Concerning an individual's
personal retirement, this is perhaps the most important question to
ask. But surprisingly, the answers are incredibly baffling so I
strongly encourage everyone reading this article to ask your
friends, relatives, co-workers, and acquaintances this question and
write back to me with your responses.
For myself, I have asked
this question to quite a number of people of all social and economic
statuses and the answers always surprised me to the point that I am
no longer shocked. Today, I can truly understand why a huge number
of Americans have not warmed up to the idea of privatizing social
security. For the most part, the general population seems to have a
poor understanding of what retirement is, much less spending a
lifetime preparing for it.
Below are the possible
responses to this quiz.
Your Employer
Is your employer truly responsible for your retirement? For people
who have been laid off from several jobs due to cyclical downturns
of the economy, the answer is a no-brainer. This group of
individuals knows by experience that an employer will not hesitate
at all to cut an employee. And in today's competitive work
environment, it is no longer uncommon for someone to have gone
through a number of different employers within the past ten years.
Although I can also
understand that certain people do expect their employer to take care
of them during their retirement days because of the type of work
they did for 20 or 30 plus years. Such examples are the military,
teachers, firefighters, police officers, and other types of
government work that may put an employee in harm's way.
But even then, does your job
have total responsibility for your retirement?
And unless your employer is
the government, is it even going to be around for the entire
duration of your retirement?
Yes, an employer gives you
your paycheck but isn't your retirement based on what you do with
the paychecks you get today? In other words, if you spend your
entire paycheck now, what will be available when you retire?
In a way, the perception of
a paycheck is what probably explains why savings has become almost
non-existent for the average American. Savings is at an all time low
while debt for certain people is at an all time high.
In all reality, many people
who are deep in debt tend to view those who have savings accounts as
losers who cannot obtain credit. But who really is the loser when it
comes time to retire? The loser with the big fat savings account and
no debt or the free-spender loaded with debt and no savings?
Yes, your employer does play
a very pivotal role in your retirement but in a totally different
aspect. What you do with a portion of each paycheck will determine
what kind of retirement you have.
Your Spouse/Domestic
Partner/Family
This is an interesting answer because a number of people feel that
their entire retirement is being handled by someone else. And that
may very well be the case but ultimately, your retirement then
depends on how your loved one planned it out.
I don't want to infringe on
anyone's definition of true love, but shouldn't someone be at least
a bit curious to what is being planned out?
And I accept that certain
people have a blind trust in their spouse or loved one when it comes
to the decisions that this other person makes. However, the only
drawback to this approach is that once you cede your responsibility
to someone else, you have to accept whatever outcome that fate has
in store.
The other half of this
answer is that a family member can be responsible for your
retirement.
About a hundred years ago,
that was true and this quiz would end right now. In the past, it was
common for an extended family to live in one place or in the
immediate vicinity. In those days your family members were entirely
responsible for your welfare in your old age. In that time, family
members and extended family did take a big role for everyone in the
family.
But the reality of today is
different.
I am not saying that all
family members would completely reject their elderly parents but
today's modern culture is totally different than from 100 years ago.
And besides, families are significantly smaller than they were just
fifty years ago.
But if someone is going to
rely on their offspring to ensure their welfare during retirement,
then he or she is in the same position as the ones who have deferred
all the decision making to their spouses. Consequently, such a
person has to be totally prepared to accept whatever outcome that
fate has in store.
The Government
This is an interesting answer because quite a large number of people
expect the government to solve all their problems or at least be
responsible for their problems. And that is probably why I expect
many people to continue to remain lukewarm to investing in private
retirement accounts.
After all, planning for your
retirement is a huge endeavor and often times, it takes a lifetime
of effort.
But if the government is
responsible for your sunset years, then there is no planning
involved, no effort exerted, and no responsibility for the
individual.
Sounds dynamite on paper but
reality is different.
First of all, Social
Security was never intended to be a welfare system but rather a
supplement to a retirement. However, that never stopped a generation
of people demanding that Social Security fulfill all their needs.
After all, America is the mightiest and wealthiest nation on earth.
If it has trillions in the national budget, surely it can support
everyone in their old age?
But therein lies the
problem. The government does have a gigantic budget but there are
plenty of other people, agencies, and organizations that want a
bigger slice of the budget for their own projects. If there was no
insatiable appetite for money from the government, then there would
be no problem with Social Security. But that is not the case.
And second, what sounded
dynamite on paper long ago is today a nightmare. There is an
unwillingness to accept the cold hard facts that our population
growth has dramatically slowed and that people are living much
longer than ever before. There are fewer workers today to support
the people going into Social Security as opposed to when this system
was first implemented.
The only solution is to
either cut benefits or raise taxes.
Either way, expecting the
government to be entirely responsible for your retirement is a hard
choice to live with in which a lot of people have already come to
grips with.
And if the government does a
poor job with your retirement (like not enough benefits), then it
will be a snap to blame the government. Why blame yourself for your
own irresponsibility and lack of planning for your future when you
can blame the government?
The Retirement Fairy
Although, I would have once expected more people to select the
government as an answer for this quiz, I think that the truth is
that the Retirement Fairy would be a far more popular choice.
The Retirement Fairy
represents the segment of the population who don't have a clue on
who is responsible for their retirement and really, they don't care.
Forget all the passionate
polarizing rhetoric on who is responsible for what, the Retirement
Fairy people just don't care. They are not into the politics or
discussion of public policy or civic responsibility. Yeah it would
be nice if Social Security worked or if everyone had their own
private retirement account but that is not their concern.
In a way, I have much more
respect for the people who believe that the government or their
employer should be responsible for their future because they at
least have a position and belief that they can articulate and vote
for. I disagree with them but at least they have thought this out.
The Retirement Fairy people
don't give a flying flip about what the future holds for them.
And perhaps the Retirement
Fairy will come down from the heavens and bestow a nice nest egg on
them. If not, there is always the lottery. Or maybe something else,
but whatever it is, they are not worried about it until it happens.
And they are definitely not going to plan for it.
And that even includes if
free money is available.
Every workplace I have been
in, I have always found people who have never enrolled in the
company 401(k) plan. They have known about it but they just haven't
gotten around to enrolling for years.
Research performed by Hewitt
Associates determined the following:
39 percent of employees
didn't participate in the 401(k) plan at all.
And of those who did participate, 40 percent didn't contribute
enough to max out the employer match. And about $1,200 per year in
matching contributions from the employer per employee was lost.
The above numbers are
staggering but those people don't care.
Yourself
Who else has better control over your future other than yourself?
Yet, this is a difficult
realization for some people to comprehend that they are entirely
responsible for planning and preparing for their retirement. But
really, who is better suited in determining your own personal
welfare for the future?
Unfortunately, there are
plenty of people who want the responsibility for their own future to
be decided by someone else. Ultimately, that is why I believe that
persuading the general population to accept private retirement
accounts will be extremely difficult. It takes effort, planning, and
lots of time. So why bother if someone else can do it for you?
But still, who has your own
best interest in mind other than yourself?
A politician, the government
or the Retirement Fairy, who really does have the best control of
your future other than yourself?
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