Like it or not, yours truly
isn't the only one getting older and grayer
I hate having my picture taken. More accurately, I hate
what looking at pictures of myself (such as the one on this
page) reminds me ofthat I am getting heavier, grayer
(though, as my father says, I'll take it in any color it
comes in), and older than I like to admit. The AARP is now
interested in my membership, my eldest will be heading to
college soon, and this Baby Boomer is anxiously watching
the age demarcation line for personal Social Security
accounts (I'm hoping to get the option).
Sitting here in the early months of 2005, it's hard to
believe how far this industry has come over timeeven in
just the past year. It's also hard to believe just how many
hurdles we have had to clear: the taint of scandals and
their aftermath for the rest of us, the trepidations of
regulatory change, the apparently inevitable reworking of
the classic three-legged stool of retirement security. For
all the turmoil, the naysayers, the prophets of doom, our
nation's pension system remains a model for the world,
IMHO. The picture may not always be pretty but, considering
the mileage, the system still looks pretty good.
We are, however, at a tipping point, it seems to me. The
Social Security program has funding, and perhaps
structural, challenges that, left unattended, will be
disastrous. Traditional defined benefit plans are costly,
complicated, disruptive to the bottom line, and still far
too underappreciated by workers. Not enough participants
are saving for retirement, and those who are, generally
aren't saving enough.
Like it or not, yours truly isn't the only one getting
older and grayer. If we hope to enjoy the kind of
retirement that has been portrayed in all those glossy
brochures over the years, we need to:
• Decide what we want a Social Security program to do.
It's more than a safety net for many of today's retirees,
but its current design is not sustainable. We need time to
implement necessary changes that can fix the mismatch
without imposing crushing tax increases and/or crippling
benefit reductions.
• Offer realistic incentives for the formation of new
defined benefit programs. Shoring up the current insurance
system is one thing, but employers need more than a stable
insurance program to restore their commitment to that
system. Some legislative clarity on cash balance plans
would be a good start, but it hardly addresses the fact
that newly stringent rules on reporting and accounting,
coupled with the current interest rate environment,
continue to push employers away from these offerings.
• Remove barriers to helping participants save and
invest wisely. Lifting deferral limits and inserting things
like the Roth 401(k) are fine for the more highly
compensated, but they won't do a thing for the vast
majority of workers. The Saver's Credit helps those at the
lower end of the spectrum, but what about the 25% who don't
participate at all? What about the 50% of working Americans
who don't even have a chance to participate? What about all
the workers who are participating, but haven't a clue as to
how to invest those deferrals? Is anybody ready to start
living on what he has managed to save and invest?
If we don't do something soon, retirement isn't likely
to be a pretty picture.
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