{"id":174,"date":"2014-12-01T16:00:00","date_gmt":"2014-12-01T22:00:00","guid":{"rendered":"http:\/\/admin.patheos.com\/blogs\/janetheactuary\/2014\/12\/is-work-save-move-the-solution-to-americas-pension-crisis.html"},"modified":"2016-08-16T09:56:32","modified_gmt":"2016-08-16T15:56:32","slug":"is-work-save-move-the-solution-to-americas-pension-crisis","status":"publish","type":"post","link":"https:\/\/www.patheos.com\/blogs\/janetheactuary\/2014\/12\/is-work-save-move-the-solution-to-americas-pension-crisis.html","title":{"rendered":"Is “work, save, move” the solution to America’s pension crisis?"},"content":{"rendered":"\n<\/head>

So says the \u201cButtonwood\u201d columnist<\/a> at the Economist, which everyone is now tweeting. \u00a0This is based on a freshly-published book, Falling Short: \u00a0The Coming Retirement Crisis and What to Do About It<\/i>, by Charles D. Ellis, Alicia H. Munnell and Andrew D. Eschtruth ($27.50 for a 168-page book? \u00a0Not on my wishlist.) <\/p>\n

Back when I started blogging, everyone was all about state and local unfunded pensions as \u201cthe other pension crisis,\u201d that is, because Social Security is the first \u201cpension crisis.\u201d \u00a0I tried to be clever and call American\u2019s lack of sufficient employer-sponsored pensions or private savings as the \u201cother other pension crisis<\/a>,\u201d but since I had maybe half a dozen readers, it didn\u2019t quite catch on.<\/p>\n

Anyway, let\u2019s look at this prescription:<\/p>\n

Work<\/b> = Americans will have to plan to work until age 70 to compensate for lack of retirement savings. \u00a0This may work for some, but it\u2019s very iffy to rely on this as government policy. \u00a0(See \u201cIs \u2018I just won\u2019t retire\u2019 a feasible solution?<\/a>\u201d also from early blogging days.) \u00a0Life expectancy is increasing, but if you think this means that people can consistently still work physically or, more likely, intellectually demanding full-time jobs up to age 70, well \u2014 what world do you live in? \u00a0What\u2019s more, while we have age-discrimination laws on the books, it\u2019s simply a given that someone who\u2019s reached their 60s will have a very hard time finding a job if they become unemployed for whatever reason. <\/p>\n

What is an option is phased retirement, that is, employers allowing their older employees to work part-time, and in less-demanding jobs, or workers changing careers to less-demanding work. \u00a0But this hasn\u2019t really caught on (except for store greeters \u2014 and there\u2019s just not that large a market for this job) because, for all that a decade ago, everyone was talking about the impending labor shortage due to Baby Boomer retirements, employers really aren\u2019t that eager to make it possible. \u00a0One incentive: \u00a0allow workers, and their employers, to stop paying into Social Security once they hit Social Security Normal Retirement Age.<\/p>\n

Save<\/b> =<\/p>\n

The federal government could help by following the British lead, and insisting on, rather than merely encouraging, auto-enrolment, whereby workers have to opt out of, rather than into, pension schemes. Only half of American workers participate in some kind of employer-sponsored pension plan. Auto-enrolment boosts participation by 40 percentage points.<\/p><\/blockquote>\n

What the columnist refers to here is a system in the U.K. called \u201cNEST,\u201d in which all employers are required to provide 401(k)-type plans for their employees, and automatically enroll them, with a match. \u00a0Employees can opt out, but, f I\u2019m not mistaken, periodically they are re-enrolled and have to re-opt-out. <\/p>\n

Of course, this is only half the story. \u00a0The U.K. had, until recently, a requirement that participants buy an annuity with their retirement savings; this has been ended but I expect that it\u2019s still much more the norm to buy an annuity there than here, where Americans basically flounder when it comes to spending their savings in retirement, with the upper middle class seeking out financial advisors who may advise a \u201c4% rule\u201d and the remainder just making their best guess. \u00a0I will once again flog the Harkin Pooled Retirement Plan<\/a>, which attempts to provide an alternative, in the form of shared-risk benefits, with some of the characteristics of annuities but more affordability.<\/p>\n

Move<\/b> = the suggestion that retirees use the equity in their house either by means of a reverse mortgage or by downsizing and using the difference between the house and the condo as extra cash for the bank account. \u00a0(Which reminds me, I have to get back to that Harvard report. . . ) \u00a0This is a limited solution, both because the number of seniors with paid-off mortgages has declined, and because senior-friendly housing (that is, a newer multifamily building, with elevators and in-unit laundries and garage parking) is not necessarily much cheaper than the single-family homes they leave behind. \u00a0But you know I\u2019m all for<\/a>, at a minimum, eliminating the subsidies that we give to seniors who stay in single family homes. <\/p>\n

So I suppose I need to come up with a pithy three word summary of my own solution, so that I can get it passed around, shared, and tweeted, too.<\/p>\n<\/body><\/html>\n","protected":false},"excerpt":{"rendered":"

So says the \u201cButtonwood\u201d columnist at the Economist, which everyone is now tweeting. \u00a0This is based on a freshly-published book, Falling Short: \u00a0The Coming Retirement Crisis and What to Do About It, by Charles D. Ellis, Alicia H. Munnell and Andrew D. Eschtruth ($27.50 for a 168-page book? \u00a0Not on my wishlist.) Back when I […]<\/p>\n","protected":false},"author":2209,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[450],"tags":[126],"class_list":["post-174","post","type-post","status-publish","format-standard","hentry","category-actuarial","tag-retirement-savings"],"yoast_head":"\nIs "work, save, move" the solution to America's pension crisis?<\/title>\n<meta name=\"description\" content=\"So says the "Buttonwood" columnist at the Economist, which everyone is now tweeting.  This is based on a freshly-published book, Falling Short:\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.patheos.com\/blogs\/janetheactuary\/2014\/12\/is-work-save-move-the-solution-to-americas-pension-crisis.html\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" 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