Can We Afford to Grow Old?

Screwed ... by Polaroid

150 years ago, in 1855, there was really no concept of retirement pay, at least for the American masses. If you were well-to-do, you could live off inheritance or investments. If you had an adult child, you could (and probably did) move into his home. Grandma had the front bedroom or a place by the hearth. People died in their 50's, so it wasn't so great of a burden on adult children. In the 20th century, we've come to expect longevity which is buttressed by some combination of:

Social Security
Fixed pension benefit
Medicare, Medicaid
401K distributions
Life Insurance

Of course, there are many other instruments that amount to personal savings -- certificates of deposit, mutual funds, annuities and such. These will provide additional benefit for people who had the money to set aside each month for the future. What presents a problem is that all the above-listed government / corporate programs are nowadays at some kind of risk. This week's TIME magazine has a cover story about underfunded pension funds in America's Fortune 500 companies. It seems many companies are digging into pension funds for capital, and when it's time to pay the piper, turn the mismanaged pension trust over to PBGC (pension benefit guarantee corp). Some companies, notably Polaroid in 2001, have declared bankruptcy to shed their pension obligations only to regroup in short order as a profitable company again. Other corporate-sponsored obligations such as stock funds and 401K can also be savaged by unscrupulous raiders and bad management (think Enron).

Many on the conservative side of the aisle would like to privatize Social Security. It's an 'unfunded mandate' to quote some. Now, fixed pensions are in their twilight -- new companies avoid them like the plague and old companies are trying to dump them however and as quickly as possible. If Social Security were privatized, the bulk of your retirement income would be based on speculative investments. 401K's can take a nose-dive with or without Enron style management. Speaking only for myself, I'd like my old age income to be more than a crap shoot. I don't want to go horse racing with the money in my rainy day jar. But now it seems business and government want us to do exactly that. How much does it cost an enfeebled old person to live out his life, in the last decade or so? It costs a lot, let's be upfront about it. Ordinary living expense combined with nursing care and medical care is actually thru-the-roof expensive. For proponents of private accounts, are you so gung-ho about your current portfolio, that you think it will see you thru all the way? Again speaking for myself -- I give the maximum amount to 401K and profit-sharing and make careful fund selections. I don't think my 401K will even pay for covered parking. I suppose a GOP argument is that tax money given to Social Security could just as easily be invested privately. An unspoken objection is that Social Security is a redistribution of funds -- part of it goes to people who never paid in or live too long.

Here, I become a blue-state Democrat, all the way through. I don't think Granny should have to sleep on your couch and eat Vicks cough drops when she actually needs hospital respiratory care. I think that every man and woman in America should have food, clothing, medical care, a roof over his/her head and in final life stages, death with dignity. Nobody should have to beg and scrape at a county hospital. Nobody (as the woman in TIME) should have to collect aluminum cans in their elder years. If you say "each man for himself" you hark back to 1855. "I'm strong, I'm smart, I went to college -- I'm fiscally responsible". Well, old age is the great equalizer. You can find out at 75 what it's like to be on the losing end of the stick. Another translation for "I can't afford it" is "I don't think it's important". My Social Security contribution is the most important slice of my payroll taxes. Can America afford to grow old? If we figure that it's important, the answer is "yes".