basically gambling either way but looking at the political situation in Europe I fear any response to changing environments will be reactionary and too little too late.
  - throw0101a 5y ago
    > The pension fund works similar to a ponzi scheme in that it can only sustain itself if there are enough new workers paying in. It does not have to be like this. Canada's used to be this way, but several decades ago they saw the problems coming and changed it: > By the mid-1990s, the 3.6 per cent contribution rate was not sufficient to keep up with Canada's aging population.[10] and it was concluded that the "pay-as-you-go" structure would lead to excessively high contribution rates within 20 years or so, due to Canada's changing demographics, increased life expectancy of Canadians, a changing economy, benefit improvements, and increased usage of disability benefits (all as referenced in the Chief Actuary's study of April 2007, noted above). The same study reports that the reserve fund was expected to run out by 2015. This impending pension crisis sparked an extensive review by the federal and provincial governments in 1996. As a part of the major review process, the federal government actively conducted consultations with the Canadian public to solicit suggestions, recommendations, and proposals on how the CPP could be restructured to achieve sustainability once again. As a direct result of this public consultation process and internal review of the CPP, the following key changes were proposed and jointly approved by the Federal and provincial governments in 1997: […] * https://en.wikipedia.org/wiki/Canada_Pension_Plan#1996_reforms https://en.wikipedia.org/wiki/Canada_Pension_Plan#1996_refor... There were a further update in 2017. It should be noted that the CPP was never meant to be the sole source of income in retirement, even when it was originally set up. There were provisions for pensions and private savings (RRSPs) as well. The combination of all of these was to fund people's retirement.
- dan-robertson 5y ago
  30 years ago was 1991. In many ways a lot of things have changed since then but if you had put savings then into something reasonably simple like a broad-ranged mutual fund, or a mix of an equity and a fixed income fund, you’d basically be fine. If you had bought a big house it depends on the location. Roth IRAs haven’t been around for 30 years but even if you do have to pay tax, you still get all that compounding happening before this imagined tax. It probably wouldn’t be worse than just having a taxable account and that would be fine anyway. One other thing to keep in mind is that older people vote more so voting populations skew a lot older than the regular population. I find it hard to imagine such people voting for anything terrible for the old.

bluGill 5y ago

Nobody should have any faith in anything in life that far in advance. You hedge your bets and save anyway even though you can't know if you will live that long, nor if the political reality will allow what currently looks like the best choice will work out that way. Today in the US the Roth IRA looks like a great investment. I remember when they first came out my dad transfering everything to one even thoguh as he said then "I have to believe they will change the laws and so by the time I retire the tax savings won't happen". So far the laws still make it a good deal, but there is always the risk that the promise gets broken.

rorykoehler 5y ago
It's simple maths. The pension fund works similar to a ponzi scheme in that it can only sustain itself if there are enough new workers paying in. We have an aging population with massively declining birthrates (inverted population pyramid [1]). Unless the next gen are unbelievably high earning there is no way it can continue. [1] https://www.worldlifeexpectancy.com/germany-population-pyramid https://www.worldlifeexpectancy.com/germany-population-pyram...
- bluGill 5y ago
  The simple math is wrong because it doesn't account for the future which might or might not have some other consideration that you don't even know of.
  - rorykoehler 5y ago
    Well yes I kind of eluded to that. It's basically gambling either way but looking at the political situation in Europe I fear any response to changing environments will be reactionary and too little too late.
- throw0101a 5y ago
  > The pension fund works similar to a ponzi scheme in that it can only sustain itself if there are enough new workers paying in. It does not have to be like this. Canada's used to be this way, but several decades ago they saw the problems coming and changed it: > By the mid-1990s, the 3.6 per cent contribution rate was not sufficient to keep up with Canada's aging population.[10] and it was concluded that the "pay-as-you-go" structure would lead to excessively high contribution rates within 20 years or so, due to Canada's changing demographics, increased life expectancy of Canadians, a changing economy, benefit improvements, and increased usage of disability benefits (all as referenced in the Chief Actuary's study of April 2007, noted above). The same study reports that the reserve fund was expected to run out by 2015. This impending pension crisis sparked an extensive review by the federal and provincial governments in 1996. As a part of the major review process, the federal government actively conducted consultations with the Canadian public to solicit suggestions, recommendations, and proposals on how the CPP could be restructured to achieve sustainability once again. As a direct result of this public consultation process and internal review of the CPP, the following key changes were proposed and jointly approved by the Federal and provincial governments in 1997: […] * https://en.wikipedia.org/wiki/Canada_Pension_Plan#1996_reforms https://en.wikipedia.org/wiki/Canada_Pension_Plan#1996_refor... There were a further update in 2017. It should be noted that the CPP was never meant to be the sole source of income in retirement, even when it was originally set up. There were provisions for pensions and private savings (RRSPs) as well. The combination of all of these was to fund people's retirement.
dan-robertson 5y ago
30 years ago was 1991. In many ways a lot of things have changed since then but if you had put savings then into something reasonably simple like a broad-ranged mutual fund, or a mix of an equity and a fixed income fund, you’d basically be fine. If you had bought a big house it depends on the location. Roth IRAs haven’t been around for 30 years but even if you do have to pay tax, you still get all that compounding happening before this imagined tax. It probably wouldn’t be worse than just having a taxable account and that would be fine anyway. One other thing to keep in mind is that older people vote more so voting populations skew a lot older than the regular population. I find it hard to imagine such people voting for anything terrible for the old.