I’m currently researching retirement, which is one of the big three of employer ‘benefits’. The other two are paid time off and medical. Specifically I’m researching and writing about employer funded retirement programs. I’ve learned some very interesting things as I’ve waded deep into the world of pensions, 401K’s and IRA’s.
It’s not the life panacea that our current culture has made it out to be. The whole concept of retirement is based upon getting people deemed as inefficient out of the industrial workforce. In short, retirement exists for the benefit of the companies, not the people who worked at the companies. It was just sold on the population like whole life insurance, something that sounds great but isn’t all it’s cracked up to be.
Initially retirement programs worked ok, not perfect but ok. But now, well, not so much. The big reason is the last 35 years as we’ve transitioned to employer provided and managed pension plans to employer contributions into 401(k) plans. That results in a situation where over the course of their lifetimes people are responsible for maintaining consistent contributions to this highly important resource allocation. Your average worker has to always be aware of the importance of not allocating resources from the immediate (housing, daycare, medical bills) to the important (long term retirement stability). We are not equipped to do that.. the immediate screams too loudly, and is too insistent to ignore.
The institutions best suited to manage this task for us have abdicated their responsibility. The risk has transferred from the organization to the individual. In many instances even people who are trained in this area aren’t very good at it. How many bankers, accountants and financial planners don’t have a portfolio of long term investments that they hold up as examples of how to do long term investing properly?.
As always, the Dilbert commentary on retirement is a very good cartoon, but sadly our retirement situation isn’t a joke.
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