[fgandiya]

What about shifting to a more stable form of retirement instead of the DIY solutions (401ks, IRAs, etc.) pushed since the 80s? As great as they are, there's a lot of BS marketing around 401ks (unless you self manage) and while the market has consistent returns over time, the premise "past returns do not indicate future performance" still applies.

Before then there were pensions which seemed more stable. Only thing I wonder about them is what would happen to the pension if the company went out of business.

[jeffbax]

Public sector pensions are bankrupting states around the country and widely mismanaged. Not to mention extremely politicized and an easy way to get votes by over-promising and kicking the burden to the future.

For all the faults of 401ks and such, they aren't destabilizing state budgets around the country, and the market is in fact relatively stable if you keep it simple. They also aren't dependent on your company remaining solvent for the rest of time.

We can also relatively stabilize Social Security if we want to, but nobody is willing to make the hard choices to do so: http://conversableeconomist.blogspot.com/2019/01/a-plan-to-f...

Until then, we'll suffer the consequences of turning anti-immigrant, years of property value getting held hostage by the few, and politicians who are fiscally irredeemable at this point (another bomb that will drop on our heads eventually)

[toomuchtodo]

I fully support high marginal tax rates on high earners (70% @ >$5 million/year in income) to help stabilize social security as well as contribute to the general fund. It’s also not a hard choice to make.

I never understand why “tax the ultra wealthy” is always deemed a hard choice, or thought of as untenable. Could they leave the country? Sure! That’s what the exit tax is for upon renouncing US citizenship.

I am not advocating for squeezing the rich to death like a python, but argue that the pendulum has swung to far towards “let them eat avacodo toast and watch Netflix”. The pendulum must swing back a bit.

[ardy42]

> I never understand why “tax the ultra wealthy” is always deemed a hard choice, or thought of as untenable.

I think part of the reason is some of those "ultra wealthy" have spent some of their wealth promoting ideas and policies that are favorable to them, though think tanks, etc. I suppose it's kinda like taking out an insurance policy.

[dragonwriter]

> I never understand why “tax the ultra wealthy” is always deemed a hard choice, or thought of as untenable.

Because the ultra wealthy have disproportionate control of the mechanisms of communication and propaganda and don't want to be taxed.

[renholder]

>Only thing I wonder about them is what would happen to the pension if the company went out of business.

I can't speak for how they're managed in the states but, in Europe, pensions can be handled in various ways[0]. Generally speaking, they're considered more secured (e.g.: FDIC insurance in the states) than bank accounts and are independent of your actual employer (and follow you, whever you go - even overseas [dependent on bilateral agreements]).

[0] - https://www.pensionsmyndigheten.se/other-languages/english-e...

[Gibbon1]

In the US we have the Pension Benefit Guaranty Corporation. It's responsible for paying out pensions of companies that go bankrupt. This I think was the outcome of Studebaker terminating it's pension plan in 1963.

One change I'd like to see is if a company goes bankrupt the pension fund is ahead of the rest of the creditors. Also underfunded pensions should be considered a liability on the books.

[BostonEnginerd]

There is a benefit guarantee corporation run by the federal government which takes over insolvent pension funds. First thing is that they cut benefits to the maximum covered amount of $67k/yr.

There is a ton of BS in the financial services industry for sure.

[soperj]

You could easily set up a state(or federally) run pension company that companies would contribute to. That way they couldn't be underfunded either, and there'd be some oversight. They do it for public service workers in Canada.

[Gibbon1]

The US Federal government has a pension plan for government employees in lieu of Social Security. None of this is any sort of Financial Wizardry. Mostly depends on demographics and demographics seldom surprises.

[jki275]

The US Federal government FERS plan is not in lieu of Social Security, it is a supplement to it. It's relatively small, about 1% of high 3 year salary average per year of service.

[Gibbon1]

Since my dad joined the federal government before Reagan he got 2%

[jki275]

CSRS was a very different pension plan, and those under CSRS did not contribute to nor draw social security. CSRS was phased out in the 80's, I don't recall exactly the year. All new federal employees since then contribute to social security and are under the FERS system.

[rootusrootus]

Pensions are insured, so in theory you can't lose everything just because the company went tits up.

Also, I don't have statistics handy but as I recall, we tend to think today that pensions were far more common in the past than they really were.

[deathanatos]

> Also, I don't have statistics handy but as I recall, we tend to think today that pensions were far more common in the past than they really were.

Best I could find was [1]. 60% of private sector workers covered in 1980 vs. 10% in 2006. Seems to me the reputation is appropriate.

[1]: https://economix.blogs.nytimes.com/2009/09/03/pensions-1980-...

[rootusrootus]

I may be misremembering, then. I had seen different numbers than that. It may also be that what I'm remembering is a comparison from farther back that explains that the pensions of 30 years ago were a brief blip and that what's going on now is we're reverting to the long term mean. Or I'm entirely wrong, which there is a lot of precedent for.

[zitterbewegung]

If the company went out I’d business and the pensions had enough to cover the people with pensions then it would operate as usuall as long at it is solvent.

[RickJWagner]

Back in the runup to the election of 2000, George Bush proposed investing Social Security funds in the stock market. Al Gore took the other side of the argument, correctly stating that the market carries risk.

Of course the long arc is always up. Today's market is far above where it was, even after the crashes of 2000 and 2008.

It's an idea that probably should be revisited.

[porpoisely]

"The market has consistent returns over time" is simply PR to get people to throw their money in. No different than the PR about bitcoin or any other asset/investment/gambling.

"The market" ( which primarily means the S&P 500 ) has only been around a few decades. Talk about "consistent returns is silly for such a short time frame. Also, if we look at other "markets", like the Nikkei for example, we know that the market doesn't have consistent returns over time.

The biggest problem with 401ks is that if you retire during a major market decline, you will be hurting immensely. Of course if you retire during market booms, everything is wonderful. Not to mention that most people don't earn enough and/or put enough in 401ks for it to really matter.

Ideally we would have government back/protected/insured pensions, just like congress has pensions for itself. But somehow they ended up with pensions and we got 401ks. We already had IRAs so if people wanted to directly be involved in the market, they had the choice. 401ks seem redundant to me. Pensions and IRAs seem complementary.

A interesting tidbit - when my company started offering 401ks in the 90s, apparently their match was 25% ( according my old co-workers who were around ). Now it's 3%. Go figure. It seems like companies dangled high matches to get national support for it and once the legislation passed, they cut their match over and over again. Another interesting note is that the old co-workers match are grandfathered in - which means they get that match til they leave. So it seems like corporate america, politicians and the older working generation threw the younger generation under the bus.

[nradov]

Defined contribution plans like 401(k) are far safer for workers than defined benefit pensions. With a 401(k) you have a numbered account and you really own the assets in it. They can't be arbitrarily taken away. And if you want lower risks as you approach retirement just shift your asset allocation from stocks to highly rated bonds; in fact many plans now have a default lifecycle fund which does that automatically.

Pensions might appear safe but it's all an illusion. If the employer becomes insolvent then you'll only receive a fraction of what you're owed; PBGC insurance is very limited.

[zozbot123]

> Before then there were pensions which seemed more stable. Only thing I wonder about them is what would happen to the pension if the company went out of business.

"Seemed" is exactly the right word to use, there. At least you're asking the right questions though, so please don't feel so unhappy about it! Here's a hint which has remarkable general usefulness: if something sounds too good to be true, it usually is.

[mortenjorck]

The more glib the delivery, the higher the burden of proof.

(Not that I'm saying you're wrong, but you're already dealing with vagaries such as "seemed more stable.")

[mrep]

> Before then there were pensions which seemed more stable.

That's the problem. Companies/governments said they were stable but they were in fact not because they were based on the capitol returns which as you said "past returns do not indicate future performance". This lead to a bunch of companies/governments overpromising pension payouts and now they either get screwed if it was a company that went/is going bankrupt or the taxpayers get screwed because they are on the hook for those overly generous pension payouts.

[Gibbon1]

Depends, a lot of companies used the pension fund to buy back their own stock. Not that companies didn't also use 401k's for the same purpose with the same result. See Enron's 401k plan.