Future of Retirement Dimming

I was talking to a man of about 40 the other day and he told me he expected to work until he died.  This notion was mostly driven by his desire to keep busy and keep contributing, but it also rested on his lack of faith in Social Security and other retirement systems.  Coincidentally, several new reports on all phases of that subject have been in the news lately.

Preparation for retirement has traditionally been described as a three-legged stool consisting of Social Security, pension and personal savings.  All three are in peril.

This recent NBC article gives a good description of Social Security.  It begins with the story of how the first person to collect paid in a total of $24.77 and collected more than $22,000 over the rest of her lifetime.  As incredible as it may seem, the system works exactly the same way now.  Just as her Social Security checks were funded not by some magical formula applied to her contribution but on the contribution of others, retired people today rely on those who are still working and still paying FICA taxes.  It seemed like a good idea at the time when the average life expectancy was 61 and full retirement age was set at 65.  Many people paid in and never collected.  There were far more workers than retirees.  The extra money could go into a “trust fund” giving the impression that we were saving for our own retirement instead of funding others.

Today the full retirement age has been pushed to 67, but with the life expectancy near 80 and fewer people working to support each retiree, we have reached a point where total benefits exceed income and that trust fund must be tapped.  The latest estimates predict that unless Washington makes some changes, by 2033 the extra money will run out and the income will cover only 75% of promised benefits.  (That 40-year-old will be only 58.)

The second leg of the retirement stool is the pension.  CNBC reports that between 1975 and 2011 the number of private sector workers with a pension-paying job dropped from 88 percent to about 20 percent.  (This trend continues with the latest talk of dissolving traditional defined-benefit pensions in favor of a 401(k)-type plan comes from the military as the Defense Secretary finds, “Personnel costs, such as pay, health care and retirement, have consumed an unsustainable share of the Pentagon's budget.”)  Those lucky enough to retain the promise of a pension, which includes most government workers, face the reality that not enough money is being set aside to meet those obligations.  If you are a politician, corporate officer or union negotiator, it’s easy to make promises that someone in the future will have to keep.  How many retirees will soon be forced to take less than expected as those in Detroit experienced when the city declared bankruptcy?  Cries of “you promised” and “you can’t take it away” are trumped by the economic reality that there is no magic money tree. 

What is left and what is the only thing individuals can really control is personal savings.  Again the news is not good.  The idea of an IRA or 401(k) with tax deferrals and sometimes a company match to encourage people to save is being characterized as a failed experiment.  Workers were encouraged to save but they didn’t.  As an example, the average 401(k) plan has less than $19,000 and “the median amount for savers in Vanguard between 55 and 64 years of age in 2013 was found to be $76,381.”  Less than $80,000 to last 20 years does not provide much security, especially at a time when financial advisors are wondering out loud whether $1 million is enough to retire on.

That’s the hard facts - all three legs of the stool are broken.  A little economic understanding and critical thinking lead to the conclusion that retirement is disappearing.  Everyone without the discipline to save will get to retirement and wonder what they are going to do next.  What will likely happen is that politicians will fiddle around, not wanting to put sound decisions ahead of their popularity and ability to be reelected, and end up throwing more money that the government doesn’t have at the problem until we reach the ultimate point of unsustainability.

Getting the Kids to School

Whose responsibility is it to get kids to school?  In Franklin Township, IN this question was not resolved until it reached the Indiana Supreme Court.

Franklin Township is located near the southeast corner of metro Indianapolis. 

“The population of the township as of the 2010 census was 54,594 up from 32,080 in 2000.”  The median income is of $70,000 is about 45% higher than that of the state as a whole.

The dispute began a few years ago when the school district felt they were forced to discontinue free bus service during the 2011-12 school year in response to financial pressures.  This situation of schools facing financial difficulties is not uncommon in many states where state-mandated property tax caps limit revenue.  In addition to this a state law requires that any bus service a school system does provide must be free of charge. 

In response to the threat of losing their free bussing, the parents, “upset by the district's action, filed a class-action lawsuit based on the premise that students had a constitutional right to bus service.”  (They were referring to the State Constitution that guarantees a free education to all.)  They lost the case.  The ruling was unanimous that a free education does not include all aspects of the education such as getting the kids to and from the classroom.

This behavior reflects poorly both on parental responsibility and on perspective.  First, the idea of passing off the requirement of getting your kids to school to another party smacks of not owning your problem, an unwillingness to see things through.  (If parents don’t think they even need to make an effort to get kids to school, one wonders how much interest they take in the progress their kids make while they are there.)  Remember, these are parents with above average incomes, not ones who would necessarily suffer financial hardship if required to make other arrangements.

Second is the perspective issue of taking school buses for granted.  It is just assumed that after getting the kids to the corner everything else is automatically taken care of, and that’s the way it has always been.  Children, with the help of parents, never had to find their own way to school.  Children and parents never had to adjust schedules to make sure they got an education.  Of course those assumptions are not true, and once again the behavior shows clearly where the values really are.

Homeopathy - Does It Really Work?

In a widely circulated article from the Guardian newspaper, the news from Australia is that it does not.  The headline reads: “Homeopathy not effective for treating any condition, Australian report finds.”  After a thorough and extensive review of over 200 research papers on the subject, the National Health and Medical Research Council (NHMRC) states:  “there are no health conditions for which there is reliable evidence that homeopathy is effective.”

They go on to warn that people who use homeopathic medicine as an excuse to delay or avoid professional medical help may be putting their lives at risk.

What is homeopathy?  The article describes it as the belief “that illness-causing substances can, in minute doses, treat people who are unwell,” and by diluting them in water or alcohol, “the resulting mixture retains a ‘memory’ of the original substance that triggers a healing response in the body.”  That is the theory.

Wikipedia defines it as “a system of alternative medicine created in 1796 by Samuel Hahnemann based on his doctrine of like cures like, whereby a substance that causes the symptoms of a disease in healthy people will cure similar symptoms in sick people.”

The fact that it is not effective is certainly not news as the first paragraph of Wikipedia entry immediately goes on to say:  “Homeopathy is considered a pseudoscience. It is not effective for any condition, and no remedy has been proven to be more effective than placebo.”  References associated with this conclusion date back to 2000 and earlier.  It was known for a long time, but the fact that any government agency has come out so strongly against it is new.

The industry has a different take.  The National Center for Homeopathy tells us:  “Homeopathy is a safe, gentle, and natural system of healing that works with your body to relieve symptoms, restore itself, and improve your overall health.”  “It is extremely safe to use, even with very small children and pets, has none of the side effects of many traditional medications, is very affordable, is made from natural substances, and is FDA regulated.”

One British source sees it differently.  After an extensive explanation of the theory behind it they describe it as being rooted in superstition, ritual and sympathetic magic; and cite a comprehensive study from 2005 showing that it is ineffective.  For the theory to be true “we would have to toss out practically everything we have learned over the past two centuries about biology, pharmacology, mathematics, chemistry and physics.”

It seems many people disagree with the industry portrayal.  Many studies have shown it as ineffective, but what about the claims of safety and regulation?  The US Government’s National Center for Complementary and Alternative Health is not complimentary on the subject.  “We have a fair amount of research on homeopathic medicine for a variety of conditions, but less evidence on its safety, particularly for over-the-counter products.”  The FDA does regulate it as a class of drugs, but “doesn’t evaluate these products for safety or effectiveness” and “some contain ingredients or contaminants in amounts that could cause side effects, drug interactions, or other safety concerns.”

Since those potential contaminants are so diluted, sometimes to beyond the point of detection, homeopathic medicine is probably safe but ineffective. The worst that can happen is for people to rely on homeopathy to the exclusion of professional medical help, especially if they avoid vaccinations.

So what’s the big deal?  It’s just people again throwing away money on a product that has been known for years to be ineffective.  But when a company gets you to pay money for something that doesn’t work, how can that be legal?  Doesn’t the government also have a consumer protection division to protect us from our own foolishness, like credit card scams, payday loans and fraudulent vacation schemes?  Out of curiosity I asked, “Where does the government’s Consumer Protection Agency stand on all of this?” 

Their website lists under the heading “Current Scams That You Should Be Aware Of” the following categories:  Benefits and Grants, Business, Cars, Citizenship and Immigration, Computers and Internet, Family, Home, and Community, Health and Nutrition, International Relations, Jobs and Education, Money, and Travel and Recreation.  A closer look at the Health and Nutrition link shows no mention of homeopathy (but there are a large number of other very interesting topics where Americans have been sold worthless or dangerous products).  Until there are enough complaints on this topic, I guess we are on our own.

The government can’t (or won’t) protect us from sellers of every product or service that takes our money and give us only promises in return.  Again critical thinking and just a little research can eliminate a lot of wasted time and money and possibly keep us safer.

More on Words

A few times in the past I've commented on the words people use to sell us things or to sound more impressive.

Just a few weeks ago in Tell It Like It Is, I mentioned a few business terms, like associates and team members instead of employees.  They say guests instead of customers.  Actions often don't live out the promise of the new terminology.

Back in January 2014 in Words, Words, Words, I explained the distinction between:  eager and anxious, less and fewer.  I complained about the loose usage of literally and how awesome has become the adjective for everyone who doesn't want to spend any time or effort to describe an experience accurately. The message was that thoughtful people choose the right word.

Likewise, way back in October 2011 in Words People Use, I warned about the use of words to make us think in a particular way, sort of propaganda-lite, used in advertising.  One example was how the word "home" has replaced the word "house" allowing realtors to sell something warm and inviting instead of just a structure to store your furniture and spend the evening in.  It has caught on to the point where even abandoned buildings (of the right size and location) are referred to as homes.

By now it should be clear that I think words are important to communications and that I am sensitive to the words chosen by politicians, the media and advertisers.  Imagine my surprise when I heard on a newscast the comment of the local sheriff when he learned about a new state law requiring more criminals to be housed in county facilities rather than in state prisons: "We don't have enough staff to increase the number of clients at the jail."  Clients?!  At least they're not calling them guests - yet.

Is It Just Me?

Sometimes I wonder if it’s just me or is the whole world crazy?  Somewhere I’ve come up with the strange idea that bedtime for children was about going to bed and going to sleep.  Sure there will be fussing, but that’s what parents are for – to make sure they get to bed on time and get up on time so they develop the right habits and don’t end up part of the “teen sleep deprivation epidemic” or run into serious problems later in life.  According to the CDC, “Sleep is increasingly recognized as important to public health, with sleep insufficiency linked to motor vehicle crashes, industrial disasters, and medical and other occupational errors.”  (See the chart for possible problems that may result from insufficient sleep.)

As these teen and adult situations have gained attention – bringing us yet another set of societal crises – any number of sources have come forward to emphasize the importance of getting a good night’s sleep.  Tips on how to do it include sticking to a regular sleep schedule, getting enough exercise during the day, having a comfortable mattress, having a relaxing routine before bed time and powering down – that is, turning off the television and other devices.  To reinforce this last point the National Sleep Foundation reminds us:  “careful studies have shown that even our small electronic devices emit sufficient light to miscue the brain and promote wakefulness.  As adults we are subject to these influences and our children are particularly susceptible.”  They go on to say, “Children using electronic media as a sleep aid to relax at night have been shown to have later weekday bedtimes, experience fewer hours of sleep per week and report more daytime sleepiness.”

How does the business community respond to this situation?  Struggling with the kids at bedtime?  - There’s an app for that!  USA Today put it this way:  “Kids who put up a fight to go to bed might change their tune thanks to Wildlandia, an innovative line of bedding that doesn't only feature cartoon jungle wildlife on its sheets and bed cover – animals come to life when seen through the lens of a mobile device.”  So the kids go to bed and the sheets come alive with wild animals that need attention.  To play the full game parents must download the app plus buy either a $70 comforter set or a $40 throw blanket.  Also available are the optional animal pillows with a giraffe or elephant, for $25 each.  That’s cheap compared to the cost of a baby sitter; and if it keeps the kids out of sight and out of mind at bedtime, where’s the harm?

There seems to be a disconnect.  If I am out of touch expecting parents to take these facts into consideration and assume their responsibility as parents, then this company will be wildly successful in selling American parents another easy answer.  Let's hope the opposite is true, where parents will do the right thing for their children’s long term wellbeing leaving wild animal bedding to gather dust on the store shelves.

Perspective and Driving

Perspective is about gratitude, being satisfied with what you have and not constantly yearning for more.  This is consistent with the ancient wisdom of moderation.  People strong in perspective understand that some things are very important and some are trivial, and they are able to put their purchases and other decisions in a proper order.  Without this ability to rank the things in our lives we may use up our resources such as money, spending on low-value items before critical needs are met, or time, deciding to spend our lives in some pursuits while we forego more rewarding ones.  Does this understanding also apply to driving?

This thought occurred to me as I drove on a 4-lane, 55mph county road on the way to yoga class.  Coming toward a freshly turned green traffic light, I was in the right lane gaining on a large truck in the left lane that had slowed for traffic ahead and was now slowly accelerating.  The rate of acceleration and overall speed of the truck was apparently not satisfactory to the car coming up from behind.  As he neared the back of the truck he sped up and cut over in front of me and pulled ahead.  Naturally, having been driving for over 50 years, I anticipated this potentially dangerous move and slowed enough to allow room to let him in.  Had I not been paying attention and not done so, who knows what would have happened?

I wondered if it was so important that he get where he was going so quickly as to put us both in danger.  Was arriving immediately on time or perhaps not any later than he already was worth the grief and inconvenience that he and his family may have been subject to between the medical attention and car repair?  Even if he had no regard for me, this should have been a consideration.

Of course as we drive on a daily commute or run errands, it is obvious that many drivers don’t have this kind of perspective.  They take driving for granted.  They have forgotten how dangerous a moving vehicle can be.  They make no mental trade off between on one hand, tailgating, cutting in and out of traffic, speeding excessively or texting and other distractions, and on the other hand, the potential serious disruption to their normal routines and, more important, the possible impact on their lives and those they care for.  Their behavior shows a clear a lack of perspective.

As is usually the case, at the next traffic light I made a left hand turn on the arrow, while he who was in such a hurry waited for the light to turn green –no perspective and no real progress either.