Will today’s workers ever be able to retire?

401(k)s, Social Security, and bold proposals, once unthinkable.

Next:Economy Newsletter "Retirement is getting farther out of reach." Generated with Adobe Firefly.   A life of never-ending labor A good job used to pay a salary that would cover needs like food and housing—and leave you something for retirement. But according to findings from Boston College's Center for Retirement Research (per MarketWatch), "39% of today's working-age households will not be able to maintain their standard of living in retirement." And as USA TODAY reports, "Research from labor economist and professor at The New School for Social Research Teresa Ghilarducci shows just 10% of Americans between the ages of 62 and 70 who are retired are financially stable." Gen X, next in line to retire, may be "the least-prepared" generation of all. In a recent survey, nearly half of the respondents "worr[ied] that retirement may not be an option," while "fully 50% of them sa[id] their main retirement planning mechanism is to avoid thinking about it altogether." These dire circumstances have forced many who would like to retire to keep working until they're physically unable to continue. Bloomberg spoke at length with Ghilarducci on what's gone wrong and how we might solve it. Her key takeaway: "It's unreasonable to think that it's just the person, an individual person's responsibility": No other country requires the individual to do so much for their retirement planning than the United States. We moved away from traditional pension plans—where if a worker worked, they were just put into a plan, that money was managed for them, they couldn't choose. We moved into 401(k)s, where the worker had to decide how much to invest, whether or not to invest, and had to choose an employer that actually provided the plan. Most employers do not. + From The New York Times: "The Income Gap Jeopardizing Retirement for Millions" + Another knock-on effect: When older workers can't retire, younger workers can't advance in their careers. + From Rest of World: "Forget Retirement. Older People Are Turning to Gig Work to Survive."   Was the 401(k) a mistake? The New York Times Magazine offers a brief history of the 401(k) and (also citing Ghilarducci) presents the cases for and against it as the foundation for retirement planning. Here's the problem: Historically "the main beneficiaries [of 401(k)s] have been higher-income workers; instead of making an economically secure retirement possible for more people, 401(k)s have arguably become another driver of the inequality that is a defining feature of American life." Solving the retirement crisis will take a great deal of effort and political will—but it can be done. The New York Times asked experts how they would fix our "$25 trillion system of retirement savings": much of their advice was aimed at making 401(k)s more widespread, more equitable, and "more like pensions." + Deeper reading: Work, Retire, Repeat—The Uncertainty of Retirement in the New Economy, by Teresa Ghilarducci + From Forbes: "Will 2024 Be the Year of the Pension Comeback?"   What about Social Security? It's been clear for a long time that Social Security benefits can't make up the difference in lost retirement savings. But maybe the US could be a little more generous to recipients (if we can figure out how to fund it, perhaps by raising taxes or, more interestingly, by adding general revenue from the federal government). The Washington Post tracked how Social Security breaks down across the globe, and the US is squarely in the middle of the pack. "Many countries face the same pressures as the United States: Their aging populations have fewer workers to support retirees," the Post reports. "But quite a few countries spend more on their public-pension programs than the United States does, with more generous benefits and lower retirement ages." + From Bloomberg: "Tim Walz Reminds Us of Social Security's True Purpose: It isn't a retirement program, but an insurance program, and the return is protection, not dollars." + From The Wall Street Journal: "Many Aging Migrants Pay Taxes. They Stare Down a Retirement With No Benefits." + From the Financial Times: "What Japan's Most Profitable Policy Experiment Can Teach Us"   Experimenting for the future A solution to the crisis won't emerge from tinkering around the edges of retirement plans. We need to think bigger. Universal basic income is one possibility. The popularity of the concept has waxed and waned (over centuries!), but the (most likely unfounded) threat AI poses to jobs has brought it back into the spotlight—and made UBI a political football in the process. A recent study funded by OpenAI's Sam Altman found that "regular payments. . .could never act as a replacement for a job (as some in Silicon Valley have implied)." But Vox's Oshan Jarow contends that " artificial intelligence isn't a good argument for basic income" anyway—rather "the conversation could focus on what basic income can actually be: an effective anti-poverty tool that would neither stave off dystopia nor usher in a leisurely paradise, but instead, just a world with less poverty." The difficulties of scaling UBI make the policy a long shot in the short term, but as I noted in WTF? What's the Future and Why It's Up to Us , at the very least, the conversation has been "a compelling exercise in imagining a radically different way of building a social safety net, and, in thinking through how we might pay for it, a radically different way of dividing up the economic pie." However, as I put it back then (or at least, as Stanford's Rob Reich summed up my argument following a friendly debate I had with thinker Martin Ford), "Universal basic income is just a software patch on the existing system. We need a complete reboot": It's time to end halfway measures that endlessly split the difference between what is needed and what is politically possible. We need bold proposals, once unthinkable. After all, virtually everything we take for granted today was once unthinkable. For millennia, humans dreamed of flying, but it only became possible one hundred years ago. As we face the challenges of the next economy, we need similar flights of boldness and invention. Dreaming the future is not reserved for technologists. The government of the people, by the people, and for the people also requires massive reinvention for the twenty-first century. + From The New York Times: "Is It Silicon Valley's Job to Make Guaranteed Income a Reality?"   —Tim O’Reilly and Peyton Joyce This message was sent to alexvarboffin.abbb@blogger.com. You are receiving this because you've signed up to receive email from us. Privacy Policy | Unsubscribe From All | Unsubscribe From Next:Economy O'Reilly Media, Inc., 1005 Gravenstein Highway North, Sebastopol, CA, 95472 (707) 827-7000