A new book by Roger Lowenstein, a well-regarded author on financial topics, raises some issues about a problem that is becoming more obvious as baby boomers near retirement- the question of whether they have saved enough. His book, While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis, discusses the way in which pension issues have affected the institutions named. It’s certainly a serious problem, but I don’t believe it’s a problem that’s inherent in the nature of pension plans, and that this is a reason to move everyone to 401(k) plans. You will find in each of the pension crises discussed a failure of careful management that took place over a long period of time. The people managing these plans knew that they were following risky paths, and they chose to follow them because they were, at least for a time, more profitable, and as for the long run, well, that’s someone else’s problem. But these crises have affected what people will have for retirement, and placed more of the saving burden on individuals. This is certainly an era in which individuals must consider their own financial situations and cannot rely upon government or employers to solve their retirement problems.

We see much discussion of individual attitudes toward retirement saving. Many writers warn us that Americans are saving virtually nothing for retirement. It’s misleading to lump everyone together, of course, because many people have saved for retirement, and those nearest to retirement are reported, again on a general basis, to be fairly well prepared for it. But there is no doubt that many people fall outside this generalization.

In future entries, I will review the conflicting evidence about saving, because some of the methods used in determining saving seem to be misleading. But there seems little doubt that Americans don’t save as much as they could in our high consumption society, and this attitude will affect their retirements and their family and estate planning.