There's a common refrain that most people "aren't saving enough" to guarantee themselves a decent pension 30 years from now.
What exactly would "enough" refer to?
People seem to imply that they hace some clue as to how to save in 2013 so that you've got a decent nest egg in 2043. By and large they absolutely rule out a simple bank account. No, they mean put it into a pension fund. What's that? It's a legal fiction that takes the money and dumps it onto the world's stock exchanges and hopes for the best.
What will stock markets look like in 2043? Maybe they will be stellar, with prices having grown far in excess of real inflation. Or maybe they won't. The crisis of 2008-present came extremely close to reducing the value of most pensions funds to zero. On what basis are we assuming that there won't be another collapse before 2043? Why are we assuming that such a collapse will be smaller than 2008?
Sure, I would like to have a big fat pension fund that has risen in value. I would be satisfied with one that has maintained its value, but I would be really irked by one that had fallen seriously due to a stock market crisis.
It's far from obvious that the world has a rosy future of economic growth left in it. Virtually all the developed countries are either shrinking or nearly shrinking. The only countries that are growing are backwards countries playing catch-up. Once they're caught up, where do they go? Why would their growth not stall the way all the developed countries have?
What do I want out of old age? Same as most, I expect. Decent, responsive health care. A pleasant, tastefully-furnished place to live, regardless of who owns it. Access to the kinds of entertainment popular with the majority of adults.
At least one of these we can start preparing right this minute, without trusting to the vagaries of the stock-traders of 2043, who are right now in nappies. We can decide what kind of dwellings we want to be in in our old age, take the money we were going to throw onto the stock market for 30 years, and use it to build those dwellings! We can do it deliberately and carefully, inspecting the buildings rigourously to ensure that they're the type that'll work well for 150 years.
That's the housing costs of taking care of our 2043 retirees. What next? Medical care! Instead of putting billions of Euro onto the stock market year in, year out, we just put it into training lots of young medical pros, to look after us in 2043 onwards. Entertainment? Simple decree: every provider has to give out 10% of his sales for free to OAPs. It functions like a 10% tax on the vendors. Less than today's VAT (which we can phase out).
This seems outlandish, to suggest that doing the sensible thing and spending the next 30 years putting away 10% of your earnings on what is, ultimately, a gamble on an entity that has recently proven itself capable of losing everything people had put into it.
But really, with the benefit of hindsight, isn't it equally outlandish to say that even after the lesson of 2008, we still think that taking a huge punt on the stock market is the only way to provide good things to people in 2043?