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In Olden Days, people who worked for an employer got a pension. The pension would pay $X/month (a percentage of your salary), maybe indexed to inflation. That was a pension you could depend on, surety you could use to plan your old age.
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Today we call it a "defined benefits" pension but back then, we just called it a "pension."
In the 1970s, these gave way to "market-based" pensions, AKA 401(k)s.
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In the 1970s, these gave way to "market-based" pensions, AKA 401(k)s.
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The theory was that instead of knowing how much you'd have to live on when you were retired, you'd take some of your wages and put them into a stock market that you didn't understand and were unqualified to participate in and cross your fingers.
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This was always going to end badly, but it was sold with sweeteners that gave it a veneer of plausibility in the 1970s (they were big on veneers in the 70s!).
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401(k)s came with massive tax breaks, so every dollar you put into your pension automatically earned 9.2% in annual savings, an incredible ROI.
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But over the years, these tax advantages have vanished. Today, the 401(k) tax break is 0.6% - and your fund manager takes 1-2% out of your savings for managing this money, leaving you in the hole before you make your first transaction.
https://www.bloomberg.com/opinion/articles/2020-07-21/401-k-plans-no-longer-make-much-sense-for-savers
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https://www.bloomberg.com/opinion/articles/2020-07-21/401-k-plans-no-longer-make-much-sense-for-savers
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All of this is kind of moot anyway. In reality, almost no one has any excess income to put into a 401(k), because of decades of wage stagnation. Those people who DO have retirement savings are likely to raid them and incur massive tax penalties once the stimulus runs out.
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I've low-key suspected that part of the GOP program of coronavirus denial was a tacit desire to head off the political challenges of a massive cohort of retirees with no savings and anemic Social Security.
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Those people weren't going to dig holes, climb in and pull the dirt in over them. Nor would they consent to starve quietly on the corner after they got evicted.
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They would become a new, grey Bonus Army, successor to Occupy, demanding mass-scale redistribution from the sharks who stole their futures. Old people vote like crazy, after all, and there's a limit to how long you can blame their all-Alpo diet on Jina and racialized people.
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Remember in March when Texas Lt Governor Dan Patrick said that old people had a patriotic duty to commit suicide so they wouldn't burden the economy?
https://www.vanityfair.com/news/2020/03/dan-patrick-coronavirus-grandparents
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https://www.vanityfair.com/news/2020/03/dan-patrick-coronavirus-grandparents
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Talk about saying the quiet part out loud!
Image:
Tom Woodward (modified)
https://www.flickr.com/photos/bionicteaching/13320631423
CC BY-SA
https://creativecommons.org/licenses/by-sa/2.0/
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Image:
Tom Woodward (modified)
https://www.flickr.com/photos/bionicteaching/13320631423
CC BY-SA
https://creativecommons.org/licenses/by-sa/2.0/
eof/
