Are the elderly going to go out on an ice flow to die or are we going to come up with a new idea?
Posted by Joel Friedlander | 3 Comments
The New York Times, in an Editorial entitled, “From Here to Retirement,” discusses, in what I consider vacuous fashion, the problems inherent in providing for the safe futures of those who choose, or cannot continue to work.
http://www.nytimes.com/2009/01/26/opinion/26mon1.htm
They talk at great length about improving the viability of the 401K plans. I believe that they have their heads stuck in the ground like an ostrich. I wrote:
“If you are tied to the concept of individual responsibility for retirement, as so many of our Republican Brethren are, there is no way to secure a guaranteed retirement. The only option for a guaranteed safe retirement future is for the government to guarantee the funding. That program is called Social Security, but obviously from the growth of the 401K, etc, is is insufficient.
What to do?
Well, first, the idea that the government cannot guarantee lifetime security for the people must be abandoned, along with the narciscistic attitude that everyone can take care of themselves. The European model of retirement may be anathema to American individualists, but it provides a far better guarantee for the future then our system does.
This will not be an easy sell in the nation of rugged individualism, will it?”
What does anyone who reads or writes on this blog think of the idea of adopting the European concept of retirement? In a simple sentence: The government takes care of its citizens when the get old.
Tags: Retirement; Social Security; Old Age in the future!
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3 Responses to “Are the elderly going to go out on an ice flow to die or are we going to come up with a new idea?”
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January 26th, 2009 @
The European model of retirement is unsustainable. The European governments in the model of Denmark allow too much power to be consolidated by the labor unions, who demand such ridiculous ideas such as retirement after 20 years of service and protection of domestic jobs against immigrant workers. And what happens? The benevolent, all knowing government develops a misshapen pyramid in which there are an insufficient younger workforce sustaining a growing older retiree population.
And you think America, a nation of 300 million, can support such a system? I call you an idealist with a foolish notion of sustainability.
Governments are never the answer to providing a solution to their citizenry. It must be left to the individual, free of government interference. Only in the individual can the best decisions be made.
Take the maligned 401(k), a solution for retirement savings which is little understood but roundly criticized. 401(k)s are a solution inhibited by regulation. Why does the government place an artificial cap on 401(k) contributions? Is the government afraid people might save too much money? This makes no sense. Why are these programs available only through an employer, who has no expertise in investments? Again, absolutely no sense, yet government regulation has placed us in this pickle.
The 401(k) should be un-tethered from the workforce and allowed to flourish in the hands of the private individuals. People would establish accounts which can be funded as much as one wishes, all with pre-tax dollars. They would be custodied with a securities firm, whose business it is to select investments suitable for long-term saving. Individuals should be allowed to withdraw from these accounts as they see fit, paying taxes upon withdraw.
But such a world will never be realized, as governments are afraid of a loss of tax revenue. Individuals, given an option of paying income taxes in a whirlpool of loss that is the federal government, or funding for their own retirement future, will select the latter every single time. And why not? At least when you save your own money, you know where it goes.
Governments do not care about the retirement health of their population. Governments care only for sustaining an immortal bureaucratic beast. So what would make one think that a government would possibly have a solution?
Eliminate regulation. Reduce government. Empower the individual.
January 26th, 2009 @
No one said anything about letting Unions determine anything about a retirement system. Naturally, there are significant differences between Europe and the United States, perhaps the trade union movement and its power being one of the most significant. As to your second assertion, that government is never the right answer, it is best never to say never. It is impossible to agree with never as a principal.
As to your assertion that 401K monies are a problem because they are tied to employers that skirts the major problem, which is that almost all of the money in 401K’s was invested in the stock market. It is the collapse of the Market which has made 401K plans problematic, not their connection to the businesses which contribute to them along with the workers. Moreover, if an individual proprietor wants a 401K all they need to do is to incorporate and they can have one, and a health plan, and a full pension plan if they wish, and all the other benefits of corporations in general.
As to the loss of tax revenues if 401k plans were expanded, tell me the name of the government in on the entire planet that isn’t concerned with taxes. Oh, by the way, you can go as far back as the Phoenicians or ancient Egyptians if you like.
What I didn’t say was to adopt any specific model, but to consider them, and as you suggest, it would be a very hard sell in the “self sufficient,” United States
January 28th, 2009 @
Howard Roark, you’re giving us an ideology, not an answer. As Joel said, the current financial crisis clearly shows that the 401k is not the one retirement answer. Sure, youngins like me can ride out this storm, but those who are retired and living on 5% average returns on, say, a million dollars, are now forced to draw from a portfolio worth 600k. Objectivism doesn’t account for bad luck.