Here is a key reason why defined benefit pensions don't work for most people and the current structure of defined contribution plans also doesn't work well: https://www.bls.gov/news.release/pdf/nlsoy.pdf
Most people will have 12+ jobs by the time they are reaching retirement age. Defined benefit pensions rely on long employment at one job which is not the case for most Americans. Corporate contribution 401ks/403bs with multi-year vesting also don't help if people are unlikely to have that job for more than 1-2 years. "Universal" defined contribution plans where an employee and employer can simply pay into a plan that is not attached to the employer, but instead to the employee SSN would allow for more accumulation of assets over the long run for many Americans while reducing administrative costs for employers.
The one plan that is operated universally this way is Social Security. That is a key reason why so many Americans are solely reliant on Social Security in retirement, as the rest of the retirement saving system is unavailable, too cumbersome, or too complex for many people making above poverty level wages..
I heard your commentary on NPR about the auto industry fight over pensions as a key element of the current strike. You did a good job of talking about these various issues. The auto workers need a retirement plan that is not dependent on the auto industry continuing to exist in its present form to still provide promised benefits 40 years from now. It is likely that many of the young auto workers will have been forced to change employers and jobs at least once by the time they retire. The changes across the economy are massive when you look at the beginning and end of rolling 30 to 40 year periods. People need to be positioned to survive the change. This is difficult because people don't like change, especially when it is forced up on them through external events.
Great to have you back
Here is a key reason why defined benefit pensions don't work for most people and the current structure of defined contribution plans also doesn't work well: https://www.bls.gov/news.release/pdf/nlsoy.pdf
Most people will have 12+ jobs by the time they are reaching retirement age. Defined benefit pensions rely on long employment at one job which is not the case for most Americans. Corporate contribution 401ks/403bs with multi-year vesting also don't help if people are unlikely to have that job for more than 1-2 years. "Universal" defined contribution plans where an employee and employer can simply pay into a plan that is not attached to the employer, but instead to the employee SSN would allow for more accumulation of assets over the long run for many Americans while reducing administrative costs for employers.
The one plan that is operated universally this way is Social Security. That is a key reason why so many Americans are solely reliant on Social Security in retirement, as the rest of the retirement saving system is unavailable, too cumbersome, or too complex for many people making above poverty level wages..
I heard your commentary on NPR about the auto industry fight over pensions as a key element of the current strike. You did a good job of talking about these various issues. The auto workers need a retirement plan that is not dependent on the auto industry continuing to exist in its present form to still provide promised benefits 40 years from now. It is likely that many of the young auto workers will have been forced to change employers and jobs at least once by the time they retire. The changes across the economy are massive when you look at the beginning and end of rolling 30 to 40 year periods. People need to be positioned to survive the change. This is difficult because people don't like change, especially when it is forced up on them through external events.
Great update! Can you expand on the downsides of DB plans for workers?
Glad you are back! When’s the book coming out?
Thank you! Winter of 2025!
In two years?!
you don't want your book to come out during an election year.