Tuesday, June 12, 2012

Reality Five: Kids Aren’t the Only Ones Who Say “You Can’t Make Me.”

Social Security Reform: Santa Clause Isn’t the Only Childhood Belief We Retain.

It seems positive incentives like an immediate boost to income and tax deferrals are not enough to induce widespread planning.  Nor is the prospect of having to give up some consumption in the future, even if the consumption one has to give up is health care.  Not planning is just too easy.

It’s worth noting that Brown’s article on YAHOO stated:  “EBRI, a Washington-based nonprofit that studies benefit plans for U.S. workers, says confidence about being able to reach a comfortable retirement has reached the lowest level in more than 20 years….”  It seems people recognize they aren’t planning for retirement. 
It concludes: “That pessimism may be a healthy sign, since it means that Americans are losing a false sense of confidence and learning the virtues of savings and thrift.”  That’s one possibility.  Another, probably more realistic, interpretation is they are acknowledging that they know what they have to do and are saying “you can’t make me.”  They don’t think they will plan and follow through.  Instead they just plan not to plan.

They don’t plan to provide for retirement and, in that sense, plan not to retire.  One can call it a default plan or a non-plan.  In short, they are saying: “Plan for retirement?  You can’t make me.  Retire.  You can’t make me.”  Social Security reform needs to acknowledge that the problem isn’t that the retirement age is wrong.  The problem is that there isn’t an age when people will magically all retire.  If reformers aren’t hearing it, someone needs to force them to acknowledge that people are saying, “you can’t make me.” 

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