> People can also invest in their own retirement accounts throughout their careers. It's stupid.
People can but will they? From what I've seen, no they won't. This is how you get an aged / aging population that has not saved enough, but often cannot work (e.g., because of health reasons). Then you have a sizeable demographic that's stuck eating proverbial cat food.
Further, even when people do save, they put money into absolute non-sense things either because they think they can beat the market (spoiler: 99.99% of us can't [1]) or because they don't know what to invest in and may not have the time to learn.
Forced savings [1] is a good thing for the general population.
Of course you are different, and don't suffer from cognitive/behaviour biases, so you'll do better than average and beat the market.
>Further, even when people do save, they put money into absolute non-sense things either because they think they can beat the market (spoiler: 99.99% of us can't [1]) or because they don't know what to invest in and may not have the time to learn.
The situation has changed with the advent of near zero cost index funds and target date retirement funds.
There is no reason for pension fund managers to exist when they have been automated.
> The situation has changed with the advent of near zero cost index funds and target date retirement funds.
Again, this assumes that people will actually invest. Which plenty of people do not do. For a large portion of they never bother setting anything up.
As someone who participates in /r/PersonalFinanceCanada a lot, the number of posts that say something like "my parents are 60 and have nothing saved" is quite tragic. There are books written on folks who have only started late in the game:
The problem is not technical in nature on the products one should buy, but behaviour on actually buying anything (even if it's a shitty mutual fund with a MER of 2%). Getting people saving something, anything is the problem.
Forced savings are a good thing for a very, very large portion of the population.
Sure, but this societal risk should be covered by the federal government, and federal government alone since the federal government is the only one that can print money. Which in its current form is known as Social Security in the US.
I think that Wikipedia definition of "forced saving" is woefully incomplete.
California does have a "strongly encouraged" saving program that is mandatory for all employers with five or more employees to offer[0]. It is similar to the MyRA program that Obama implemented but was left to fade away for partisan reasons.
401k matching might solve this problem? Are any governments doing this? It’s a really strong incentive to contribute the maximum every year, and while it does cost some money, it’s peanuts compared to the long term liability of a pension. With (tax free) compounding interest, the employee would probably end up better off in most cases when they retire.
Okay, so if this is the only thing then we can just turn it into a defined contribution fund instead of a defined benefit fund. You don’t make $x, you just have to put $y into a 401k. Why does it have to be different for public sector workers?
People can but will they? From what I've seen, no they won't. This is how you get an aged / aging population that has not saved enough, but often cannot work (e.g., because of health reasons). Then you have a sizeable demographic that's stuck eating proverbial cat food.
Further, even when people do save, they put money into absolute non-sense things either because they think they can beat the market (spoiler: 99.99% of us can't [1]) or because they don't know what to invest in and may not have the time to learn.
Forced savings [1] is a good thing for the general population.
Of course you are different, and don't suffer from cognitive/behaviour biases, so you'll do better than average and beat the market.
[1] https://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street
[2] https://en.wikipedia.org/wiki/Forced_saving