on retirement planning

In response to Mike the Mad's suggestion that old-school benefit pensions are a better alternative to the unreliability of market-based 401K plans, I wrote the following...

Pity the Poor Couple Who Make $250,000 Per Year (Haven't We Been Through This Before?) : Mike the Mad Biologist:

I still see (just looking at the blatantly obvious examples of the car and airline industries, and state governments) that the pension idea simply will never work anymore. The idea of a corporation paying for your retirement is a sign of "loyalty" that simply does not exist anymore, either for the worker to the company or the company to the worker. It is predicated on the idea that a company will only ever get bigger and continue to grow its profits, something the industrial world has shown is simply no longer the case. Finally, it puts retired workers directly at odds with a corporation's REAL "customers", the stockholders, over who actually gets the lions share of the profits even if that ever-increasing growth actually takes place. Given how the law benefits stockholder value when it comes to the legal responsibilities of a board and a CEO, the pension fund will always go before stockholder dividends do.

Now, the obvious "out" for all of that is to replace pension funds with retirement stock grants (my last company did something similar, replacing 401K matches with ESOP grants), but that just makes matters worse: not only is your retirement all dependent on a single company's performance far in the future beyond your time working for them, but unlike a pension fund, there is no government protection when that stock value drops down to a penny a share because the market forces simply left them behind or the CEOs screwed the pooch royally. Enron is a textbook example for that.

401K and IRA may suck, and benefit the wealthy (or at least the upper middle class) more than most others, but outside of actually increasing social security benefits, it really is all we have left.

Faith in in the success of a single company after you're no longer working for them is faith in a failed system, based on assumptions of future growth, or even future existence, that could never hold out forever...or even into next week.

on obsolescense...

Classmates.com Employees Don't Have Heart To Tell CEO About Facebook | The Onion - America's Finest News Source:

SEATTLE—Employees at Classmates.com—an online service that enables users to find and communicate with people from their past for a monthly fee—have done everything in their power to keep the company's CEO from finding out about the wildly popular social networking site Facebook. "He knows something is going on," Classmates.com web coder Josh Krzysch said while combing his boss's newspaper and removing any offending articles. "The other day he asked me why people aren't interested in getting in touch with old friends anymore, and I told him that the Internet just isn't very popular right now. What else was I supposed to say?" Employees claim that unless things somehow miraculously improve by next month, they plan to quietly pack up their desks and leave in the middle of the night.