After WW II, Germany introduced a pension for people over 60, it was a good thing to do but in reality, the average age for life expectancy was 62. This means many people did not collect the money because they passed away. It has been over 75 years since the pension introduction and the good news is people typically live longer, many reach into their 90s. The ages for retirement crept up to 65 and upon reaching that age, the government sends you money. For a long time, the government money, plus a pension from work, plus your own savings allowed you to live reasonably comfortably. Times have changed, people live longer, and many people no longer have a pension at work. If people are living longer, do they have the resources to live a reasonable comfortable life? What should the government do?

In an article by Fatima Hussein of the Associated Press, the Biden government passed a $1.7 trillion spending bill to shore up retirement accounts of workers. The retirement savings measure labelled Secure 2.0 would reset how people enroll in retirement plans – you are automatically in and have to opt out if desired; if someone has student debt and many have – the student-loan payments can be a substitute for their contributions to the pension plan which means they can get matching employer contributions; the age for required distributions from plans increases from 72 to 75; and expands a tax-deductible saver’s credit.

According to Monique Morrissey, an economist at Economic Policy Institute in Washington, while the bill helps individuals, it also helps the companies which manage the funds or the financial services industry. Given that companies such as BlackRock Funds Services Group, Prudential Insurance, the Business Roundtable and American Council of Life Insurers help lobby for the bill, it stands to reason they will benefit from it.

The reality is according to the US Census in 2020, 58% of working-age baby boomers had a least one retirement account, 56% of Gen Xers and 7.7% of Gen Zers.

Linking to dividend paying stocks, macro trends are seen throughout the economy, and we know work has and is changing and governments are a lagging solution. They know the issue but there are vested interests on both sides, some who benefit from the existing structures that do not want change. It is the reason why it is easier to see in a smaller community of the plant which existed for generations slowly wind down and then it is shut. Everyone knew but it is hard till the final decision is made. When you are investing you can see the macro trends, but how does it translate on the ground? how are people making decisions? As we move into the New Year, pay attention but watch how people actually make decisions.

There are more questions than answers, till the next time – to raising questions.