Tuesday, January 03, 2006

More on pensions

This is a bit late; I saw it in my referrer links. Searchlight Crusade had a minor criticism of one thing I said in my last entry on pension obligations. Actually, I'm quite aware that the reason for pension plan shortfalls is, as he puts it, "timely funding of obligations." However, my point all along is that pension plans, whether United's or GM's or Social Security, are structurally doomed. It is a necessity that workers save for themselves, and give up this notion about companies continually funding the gap.

What if my bank offered me a 50% annual return on a 12-month CD, guaranteed in writing? Of course my bank would be contractually obligated one year later, but I had better have realistic expectations. Can it afford to pay that, and do I have confidence in its finances? Similarly, workers must be realistic about their employer's future profitability. The better way is if I saved $x for myself every month, ensure my own "timely funding" of my retirement plan.

1 Comments:

Blogger Mike said...

Mmmm...50% return...

Wednesday, January 04, 2006 12:15:00 AM  

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