Friday, October 10, 2014

Retirement Crisis 2

This article reinforces many of the points I have been making about discipline, responsibility, media hype and how if we don’t take care of ourselves, help will be inflicted upon us.

In America we don’t have any problems because very soon each one becomes a crisis.  The news media can’t keep us interested in stories unless they are cute, outrageous, scary or otherwise emotionally engaging.  Instead of straight news we get pets or wild animals in unusual situations, freaks, celebrity gossip, natural disasters, epidemics and the crisis of the week.

This story is about the retirement crisis.  It features an interview with a US Senator from Oregon asking him “why he is worried about the ability of Americans to save for a successful retirement and what he plans to do about it.”  He considers his concern that not enough people are saving for retirement as a call to action.  He wants to make it easier for them.  Apparently, spending less money than you earn is too difficult for us to figure out, so the government must come to the rescue.

The basic problem is that the IRA was “intended for a typical person,” but it’s primarily well-off people taking advantage of it.  With the decline in traditional pension plans, typical people are not saving enough.  This is all old news.  His idea, based on a law in his home state is to require employers that don’t offer a pension or 401(k) plan to withhold a set percentage from each paycheck as an automatic IRA contribution.  Participation is not mandatory for employees.  This, of course, is something employees could do for themselves, on-line with their bank requiring very little effort if they were interested.

On one hand he says that “it seems to be popular” in Oregon.  He goes on, however, to bemoan the low level of retirement savings in his state.  “If steps aren't taken to make (saving) easier, this country will find a lot of people hurting and there will be real consequences.”  Gee, unsatisfactory behavior in the dimension of discipline has consequences – what a revelation!

He is a Democrat but expects bi-partisan support.  That also is not surprising since the program is remarkably similar to a Republican plan a decade ago to partially privatize social security by assigning a portion of FICA tax to an individual account.  No doubt steps will be taken and hopefully a few more people will save a few more dollars for retirement.  Will “the crisis” be diverted? – Not likely.  Government programs can’t fix individual failings.  Behavior has consequences and further programs will doubtless be proposed to protect people from the consequences of their own actions in order to get reelected.

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