Freedom – To Be an Idiot, Savings-Wise

The well-documented failure that is the shift from pensions to the 401(k) (most working people just don’t save), calls from the Political Right, increasingly heeded by the Left, to scale back Social Security, and a paltry U.S. personal savings rate all add up to looming debacle as Baby Boomers and those trailing behind them will retire without the resources to see themselves through their old age.

Calls for mandatory worker and employer contributions to retirement accounts are frequently met with protests, essentially against the notion of government meddling in its citizens’ affairs. Well guess what, folks, most citizens can’t manage their finances well enough to prepare for a life after work. And the fantasy that the free market (it ain’t actually a free market if players lack information) will work this out nicely is ridiculous.

The 401(k) has been a bonanza of fees for financial advisory firms, but on the whole has left future retirees less well off than they were under prior arrangements.

US Personal Saving Rate Chart

US Personal Saving Rate data by YCharts

A long period of wage stagnation hasn’t helped.

Happily, there are models for successful national retirement plans, and this New York Times article by Steven Greenhouse smartly explains the models and how and why they work. Prepare yourself, Provincial Americans: the examples come from foreign shores. The Australians, the Dutch and the Danes seem to be out-saving us and, consequently, can look forward to happier retirements. The heavy hand of their governments is one big reason.

The current political mood in the U.S. is hostile to learning from the experience of Koreans (nice education system, eh?), Danes and the Dutch, or anyone who isn’t a Yankee, with a national not-invented-here syndrome having settled in. It has colored the national debate on healthcare. And, if anyone in public life seeks to take up the retirement issue, beyond simply proposing that we reduce social security benefits, bringing up the smart work done in other countries might be political suicide.

That’s too bad. The U.S. doesn’t have a monopoly on smart ideas; remember lean manufacturing and just-in-time inventory, tricks we lifted from the Japanese? See this brilliant blog ranking America vs. other nations on a wide range of metrics. It’s time we become intellectual internationalists, and bring some foreign-tested best practices home.

Jeff Bailey, The Editor of YCharts, is a former reporter, editor and columnist at the Wall Street Journal and New York Times. He can be reached at



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