Save or else
There are forces at work that think the retirement system is broken (401(k)’s, IRA’s). ‘They’ say that government knows best, and that ‘big brother’ should step in and take care of you.
‘Their’ theory is simple. A voluntarily contributed to retirement system is not working. People will not and do not save enough or anything at all for their future needs.
There is some truth to that. Many people are not saving, or if they are, not enough.
For the first time in history of modern humans, the experiment of not having to work until you drop has been playing out, and we are entering new territory.
‘They’ do have good intentions. ‘They’ want people to have a chance at a dignified and enjoyable retirement. Nothing wrong with that.
But ‘They’ are one track minded. What about those who are saving? Over 70% of employees who have access to retirement plan at work do save, and have saved literally trillions. That’s the key; access to a plan.
The Rub — Us vs. Them
‘They’ propose to force us to save 7% or more of our income. ‘They’ want to put that into a government run program for our future benefit. ‘They’ want to guarantee us a future. ‘They’ think they can do it better than us. ‘They’ have the answer.
Wait, aren’t we already doing that?
Does sound familiar doesn’t it? Sounds like Social Security, but it is not. The Social Security story has played out, and we see where that has gotten us.
Remember Social Security was never meant to be the main pillar of retirement; it was designed to be a safety net for widows and orphans. But all of ‘Them’ before us knew better and kept expanding and expanding its benefits to where we are today. And with those expanding benefits, came expanding expectations.
What should we call this? Social Security 2.0?
We as a nation already spend 57% of our budget on entitlement programs, and projections show that percentage exceeding 100% by 2025. Sounds like a long time doesn’t it. But, that’s only 13 years! 1999 was 13 years ago. Still feel like partying?
I’ll take the free market over government run programs any day.
With the free market, we can:
- Do our homework and make informed decisions
- Benefit from competition and innovation
- Hire and fire providers with ease
- Exercise greater control over our own destiny
With government we can:
- Outsource our responsibilities into the hands of a few
- Hope that ‘They’ will have the political will to do the right thing, over many decades
- Trust that our assets set aside won’t be ‘borrowed’ to scratch an immediate itch
- Believe that someone else will take care of us
So what is the solution? I agree that for the benefit of us all, we should institute mandatory retirement savings.
Blend the power of the government to mandate what is good for us with the power of the free market to deliver superior solutions.
Take what we have learned from unions, pension plans, Social Security, and the voluntary retirement system, and re-imagine what is possible.
Can we do that before its too late? Let me know your thoughts on this.
(This is a hot topic, and one that we explore in our film: Broken Eggs Film – The Looming Retirement Crisis in America. Watch for the teaser in September 2012, and its full release in 2013.)