Americans in all walks of life and working for all kinds of employers need to plan for retirement. The way things are going, our golden years are going to be lengthy, and as we grow physically older, they may also be marked by mental diminishment.
Reflect on the courageous letter of former President Ronald Reagan informing Americans that he suffers from Alzheimer's disease, a progressive and irreversible neurological disorder.Reagan's malady is not unusual: One in 10 will be afflicted by age 60 and one in three by age 80, with a twilight to reason that ends in total confusion. And long-lived oldsters, no matter their level of competence, are often called on to manage their financial affairs - certainly a great risk to those individuals and a potential burden to a nation that's aging.
Yet, when it comes to financing retirement, we are increasingly leaving it up to individuals to shift for themselves through the use of 401 or other self-directed retirement plans.
Firms and governments are cutting back on the defined-benefit plans that hold the employer responsible for supplying a stated level of benefits at retirement. They are turning instead to fixed-contribution plans, allowing workers to set aside part of their earnings in self-administered retirement accounts - 401 and the like - to which the employer may or may not contribute.
That's a big change. Employers used to pay for the retirement plan, but now increasingly the workers themselves do. Even more worrisome is that the workers have control over how their contributions will be invested.
That may sound like democracy in action, but for most of us it is a bummer. The track record to date shows that letting folks manage their own retirement investments is like having them perform their own brain surgery. It is a mistake. It is better to leave investing to experts who have a fiduciary responsibility to the investor.
I doubt if those who depend on these plans are aware of the importance of the decisions placed in their hands and are equipped to choose their options intelligently.
Moreover, as retirees age, the less likely they are to be able to administer their assets. Folks with little or no reasoning powers left are sucker bait for fleecing. Those physically, mentally or financially disabled become wards of the state, which means others will be taxed to see them through their terminal years.
These are not pleasant visions, but they must be addressed now to avoid their materializing in the future.