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The World Economic Forum predicts a USD 400 trillion pensions shortfall by 2050

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Re: The World Economic Forum predicts a USD 400 trillion pensions shortfall by 2050

#81

Post by ant6n »

verelo wrote: post #49
gulbanana wrote: post #46

Earlier quoted context omitted.

Why are they "supposed to" do that? It's in the interest of society as a whole to make sure that everyone is looked after in their old age.

The US has to pick model for right or wrong. Saying it's in everyone's best interests to look after people is totally true, but it's not really the design of the US social system. The US is free market, in a free market you look after yourself and in return are a little less regulated and/or taxed. Both work, but yeah...in the current model, it anticipates people looking after their own retirement plans. In my opinio…

Most developed countries have a system that's somewhere between free market capitalism and socialism, trying to pick each approach for each concern to maximize benefit to society overall.

Just because you organize a fair amount of the economy around ideas of free market efficiencies (which already has a big asterisk), doesn't mean you should organize all of society around that idea.

Re: The World Economic Forum predicts a USD 400 trillion pensions shortfall by 2050

#82

Post by [deleted] »

verelo wrote: post #49
gulbanana wrote: post #46

Earlier quoted context omitted.

Why are they "supposed to" do that? It's in the interest of society as a whole to make sure that everyone is looked after in their old age.

The US has to pick model for right or wrong. Saying it's in everyone's best interests to look after people is totally true, but it's not really the design of the US social system. The US is free market, in a free market you look after yourself and in return are a little less regulated and/or taxed. Both work, but yeah...in the current model, it anticipates people looking after their own retirement plans. In my opinio…

[deleted]

Re: The World Economic Forum predicts a USD 400 trillion pensions shortfall by 2050

#83

Post by slv77 »

RobertoG wrote: post #29
slv77 wrote: post #21

Earlier quoted context omitted.

Pensions are a structured transfer of wealth from the old to the young. It's possible to have high unemployment when: - Inadequate savings for the median retiree - High levels of wealth inequality - High levels of foreign debt In that case the wealth transfer mechanism is broken. Those that are old are reducing consumption while those that are young can't generate income to replace it while those holding all the weal…

"[..] a structured transfer of wealth from the old to the young" Do you mean from the young to the old? How "inadequate savings for the median retiree" create unemployment? I can't think of the mechanism. Do you mean a deficit of investment in the economy from the savings?

"Do you mean from the young to the old?"

I'm thinking of wealth as the claim on productive assets such as stocks, bonds and property. Pensions are a structured transfer of wealth from the old to the young and of labor from the young to the old.

"I can't think of the mechanism..."

Inadequate savings can create structural problems that result in temporary mismatches between the desire to work and the desire to consume.

For example if retirees are worried that savings or pensions are inadequate they may delay consumption which can create temporary high unemployment.

Re: The World Economic Forum predicts a USD 400 trillion pensions shortfall by 2050

#84

Post by orangecrush4000 »

blindwatchmaker wrote: post #53
anovikov wrote: post #40

Earlier quoted context omitted.

Well, people are supposed to fund their own pensions. This is not a tool of redistribution. If they life longer, it is logical they have to either retire later, get lower pensions, or contribute more, or all of the above.

I don't think it's axiomatic that individuals should be funding their own pensions. I feel a lot of these problems that keep popping up have the same fundamental root cause: governments (and the non-wealthy) have less resources, as more of those resources end up concentrated in fewer hands over time which has certainly been the case in first world countries over the last few decades. Proposed solutions of austerity a…

Oh, so other people should fund their pensions?

Re: The World Economic Forum predicts a USD 400 trillion pensions shortfall by 2050

#85

Post by orangecrush4000 »

payne92 wrote: post #55
lr4444lr wrote: post #33

People will have to pay a little more, a little longer, and take out a little less in some combination. I am sure the actuaries are smart enough to figure it out.

The problem isn't the actuaries, it's the assumptions. For example, NOBODY KNOWS how much health care will cost in 20 years, but that's central to figuring out defined benefit obligations (as just one example). Or, what's a good investment rate of return assumption to use? Small differences (e.g. fractions of a percent) compounded over decades lead to huge differences. How do you model black swan events (e.g. 2008 cr…

Those crashes hapoen every 40-70 years. Deleveraging is the term you are looking for

Re: The World Economic Forum predicts a USD 400 trillion pensions shortfall by 2050

#86

Post by orangecrush4000 »

mac01021 wrote: post #17
RobertoG wrote: post #3

I get how an excess of pensioners (not enough workers) in an economy can be a problem. I get how an excess of unemployed people (people without a job) can be a problem. What I don't get is how both can be a problem at the same time.

Imagine a desert island with three inhabitants: W, P, & U. W climbs trees every day to fetch coconuts and then swims them across the channel to a neighboring island where she barters them away for drinking water and then swims back with jugs full of water. P used to help W with the tree climbing, but is now too old to do the work. However, he long ago made a deal with W, and she's a man of her word, so she keeps him…

Prostitution, that's how
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