Can We Avoid Another Cataclysmic Meltdown Of The Global Financial System?

Chapter 8 The End of Retirement

Chapter 8 describes the  American retirement system as a “three-legged stool”, that is made up of “Social Security”, “Pension Funds”, and “privately funded  retirement programs”. This retirement system is also described by one expert as being “imperiled” and “headed for a serious train wreck”. Another expert is quoted as saying that this system “has become an area of major risk and touches the lives of every American”.

One of these three “wobbly” legs” is the Social Security program, that is described as being under-funded and  expected to  be nearly depleted by 2030. It is common knowledge that Social Security is one of the most popular Government programs. It is also evident that the Social Security program  is under attack from all sides of the political spectrum and questions remain as to what should be done to save it. However, this chapter offers no specific solutions.

Of the other two “wobbly” legs”, the privately funded  retirement programs, are the primary focus of this  chapter, it is claimed that these programs have been “hijacked” by Wall Street’s asset management industry.

It is also claimed that retirement savings that are invested in these privately funded  retirement programs are being put at risk by the  asset managers of most of the major privately run funds, such as Ameriprise Financial, Fidelity, Blackrock, that reinvest private pension contributions.

As explained,  a disproportionate amount of the contributions entrusted to these asset managers are collected as management fees. It is further explained that over the long-term, these portfolios of stocks and bonds that are being professionally managed, have historically under-performed, when compared  to indexed funds. This suggests that the high management fees being charged by privately funded  retirement program asset managers,  cannot be justified.