401(k)s Will be Unthinkable in 50 Years

[Eddie Teach]

And retired people don't need to live where the jobs are.

[Admiral Yi]

At some point you have to look at what actually happens, not at what's supposed to happen.  That applies to all ideologies, not just communism.  If many people do wind up with few savings, then I guess it's enough of a rocket science to them. 

Real people have all sorts of mental biases that make them do bad investment decisions, so designing a social policy around them not having those biases is indicative of not keeping your own political biases under control.

No, it's not rocket science to them.  People like Squeeze loot their retirement accounts not because the investment options are perplexing, or because the mechanical steps are confusing, but because they prefer to spend the money now.

I agree that some people will make poor choices, which is why upstream I said if you want to change the law to make the money inaccessible until retirement, I'd be in favor.

But no seems very interested in that idea, I suspect because a lot of the people who oppose 401ks do so not because they can be looted, but because they don't provide the same gold plated retirements of the Labor defined benefit plans of the golden age of Big Labor.

[dps]

And retired people don't need to live where the jobs are.

Yeah, but not really relevant if you want to follow my advice and have the mortgage paid off before your retire.

[Eddie Teach]

You can sell it and move somewhere cheaper.

[Valmy]

I agree that some people will make poor choices, which is why upstream I said if you want to change the law to make the money inaccessible until retirement, I'd be in favor.

It may very well be possible that simply making them loot proof may be all it takes to course correct. That would be an easy fix

[Valmy]

And retired people don't need to live where the jobs are.

Yeah, but not really relevant if you want to follow my advice and have the mortgage paid off before your retire.

Property taxes though...

[Admiral Yi]

It may very well be possible that simply making them loot proof may be all it takes to course correct. That would be an easy fix

Centrist!

[DGuller]

There is nothing to loot if you don't invest enough in the first place.  Yes, you can make an argument that people are rationally choosing consumption now over consumption later, but that's again substituting ideology over understanding of how people actually function. 

A far more realistic explanation is that they don't understand how much consumption later they're foregoing by consumption now, or that they're simply paralyzed by the complexity of decisions they have to make, and make no decisions.  The fact that people's 401k contributions seem to depend a lot on what defaults the company sets blows a huge hole in the theory that they're making rational decisions with their 401k.

[dps]

And retired people don't need to live where the jobs are.

Yeah, but not really relevant if you want to follow my advice and have the mortgage paid off before your retire.

Property taxes though...

Lots of places give senior citizens some sort of exemption or deduction from property taxes.

[Admiral Yi]

There is nothing to loot if you don't invest enough in the first place.  Yes, you can make an argument that people are rationally choosing consumption now over consumption later, but that's again substituting ideology over understanding of how people actually function. 

A far more realistic explanation is that they don't understand how much consumption later they're foregoing by consumption now, or that they're simply paralyzed by the complexity of decisions they have to make, and make no decisions.  The fact that people's 401k contributions seem to depend a lot on what defaults the company sets blows a huge hole in the theory that they're making rational decisions with their 401k.

Who in the world are you talking to? 

[Valmy]

And retired people don't need to live where the jobs are.

Yeah, but not really relevant if you want to follow my advice and have the mortgage paid off before your retire.

Property taxes though...

Lots of places give senior citizens some sort of exemption or deduction from property taxes.

Yes...I guess I should know that since that turned out to be an unexpected bonus of living in a multi-generational home.

[DGuller]

There is nothing to loot if you don't invest enough in the first place.  Yes, you can make an argument that people are rationally choosing consumption now over consumption later, but that's again substituting ideology over understanding of how people actually function. 

A far more realistic explanation is that they don't understand how much consumption later they're foregoing by consumption now, or that they're simply paralyzed by the complexity of decisions they have to make, and make no decisions.  The fact that people's 401k contributions seem to depend a lot on what defaults the company sets blows a huge hole in the theory that they're making rational decisions with their 401k.

Who in the world are you talking to? 

No one now.

[Monoriu]

As opposed to not understanding basic financial management, the fatal mistake is in thinking that as long as they belong to some group, "they'll be fine".  They'll be fine is really euphemism that other people in the group won't watch them suffer.  As long as I belong to these social groups, be they my nation, my race, my family, my neighbourhood, my social circle, and I make meaningful contributions, maintain reasonable relations with others, I'll be helped when I need it. 

This faith is misplaced.  Because in the age of capitalism, it is very possible to do it on your own.  Difficult, maybe.  Possible, yes.  The folks who plan retirement on their own don't have much incentive to do the reciprocal thing.  The political method only works if there is sufficient political support, and there isn't. 

[KRonn]

This is interesting and probably quite true, because even though I've been saving since my 20s I still feel like I should have planned to have more. And financial pundits constantly say you need up to a million or maybe a bit less, depending on your retirement plans. I think that's a bit high of a predictor of need but what it does show is that most people can't save that much. With kids, mortgages, other bills it's hard enough to save, never mind saving that much.

[Habbaku]

The $1 million figure is thrown around a lot, but is mostly geared around a rather high standard of living in retirement. Most people making under $40,000/year before retirement definitely don't need the traditional $40,000+Social Security/year in retirement income, but significantly less. Accounting for Social Security payments as well, the number for a lot of middle-class retirees is significantly lower.

As always, "it depends".