Saturday, April 5, 2014

Has the crisis destabilized retiree future?

Interesting take from the WSJ on retirement in America. It echoes a sentiment heard often these days: Social Security isn't going to cut it. Check out the article below. 

"Social Security can’t save us from the poorhouse:" http://on.mktw.net/1hngRlh

Do you think that the government has a responsibility to help stabilize the retirement outlook especially in light of fractured (or evaporated) pensions post financial crisis, or is it on us, the individual to secure our future?

11 comments:

  1. Based on the statistics in the article, I think income inequality has a big role to play in this issue. With any government policy, it looks like it is beneficial to one group or the other of the income inequality line. Therefore, I don't think government will be able to come up with an efficient solution and individuals have to step up to secure their own future. However, government should take the responsibility to push the individuals through the means of education. With better education, individuals would be more cautious about their future.

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  2. i'm wondering... if individuals have to secure their future, does the mean decrease in consumption, personal savings increase, and decrease in financial investments?

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  3. Social security is one of the most successful and socially important government programs we have. It provides a guaranteed income each year to more than 55 million American workers and their families who have lost income (due to retirement, disability or death) and has helped cut the senior poverty rate by more than two-thirds between 1960 and 2008 without causing a single penny of deficit for the U.S.

    Veterans who have become disabled fighting for the United States should not be denied their benefits because of the deficit. Social Security is not causing the deficit; the deficit is mainly a result of the reduced government revenue caused by the financial crisis. I don't think the budget should be balanced on the backs of disabled veterans, rather, we need to increase our ability to provide for those in need by having more progressive taxes on the wealthy.

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  4. I think the Social Security situation is very bleak, so personally I am planning with the assumption that I will not have any monthly paychecks from the government. We were talking about this topic briefly in Moffit's Investment class, and according to a graph he showed us, by about 2030 we will run out of money. If a few changes are made (e.g. extend retirement age), social security could last until about 2037. It would take a large overhaul to make social security more secure for the future. I think the government does have a responsibility to help stabilize the retirement outlook, but of course it's a very political issue.

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  5. It is both the responsibility of the government and of the individual. The government should work to secure us a high quality of life, however they are not perfect. For this reason, the individual should care for his/her own well being, and work to secure a financially stable future.

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  6. I like the ideas of Utsav and Jacob combined. Each individual should be responsible for his own savings. If one is not motivated enough to plan for and take care of one's own future, then it is absurd to ask someone else to do it. But Government is not responsible-free. What they can do is to create an environment and system that encourage each person to own a saving plan. The Gov't can achieve this through educational programs and legal requirement that companies implement saving plans for employees, for eg. In the article that Rasheed shared, it clearly says that "It’s hard to save if your company doesn’t even have a plan."

    Culturally speaking, it is difficult for Americans to cultivate a saving habit in a consumerism economy. Most Americans make purchases using credit cards, which allow them to spend the money they do not have at the moment. Overtime, many may lose sight of the loan and late payment accrued on their credit cards... In Vietnam, many people save but sadly not in the bank accounts! As a result not much money is turned into capital for investment.

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  7. I would much rather have someone else take care of my Social Security when I come of age but I do not see it happening in my future. I think it is up to us to secure our own future.

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  9. I believe it is the individual's responsibility to secure their own future. The cost of social security is rising rapidly and is a major contributor for the massive budget deficit (The annual cost of Social Security and other welfare spending alone exceed annual tax revenues). Like Rick Perry infamously stated, Social Security is a pyramid scheme and essential a failure. I do not trust a bunch of bureaucrats who are heavily influenced by politics to secure my own future. The government controlling people's retirement funds will be seen as socialism by many. I expect the government to stay out of my finances and focus on maintaining economic stability through pragmatic and predictable monetary/fiscal policies.

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  10. If we are talking about individual's responsibility to secure their own future, according to Moffit's advice in the Principles of Investment class, every individual should have saved at least 8 times his/her salary by the time retirement age is reached. However, in order to achieve this I think we need better income redistribution, allocation of saving between companies and individuals, tax incentives, and of course, to educate our people because as I see the situation, only 60% of working Americans are saving for retirement! What is happening to the remaining 40% of working Americans? Why aren't they saving?

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  11. I agree with Ly. The responsibility should be placed primarily on the individual. However, the government should be responsible for guiding individuals towards retirement savings. I think some type of requirement for companies to implement savings plans, as Ly suggested, would be a step in the right direction. It would help ensure that individuals are being responsible for their future.

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