Saying "mandate," as in the health care law, seems to be like throwing meat to an angry bear. Even though we have been under a mandate to pay taxes into Social Security and Medicare since 1937, the political turmoil over the mandate-tax definition for so-called Obamacare refuses to go away.
So, it was with more than a little little surprise that I was alerted to an article in the New York Times (thanks, Sonia!). A professor of economics outlines the failure of our present volunteer retirement system to provide a satisfying retirement for many.
She points out that 75% of Americans nearing retirment age have less than $30,000 in retirement savings. To her that emphasizes that human behavior does not lend itself to voluntarily giving up something today to have adequate resources in the future. She predicts a looming disaster as people enter retirement completely unprepared. She discounts the supposed solution, to keep working, as unrealistic due to the sky high unemployment rate for those over 50.
Her answer? She proposes a mandated retirement savings system in addition to Social Security. She argues that the only way we will be prepared to stop working is to be forced to set aside adequate resources. To read the full article click here:
I am well aware that many people play completely by the rules, work hard, save, and still get screwed by the failure of their employer to live up to its promises. Investments are decimated when greedy or risk-loving people take advantage of the system and get caught. Those are not the people she is writing about. Those folks are victims that are paying a price they should not have to confront.
I do agree with the author on one crucial point: too many people who aren't in the category noted above do a terrible job of preparing for their own retirement. I guess they assume the tooth fairy will make it all OK. They think they can keep working until their dying breath. These assumptions are the human equivelant of the ostrich sticking his head in the sand.
As regular readers know, I am a big believer in personal responsibility in most areas of life. Last fall I wrote that for retirement we are on our own. The days when we could depend on a company delivering a promised pension and health benefits until our death are over. Even government and public service pensions and benefits are under attack in many cities.
Social Security payments are an important part of most retirement plans. I, for one, am very glad it is there. Likewise, as someone who has never had a company-provided health plan, Medicare will be a life-saver for me when I reach 65.
But, the idea of adding another program to insure that my lack of planning for my future won't put me in a pickle strikes me as way out of line. Of course, her idea hasn't a prayer of even being discussed my those who could do something about it. But, the author is proposing a "get out of jail free" card: no personal sacrifice or planning would be required beyond another tax. "They" would take care of what we won't.
If my satisfying retirement depended on that, I'd be scared out of my mind.
What are your thoughts? Without this author's idea in place, she contends unprepared retirees could bankrupt us all. Or, will they? How far should we go to manage peoples' tendencies? Fill the comment page!