The Good Old Days
I often hear about the good old days when everyone in the land had a pension that lasted a lifetime. These good old days come up when people complain about 401(k) plans and how they have failed America. However, were the good old days really that good? I don’t profess to have all the answers, but this memory of the good old days seems to be a bit hazy at best.
First of all, only about half of American workers were covered by pensions. This is hardly comforting to the other half that did not have a pension. And on top of that, just how secure are those old pensions? The answer right now is a big shakier than many remember. Those old pensions are still the same pensions we are living with today.
The reality is many of those pensions are significantly underfunded. The problem of under-funding is present in public and private pension systems. And the scary thing is the PBGC, which is the safety net behind pensions is also running out of money.
In the first segment of the program, I cover the current health of the pension system in the United States. Don’t worry, it can be fixed, but it is going to take a lot of effort and sacrifice.
In segment two, I cover the exciting topic of the fine print. Investment disclosures are something that everyone struggles with. There have been many attempts at trying to develop more effective and simpler disclosures but it does not seem to matter. For whatever reason, disclosures appear to contain some kind of fatal dose of Kryptonite that renders investors oblivious to the risks involved. Unfortunately, I don’t have any simple answer to fix this problem. Caveat emptor still reigns supreme when it comes to purchasing investments.
In segment three, I respond to an excellent question from podcast listener Randy. He had a great question about when is it appropriate to invest in a stable value fund. Most listeners know, I am not a fan of stable value funds, but sometimes you don’t have much choice.
Finally, in segment four, in the remaining time I have, I cover some of the issues or problems that I see with stable value funds. The perceived safety and guarantee of stable value funds make them very attractive to retirement plan participants. It is my opinion that most people would do better if they did not commit their savings to these high cost, low return vehicles.
It was the dreaded spring-forward Daylight Savings Time weekend… so I know many of you may have missed the broadcast. That’s why we have this podcast. I hope you enjoy the program – Gary
If you have a question for Gary or would like to chat with him, the best way is to contact him through email. Gary’s Email firstname.lastname@example.org.
If you are not the emailing type, you can always try to reach him via telephone at 916.436.8331.