In Canada we have two government retirement plans, Old Age Security and the Canada Pension Plan. The first comes from tax revenues and is generally underfunded. The second is completely contributory; it pays for itself from contributions from employees and employers, has enough money to last 70+ years (if contributions were to suddenly stop), and made an 11% profit last year. It pays a sustainable rate relative to contributions, but since Canadians don't have to contribute much they don't get paid much. CPP pays a very rough 25% of your average pay in retirement. (OAS pays about $7,000.) So your retirement income, if you didn't save, is about $7,000 plus 25%. The typical working income is around $35,000, so in retirement you could expect $15,000 to $16,000 per year, per person, which isn't much.
(I looked at the rates in Germany, US and even Greece. The Canadian contribution rate is currently 4.95% for employees outside of Quebec, with a small exemption; employers have to match the contribution. Greece paid 6.67% for employees before 2010's pension crisis, but paid 40% of the original income, which wasn't sustainable. In Germany the contribution rate is 9.8% (19.6%, apparently half for employees), basically double what we have in Canada.)
The completely contributory part is how Social Security "should" work, but doesn't (Social Security is more like a combo of OAS and CPP; not enough money goes in via contributions so the US government has to dip into its reserves to pay seniors).
Next year the Canadian government will gradually increase contributions and payouts from this well-run CPP (this was announced a few years ago). Needless to say, this drew lots of ire and controversy in Canada. Many Canadians cannot distinguish between Old Age Security, the Canada Pension Plan and Social Security, so if they heard that Social Security is a "Ponzi scheme" they think the Canada Pension Plan must be too! I imagine if the American government were to increase Social Security contributions or create a new retirement plan it would create even more rage.
This is almost a psychology site. It's not just about managing money better, but thinking better about money. Unfortunately getting other people to agree to this kind of thinking is very difficult.
Just came across this article from February 2018:
https://www.theatlantic.com/business/archive/2018/02/pensions-safety-net-california/553970/
A few choice quotes:
More and more older people are finding themselves in a similar situation as Baby Boomers reach retirement age without enough savings and as housing costs and medical expenses rise... Many people reaching retirement age don’t have the pensions that lots of workers in previous generations did, and often have not put enough money into their 401(k)s to live off of; the median savings in a 401(k) plan for people between the ages of 55 and 64 is currently just $15,000, according to the National Institute on Retirement Security, a nonprofit.
Two-thirds of Americans don’t contribute any money to a 401(k) or other retirement account (emphasis mine), according to Census Bureau researchers. And this could have larger implications for the economy. If today’s middle-class households curtail their spending when they retire, the whole economy could suffer.
This is a disaster in the making...Would it make more sense to get employers out of the retirement-plan business, and have the Federal Government establish a 401(k) for all, with a mandatory minimum contribution from the employee/taxpayer, optional contributions/matching from the employer, and some sort of matching from the USG?
I don't know if that would work, if we could somehow avoid the political issues. That sort of plan would allow employees to make the investment decisions, right? Most people are bad investors. They would invest in fixed investments to avoid any risk, or take loans out against the money, or withdraw early despite penalties, or find some excuse not to contribute in the first place.
The United Kingdom did something similar, where there's less political rage about it. Of course this still drew some heat. Link for info:
https://www.autoenrolment.co.uk/knowledge-bank/in-depth-articles/pension-changes