4 ms·

What's most interesting here is that the promoted solutions are untested. We won't know how well IRA/401k etc works until we get a couple of generations under o

What's most interesting here is that the promoted solutions are untested. We won't know how well IRA/401k etc works until we get a couple of generations under our belt who use that system instead of pensions. So, unfortunately, I'm thinking the GenX'ers and the Millennials will be the involuntary guinea pigs as they age into retirement. If it doesn't work, there will be little we can do for those generations of retirees. I can't say whether or not individual funded retirement will work? But just back of the napkin sort of guesstimate at whether a lifetime of saving plus interest can net you 30 years of livable yearly interest or drawdowns (assuming social security) + the necessary medicare supplements/or health insurance? I don't know? It seems unlikely. And again, all that is under the rosy scenario where social security still exists. If social security is changed, the picture is even more bleak. I could be wrong, but I think people are going to need to acclimate themselves to working through much of retirement. How much will likely depend on how well you did saving. But I suspect a sizable majority of GenX and Millennials will have no choice in the matter. Watching the current retirees may make us sad, but these scenarios may be nothing compared to what's coming.

cogman10 2y ago
They are tested and the results have already been a disaster. People don't save for 401ks. And why would they? The fact is, when you are living paycheck to paycheck, retirement takes a backseat to rent. And even when they do save, we are currently looking at a market downturn. The last 5 years have been pretty rough in terms of the stock market with returns being much lower than you might count on. There is an option, it's fully funding social security by lifting the income cap. It's silly that you get a tax break on SS simply by making too much money. The biggest threats to the average person being able to retire is the government gutting, dismantling, and/or privatizing Medicaid, Medicare, and social security. With those gone, yeah grandma is going to have to work in the Foxconn factory to avoid eating catfood. It's not completely hopeless, but people really need to be informed on this. We are running headlong into this problem because neither party wants to raise taxes to fund these essential programs. This is a government problem to solve which is best solved by a government agency. It will be a disaster if private corporate leaches get involved, matching the current state of healthcare for anyone not disabled or younger than 65. For anyone that advocates UBI. That's what social security is, UBI (with an age restriction).
- raymondgh 2y ago
  My iOS Stocks app says S&P 500 is up 146.23% over the last 5 years. But isn’t that much too short an interval to evaluate in the first place in consideration for retirement?
  - dmoy 2y ago
    That doesn't even include dividends. It's more like 166% after dividends But also yes it's too short of an interval for retirement savings
  - blargey 2y ago
    “Up 146%” is either because your start time is during the 2020 market crash, or the display is actually “150% of the starting value” (up 50%).
- ryandrake 2y ago
  I know people in my age group (GenX) who have not saved even a penny for retirement. And these guys are in good jobs in tech with access to generous 401ks. They just spend their whole paychecks, and more via borrowing. If these guys (who definitely have the means to) won't save, I don't understand why we think "personal savings" is overall a viable system for taking care of the elderly. There is going to be a huge amount of either 1. misery or 2. bailouts in the next 30 years as GenX and Millennials start retiring.
  - lotsofpulp 2y ago
    Everyone already has mandatory defined benefit pensions in the US. It’s called Social Security.
- dmoy 2y ago
  People definitely don't save enough for retirement under the current system. The median household entering retirement right now has like $150k, which translates to very little on top of social security. So now without pensions, people's entire retirement strategy is social security and maybe selling a primary residence. Elder poverty is already high, and will get much higher in the future > The last 5 years The last 5 years were freaking amazing for investments. Even including the current small downturn, s&p 500 total returns are up like +160% in the last 5 years. After factoring inflation it's more like +80% or so? Which is over 10% real returns per year, which is wayyyyy above historical average (closer to 5-7% real returns).
srdesigner 2y ago
Good comment. I would suggest if you get to the point where you want to really analyze your probability of success, you try one of the retirement modeling apps (I use and really like Boldin). It was VERY eye opening for me in a good way. I have verified my results with several other sources. Its no guarantee of course, but I got some peace-of-mind from doing this.
mandevil 2y ago
I have two thoughts. A) Retirement creates a better equilibrium, for the economy as a whole. Not just because you flush all the people who have lost a step and yet have enough social/economic power to hide it out of making decisions, but because it clears the way for ambitious younger people who are getting blocked out of advancement opportunities because the generation ahead of them just isn't #%@#$ leaving. Not that I have any experience with that, obviously. You can have a equilibrium where everyone works until they physically can't any more, but that's simply a worse one, for almost everyone. B) If we're going to have retirement, it is a better equilibrium for our economy as a whole to do it through some sort of enforced group savings plans rather than individuals. The big risk with retirement is outliving your money. If you have a group of a hundred thousand people, you can statistically infer that X% of them will be dead at age 75, and X+Y% of them will be dead at age 76, etc. (1) So you don't need to save as if everyone is going to live to be 90, only some percentage of them. But if retirement is entirely individual responsibility, then everyone needs to save as if they are going to be 90, which leads to an unnaturally high savings rate and that leads to weaker current economies (2) and giant pools of money seeking high returns(3). 1: Yes, improved medicine might change the exact distribution here, but that is projectable, with a small fudge factor you can basically ignore it. 2: That money is saved, not getting spent and turning into your neighbors income! 3: This is what caused all of those boom/bust cycles in our economy over the past 20 years.
- jonkho 2y ago
  So you are proposing… social security?
  - mandevil 2y ago
    Indeed I am! I am trying to make the case that something like social security is economically efficient even setting aside any moral case for taking care of vulnerable people. I believe social security pencils out as a huge positive to the overall economy, and that it is emotional "I don't want to help them with my taxes" nonsense that leads people to oppose it. As an example, look at all of the hard work, documented by Katznelson in _When Affirmative Action Was White_ and _Fear Itself_, by lots of racists to keep African-Americans from benefiting from Social Security when that program was created.

cogman10 2y ago

They are tested and the results have already been a disaster. People don't save for 401ks. And why would they? The fact is, when you are living paycheck to paycheck, retirement takes a backseat to rent. And even when they do save, we are currently looking at a market downturn. The last 5 years have been pretty rough in terms of the stock market with returns being much lower than you might count on. There is an option, it's fully funding social security by lifting the income cap. It's silly that you get a tax break on SS simply by making too much money. The biggest threats to the average person being able to retire is the government gutting, dismantling, and/or privatizing Medicaid, Medicare, and social security. With those gone, yeah grandma is going to have to work in the Foxconn factory to avoid eating catfood. It's not completely hopeless, but people really need to be informed on this. We are running headlong into this problem because neither party wants to raise taxes to fund these essential programs. This is a government problem to solve which is best solved by a government agency. It will be a disaster if private corporate leaches get involved, matching the current state of healthcare for anyone not disabled or younger than 65. For anyone that advocates UBI. That's what social security is, UBI (with an age restriction).

raymondgh 2y ago
My iOS Stocks app says S&P 500 is up 146.23% over the last 5 years. But isn’t that much too short an interval to evaluate in the first place in consideration for retirement?
- dmoy 2y ago
  That doesn't even include dividends. It's more like 166% after dividends But also yes it's too short of an interval for retirement savings
- blargey 2y ago
  “Up 146%” is either because your start time is during the 2020 market crash, or the display is actually “150% of the starting value” (up 50%).
ryandrake 2y ago
I know people in my age group (GenX) who have not saved even a penny for retirement. And these guys are in good jobs in tech with access to generous 401ks. They just spend their whole paychecks, and more via borrowing. If these guys (who definitely have the means to) won't save, I don't understand why we think "personal savings" is overall a viable system for taking care of the elderly. There is going to be a huge amount of either 1. misery or 2. bailouts in the next 30 years as GenX and Millennials start retiring.
- lotsofpulp 2y ago
  Everyone already has mandatory defined benefit pensions in the US. It’s called Social Security.
dmoy 2y ago
People definitely don't save enough for retirement under the current system. The median household entering retirement right now has like $150k, which translates to very little on top of social security. So now without pensions, people's entire retirement strategy is social security and maybe selling a primary residence. Elder poverty is already high, and will get much higher in the future > The last 5 years The last 5 years were freaking amazing for investments. Even including the current small downturn, s&p 500 total returns are up like +160% in the last 5 years. After factoring inflation it's more like +80% or so? Which is over 10% real returns per year, which is wayyyyy above historical average (closer to 5-7% real returns).

srdesigner 2y ago

Good comment. I would suggest if you get to the point where you want to really analyze your probability of success, you try one of the retirement modeling apps (I use and really like Boldin). It was VERY eye opening for me in a good way. I have verified my results with several other sources. Its no guarantee of course, but I got some peace-of-mind from doing this.

mandevil 2y ago

I have two thoughts. A) Retirement creates a better equilibrium, for the economy as a whole. Not just because you flush all the people who have lost a step and yet have enough social/economic power to hide it out of making decisions, but because it clears the way for ambitious younger people who are getting blocked out of advancement opportunities because the generation ahead of them just isn't #%@#$ leaving. Not that I have any experience with that, obviously. You can have a equilibrium where everyone works until they physically can't any more, but that's simply a worse one, for almost everyone. B) If we're going to have retirement, it is a better equilibrium for our economy as a whole to do it through some sort of enforced group savings plans rather than individuals. The big risk with retirement is outliving your money. If you have a group of a hundred thousand people, you can statistically infer that X% of them will be dead at age 75, and X+Y% of them will be dead at age 76, etc. (1) So you don't need to save as if everyone is going to live to be 90, only some percentage of them. But if retirement is entirely individual responsibility, then everyone needs to save as if they are going to be 90, which leads to an unnaturally high savings rate and that leads to weaker current economies (2) and giant pools of money seeking high returns(3). 1: Yes, improved medicine might change the exact distribution here, but that is projectable, with a small fudge factor you can basically ignore it. 2: That money is saved, not getting spent and turning into your neighbors income! 3: This is what caused all of those boom/bust cycles in our economy over the past 20 years.

jonkho 2y ago
So you are proposing… social security?
- mandevil 2y ago
  Indeed I am! I am trying to make the case that something like social security is economically efficient even setting aside any moral case for taking care of vulnerable people. I believe social security pencils out as a huge positive to the overall economy, and that it is emotional "I don't want to help them with my taxes" nonsense that leads people to oppose it. As an example, look at all of the hard work, documented by Katznelson in _When Affirmative Action Was White_ and _Fear Itself_, by lots of racists to keep African-Americans from benefiting from Social Security when that program was created.