Hacker News Reader

Comment by banned1 | Hacker News Reader

Or better, give the money to the people and let them take care of their own retirement.

This would work for some people. How many stock market crashes have you lived through? I vaguely remember 1987, but did not have skin in the game at that point, so no lessons learned (but no wrong lessons learned?). I had money in the market during the dotcom crash where the Nasdaq dropped 78%. My dotcom holdings were mostly eBay at the time, so I was not as impacted as many. Then the 2008-09 madness. At some point I split investments between my long holdings and a double short SP500 fund for around a year to save my sanity. Since then a bull market and I bought a chunk of Tesla at $21. Good times. I have made out alright, but really like thinking about financial matters.

I know many people in their 50's that during the dotcom and real estate crashes could not stand the losses and sold near the bottom and are still in all cash. Seems like controlling your own retirement assets is a good system to transfer money from regular people to the market makers/full time stock investors. I think some kind of annuity that you buy every year that kicks in at age 65 or 70 is what most people want. Too bad those have really high commissions and horrible returns.

Forced 401k savings would work, but forcing annuities would cut returns through high fees, and removing too much risk too early.

* like controlling your own retirement assets is a good system to transfer money from regular people to the market makers/full time stock investors.*

Who said you have to? Fidelity, Securian, and the likes all offer balanced, automated, diversified 401ks and IRAs. Check the plans, and tell me if there's any concentrating on a given sector.

Maybe I was a bit obtuse but the transfer comes not from poor diversification (although that can be a problem) but market timing. When a person in control of their retirement fund and has a diversified retirement account, just like the experts say, they eventually build it up to a decent amount. Now they start to pay attention to the losses and gains. If stocks now go crazy for a few years, all the hype and past missed gains are so great they sell their bonds and buy stocks near the peak. Then the market crashes and they sell near the bottom for a 50% loss. Then they have been so burned they just keep it in cash and miss out on making it all back and then some in the next bull market. The really unfortunate (stupid?, greedy?, gullible?) people cycle through this more than once. I know I'm not immune.

Not sure how one would set up a system where people can control their own retirement funds and yet not control them. Some system where you can only trade with a one month lead time? Or only allow people to buy those timed funds that mix and match highly diversified stock and bond funds depending on your age. Seems like a hard problem.

You seem to be discounting limitations of human hardware to effectively execute your program.

Seems like there are even worse limitations when pooling together everyone's assets and putting a lien on future taxpayer's funds.

The best retirement plan is to raise a family and have successful children that you can depend on (and vice versa).

Whether or not it's worse... ehh... a lot of room for personal judgment in there.

What it definitely does is take a lot of little problems (at least at government scale) and aggregate it into one whopping big problem bigger than all the little problems combined (because basically we're paying interest on the deferral of those small problems), thus trading a whole bunch of small problems that at least sometimes someone could have fixed or mitigated, into one huge problem that is too large for even the government to fix and for which the individuals involved have no optionality.

It would be nice if there was some way to figure out how to stop governments from "solving" problems that way, as for some of those problems we're already arguably at the end of the road, and we're certainly staring down the barrel of a lot more of them that are no longer so much "decades" in our future as "years" in our future.

I know someone who after he retired fell for a scam and lost all his savings. I know someone who because of a genetic defect has decided not to have kids (he will die at around 55 but the last 10 years he will be disabled enough that he can't work)

There is no good answer that covers all cases.

Yes, there are rarely solutions that can cover all edge cases. But looking at it in terms of maintaining a society, it works well...and that's all we had before the 1950s.

It did not work well, and those factors contributed to the creation of social security.

The only solution is beefing up social security while ensuring transparency and long term (centuries) stability.

But people have to vote and care for this to work.

And yet, here we are discussing what happens when we see Dad Government saving for me. sigh

We give all of our info to Facebook, then complain when "privacy".

We give all of our money to the Government or Union, then complain "it went broke."

That is a terrible idea. Period.

If its one thing that I've consistently found among my American friends, its a shocking lack of any kind of long-term financial saving/thinking (note that I say most, not all. And people in the tech industry are generally better about this but not always). Any time they come across some sort of financial windfall, its all spent in vacations, car or a new house. The house at least is a financial investment so I will give you that.

Viewing a house, assuming you only have one, as a financial investment is not a good idea. The focus should be on educating students on taking care of themselves.

I'm also not sold on subsidizing financial firms with the tax benefits of 401Ks and IRAs, but it's better than nothing. But it's obvious that giving politicians a big pot of money to throw around and a lien on future taxpayers is also terrible.

401Ks and IRAs are good for retirement if and only if the economy doesn't collapse. 2008 saw +50% of the DOW's value "go away". Some individual retirement portfolios lost more.

If the economy collapses, then you're going to need guns, water, a farm, and a group of people to help defend yourself.

"Value" was only lost if all the assets were sold in 2008. Assuming you were diversified and just had the run of the mill index funds, you'd have tripled your "value" since then. The dollar loses value every day, and it will continue to do so, so you need to make sure you're making more and more of it. Unless you're adept at investing in cash flow businesses and maintaining them, your best bet is via the stock market. At least then you can tread water, and if another recession comes, the government will just print some more again, but at least you'll be treading water with inflation.

I do have sympathy for people who work hard their whole lives and never make enough money to build decent savings for retirement. There should be help for these people.

On the other hand, I have very little sympathy for people who are paid well but don't plan wisely. How can you not understand that you need to save money? It takes all of a couple hours to understand the basics of a 401(k) or traditional/Roth IRA, and you don't have to set it up perfectly to have an effective savings plan. I greatly resent the idea that my productivity should be siphoned off to protect the latter group from the consequences of their actions.

Are you sure it is just your American friends? 30% of Europeans have no savings, whereas "only" 16% of Americans have no savings.

"Americans are bad at saving money, but Europeans are much worse" - https://www.marketwatch.com/story/americans-are-bad-at-savin...

Reply on news.ycombinator.com