6 ms·

i strongly oppose the American approach to pensions, which is regrettably spreading worldwide. relying on private savings to finance retirement is highly risky

by kome 2y ago

i strongly oppose the American approach to pensions, which is regrettably spreading worldwide. relying on private savings to finance retirement is highly risky, and this is the crux of the article in question. pension systems should be administered through public programs, not turned into moralistic contests in which individuals are penalized if their investments fail for any reason (and it's only their fault... while it's clear it's a social failure). basic solidarity is essential in ensuring both the health of retirees and the fulfillment of reasonable expectations for a secure retirement.

KK7NIL 2y ago
Public pension schemes always end up being turned into Ponzi schemes for short term political gain, especially as birthrates keep dropping. US social security and Medicare are a great example of this but you'll find similar examples throughout the western world. In contrast private retirement plans put the individual in charge of their own retirement (why should the government be telling you when to retire?) and doesn't put a financial burden on unborn generations.
- pjc50 2y ago
  > financial burden on unborn generations. The money always has to come from the labour of the future somehow. So you get the same burden laundered through the private sector, such as young people having to pay extortionate rents to retired landlords.
  - dsheets 2y ago
    Why must the money come from future labor? Money can be saved and invested. Let them eat their capital and not their young.
    - kome 2y ago
      investment is literally future labor expectations. and a risk. in case of crisis the gov routinely starts bailouts and save the financial markets with interest rate operations or open market operations. those operations have deep re-distributive implications. don't think they are free.
      - KK7NIL 2y ago
        > investment is literally future labor expectations. and a risk. This is simply Marxist crap and outright untrue. > in case of crisis the gov routinely starts bailouts and save the financial markets with interest rate operations or open market operations. those operations have deep re-distributive implications This is a rather new phenomenon and not at all necessary for profitable private investment. It's really completely irrelevant to the discussion.
        ben_w 2y ago
        > This is simply Marxist crap Not only but also. Adam Smith counted labour this way, along with capital and natural resources. Until we're all rendered unemployable by AI[0], there's still human labour doing stuff in the system — the bedrock foundation for all the rest. [0] 2^(1 + roll a D4) years? I expect it to be relevant on the timescale of me reaching pension age, but between Scylla[1] and Charybdis[2] I'm not at all certain. [1] smoke-and-mirrors marketing [2] exponential growth
      - dsheets 2y ago
        If you redefine everything as deriving value from labor and labor alone, OK. Government intervention is not a given, is not universal, and its impact on labor isn’t unique. There are other investment vehicles besides equity and other ways to take value from past into future that are neither garnishing the wages of children and grandchildren (most current state systems) nor investing in artificially inflated markets. Just as a thought experiment, consider if all state pension contributions were just used to immediately purchase gold on the open market that was then put into a vault labelled with the year of birth of the contributor. Please explain how this (obviously naive) strategy is dependent on future labor. As far as I can tell, this system would be completely market-based and future labor would likely benefit as their “gold” might be cheaper as there would be less demographic demand.
        ben_w 2y ago
        > If you redefine everything as deriving value from labor and labor alone "Alone" seems to be an unnecessary addition for the problem to exist. And until the AI really can take all our jobs, it's not a redefinition, labour is one of several pillars alongside capital, though specifics vary depending on your school of economics: https://en.wikipedia.org/wiki/Factors_of_production https://en.wikipedia.org/wiki/Factors_of_production > Just as a thought experiment, consider if all state pension contributions were just used to immediately purchase gold on the open market that was then put into a vault labelled with the year of birth of the contributor. Please explain how this (obviously naive) strategy is dependent on future labor. As far as I can tell, this system would be completely market-based and future labor would likely benefit as their “gold” might be cheaper as there would be less demographic demand. Consider this experiment on an island with just yourself. You bury the gold. You reach pension age, and stop working. You dig up the gold. You now have gold. What do you spend it on? There's nobody offering services, regardless of how much you offer, therefore cost of goods, services, and other assets has a divide by zero error and inflation is asymptotically infinite. Similar arguments work when the working population shrinks even if not becoming literally zero: unless technological improvements happen faster than the workforce shrinks, which is complex because tech affects different products at different rates, shrinking populations cause your model to get inflation even with gold as a currency.
    - deleted 2y ago
      [deleted]
  - kome 2y ago
    great point.
  - KK7NIL 2y ago
    This is simply not true, my investments make money from profitable business operating today, not "labor of the future". Maybe you should stop reading Marxist economists.
    - Delk 2y ago
      How will those businesses continue to turn a profit without people doing productive work for them?
  - wakawaka28 2y ago
    It's not the same. If I save money it is no burden to anyone else. If I invest it, then the people receiving my investment do so voluntarily and we all make money or lose it. I have no power to exact a burden on anyone else through these simple mechanisms. The state on the other hand has virtually unlimited power to tax us into oblivion. >such as young people having to pay extortionate rents to retired landlords. There is a pathological case here when it comes to rent, but we are far from that. Rent is only extortion when there is widespread collusion to fix the prices. Otherwise it is supply and demand. If inflation and high demand have made prices unaffordable, it's not your landlord's fault. Landlords also provide a service (strange as that may sound), and aren't stealing from anyone. If you had a profitable business, you could compete with the property sector for investment. Unfortunately we have outsourced many profitable things in the West, because we're competing with slave labor.
- deleted 2y ago
  [deleted]
- kome 2y ago
  this comment can be summarized like this: https://i.redd.it/jbab7jrhvt211.gif https://i.redd.it/jbab7jrhvt211.gif after three major financial crises in the past 20 years, it’s hard to call private finance “safe” from ponzi-like risks. more than a quarter of Americans have no retirement savings at all, and the 401(k) balance for near-retirees often falls well below $100,000. but it's the logic of the argument that is faulty: declining birthrates also hurt private markets, which rely on a growing workforce just as public pensions do. do you think finance is somewhat magical? if there is no growth also the financial markets won't grow. pensions shouldn't be about growth, but they are mainly about redistribution. if we dismiss public pensions as a ponzi scheme, then by the same logic, private plans—completely at the mercy of market swings—could be called ponzi too, except they often leave those who earn less with nowhere to turn when things collapse.
  - KK7NIL 2y ago
    > declining birthrates also hurt private markets, which rely on a growing workforce just as public pensions do. Right, it's well known that the US' demographics are the foundation for its strong economy, not advancements in productivity and technology. /s > if there is no growth also the financial markets won't grow. Financial markets don't need to grow for your investments to pay off. Investing into growth stocks is very popular now a days but value stocks (which might not grow at all but have profitable operations) and fixed income are perfectly good options too. > if we dismiss public pensions as a ponzi scheme, then by the same logic, private plans—completely at the mercy of market swings Some of them can be, the difference is that public pensions are a Ponzi scheme I'm legally forced to contribute to and have little say in. Not so for private plans.
- EE84M3i 2y ago
  > In contrast private retirement plans put the individual in charge of their own retirement (why should the government be telling you when to retire?) What countries let you do this? I thought 401ks, for example, do not generally allow tax free early withdrawals.
  - wakawaka28 2y ago
    A 401k allows no tax-free withdrawals. On top of the taxes there are additional penalties if you take the money early, with few exceptions.
  - javagram 2y ago
    Early retirement can be done through https://www.irs.gov/retirement-plans/substantially-equal-periodic-payments#q2 https://www.irs.gov/retirement-plans/substantially-equal-per...
    - ndriscoll 2y ago
      A better, more flexible strategy is Roth conversion laddering: https://www.investopedia.com/how-roth-conversion-ladder-works-5214808 https://www.investopedia.com/how-roth-conversion-ladder-work...
endymi0n 2y ago
I agree, but the German one is also pretty dodgy: Basically pay the rents of the old generation from a share of the working one. It's already coming apart due to demographic change and the next few years will be disastrous. If there's an approach to model imho it's the Norwegian one: Actually backed by stocks, but managed and distributed by a central investment fund. It's far easier if the country is smart enough to centralize oil profits as well though...
- Ekaros 2y ago
  Failure in most of these systems were that original contributions were never sufficiently high to actually cover the future outgoings. Whatever those boomers that think they paid say...
  - tonyedgecombe 2y ago
    More fundamentally the ratio of workers to retirees has shifted. No matter how you fund pensions this will create challenges.
    - arkh 2y ago
      When implemented those scheme goal was to make sure people who could not work anymore would have a decent end of life. The problem is the baby boomer generation transformed it to the point retirement was "when you started living your real life". People being retired perfectly healthy for more time than what they worked is not an exception for them. And that generation managed to pile more shit on the next generations: regulations to make housing more expensive, requiring more education for every job meaning people start working later, outsourcing has much as possible. And not having replacement level children. So now people have to pay a lot more for those privileged generations. Meaning they have less available money to get a stable situation, meaning even less children so the problem will go worse and worse. At least one generation will have to be sacrificed to have a chance for ones after them. Will the Millenials accept to be it, or will they pull a boomer?
- lm28469 2y ago
YWall39 2y ago
European pensions are predominantly unfunded, and promises typically amount to 3.5 times GDP. The prevailing view among those who have looked at this is that nobody under the age of 40 will get anything close to what is promised. The only exception is Netherlands, and maybe Sweden. Leaving private pensions the only option.
- vkou 2y ago
  Basic demographic analysis will point out that in a world with a declining and aging population, private investments are probably not going to be doing so hot, either. Wealth creation requires work. Retirees don't work, but still require a portion of the wealth that workers create to live. It doesn't matter if it's a government pension or a 401K investment, a declining worker population will mean that you'll have the exact same retirement problem. Government pension require people working and being productive and paying taxes. Your investments will only produce returns if people are working and being productive (in which case they are also probably paying taxes). Unless, you know, you do some wealth redistribution, away from people who own all the means of production, to the people who don't. Then they former will be the ones with a problem. It won't generate more net wealth, but it would certainly prevent a large portion of it from being locked up in the hands of a small elite. Or, alternatively, more automation and high taxes on robots. Privatizing the problem of pensions is just an accounting trick. It doesn't actually solve the problem.
  - YWall39 2y ago
    I am more optimistic. I always suggest automatically dropping x% of ones income into an index fund. At the least it will hedge against the very real chance governments will not be able to deliver on their promises.
    - vkou 2y ago
      > index fund What wealth will your index fund produce when nobody is working, and nobody has the money to buy stuff? However you answer that question, I'll retort with - 'And exactly what will stop the government from taxing that wealth, to keep pensions working?' > At the least it will hedge against the very real chance governments will not be able to deliver on their promises. That's a fair point, there's the very real possibility that governments will refuse to take the steps necessary to deliver on those promises. A good way to ensure that they won't shirk from that is continuing to elect the kind of government that will. Don't vote for people who seek to destroy public systems.
dutchbookmaker 2y ago
Funny that I know quite a few baby boomers and every single one has a pension, a 401k, maybe a roth AND gets social security and medicare. Not a single one has a college degree. All life long factory workers. Some alcoholics. All they did was show up to the factory job. I know my father hasn't read a book in at least 50 years and he might not have read any in school either. They have no real expenses either besides going out to eat, vacations and sports gambling. Legal structures in place so that the nursing home will be on the tax payer if needed. Anyone of retirement age right now that is not doing well in America REALLY fucked up in life. Of course, this is all being paid for on the tab of younger people. It is a brilliant system if your old.
- PopAlongKid 2y ago
  >They have no real expenses either besides going out to eat, vacations and sports gambling. Then you don't really "know" boomers. First, there are tax expenses on the pension/401k/Soc Sec. Rent or homeowner maintenance/taxes/insurance are huge, even without a mortgage. Transportation--how do they get to the eat-out place? Medicare does not cover dental or vision, and you can usually expect several crowns/root canals and eye cataracts during this period. Electric/natural gas/internet utilities, even water and trash collection, are all rising faster than inflation. Add in possible veterinary bills, and financial aid to adult children who need it, and you have plenty of expenses. >Anyone of retirement age right now that is not doing well in America REALLY fucked up in life. No need to explain how completely wrong and ignorant this assessment is.
  - S_Bear 2y ago
    My parents are poor boomers that could have been rich boomers if they had any self control at all. Instead they pissed away opportunities and money and now they sit and complain they don't have enough. If they had to live as I do, they'd be wealthy due to how high their earning power was in the 70s and 80s.
CincinnatiMan 2y ago
With a pension system, if I die shortly after retiring, my heirs and I get nothing. Whereas if I save for my own retirement with a 401k, my heirs would get that money.
CobaltFire 2y ago
Around 2011 a report from the CBO came across my desk. It was a study regarding how long US military retirees lived after retirement. Two key findings were in the report: Career Military lived (this is from memory but should be very close to accurate) 7-15 years longer than their civilian cohort. The difference in longevity tracked so strongly with rank they had to run the numbers several times and make sure there weren’t errors. As in, E5 retirees were the shortest lived, while O6+ were the longest. They identified several possible reasons for the longer lifespans including availability of care and adherence to care. They also identified several possible reasons for the difference between ranks including obesity, smoking, and alcohol use (all had the same trends). That report likely led to us reducing the military pension, which has had a fairly impressive negative impact on retention. All of that to say that defined benefits plans are EXPENSIVE and they cut those benefits 20% due to people living ~40 years retired vs the budgeted ~25.
- HWR_14 2y ago
  I thought the military could retire with a full pension after 20 years. Wouldn't that imply that they have an expected retirement of around 40 years?
  - datadrivenangel 2y ago
    People living closer to 80 than 65, assuming enlisting at ~20 and retiring at 40.
    - HWR_14 2y ago
      But 65 is an unrealistically low life expectancy for someone retiring from the military.
      - CobaltFire 2y ago
        Little late here, but it wasn’t really when the system was put in place. Smoking, alcoholism, poorer medical care, etc. likely meant a much shorter lifespan.

by kome 2y ago

KK7NIL 2y ago

Public pension schemes always end up being turned into Ponzi schemes for short term political gain, especially as birthrates keep dropping. US social security and Medicare are a great example of this but you'll find similar examples throughout the western world. In contrast private retirement plans put the individual in charge of their own retirement (why should the government be telling you when to retire?) and doesn't put a financial burden on unborn generations.

pjc50 2y ago
> financial burden on unborn generations. The money always has to come from the labour of the future somehow. So you get the same burden laundered through the private sector, such as young people having to pay extortionate rents to retired landlords.
- dsheets 2y ago
  Why must the money come from future labor? Money can be saved and invested. Let them eat their capital and not their young.
  - kome 2y ago
    investment is literally future labor expectations. and a risk. in case of crisis the gov routinely starts bailouts and save the financial markets with interest rate operations or open market operations. those operations have deep re-distributive implications. don't think they are free.
    - KK7NIL 2y ago
      > investment is literally future labor expectations. and a risk. This is simply Marxist crap and outright untrue. > in case of crisis the gov routinely starts bailouts and save the financial markets with interest rate operations or open market operations. those operations have deep re-distributive implications This is a rather new phenomenon and not at all necessary for profitable private investment. It's really completely irrelevant to the discussion.
      - ben_w 2y ago
        > This is simply Marxist crap Not only but also. Adam Smith counted labour this way, along with capital and natural resources. Until we're all rendered unemployable by AI[0], there's still human labour doing stuff in the system — the bedrock foundation for all the rest. [0] 2^(1 + roll a D4) years? I expect it to be relevant on the timescale of me reaching pension age, but between Scylla[1] and Charybdis[2] I'm not at all certain. [1] smoke-and-mirrors marketing [2] exponential growth
    - dsheets 2y ago
      If you redefine everything as deriving value from labor and labor alone, OK. Government intervention is not a given, is not universal, and its impact on labor isn’t unique. There are other investment vehicles besides equity and other ways to take value from past into future that are neither garnishing the wages of children and grandchildren (most current state systems) nor investing in artificially inflated markets. Just as a thought experiment, consider if all state pension contributions were just used to immediately purchase gold on the open market that was then put into a vault labelled with the year of birth of the contributor. Please explain how this (obviously naive) strategy is dependent on future labor. As far as I can tell, this system would be completely market-based and future labor would likely benefit as their “gold” might be cheaper as there would be less demographic demand.
      - ben_w 2y ago
        > If you redefine everything as deriving value from labor and labor alone "Alone" seems to be an unnecessary addition for the problem to exist. And until the AI really can take all our jobs, it's not a redefinition, labour is one of several pillars alongside capital, though specifics vary depending on your school of economics: https://en.wikipedia.org/wiki/Factors_of_production https://en.wikipedia.org/wiki/Factors_of_production > Just as a thought experiment, consider if all state pension contributions were just used to immediately purchase gold on the open market that was then put into a vault labelled with the year of birth of the contributor. Please explain how this (obviously naive) strategy is dependent on future labor. As far as I can tell, this system would be completely market-based and future labor would likely benefit as their “gold” might be cheaper as there would be less demographic demand. Consider this experiment on an island with just yourself. You bury the gold. You reach pension age, and stop working. You dig up the gold. You now have gold. What do you spend it on? There's nobody offering services, regardless of how much you offer, therefore cost of goods, services, and other assets has a divide by zero error and inflation is asymptotically infinite. Similar arguments work when the working population shrinks even if not becoming literally zero: unless technological improvements happen faster than the workforce shrinks, which is complex because tech affects different products at different rates, shrinking populations cause your model to get inflation even with gold as a currency.
  - deleted 2y ago
    [deleted]
- kome 2y ago
  great point.
- KK7NIL 2y ago
  This is simply not true, my investments make money from profitable business operating today, not "labor of the future". Maybe you should stop reading Marxist economists.
  - Delk 2y ago
    How will those businesses continue to turn a profit without people doing productive work for them?
- wakawaka28 2y ago
  It's not the same. If I save money it is no burden to anyone else. If I invest it, then the people receiving my investment do so voluntarily and we all make money or lose it. I have no power to exact a burden on anyone else through these simple mechanisms. The state on the other hand has virtually unlimited power to tax us into oblivion. >such as young people having to pay extortionate rents to retired landlords. There is a pathological case here when it comes to rent, but we are far from that. Rent is only extortion when there is widespread collusion to fix the prices. Otherwise it is supply and demand. If inflation and high demand have made prices unaffordable, it's not your landlord's fault. Landlords also provide a service (strange as that may sound), and aren't stealing from anyone. If you had a profitable business, you could compete with the property sector for investment. Unfortunately we have outsourced many profitable things in the West, because we're competing with slave labor.
deleted 2y ago
[deleted]
kome 2y ago
this comment can be summarized like this: https://i.redd.it/jbab7jrhvt211.gif https://i.redd.it/jbab7jrhvt211.gif after three major financial crises in the past 20 years, it’s hard to call private finance “safe” from ponzi-like risks. more than a quarter of Americans have no retirement savings at all, and the 401(k) balance for near-retirees often falls well below $100,000. but it's the logic of the argument that is faulty: declining birthrates also hurt private markets, which rely on a growing workforce just as public pensions do. do you think finance is somewhat magical? if there is no growth also the financial markets won't grow. pensions shouldn't be about growth, but they are mainly about redistribution. if we dismiss public pensions as a ponzi scheme, then by the same logic, private plans—completely at the mercy of market swings—could be called ponzi too, except they often leave those who earn less with nowhere to turn when things collapse.
- KK7NIL 2y ago
  > declining birthrates also hurt private markets, which rely on a growing workforce just as public pensions do. Right, it's well known that the US' demographics are the foundation for its strong economy, not advancements in productivity and technology. /s > if there is no growth also the financial markets won't grow. Financial markets don't need to grow for your investments to pay off. Investing into growth stocks is very popular now a days but value stocks (which might not grow at all but have profitable operations) and fixed income are perfectly good options too. > if we dismiss public pensions as a ponzi scheme, then by the same logic, private plans—completely at the mercy of market swings Some of them can be, the difference is that public pensions are a Ponzi scheme I'm legally forced to contribute to and have little say in. Not so for private plans.
EE84M3i 2y ago
> In contrast private retirement plans put the individual in charge of their own retirement (why should the government be telling you when to retire?) What countries let you do this? I thought 401ks, for example, do not generally allow tax free early withdrawals.
- wakawaka28 2y ago
  A 401k allows no tax-free withdrawals. On top of the taxes there are additional penalties if you take the money early, with few exceptions.
- javagram 2y ago
  Early retirement can be done through https://www.irs.gov/retirement-plans/substantially-equal-periodic-payments#q2 https://www.irs.gov/retirement-plans/substantially-equal-per...
  - ndriscoll 2y ago
    A better, more flexible strategy is Roth conversion laddering: https://www.investopedia.com/how-roth-conversion-ladder-works-5214808 https://www.investopedia.com/how-roth-conversion-ladder-work...

endymi0n 2y ago

I agree, but the German one is also pretty dodgy: Basically pay the rents of the old generation from a share of the working one. It's already coming apart due to demographic change and the next few years will be disastrous. If there's an approach to model imho it's the Norwegian one: Actually backed by stocks, but managed and distributed by a central investment fund. It's far easier if the country is smart enough to centralize oil profits as well though...

Ekaros 2y ago
Failure in most of these systems were that original contributions were never sufficiently high to actually cover the future outgoings. Whatever those boomers that think they paid say...
- tonyedgecombe 2y ago
  More fundamentally the ratio of workers to retirees has shifted. No matter how you fund pensions this will create challenges.
  - arkh 2y ago
    When implemented those scheme goal was to make sure people who could not work anymore would have a decent end of life. The problem is the baby boomer generation transformed it to the point retirement was "when you started living your real life". People being retired perfectly healthy for more time than what they worked is not an exception for them. And that generation managed to pile more shit on the next generations: regulations to make housing more expensive, requiring more education for every job meaning people start working later, outsourcing has much as possible. And not having replacement level children. So now people have to pay a lot more for those privileged generations. Meaning they have less available money to get a stable situation, meaning even less children so the problem will go worse and worse. At least one generation will have to be sacrificed to have a chance for ones after them. Will the Millenials accept to be it, or will they pull a boomer?
lm28469 2y ago

YWall39 2y ago

European pensions are predominantly unfunded, and promises typically amount to 3.5 times GDP. The prevailing view among those who have looked at this is that nobody under the age of 40 will get anything close to what is promised. The only exception is Netherlands, and maybe Sweden. Leaving private pensions the only option.

vkou 2y ago
Basic demographic analysis will point out that in a world with a declining and aging population, private investments are probably not going to be doing so hot, either. Wealth creation requires work. Retirees don't work, but still require a portion of the wealth that workers create to live. It doesn't matter if it's a government pension or a 401K investment, a declining worker population will mean that you'll have the exact same retirement problem. Government pension require people working and being productive and paying taxes. Your investments will only produce returns if people are working and being productive (in which case they are also probably paying taxes). Unless, you know, you do some wealth redistribution, away from people who own all the means of production, to the people who don't. Then they former will be the ones with a problem. It won't generate more net wealth, but it would certainly prevent a large portion of it from being locked up in the hands of a small elite. Or, alternatively, more automation and high taxes on robots. Privatizing the problem of pensions is just an accounting trick. It doesn't actually solve the problem.
- YWall39 2y ago
  I am more optimistic. I always suggest automatically dropping x% of ones income into an index fund. At the least it will hedge against the very real chance governments will not be able to deliver on their promises.
  - vkou 2y ago
    > index fund What wealth will your index fund produce when nobody is working, and nobody has the money to buy stuff? However you answer that question, I'll retort with - 'And exactly what will stop the government from taxing that wealth, to keep pensions working?' > At the least it will hedge against the very real chance governments will not be able to deliver on their promises. That's a fair point, there's the very real possibility that governments will refuse to take the steps necessary to deliver on those promises. A good way to ensure that they won't shirk from that is continuing to elect the kind of government that will. Don't vote for people who seek to destroy public systems.

dutchbookmaker 2y ago

Funny that I know quite a few baby boomers and every single one has a pension, a 401k, maybe a roth AND gets social security and medicare. Not a single one has a college degree. All life long factory workers. Some alcoholics. All they did was show up to the factory job. I know my father hasn't read a book in at least 50 years and he might not have read any in school either. They have no real expenses either besides going out to eat, vacations and sports gambling. Legal structures in place so that the nursing home will be on the tax payer if needed. Anyone of retirement age right now that is not doing well in America REALLY fucked up in life. Of course, this is all being paid for on the tab of younger people. It is a brilliant system if your old.

PopAlongKid 2y ago
>They have no real expenses either besides going out to eat, vacations and sports gambling. Then you don't really "know" boomers. First, there are tax expenses on the pension/401k/Soc Sec. Rent or homeowner maintenance/taxes/insurance are huge, even without a mortgage. Transportation--how do they get to the eat-out place? Medicare does not cover dental or vision, and you can usually expect several crowns/root canals and eye cataracts during this period. Electric/natural gas/internet utilities, even water and trash collection, are all rising faster than inflation. Add in possible veterinary bills, and financial aid to adult children who need it, and you have plenty of expenses. >Anyone of retirement age right now that is not doing well in America REALLY fucked up in life. No need to explain how completely wrong and ignorant this assessment is.
- S_Bear 2y ago
  My parents are poor boomers that could have been rich boomers if they had any self control at all. Instead they pissed away opportunities and money and now they sit and complain they don't have enough. If they had to live as I do, they'd be wealthy due to how high their earning power was in the 70s and 80s.

CincinnatiMan 2y ago

With a pension system, if I die shortly after retiring, my heirs and I get nothing. Whereas if I save for my own retirement with a 401k, my heirs would get that money.

CobaltFire 2y ago

Around 2011 a report from the CBO came across my desk. It was a study regarding how long US military retirees lived after retirement. Two key findings were in the report: Career Military lived (this is from memory but should be very close to accurate) 7-15 years longer than their civilian cohort. The difference in longevity tracked so strongly with rank they had to run the numbers several times and make sure there weren’t errors. As in, E5 retirees were the shortest lived, while O6+ were the longest. They identified several possible reasons for the longer lifespans including availability of care and adherence to care. They also identified several possible reasons for the difference between ranks including obesity, smoking, and alcohol use (all had the same trends). That report likely led to us reducing the military pension, which has had a fairly impressive negative impact on retention. All of that to say that defined benefits plans are EXPENSIVE and they cut those benefits 20% due to people living ~40 years retired vs the budgeted ~25.

HWR_14 2y ago
I thought the military could retire with a full pension after 20 years. Wouldn't that imply that they have an expected retirement of around 40 years?
- datadrivenangel 2y ago
  People living closer to 80 than 65, assuming enlisting at ~20 and retiring at 40.
  - HWR_14 2y ago
    But 65 is an unrealistically low life expectancy for someone retiring from the military.
    - CobaltFire 2y ago
      Little late here, but it wasn’t really when the system was put in place. Smoking, alcoholism, poorer medical care, etc. likely meant a much shorter lifespan.