End of the Risk-free Retirement

For about half a century, our ruling class has encouraged the plebs in the idea of "retirement."  The idea is that after a life of work you can retire from daily toil and kick back.  As a right.

Maybe the government would kick in with a pension, as with Social Security.  Or maybe your rich corporate employer would kick in with a defined-benefit pension.  Then there are all those tax-advantaged savings programs like IRAs and 401(k)s.

But the truth is, according to Megan McArdle, is that there is no such thing as a risk-free retirement.  We've seen the corporate pension go the way of the Studebaker.  And now we see that public-employee pensions are in the same mess as corporate pensions of a generation ago.  You get into an economic downturn and suddenly your promises are worth nothing.

McArdle develops a mantra for this problem.  The future is uncertain, she reminds her readers, and you can't make that uncertainty go away.

We shouldn't have been surprised--however much financial planners may boast of reducing risk, it is rare for financial risk to actually disappear.  What we do is move it around, maybe transform it a bit.  But the risk always remains.

You cannot get to age 65 (or whatever), quit work, and say: Now I'mm checking out, so my pension, my Social Security, my savings can take care of me.  The future is uncertain. Period.

Retirement always was something of a fantasy.  It presumably developed out of the idea that a manual worker really is clapped out -- but actually well before age 65 -- and unable to work.  So noble government would propose programs and mandates to take care of the needy and the elderly.

Trouble is that governments are all in the business of looting the world for the benefit of their supporters.  And old people are an obvious source of loot.  So even if you think that everything is hunky-dory, chances are some war, some inflation, some confiscation, some disaster will come along and spoil all your plans.  The government will come and tap your savings like in Cyprus.

Cooler heads are saying that it is time to forget about retirement.  You need to be able to respond to whatever the world throws at you.  Older people like me need, in other words, to be employable and adaptable, just like any other responsible adult.  When you start to decline mentally and or physically so that you cannot take care of yourself then it is time to dip into savings and pensions, and maybe throw yourself on the mercy of your children.

Right now, of course, after a century and a half of Marxism, socialism and progressivism, we have the worst of all worlds.  We have the 47 percent that thinks it is "owed."  And we have numerous special interests with the power to loot the commonwealth.  We built powerful government to help the poor, but most of the time it just helps the ruling class.

Whether or not this is just, it means that the economic relations between worker and employer, between debtor and creditor, between spender and saver, between young and old, are grievously distorted by political meddling and outright looting.  It means that necessary adjustments are very hard to make.  It means that ordinary people will suffer.

Because the future is uncertain.  If you guarantee the future for Bill then it means that you will make the future even more risky for Pete.

And the moment we think that we have figured it all out is the moment that the universe decides to give it to us, good and hard.