Expand Social Security, get rid of 401Ks

mathbabe

People, can we face some hard truths about how Americans save for retirement?

It Isn’t Happening

Here’s a fact: most people aren’t seriously saving for retirement. Ever since we chucked widespread employer based pension systems for 401K’s and personal responsibility, people just haven’t done very well saving. They take money out for college for their kids, or an unforeseen medical expense, or they just never put money in in the first place. Very few people are saving adequately.

In Fact, It Shouldn’t Happen

Next: it’s actually, mathematically speaking, extremely dumb to have 401K’s instead of a larger pool of retirement money like pensions or Social Security.

Why do I say that? Simple. Imagine everyone was doing a great job saving for retirement. This would mean that everyone “had enough” for the best-case scenario, which is to say living to 105 and dying an expensive, long-winded death. That’s a…

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