Is the Retirement Crisis Really a Crisis?
PBS Frontline recently presented a documentary called “The Retirement Gamble” which examines the role of the financial services industry in the developing retirement savings shortfall facing a large number of Americans. According to PBS correspondent Martin Smith, “half of Americans say they can’t afford to save for retirement while 1/3 have next to no retirement savings at all.”
Jack Bogle, founder of Vanguard, is on hand to give some wise counsel for future retirees. The Wall Street Journal’s Jason Zweig also provides some insight.
Bogle points out that an investor paying management fees of two percent annually will give up over 60% of their capital over a period of 50 years.
SMA Comment: A lot has been documented recently regarding the “looming retirement crisis,” along with the rich getting richer, while the poor and middle class stagnate. It is true that many seniors will be subsisting on low-cost food (perhaps even cat food) and living in trailer parks, or worse, as one subject in the documentary mentions.
That there is a problem with retirees being short on funds should be expected in a culture that bombards and brainwashes individuals to consume every dime they come across during their working lives, or even borrow to “stay in fashion.” Several of the struggling boomers, including documentarian Smith himself, are shown peering into their Apple Macbooks and iMacs.
Additionally, the financial services industry isn’t helping seniors by convincing them to invest their meager life savings in actively managed funds where they get clipped by 1-2% per year on average. These onerous fees tend to devastate the returns of accounts set aside for retirement. A number of $155,000 was thrown out regarding the average fees a holder of a 401k will pay over their plan’s lifetime.
However, is this really a crisis?
Seniors having less is actually good for the environment, as their carbon footprint is on the decline. The bottom 90%, whose economic influence wanes, drive around less, are forced to monitor their electricity consumption, and so forth. The top 10%, whose wealth continues to increase geometrically, can travel a limited amount and consume only so much steak and lobster. Is it not a good thing for the sustainability of planet Earth that wealth gets re-distributed from prospective retirees to the Wall Street elite?
Also, many seniors short on retirement funds will be forced to continue working, which may actually be good for their physical fitness, well-being and sense of worth.
Where is the crisis?