A Dumb Lot We Are


Employers are a short-sighted dumb lot after all. A few years back the in thing was to convert pension plans to what is called a cash balance plan, translation; sort of a pension but with far less of a benefit in the years ahead.

Then when that was done, they began eliminating all pensions in favor of the 401(k) plan. Ok, so a 401(k) plan is better than nothing.

Today less than 17% of American workers in the private sector have a pension to count on; about 60% have a 401(k) plan.

But now employers are really getting smart. With 401(k) accounts in the dumper (temporarily at least), a growing number of employers are breaking their promise to workers and eliminating or suspending the employer matching contributions into the 401(k) accounts. Whoopee, now it will take even longer to recover and that much more difficult to save for retirement.

Isn’t it ironic that we are creating a whole generation of workers who will have limited sources of income in retirement other than Social Security at a time when Social Security itself is headed for trouble? And, we will have a generation of retirees who wont have the money to spend on the goods and services made by the companies who are now contributing to the inability for workers to have a viable retirement. But, hey the savings rate in the US is jumping like crazy we are already up to about 4% and climbing. At that rate the average 45 year will be able to retire in a manner to which they are not accustomed by about age 83.

What will people do? Well, for one thing they may not retire which creates a whole different set of implications for companies and for new workers looking for jobs in the years ahead. Penny wise and pound foolish comes to mind, but employers are notorious for not being able to think beyond their next earnings report and politicians have an uncanny ability to create laws that are counterproductive and are now in the process of attacking the 401(k) plan as a failure. There is a failure alright; it’s called a dearth of common sense.

I read in various publications all the steps people are taking to cope with the is economic crisis¨ like not using credit cards, not buying what they don’t need, paying off debt, giving up a vacation they planned but were going to charge, eating out less, telling their kids they can’t have whatever they pick up in the toy store. I say to my self, no wonder I am not feeling the crisis, cheapskate that I am I never did any of that stuff in the first place. Go figure.

I never took any of my four children to Disneyworld ® when they were small because I could not afford it. Now in their 30s they all still remind mind of this failure as a parent. But I’ll show them, now I am retired and I’m going to take my grandchildren.

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