For Want of a Nail
6 Pages Posted: 15 Jun 2008
Date Written: June 8, 2008
It has been the author's privilege in recent years to personally visit with a number of nationally recognized retirement industry gurus. Generally speaking, these discussions have tended to identify two obstacles as blocking the implementation of any corporate strategy designed to retire workers in dignity.
FIRST: Life expectancy is soaring, with the financial implication being that if persons retiring at age 65 lived into their nineties (or beyond, as many are beginning to foresee), the current pension paradigm will simply not be affordable! However, when this issue was confronted head-on in Common Cents (May 2008), which is available at http://ssrn.com/abstract=1128376 a sensible methodology circumnavigating this particular obstacle was revealed.
SECOND: While most agreed that nobody had yet to logically ascertain the incremental business cost to retire workers in dignity, it was nevertheless intuitively deemed to be beyond the ability of the typical business model to accomplish while, at the same time, remaining true to the company's profit plan. This second issue is confronted, again head-on, by this paper For Want of a Nail (June 2008) with once again a surprising conclusion predicated on Fortune 500 data.
The issue is not really whether we the people will be financially able to enjoy an adequate retirement income. Most benefit gurus believe that such a goal is attainable. The real issue is thought to be this: what is the best delivery system for an adequate retirement income?
Many solid citizens believe that only the federal government will be able to deliver the necessary result (and this issue transcends political beliefs). Other equally thoughtful citizens believe that only the free market can deliver the needed result and, at the same time, preserve the foundation which supports our liberty and freedom.
The primary purpose of this paper, For Want of a Nail is to focus on the key factors comprising a retire in dignity equation so as to enable readers to first make a fair assessment and judgment, and then to undertake the activity necessary to make it so.
Keywords: 401(k), retirement, ERISA, defined contribution, fiduciary
JEL Classification: C53, D31, D63, E21, G18, G23, G28, J26, K00
Suggested Citation: Suggested Citation