stone wrote:
What worries me is that people somehow suppose that stock/bond/rare stamp/whatever based pension plans are something other than an ongoing transfer from the people working to the retirees. If you are terribly clever and your 50% rare stamp:50% Greek stocks retirement portfolio does terribly well- then all that means is that you have a greater claim over people of working age when you retire. If every retirees does similarly well and so all workers are run off their feet then that will cause inflation. If all retirement plans go belly up then that will simply mean more working age people are unemployed who otherwise would have been working to provide stuff bought by retirees. Maybe I'm stating the obvious but I sometimes sense that people are going misty eyed imagining that somehow the savings are "working" during the intervening period and that somehow something real is transfered to the future.
Stone, a nation of savers is very much a good situation to be in. Look at the US during the 1950s, when people were saving 10%+ of their income. People who have lots of savings feel comfortable buying goods and services, which creates jobs, and it's very much a "rising tide lifts all boats." People who go into debt to buy goods and services like what has been going on for the last decade or more, eventually run out of credit which causes deleveraging.
I'd much rather live in a country where everyone has a comfortable retirement account than one where people are broke.
"I came here for financial advice, but I've ended up with a bunch of shave soaps and apparently am about to start eating sardines. Not that I'm complaining, of course." -ZedThou
Storm, I totally agree about debt and about people being assured of a reliable retirement. I just think a social security style system but scaled up might make a better job of it.
"Good judgment comes from experience. Experience comes from bad judgment." - Mulla Nasrudin
According to a Feb 19, 2011 article in the Wall Street Journal, "the median household headed by a person aged 60 to 62 with a 401(k) account has less than one-quarter of what is needed in that account to maintain its standard of living in retirement." This according to a study commissioned by the Journal, and conducted by the Center for Retirement Research at Boston College.[1]
Given the demographics, SS issues, and things like the above it is not a bright future out there for most retirees.
I would add that many rather successful people, doctors, lawyers etc have little knowledge of asset allocation and choose high cost investments.
With the real estate debacle comes the huge numbers of people who have borrowed out home equity and now suffering mightily.
These 1 1/2% advisers will not steer you to the HB PP much less PRPFX.
