[morecoffee]

> The whole western world is in for a rude awakening in the coming years with regards to retirement.

No kidding. Who will pay for all the people who didn't save? The people who did. I have very little expectation of keeping most of my money as I get older.

[icelancer]

>Who will pay for all the people who didn't save? The people who did.

Correct. It is generally a good idea to consider all of the money being paid into Social Security to be completely wasted. I am in my early-mid 30s and I do not expect to see a dime of it. I think it will either be insolvent or subject to some ridiculous tax structure if people have earned X dollars in their lifetimes or spent too many years in high tax brackets (which I expect to in my late 30s and 40s).

Taxes will also go up dramatically as the years go by. I have a maxed-yearly Roth IRA but I also don't expect the government to keep their promise on letting me take out 100% of it tax-free despite all my contributions being post-tax. I expect to be double taxed on that, because, well, why not?

Retirement is ridiculous. It's just generally safe to assume all of your money is going to be taxed at a much higher rate and through loopholes/broken promises by the government. We face a really huge shortfall in the next few decades in public welfare programs, Social Security, and other tax-advantaged vehicles that I doubt will be honored down the line.

[marvin]

Just out of curiosity, what's preventing the US from implementing changes to Social Security that are sustainable? I read up on this for Norway a few months ago, and was actually pleasantly surprised at the thought that's gone into the sytem.

Norway's public pension system is now funded by every employee having 8% of their salary taxed away and earmarked to retirement. The money is placed in a broad stock and bond fund. In retirement, the earmarked amount of money for each employee is paid out in a monthly amount that matches the life expectancy of the retiree.

E.g. if the employee has paid $150.000 to the system over a lifetime of work, retires at 65 and the life expectancy for this age cohort is 10 years, the annual payment will be $15.000. The state covers for retirees that live longer, keep the money for retires that live shorter and provide a guaranteed minimum for people who reach 67 without saving up a minimum amount. To offset this, the possible monthly payment is capped with a maximum for high earners. There is also some inflation adjustment built in.

In effect, this provides a living wage for all retirees, with additional private savings required if you want to maintain a higher standard of living. The system is self-contained and is not based on younger workers paying the pensions of older workers.

[mattmanser]

It's not retirement that's ridiculous, it's that old people have a vote in this and because that vote is so overpowering, no-one will even try and fix the issue until it's too late.

[awinder]

Double taxation is extremely unlikely, and would likely have to be of the form of applying a tax to earnings in the Roth IRA or something like that. Which is how other investment-related income is taxed anyways so, I don’t know.

Additionally, SS pays out at 75% of projected levels at the height of the retiree crunch, so assuming the program will just vanish is not something a lot of financial advisors are going to consider. Given the universe of possibilities, the one that doesn’t result in people with pitchforks is probably the one that we will go with. We could also solve this problem today with a 1.8% addition to the payroll taxes, removing means testing, etc. It’s a problem to be solved but expecting the world to burn in the process of solving it, the magnitude just isn’t there. Makes for good fan fiction though :-).

[carbocation]

If you really expect your Roth to be double taxed, why not contribute to a traditional IRA instead?

[nostrademons]

Depends how history plays out in the future. If people who save end up paying for people who didn't, it implies one of three things: 1) financial panic 2) inflation or 3) taxation.

All of these are fairly likely, but looking back at history, there are a number of other possible futures that would take care of the problem. Mass plague, where all the old people die off. Mandatory euthanasia, where the government kills all the old people. War or anarchy, where both young and old die indiscriminately. Colonizing other planets, which opens up vast new resources. Mass automation of health & elder care, so the robots pay for the people who don't save.

The depressing thing is that most of these are pretty horrible, and the two that aren't - automation and spaceflight - are probably the least likely. But then, history is filled with black swan events that open up human frontiers that nobody could've imagined. Maybe one of them will save us.

[kamaal]

Or like it worked in most socialist economies which gradually migrated to free market in the 90s.

Older people make painful sacrifices to merely survive. Younger population doesn't care, and largely thinks the old deserve it for not being serious about their retirements in young age.

Social security in that situation will largely depend on continuing to work in old age, and surviving on bare minimum money and at worst depending on kids and friends.

War and anarchy aren't feasible in old age, when you get knee pain for walking across the street. The whole thing will be bad, its just people have to deal with it and move on.

[sddfd]

Exactly and now tell anyone that it was ever a good idea to not provide basic pensions for everyone and make payments mandatory.

If that had been the case then at least everyone had paid at some point.

[nostrademons]

It wouldn't actually matter. The problem is demographic, not financial.

Ultimately, somebody has to produce the resources, goods, and services that every person on earth needs to survive. If people live an average of 5 years after retirement, work for 50 years, and the population is at a steady-state, then every elder is supported by 10 workers. If the population has doubled in the last generation, then it's 20 workers. If the population is still doubling but people are now living for 10 years after retirement, then it's still 10 workers/elder. If the population returns to a steady-state but people now live for 20 years after retirement, though, we're down to only 2.5 workers/elder. Suddenly everybody feels the pinch.

Pensions, 401ks, stock market growth, and all other forms of retirement savings are just different ways of lying to ourselves. Ultimately, goods have to be produced, services have to be rendered, and money is just a way to track who has done that and reward them appropriately. If you have fewer people doing the work and more people depending upon it, standards of living will fall.

If I had to bet on a (peaceful) solution, it would be automation. Do more with less and a given number of workers can support a much greater number of dependents; the only challenge then becomes redistribution in a way that people find adequately fair. But elder care has proven stubbornly resistant to automation: if you've ever had a family member in their 90s and tried to take care of them at home, you may be doubting that it's even possible for 2.5 workers to take care of one elder, even if their own needs were completely automated away and they had no children.

[varjag]

This idea is not without drawbacks. Mandatory pension systems have a history of being wiped out by extinction events both governmental (USSR et al) and corporate (Kodak and other midcentury megacorps).

It's at least something I guess, but retirement planning is a really really long forecast horizon and is inherently risky.

[frisco]

> I have very little expectation of keeping most of my money as I get older.

Welcome to the world of Bitcoin and Monero.

[googletazer]

Incredible that you are so heavily downvoted. Just shows the level of fear and disdain that even technical people have towards cryptocurrency.