No. 1 addressed the impact of ever-flattening organizations, moving away from top-down vertical leadership and workers/members, toward horizontal collaborative organizations, which are much more organic.
No. 2 spoke about the impact of the deterioration of individual health in the face of modern inactivity and poor eating habits.
No. 3 addressed the unbearable costs of overregulation on our lives and our economy.
No. 4 rehearsed the certain fiscal pain we face as the U.S. careens toward the fiscal cliff of overspending and borrowing.
This blog speaks to the uncertainty which has been introduced into the market, but even more so into the lives of millions of everyday people who are relying upon a 401(k) or similar self-managed funds for retirement. The combination of retirement plans moving to self-directed non-guaranteed funds, such as 401(k) plans, together with the market losses of recent times, has raised questions in many retirees and prospective retiree’s minds about how they will make it. Even assuming Social Security pays everything one is entitled to, most of us will need to supplement that with personal funds. In contrast to a generation ago, very few people in the work force, especially younger workers, will have a defined benefit from a pension. The pitch was that one could manage his 401(k) fund to have a better nest egg than a stodgy old guaranteed pension amount. But with the market gyrations of the last five years, there is growing doubt about that. Returns from the market, whether on bonds or equities, have not met even modest projections necessary to create sufficient retirement income for retirees for either pension plans or privately managed retirement accounts.
Moreover, many people have “raided” their retirement accounts for emergencies such as medical events, expensive college tuition for children, or business reverses. People tend to move from job to job more now than in the past, and a job change is hard on retirement as people wait to vest in their new plans and/or cash in their old plans as they exit their old job. As wages have been reduced or stagnated, people who projected savings have had less to contribute toward retirement plans than they expected.
The bottom line is that more people today are less prepared for retirement than at any time since modern pension systems were established. Social Security, even if it meets its promised payouts, will not be sufficient for most people to maintain anywhere near the lifestyle they have enjoyed. We are seeing people work longer, seniors going back to work, taking part-time work to supplement their income and other measures to make do.
A future with a large number of less-well off senior citizens will affect society broadly as more government aid is consumed by seniors and as they have fewer resources to help their children, grandchildren, or the charities and communities, of which they have been the mainstay.