E pluribus hubris

Well, that was a nice "vacation." We came back to WNY and did a lot of clean-up, fix-up, paint-up stuff and put our Fredonia home on the market. The "open house" was yesterday, so things are a little more calm at this point.

Let's talk about retirement and--along the way--America. We seem to live by several familiar phrases. The first to come to mind is, "We're number one!" Often followed by masses chanting, "USA, USA!"

Welcome to the wonderful world of hubris, defined as "excessive pride or self-confidence." We have the world's largest economy and biggest military so we must be doing everything right. We have nothing to learn from smaller nations. God blesses America and He/She certainly wouldn't bless us with inferior solutions to our problems.

So let's look at retirement in America. Remember the "three-legged stool" of retirement planning? Leg one was Social Security, leg two was your pension and leg three was your savings. If you're a retired NYS teacher, you almost certainly have a nice sturdy three-legged stool and, while you're probably not part of the 1%, you probably are able to pay your bills.

Don Esmonde--while discussing the views of a new member of the Clarence school board in this morning's Buffalo News--referred to that pension leg as "...benefits that disappeared in corporate America with the two-martini lunch."

By the way, if you think that replacing pensions with 401(k) plans is a good thing--or even that it makes financial sense--have a look at a post I did called "What's so bad about 401(k)-type plans?" and have your eyes opened!

On May 14, the NY Times published a special section on retirement which included an article by Steven Greenhouse titled, "How they do it elsewhere." Here's the first paragraph: "The United States can boast that it has the world’s best basketball players, fighter jets and country and western singers. But hardly anyone would ever boast that the United States has the world’s best retirement system."

According to Greenhouse, 58% of American workers have neither a pension plan nor a 401(k). Imagine for a moment what your life would be like should your pension disappear. Could you live on Social Security and your savings? Apparently 58% of today's workers will be doing just that.

USAToday ran an article this morning titled "Will U.S. workers ever be able to retire?" It included the fact that "One-third of America's [current] retirees get at least 90% of their retirement income from the [Social Security] program, with annual benefits averaging a modest $15,000 for an individual."

A new report comparing our retirement system with others around the world is referenced by both the Times and USAToday articles. From the Times: "A new report ranking various countries’ retirement systems gives the United States a C, considerably worse than the A received by Denmark and the B-plus given to the Netherlands and Australia. The study, by the Mercer consulting firm and the Australian Center for Financial Services, weighs adequacy of benefits, breadth of coverage and other factors, and points to numerous weaknesses in the American system."

"Those shortcomings include contribution rates too low to assure adequate retirements for middle-class Americans and many workers withdrawing large sums from their 401(k)’s before they retire."

"The report also cites poverty-level retirement benefits for many low-income workers and pensions that fail to keep up with inflation. It also points to the common practice of retirees withdrawing large sums from their 401(k)’s soon after retiring, leaving many without an adequate income stream if they live past 80."

Oh, did I mention that participation in the 401(k) plan at work--if there even is one--is voluntary?

Certainly, there is room for improvement. We could task our Congress with formulating a system which would provide a reasonable assurance of an adequate retirement for all American workers. If other countries can do it, so can we.

Well, there is one small roadblock and it's another much-used phrase in America: "You're not the boss of me!" And up pops the mandate.

Other industrialized nations have discovered that they can provide medical care at half the cost of the USA, while also producing outcomes that are measurably better than ours. This requires, however, that the government mandate that everyone participates.

Awhile ago, I did a blog post which discussed mandates. It was called "We have laws because "please" doesn't work." I would urge you to take another look at it.

Again, from the NY Times piece: "John A. Turner, director of the Pension Policy Center in Washington, said some foreign features might not fit American culture, like mandated participation in the pension system as in Australia and Chile. He does not advocate such a mandate."

“We’re quite different from many other countries,” he said. “There’s an emphasis on individual freedoms and rights and responsibilities versus collectivism — although I admit we will never have high pension coverage without some form of mandate.”

“In the United States, collective is a four-letter word,” agreed Harry Smorenberg, head of a Netherlands-based consulting firm on pensions and founder of the World Pension Summit."

Now if "collective" is such a four-letter word in America, I wonder why the business community spends so much time and money in "team-building" activities. Working together toward a common goal is good for the corporation, but not for individuals?

I remember a world in which conservatives actually brought forth a healthcare plan with a mandate for individuals to purchase insurance because it was a matter of "personal responsibility." Now it seems that any law requiring collective action is "unamerican."

Life would certainly be better without those tyrannical government mandates that we all drive on the same side of the road or obey the speed limit.