I agree. I didn’t have a job that allowed me to save (and that included CalPERS for retirement) until I was 44. Since then, I’ve maxed out my contributions most years. The exception was four or more years after I bought a house.
It’s very possible to start late and still retire well.
I worked 30 years with local government. They took a fair bit out out of my salary, and the county paid, about the same into a state retirement system. That guaranteed me a percentage of my final few years salary (and some benefits - like health insurance) for life.
And a very generous 401k match.
At some point this became obviously unsustainable, and all new hires got a much reduced deal.
I also paid into social security - which is obviously on the same path.
My wife is a career teacher with very much the same deal, which is also not available to recent hires.
We got ours, and will seemly have a very comfortable retirement - sucks to be a couple generations behind🤷🏻♂️
In all seriousness - I am very worried what that means for for our children.
We had a long path, but a real reward at the end.
I don’t see that for the younger folks.
I hear this a lot from conservative friends. I am more positive for the next generation. While we had more institutional pathways for funding retirement, like pensions and funded accounts, my kids have abundant ways to save, just differently. But, nowadays it is less automatic and more falls on the individual - you have to direct funds into a 401k or an IRA, and you have to select securities, and you have to monitor performance and make adjustments over time, rather than someone else worrying about the details. They have to be more involved, but I am confident my kids will do better than I did.
Where do kids normally learn this stuff? My parents always encouraged me to “save money” but never really explained how. School never talked about it, either in the practical how-to sense or the statistical population demographics sense. We learned Excel formulas for scientific modeling, but never a basic household budget. All my jobs assumed I know what a 401k was (I didn’t).
Is this something that normally gets taught somewhere, or is it kinda like cooking in that either your parents show you the way or you’re just kinda screwed and left to figure it out on YouTube someday? Or on some random internet forum in your 40s 
What do the youngins today do? Is there like some “retirement creator” on TikTok that tells them what to do in 5-second tidbits?
It doesn’t really get taught anywhere - but it’s probably not accurate to say that your jobs assumed you knew what a 401K was. If you are as old as me, and started working before the internet was a thing, they gave you the application forms and program brochures etc. just like they gave you application forms and brochures for health insurance. But they didn’t explain anything to you , not the health insurance or the 401K or other forms of retirement savings and they didn’t give you any help deciding which insurance plan was best for you or whether you should enroll in the 401K. To the extent any assumptions were made, it was assumed you would educate yourself - and it’s much easier now than in was in 1988 or so. The only sort of explanation I got was the union at one jobs, where the shop steward told all the new hires to join the pension, because while we all think we will leave in a few years, most of us would still be until we had 30 years in the pension.
Incidentally, it would be really hard to teach this stuff in school, because 401Ks, 403Bs and 457Bs all have different rules and you won’t know until you are in the working world which one(s) are available to you.
Your kids might. I’m not so sure about other people’s and I’m not entirely sure this worry is a conservative issue. The shift from pensions to the 401k and its cousins has absolutely hurt would be retirees precisely because a.) for most feeding a 401K or IRA is optional and delayed gratification when you are young is a hard habit to instill, b.) the shift from longer-term employment to shorter-term models have made it all more complicated and c.) most people are not trained in how to manage money. I certainly wasn’t. My folks had a combination of (small) pensions and IRAs but didn’t discuss that with us kids. I’ve spent over 34 years now with one employer with a defined benefit pension system (moderately healthy) that has a modestly capped built-in COLA and non-matched 401k options on the side as a cherry on top. That combo is going to be rather rare going forward. I have younger friends that don’t have diddly in comparison - they’re putting funds aside but whether it will be enough to retire is an open question.
I am not sanguine about the future retirement prospects for the millenials and later, precisely because somewhat more forced, idiot-proof options like pensions are disappearing and others like social security are under increasing financial distress (solvable, but nobody agrees on which tack to take) and ideologically-driven political threat.
I started working before there were 401Ks, and when they started, and we switched from pensions to 401K matching, there were meetings about it. I assume that there is at least some information about it in the onboarding benefits process - HR departments are really good at loading you with information.
I think 401Ks are now the default, to be opted out of instead of opted into.
I agree we need more education early in life about saving, but I don’t think you need to be a rocket scientist to figure out that you should. Some people live close enough to the edge that saving is hard, but others just spend too much and save too little. The people I know who are terrible with money aren’t dumb, some just grew up in a family with bad habits. My daughter got interested in the psychology of economics when the first thing her boyfriend’s father did after getting laid off was buy a new car.
I would just add pensions, even if widely available, would disappear with employees hopping around from job to job - you have to stay long-term to get a pension. I suppose you’re saying people might not hop around if pensions were available, but I’m not sure. I think they would. It would still involve delayed gratification and lots of people I (use to) work with chase an extra $1 or $2 an hour because they get it right now.
I think you explained, and the OP did by asking, is that no one really knows how to retire, or how to think 40 years into the future.
Personally, I’m drilling into my nephews and daughter about investing and saving, and delaying gratification, etc. Not really how to do it, but just that they are concepts that exist and are worthwhile. I don’t think the details matter really. I also don’t think this is the best method for a population to learn about it. Probably should be taught in high school as a separate course on personal finance.
What would be nice is a self-funded pension. It could be one of the 401k investment options in addition to stocks. It might not do as well as stocks, but for people who get flustered making investment decisions, it could mean more money in retirement. If someone has to decide which fund to invest in and when to move things around, they may feel overwhelmed and not do anything. Or they may make poor decisions and lose a lot of money. Or they may pull the money out for luxury purchases. With the self-funded pension, the money is locked away and all the investment decisions are left to the experts. The person contributes $/mo for 40 years and gets $$$/mo in retirement. Sort of like an annuity or life insurance policy. Something like that would be a useful as a default retirement plan.
Target date funds are sort of like a “self funded pension” in that experts are responsible for choosing the investment mix based on the age of the participants.
A target date fund that turned into an annuity upon retirement would be a reasonable approximation. The exact benefit amount would not be guaranteed like a traditional pension.
That’s actually an option that has opened up lately due to the SECURE Act.
Yes, this. Plus, I knew some of the people in HR who were big boosters of contributing the company max percentage, or at the very least a percent or two. Made an impression on me, and now I have a comfortable retirement.
“Show me your friends and I will show you your future” is true in this case. For me it was a combination of marrying someone who always wanted a house and was already saving for one - I would likely have not become a homeowner without that, and having a friend who was into finances - basically exposure to the idea of mutual funds and IRAs and the stock market as a young adult. Also, the pervasive talk about "Social Security wont be there in the future - you gotta do it for yourself!’ thinking once you are exposed to that sort of thing.
My parent’s did not really discuss their finances with us or any of their retirement funding strategies. I just assumed they did okay with whatever they had since they lived alright into retirement (altho sadly, it was a short retirement for both of them).
It would be smart to start talking to middle-schoolers and high-schoolers about:
It does not need to be long and boring lectures, but just a discussion topic over dinners occasionally, so the idea of “saving for retirement” and delayed gratification is normalized along with getting that new phone/car/computer, etc., and it does not become an either/or thing. If at a minimum they already know what a 401k and IRA is when they finish high school, they’ll be way ahead of the game!
I’m not really sure because I feel like I understood basic concepts such as compound interest, stocks, savings, etc since I was a child. I mean I’m pretty smart but I think it also came from growing up with sensible, professional, largely apolitical parents. I think if you grow up with parents who are broke or flakey with money or have weird leftist beliefs that money is evil or whatever, or have so much money they don’t really have a concept of it , that can make it difficult to learn good fiscal habits.
As an adult, where do adults learn shit? The read books written by experts (or expert-ish). “Millionaire Next Door”, “Personal Finance for Dummies”, books by Suzie Ormond, “Rich Dad Poor Dad” and other works by Robert Kiyosaki.
Also one can buy an annuity. I think they are generally seen as not awesome, but they do exist.
(And for anyone who doesn’t know, basically you give them some money and they give you back periodic payments. They’re banking on being able to make more than they pay you and/or you having an early death)
But to add to what others have said:
I too have wondered why nobody has ever developed an “open to all” pension, where you pay in along your whole working life, regardless of job changes and the like, and at the end you get a fixed, guaranteed payment and healthcare. Obviously you’d need to set a minimum contribution to get the healthcare.
The SECURE Act actually opened this option up. I haven’t found the right article, but plans can now add an annuity-like feature to target date funds that will transform it into an income-producing annuity at retirement.
The issue is that it needs to be buoyed by an underlying insurance product, created by an insurance company. Companies ran away from pensions because they were on the hook for providing the guaranteed income to their retirees, and found managing that was impossible. That risk remains, even if they off-load the pension-building to a third party - they are fiduciarily responsible for offering investment options in their 401k that are solvent.
Of course I understand the reasons companies soured on pensions, but I would think that a professional manager should be able to do the math. I think (this is what I suspect, not making a factual claim) that a lot of what hurt pensions was that for a time the unions were extracting too many concessions.
We hear stories of people retiring from a job and collecting pensions at 55, for instance. I have an uncle who did that, because union rules were age + years worked = magic number, you can retire. So he started at 18, and hit the magic number at 55. He’s now in about his 25th year of collecting, including insurance. Probably go another 10.
We don’t have to be that generous.
Assuming you’re serious , the answer is because some entity would have to guarantee it. Pensions are not necessarily open only to employees of a single employer - it’s not uncommon for a public pension to be open to state and local government employees or for a union to have a a pension open to all members, no matter where they work. But if the investments don’t earn enough in a particular time period , and there haven’t been earnings set aside from previous time periods the employer/union is going to have to make up the shortfall. How are the various employers going to decide who makes up how much of the shortfall? Which is why the only way you can have something close to what you describe is to have it backed up by a government - and not just a government, a national government. Because if it’s backed up by a lower level government, what happens when people move from one city/state/province to another?
Or it could be an insurance product - in which case, I’m pretty sure it’s available already in a slightly different form ( an annuity)
It is by no means impossible. It may be the case that the benefit wouldn’t be enough to be worth it, but as long as the earnings on the money taken in don’t exceed the benefits paid out, it could be done.
I acknowledge that guaranteeing the money would be a challenge. But again, if State Farm can get reinsurance for when the Big One hits, it seems like a plan like this would be able to get a similar coverage.
I’m not aware of annuities providing health coverage (but maybe some do?)
Anyway, even if it doesn’t work I don’t think it’s an absurd idea.