This is one of the reasons I suggest people buy a house rather than renting. The financials may not always make sense, but it forces savings in a way that many people would not otherwise do.
How many people do you think would manually pay a large chunk of their paycheck into a savings account every months before deciding whether they can afford an extra order of curly fries?
Rent eats first and having a mortgage lets you actually save some of that (once you get past the substantial interest heavy starting year).
> The 401k was an experiment, and that experiment has largely failed.
Retirement accounts are not the problem. It’s a general lack of financial education. People can barely calculate simple interest. Compound interest is even less natural. Calculating the present value of a fixed payment annuity in 25 years? We’re a slim minority that can do that from scratch.
Some of the best savers are the ones that do not even understand the financial constructs, but take the savings rates and methods as gospel. Faithfully putting away percentages of their salaries that are orders of magnitude higher than the rest.
> The answer is probably a more generous and better funded Social Security, except that fund keeps getting raided for other purposes.
Social security is claimed to be “money you paid into”. But that cannot be true if the net amount grossly exceeds what you paid in. That system simply would not work without another revenue source.
People have to pay massively more into it over their entire working lives.
And if someone wants a pension the financial product exists. Except nobody wants to actually pay for it because an inflation adjusted guaranteed annuity for life is incredibly expensive! So the present value of it divided out would be more than people are willing to actually pay.