The Watered-Down Deal

When I was thinking about what to write this month, I asked ChatGPT for some ideas, because if nothing else, it’s entertaining to see what it comes up with. The AI’s first suggestion was a blog post about, “The importance of starting early: Tips for millennials to save for retirement.” 

I rolled my eyes immediately and not just because I’ve seen a million of those types of posts over the years. I believe I count as an “elder millennial,” and at 42 years old, I don’t think recommendations like “save early” are helpful at this point, mid-career. But putting aside the fact that ChatGPT incorrectly assumes “Millennial” is a synonym for young people, I also am not a big fan of overly simplistic advice like “save early.” 

Yes, starting early is important, but that kind of advice is so narrowly focused on individual responsibility, assuming everyone has equal opportunity to save early and that we all live in some sort of bubble isolated from social and economic forces that are constantly changing and evolving and well beyond the control of the individual.

That got me thinking about the overall shift over the last few generations in savings options and the moving goal posts people have experienced. I’m writing this post as people in France completely freak out about the French government raising the retirement age from 62 to 64. I get the perspective of the government. People are living longer. The ratio of workers to retirees is shifting and straining budgets. And yes, it is only a two-year difference, but it is yet another change in a long parade of changes where retirement benefits seem to get worse rather than better over time. 

For my entire career, I’ve just sort of accepted that I’m going to get a worse deal than my predecessors - even those just a few years ahead of me. Pensions are becoming rare, like endangered animals on the brink of extinction. I’ve worked in government for most of my career and have been lucky to be a part of a couple pension programs, but I’ve never been in the “good” tiers of the plans. Due to my age, I’m always in the fourth or later iteration, the one where the benefits are way less generous, the retirement age is higher, and more of the responsibility and risk has been shifted to the saver.

And the constant message to me has been that even if you do all the things you’re supposed to do, you probably still won’t have enough saved for retirement. 

I know many of my peers haven’t been as lucky as me, especially those I went to college with who went into jobs in the entertainment industry, where the work is gig-based and often there isn’t a workplace savings retirement option. Forgetting pensions for a moment, there’s such a stark difference between a 401(k) and an IRA, in terms of contribution limits and having an employer chip in. An IRA can be helpful as a supplement to other options, but it feels woefully inadequate as the primary source for retirement income … especially when I’ve also been hearing my whole life from the media and general pop culture that folks in my age group can’t count on Social Security the way prior generations have. 

From a detached, impersonal perspective, I totally understand the reasons behind the overall shift to watered down options over time. But that doesn’t change the fact that it feels crappy. At minimum, I think it would help if more folks in the media and industry simply admitted that it is a bit of a raw deal, especially while doling out advice like “save early” or whatever the sound-bite messaging is.

Changing our systems so that they truly support people in retirement will take a lot of time and effort, and there is a lot of innovation happening right now to help reverse the trend, through new employer and state-sponsored options we talk about here in these forums. But as we look to make options better for those in the future, we should also all collectively admit that things aren’t currently working well and that it’s often individuals and families that have to pay the consequences of these system failures. 

In the meantime, I’ll still be saving what I can, piecing together my own Frankenstein retirement solution like so many of my peers, and I definitely won’t be taking any advice from AI chatbots, no matter how simple the soundbites solutions they offer might seem.

Columnist and Senior Associate Joel Metlen is based in Oregon. Joel is a pioneer of the state facilitated retirement savings space, woven into a career of public service and innovation. At OregonSaves, Joel’s responsibilities ranged from marketing and employer engagement to operations and data analysis. You’ll see his insights from that experience, and more, here.

This piece was featured in the April 6, 2023, edition of Retirement Security Matters. For more fresh thinking on retirement savings innovation, check out the newsletter here.