A recent article on line cites a 2007 Federal Reserve Bank survey that found that the average American approaching retirement had amassed a staggering $60,000 in 401(k) savings. Since that was pre-meltdown, one can only wonder what they are worth today. Perhaps enough for part of a "Golden Year in the Sun". The use of the singular is not a typo.
The article goes on to give insights into the number of firms that are going to reduce or terminate matching contributions to 401(k) and similar defined contribution plans. In short, more and more future retirees are going to be in less that stellar financial shape.
What gave me pause about GWB's "Ownership Society" and the attendant privatization of part of Social Security is that if you are living hand to mouth, as at least 50% of the population is doing, the investment in the future you are able to make is paltry, if any at all. Take Social Security and make part of it subject to the vacillations of the market, and today's paltry can look robust compared to tomorrow's down market.
For example, my Mom worked until she was 70, as it was her major form of entertainment. The last 15 years of that time, she pumped as much as she could into a 401(k). She retired in late Summer of 2000, and six months later began receiving mandatory distributions of her 401(k). Less than 2 years later, due to the market tumble following 9/11, every dollar she was forced to withdraw over the next 2 1/2 years had originally cost her an average of $1.50. She had no idea of what was going on, nor did I, as I was totally unaware that her monthly "pension" included these 401(k) funds until late in the game. My "bad" for not knowing where the money really came from, I guess. Had I known at retirement time, I would have encouraged her to move the funds from a stock based portfolio to lower yield, lower risk investments. But, since these were mandatory distributions, once the market fell, the damage was done. She couldn't halt distributions to wait for the market to rise.
"Ownership Society" is a truly Orwellian term. It refers to something that, for a significant portion of the population, really only exists in the abstract. As Yogi Berra would have said, "You can't own anything until you own it." Like it or not, the lower 50% of the income scale in the US do not earn enough to "own" a lot, and it takes a lot to retire. We didn't even encourage building equity in one's home the past 10 years. Placing the whole monkey on their backs is fine, but just don't make it look like a glorious, slam dunk ticket to a secure future.
But then, for the private firms that would receive this privatized Social Security money to invest, the scale of what they could own as a result would be staggering. And, as we have seen, the US financial industry truly has the everyday working stiff's best interests at heart.