Apocalyptic headlines about a looming “pension crisis” are the surest sign that there is none

Quick question: how many of your readers “checked” the internet in 1995? Or a GPS function on your cell phone in 2005?

The speculation here is that in 1995 no one reading this article had any yearnings for the Internet, while in 2005 the demands mirrored those of 1995. Please think about it for a second.

If you think about what if the internet stopped working for a day, a week or even an hour right now. Would your situation feel like a crisis? What happens if the GPS stops working on your mobile phone?

The not-so-unreasonable speculation here is that the short-term loss of the Internet and its myriad functions would cause a sizable majority of the readers of this column to have a bit of a crazed frustration. And that despite the fact that quite a few readers have survived most of their lives without the Internet or GPS.

Ok, but what does all this have to do with the so-called “retirement crisis” or lack thereof? Quite a lot if you think about it. For starters, it’s a reminder that “crisis” is a relative term. While a lack of internet would be a crisis for most of us today, less than 20 years ago a lack of internet dominated the majority of our waking hours. Imagine that until the advent of always-on smartphones, access was largely a function of sitting at a desk. Now the internet connection is all the time, and in a way we are on the internet all the time. Yes, crisis conditions without what affect so many of our daily existence.

It is important to keep the term “pension crisis” in mind. Googling the latter will bring up over 100,000 search results. The headlines are frightening and include “Baby boomers, the richest generation, are in the midst of a pension crisis (Barrons)”, “High retirement anxiety among Millennials and Generation X (forbes)” and “America’s $7 trillion pension crisis is getting worse (Bloomberg).” What should readers do? If you believe the experts, the future looks bleak. Except that it isn’t, and neither will retirement. These headlines unwittingly revitalize why we should be quite optimistic about the future that awaits us. Think about it.

For one thing, the fact that there is even a suspicion of a pension crisis speaks to how much better life is getting. That’s because the term “retirement” already suggests that in the world of plenty we live in, there will be a future life that will be governed by free time, if the choice is made to do so stop working. Yes, we live in a time when it is possible to live without a job.

Second, consider the meaning of a cessation of work and what life will be like after we stop. Keeping this to ourselves is a signal that life expectancy is not only becoming more common, but also growing by the day. In fact, the expressed concern that we don’t have enough for retirement is rooted in the very real possibility that life after work will be long and active.

Third, implicit concern about the costs associated with retirement is that we will have all sorts of opportunities to spend our savings when we are not working. Hopefully it will remind readers why internet access and GPS functionality led to this article. Capitalists routinely create new products and services for us that we once knew nothing about but now cannot do without. This is important when thinking about retirement simply because the feared costs of retirement are rooted in exponentially more purchase options in retirement. Contrast this with 25 or 50 years ago, when our ability to consume was exceedingly small compared to today.

Hopefully all of this is a reminder that improvements in living standards and life expectancy are very much influencing the expressed pessimism about retirement. The pessimists don’t know it, but they explain once again why what worries us should make us optimistic. In other words, the profit motive delivers, and there will be plenty when it comes to retirement.

How do we know? See last heading. A $7 trillion pension crisis? If it is that big, imagine the feverish effort now being motivated by profit to reap the rewards of a supposedly unmet need of “crisis” proportions. In other words, the future for retirees is bright precisely because market problems mobilize brilliant market solutions.

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