The article actually goes on to discuss the modeling of retirement shortfalls in more detail and makes the case that the problem is not as bad as it seems initially. From the last paragraph:
> But as of today, we can reasonably say that the retirement income challenge is smaller than many people claim and retirement income security is likely to improve over time.
But the previous paragraph talks about a possible problem:
> None of this means there isn’t work to do. If Social Security were to go insolvent, triggering 20% or more in benefit cuts, that truly would be a retirement crisis for low- and even middle-income seniors.
From what I’ve read, a reduction in social security benefits is inevitable unless there is a massive increase in the funding (taxes) for it. I don’t know if that is feasible either, politically. Maybe the reality is everyone just has to accept a lower quality of life to save more for retirement, or a lower quality of life in retirement.
> Moreover, as the Morningstar report shows in detail, making retirement accounts more widely available and automatically enrolling workers can help close gaps in retirement security.
I assume this isn’t about pensions. Personally I don’t trust them, and have read that many pensions actually are in the red financially. I’ve also seen articles where employees had their pensions cancelled - I think if the business goes bankrupt you may not get your benefits that you put in years of work for. Anyone know the legal details of how that works?
Social security will be topped up from the general fund, this is a given. You should ask why so many retirees are retiring with insufficient assets.
Why don’t you trust pensions? Because of failure scenarios. But, most humans are not sophisticated enough to manage their retirement assets themselves. Humans are terrible at this sort of financial planning, and need systems to protect and insulate themselves from poor outcomes. We absolutely can do better. When we don’t, that is an intentional choice. Pensions contributions from orgs have become shareholder returns or management comp.
> Social security will be topped up from the general fund, this is a given.
I do not think you understand the magnitude of the funding gap that is coming. It’s on the order of needing to double or quadruple the SS tax, and will be large enough to significantly impact quality of life for workers.
I don’t think it’s out of the realm of possibility that people able to work balk, especially given that previous and future generations were never taxed this hard for the elderly.
> Moreover, as the Morningstar report shows in detail, making retirement accounts more widely available and automatically enrolling workers can help close gaps in retirement security.
This is what Australia has been doing for a number of decades now.
I may misunderstand something, but isn't this how it works in most of the world? Certainly in the whole Europe. Social security contributions are mandatory for everyone and invested by state.
It's different in that it's funded by employers, but unlike the old defined benefit pensions it's portable throughout your career. You can also move between investment funds based on their fees, performance or whatever other factors you consider appropriate.
Systems differ by country, and part might be paid by state, part from non-governmental managed funds. Yet contributions are taxed from income. And then there is whole split between private, municipal and state employees. Also in some countries it is not personal fund, but defined pension based on contributions with different times affecting in different ways.
In general mandatory contributions that are then managed by myriad of ways. With possibly different ways of payouts.
The article actually goes on to discuss the modeling of retirement shortfalls in more detail and makes the case that the problem is not as bad as it seems initially. From the last paragraph:
> But as of today, we can reasonably say that the retirement income challenge is smaller than many people claim and retirement income security is likely to improve over time.
But the previous paragraph talks about a possible problem:
> None of this means there isn’t work to do. If Social Security were to go insolvent, triggering 20% or more in benefit cuts, that truly would be a retirement crisis for low- and even middle-income seniors.
From what I’ve read, a reduction in social security benefits is inevitable unless there is a massive increase in the funding (taxes) for it. I don’t know if that is feasible either, politically. Maybe the reality is everyone just has to accept a lower quality of life to save more for retirement, or a lower quality of life in retirement.
> Moreover, as the Morningstar report shows in detail, making retirement accounts more widely available and automatically enrolling workers can help close gaps in retirement security.
I assume this isn’t about pensions. Personally I don’t trust them, and have read that many pensions actually are in the red financially. I’ve also seen articles where employees had their pensions cancelled - I think if the business goes bankrupt you may not get your benefits that you put in years of work for. Anyone know the legal details of how that works?
Social security will be topped up from the general fund, this is a given. You should ask why so many retirees are retiring with insufficient assets.
Why don’t you trust pensions? Because of failure scenarios. But, most humans are not sophisticated enough to manage their retirement assets themselves. Humans are terrible at this sort of financial planning, and need systems to protect and insulate themselves from poor outcomes. We absolutely can do better. When we don’t, that is an intentional choice. Pensions contributions from orgs have become shareholder returns or management comp.
> Social security will be topped up from the general fund, this is a given.
I do not think you understand the magnitude of the funding gap that is coming. It’s on the order of needing to double or quadruple the SS tax, and will be large enough to significantly impact quality of life for workers.
I don’t think it’s out of the realm of possibility that people able to work balk, especially given that previous and future generations were never taxed this hard for the elderly.
I am acutely familiar with the math.
> Moreover, as the Morningstar report shows in detail, making retirement accounts more widely available and automatically enrolling workers can help close gaps in retirement security.
This is what Australia has been doing for a number of decades now.
https://en.m.wikipedia.org/wiki/Superannuation_in_Australia
I may misunderstand something, but isn't this how it works in most of the world? Certainly in the whole Europe. Social security contributions are mandatory for everyone and invested by state.
It's different in that it's funded by employers, but unlike the old defined benefit pensions it's portable throughout your career. You can also move between investment funds based on their fees, performance or whatever other factors you consider appropriate.
Systems differ by country, and part might be paid by state, part from non-governmental managed funds. Yet contributions are taxed from income. And then there is whole split between private, municipal and state employees. Also in some countries it is not personal fund, but defined pension based on contributions with different times affecting in different ways.
In general mandatory contributions that are then managed by myriad of ways. With possibly different ways of payouts.