This rumor gained some traction when the government of Argentina seized $24 billion in private pension assets in 2008. Now CNN has given column space to one Yvonne Walker, "president of the Service Employees International Union (SEIU) Local 1000, which represents 95,000 California state employees." It seems Ms. Walker doesn't think the employees should control their own money, either:
401(k)s are too risky for retirementIt goes on in this vein for a while, concluding:
Sharon Edwards of Salem, Oregon, may have to move to Mexico, where the cost of living is cheaper, so she can afford her retirement.She was always good about saving, but because of forced retirement at 62, the self-employed interpreter is now limited to a $500 monthly budget. Her finances are determined by Social Security, savings and the cost of treating a chronic lung disease. She worries about meeting her basic needs during her later years and thinks about selling her house to finance her expenses."When I budgeted for life as a single woman, I didn't budget for 3% inflation, the loss of half of my retirement savings in the market crash, my hearing loss or early retirement," she said.Almost daily, we hear stories of the crisis stemming from the breakdown of the three-legged stool of retirement: traditional pensions, Social Security and individual savings. For the majority of Americans, one of the legs of the stool is already gone -- traditional pensions. With its replacement, the 401(k), the stool is in danger of tipping retirees into poverty.
We need to explore new innovative retirement models that provide guaranteed retirement income for all workers if we are going to be a country where once again working people can reasonably expect to be able to retire.Yes, Ms. Walker thinks that the government should be in charge of investing our money for our retirement because, well, we're just too stupid to do it for ourselves.
This year, California State Sen. Kevin De León and Darrell Steinberg, the Senate president pro tempore, made headlines for introducing legislation that would allow private-sector workers to enroll in a modest, state-operated retirement program.
A similar proposal has been championed by New York City Comptroller John Liu. The plan, based on a new retirement model created by New School economics professor Teresa Ghilarducci, would pool employee and employer contributions into a professionally managed, citywide retirement fund.
Although the future of these proposals is uncertain, they are a step in the right direction. Traditional pensions usually outperform their counterparts because they are managed professionally, and because they can use the average life expectancy of their participants for their investment time horizon.
We should look at what has worked well with traditional pensions, which keep nearly 5 million older Americans out of poverty, and use those attributes to reach more retirees. After all, shouldn't retirement stories come with happy endings?
Should I point out that San Francisco's public employee pension fund is "drowning in red ink"? So is Los Angeles'. Detroit's, too, and many others. So much for their planners being so much brighter than ours.
And what about that second leg of the stool - Social Security? It runs out of money in 2033, according to the San Francisco Chronicle:
The trust funds that support Social Security will run dry in 2033 — three years earlier than previously projected — the government said Monday.Except there is no "trust fund." It's full of IOUs from the Treasury Department, and Social Security payouts will exceed income not in 2033, but around 2018 if not earlier.
So no, Ms. Walker, you can't have my 401(k) funds.