Destor - are you still "social libertarian, economic liberal"? :-) :-)

I think it's a very interesting topic with lots and lots to think about, but it doesn't have the feel of an epic battle and will likely go down unnoticed.

It's highly commendable that the administration is trying to do something about the retirement planning by Americans, but (predictably) I disagree with the method while agreeing with the aim.

It seems to me that Democrats are caught in between the ideals of social justice and providing for those at or below poverty on the one hand, and declining personal responsibility on the other.

But it's highly likely, if not certain, that the latter is the result of the former.

People save less because the compelling need for them to do so has been removed. You can live recklessly and still get bailed out by the government when you reach certain age.

I think the "opt-out" 401(k), together with the entire package of proposed and existing mechanisms, are actually going to make the problem worse, because they explicitly encourage behavior that's causing the problem in the first place.

We also need an absolute commitment to social security -- more funding and yes, more generous benefits.

There's a letter for you regarding that from Timothy Geitner, Kathleen Sebelius, Hilda Solis and Michael Astrue, here:

http://www.ssa.gov/OACT/TRSUM/index.html

I myself am not looking forward to retirement because I already see a lot of resentment towards baby boomers from the younger generations on the net, and I'm a mid-boomer, and I have this picture of them throwing rocks at us by the time I retire because of the larger and larger chunks coming out of their paychecks. It's actually one reason why I am fully supportive of raising the age--back when Social Security was invented, many more people were croaking before hitting 65--I'd be glad not to take Social Security until like 75 if they would not bitch about paying for some of my health care starting at 65.

Rec'ed for the smart discussion on something besides healthcare.

However - markets are predicated on future growth. Without future growth, there is no reason for stocks to go up.

Future growth is predicated on (essentially) two things:

a) increased number of point-of-buy (e.g. consumers, broadly defined). Going with the idea that the planet is finite and can only house so many people -- and that we are damned close to maximum now, if not past it -- this is going to be a non-starter. Already we are clearly running out of accessible (and inexpensive) potable water... and we are poisoning a good bit of it as well. That's enough to cause a crisis in population growth and level things off (if not actually shrink, which is more likely).

b) accessible, cheap sources of energy to fuel industry and innovation. The "future shock" of the past 150 years is a result of our using up in an instant a resource that takes millions of years to form. Sadly much of is was used for simply destruction (e.g. war). We are presently at the point where we have used more than 1/2 of all available (peak oil), meaning that the next 1/2 will be much more expensive (you find the easy 1/2 first!). Quaint notions of sustainable energy aside (which is another blog in and of itself), it is the cheapness of the energy that is critical. The pure profit motive would indicate that there are no sources of energy as cheap as oil -- as who wouldn't want to invent the technology to become the next Standard Oil?

As a result of these two facts (no market growth and no fuel to grow economies), the stock market in 20-30 years may well look like the mercantile exchanges of 200 years ago.

In other words, the whole notion of 'retirement' is going to go out the window.

The 401k the government invented in which I have participated has ended up a big lie. Tens of millions of Americans have seen their 401k plans lose half or more of the accumulation ever since the tech meltdown of 2000. It is a crock of shit.

Whatever they do it has to come with some form of certainty so people who save all their working lives don't get shafted by Wall Street or someone else fucking up. There are a lot of people looking at their retirements evaporating into thin air because of the irresponsible actions of Wall Street and government isn't doing one thing to the persons who caused it. And the worst part is government invented this and sold it to the American worker with big promises of safe investments. I remember it very well and we have very plainly been lied to. This is possibly the biggest rip off ever in history.

Your idea of a government match of 3% sounds disturbingly like Republican ideas for privatizing Social Security. It's hard to picture a source of revenues for this other than increasing the SS tax, so isn't this the same thing? If so, wouldn't we be better just kicking the extra moneys towards the trust fund and upping regular payments?

Couple of problems here I think Destor. First, you need work to have enough money to put toward any kind of retirement. Second, the upper crust of American society don't agree with your conclusion about retirment being the sort of thing people deserve. They absolutely believe that work should be cradle to grave. That's why they've worked so very hard these past 40 years to destroy every support in society for the middle class.

"This year, because of temporary deflation, Social Security recipients got no cost of living increase."

*Not true*. The Social Security COLA for 2009 was 5.8%, the highest in over 25 years. (There won't be any COLA in 2010, however.)

I understand your objection to "opt-out" provisions (or auto-enrollment as most HR people call it) Destor. It does seem coercive. However, it is the only technique that has proved effective in increasing participation in 401(k) plans. And while it does feel a little "big-brotherish" companies end up spending more on retirement benefits when they auto-enroll simply because they end up paying the match to employees who otherwise would have sat our and missed the match. In fact, I know of companies that have decided not to implement auto-enrollment simply because they were worried that doing so would cost them too much.

One thing people often don't understand in these debates is the difference between individual account-type plans and group benefits. In an individual account-type plan, money is put into an account (by the individual, his employer, and/or the government) and invested. The individual owns the assets in the account. The problem with this type of benefit is there's no risk management feature to protect the individual from things like a downturn in the market at an inopportune time (i.e., at retirement age), loss of income (and therefore inability to fund the account), early need for the benefit (because of disability), a longer than expected lifespan, or greater than expected inflation.

Group benefits (like pensions, Social Security, and certain private-sector annuity plans) provide some risk management features similar to insurance. The basic concept of all group benefits is that the desired benefit is defined, the likely variation in individual experience is accounted for, and then the funding (contributions) are set accordingly so that every individual can receive the defined benefit (say a monthly payment for life) regardless of what happens to him as an individual. In a group benefit a person who dies young, for instance, subsidizes a person who lives long, but both people have the peace of mind that if they happen to be the one who lives long they'll be taken care of. While individual account type plans (like a 401(k)) have their uses--they are excellent ways for people to get something more than the average benefit--they are not good ways of providing basic social insurance. Group benefits are far more effective. Unfortunately, however, group benefits seem to have fallen out of favor. Employer pensions are rapidly disappearing, Social Security is under threat, and private-sector annuities have long been out of favor both because the insurance companies that offer them overprice them and because people have been convinced by their own greed, by the financial industry's marketing efforts, and by right-wing pseudo-capitalist ideology that chasing returns in the stock market is the way to protect their futures.