The Retirement Plan Solution: The Reinvention of Defined Contribution

The Great American Retirement System?

The idea of an active retirement as a right is relatively modern. One of the earliest old-age pension programs was introduced in 1889 by Germany's "Iron Chancellor," Otto von Bismarck. This offered an income for life to workers who reached the age of 70. But since average life expectancy at the time was 45, this was not exactly a promise of a healthy and prolonged final phase of life, full of enjoyment.

Today, attitudes are completely different. We expect to retire from work rather than to die with our boots on. We expect to have several healthy years ahead of us when we retire. We want some fun before we go, and we expect the money to be available to pay for it. So retirement has become a phase of life to look forward to. But the longer we live, and the more we hope to do in our golden years, the more expensive a proposition it becomes.

This book is about how America—or any other country for that matter—can take steps to make that proposition affordable. We will address the background issues that make it so challenging: the fact that people are living longer, the need for regular saving throughout a working lifetime, and the demands and risks that come with putting those savings to work in the capital markets. We look at the inefficiencies built into the way in which the system operates today, and at how these inefficiencies might be overcome. We will set out a vision of how the system can be made better.

In America, "the system" is increasingly ...