The Perfect Swindle is about understanding and finding solutions to the growing retirement crisis facing tens of millions of Americans.
Since 1981 shaky 401(k) schemes that depend on stock market investing have increasingly replaced secure, traditional pensions. The financial services industry encourages the belief that these schemes will produce generous benefits. But 30 years after their first introduction, the first generation to retire under these plans has learned that they produce less than half the benefits of the pensions they replaced.
Even before the stock market crisis of 2008, the signs were everywhere that very few people would be able to accumulate enough wealth through these accounts to ensure financial security. As a result, most people are looking forward to—or rather becoming resigned to—working longer and seeing their standards of living dramatically decline when they do retire.
401(k) benefits are lower than those of traditional pensions because the financial services industry drains considerable management fees, commissions, and profits from the accounts involved; and individual plans lack the advantages of risk pooling that traditional pensions have.
Those who still have traditional pensions, mainly public employees such as school teachers, find themselves under attack for having decent retirement plans. The financial services industry, aided and abetted by conservative think tanks, has mounted a massive propaganda campaign to convince taxpayers with disingenuous scare tactics about unfunded liabilities that their retirement plans should also be converted to 401(k)s.
These same interests would like to further undermine retirement security by privatizing or lowering the benefits of Social Security.
What has and is occurring is a massive swindle in which the financial services industry is raiding the collective retirement savings of tens of millions of people to inflate its profits, which have grown enormously at the expense of retirement security.
This blog is dedicated to exposing and organizing resistance to that swindle.
Who am I? I have researched retirement systems in the United States, Europe and Latin America and written about them in articles and books. The most relevant is Double Standard: Social Policy in Europe and the United States. Through that research I realized how bad the retirement situation is becoming in the United States. I also realized how bad my own retirement situation was since I had a 401(k) like retirement plan. That led to the formation of the Connecticut Committee for Equity in Retirement, a rank and file advocacy group that initiated a union campaign that won the right of public employees in Connecticut to transfer from our failing 401(k) type plan to the state’s traditional pension. We recommend that other employees examine their plans and, if necessary, work toward reforms that will reverse the disastrous trend and restore or create traditional defined-benefit pensions. We are also strong supporters of Social Security, a successful and necessary program that needs to be defended and expanded.
For more information about me, you can go to my website.
This blog will be open to everyone who wants to learn more about the retirement crisis in the United States: accepts its general point of view that defined benefit pensions, including Social Security, are better than 401(k)-type private accounts for ensuring retirement security; and is interested in engaging in progressive retirement reform movements.
–James W. Russell
7 thoughts on “The Retirement Crisis and This Blog”
This is interesting.
I’m glad you liked it.
In all of these postings Prof. Russell is keeping people informed about the right wing/Republican Party/Tea Party assault on worker’s rights. Hopefully workers in large numbers will pick up the banner and fight for their Social Security and pension benefits before they lose them.
“Swindle” is a strong word although it certainly appears to have been just that from your very thoughtful and analytical postings. Indeed it’s obvious that some in the investment industries have been actively promoting swindles.
On the other hand, I have known some of the investors who targeted people with 401 type plans and they never appeared to me to be knowingly engaged in swindles. Indeed, they seemed to just be trying to make a living and genuinely believed that they were doing people a favor. I remember one such person telling me how much she enjoyed showing people how much they could earn to support their retirement based on the predictions of her computer models.
Perhaps some well-meaning investment counselors simply had too much faith in complex mathematical models that were beyond their understanding, based on questionable data and tied to past reality anyway.
So, words such as “swindle” will predictably catch people’s attention, but also predictably trigger defensiveness and anger. Additional words to that get these points across while also toning down reactionary feelings could include ”misguided “, “mistaken” or “unexpected”.
(Disclosure: sister of James W. Russell)
In a few days I will post a more substantive reply as a regular posting. For now, I have no doubt that there were sincere IRA and 401(k) salespeople who genuinely thought that they were helping people. But they were operating within an institutionalized framework, often unknowingly, in which deceptive information was being used to convince people that the new plans were better than traditional pensions. They were at the least operating within an institutional swindle.
Absolutely agree! retirement situation is becoming worse and worse every year. Thank you for providing us with the quality information.
The 401(K)is offered by companies to employees as a wealth enhancing tool to support their retirement goals in lieu of other options i.e., a pension fund or retirement based fund.
One of the desperate problems with this tool is that many employees do not fully understand or possess the requisite knowledge of the market and wall street in order to make elections based on informed decison making. In addition, in general most people now rely on this tool for their total retirement and no longer have savings or other accounts to supplement their retirement income. So in effect, the 401(K) has come to occupy a unique niche as a “monopolist” in the market place of financial services offered to employees to meet their retirement needs. This in itself should be cause for alarm and accordingly, people should demand that competing retirement vehicles/alternatives be offered to employees.
Lastly, the whole issue of retirement in general needs to be examined and reassesed as we have and continue to operate with what I believe is a mid-twentieth century construct that does not fit nor benefits the citizenry of this country anymore.