Monday’s Mtg: Is There a Looming U.S. Retirement Crisis?

I knew this would happen someday. We did this topic about a year and a half ago, in December 2013!. Oops. It was a good meeting and my intro post had some nice links, many of which I’ve reproduced below. Now, there is not much in the way of new developments in this area since 2013, since whether there is a retirement crisis and how big depends on long-range projections that do not change much with short-term economic fluctuations. But, I still think we can freshen up this issue on Monday night in several ways.

First, we can look at the weird politics that surround anything having to do with the interests of the elderly in this country. Older voters are now the base of the Republican Party, even though they are the most reliant on the socialistic government programs (Social Security, Medicare, and others) conservatives claim to despise in the abstract: Why is that? Progressives say they are the great protectors of these programs, yet liberal proposals for new government spending almost always exclude the elderly and (possibly) would come at old folks’ expense.

Second, if there is a large looming U.S. retirement crisis, it is a function of some of the other problems we talk about all of the time. Low wages and income inequality in particular, but also rising health care costs and other problems. Are the solutions to our retirement crisis to be found in goosing Social Security or other government benefits, as some progressives like Elizabeth Warren and Bernie Sanders have proposed? Or, should any teeth-pullingly hard to get new spending be aimed at helping working people?

Lastly, we can view our retirement problems as part of an old problem that I’ve learned something shocking bout since our 2013 meeting: The “Great Risk Shift.” This is the huge transfer of financial costs and risks away from large institutions – corporations and governments – to employees and taxpayers that has occurred in the last 30 years. Via this book, I’ve just learned that hundreds of blue chip American companies have been using their employee pension plans as a kind of cash cow, looting them to pay for other priorities.

But in order to do any of these, it may be helpful to get a brief refresher on the basic issue of whether there might be a big retirement crisis in America’s future. I’ll try to do that in a short introduction. Have a nice Fourth of July and I’ll see you Monday.

Discussion Questions –

  1. Definitions: What makes for a “secure” retirement in the USA? What are the “3 legs” retirees are supposed to lean on financially?
  2. Leg 1 – Private pensions:  Who gets company pensions and who does not? How adequate and well-funded are they? Have big companies really been looting them in recent years?
  3. Leg 2 – Savings/Investment: Same.
  4. Leg 3 – Social Security:  How generous are its benefits and who relies most on it for retirement income?  How big is its funding shortfall and how hard would that be to make up?
  5. 1+2+3: So, do experts predict a big future U.S. retirement crisis?  Why/for whom? How sensitive are these estimates to small changes in assumptions?
  6. Fixes: What can and should be done about all this? Is spending more on the elderly the best place to spend any new public money?

SUGGESTED BACKGROUND READING –

Our last mtg on retirement –

Yes, a huge retirement crisis looms-

No, there is no looming crisis!

Next Week: Can science explain the mind?

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2 responses

  1. With regard to the “reality” of the trust fund, here is the crucial distinction:
    If it were invested in corporate stocks and bonds, it would be repaid from profits earned in business.
    Being invested in govt. bonds, it must be repaid from taxes. Which of course is the source of SS revenues in the first place.

    Much political gamesmanship around this issue, of course.

  2. […] member Penny suggested this topic. It’s a good one. We have discussed retirement issues and entitlement reform before. But, except for this meeting on Social Security’s […]

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