Retired and emotional

PBS's big-budget leftist documentary factory, Frontline, drew considerable attention last week with its program, "The Retirement Gamble." You can check it out here.

All TV documentaries view with alarm. In this case, some of the alarm is justified. The program looked at the dire state of retirement saving in the United States. You've probably heard the stats: many people nearing retirement age, or what used to be considered retirement age, haven't remotely enough to carry them through until The Reaper carries them out. Some, having had their investments nearly erased in the one-two punch of the dot com bust and the Great Recession, find themselves with hardly enough lolly to keep body and soul together. On top of that, they owe more on their house mortgages than their houses are worth.

"The Retirement Gamble" introduces us to some of these people. Of course one has a natural sympathy for anyone in that position. I don't believe the program exaggerates the devastation. And it is correct that replacing company pensions with 401(k), 403(b) plans and such has resulted in consequences that should have been foreseen, but weren't.

In other ways, the program is a piece of tripe.

The show offers two main arguments, explicitly or implicitly. First, these victims were fooled -- fooled, do you hear me? -- by mutual funds hired by companies to administer their so-called defined contribution plans. We are told the workers were gulled into contributing without considering the expenses; that they were offered "too many choices" of investments for them to understand; that some stupidly put all their retirement money in the stock of their employer; that they were too busy with work to take time to become familiar with retirement finance. 

I say their excuses are economical with the truth. There are undoubtedly some exceptions, but by and large, these people failed to take responsibility for themselves and their families.

Look. If something is important enough to us, we learn about it. We study and discuss it. Yes, some things are confusing; having recently retired from full-time work myself, I've had my head turned inside out trying to fathom the complexities of medical insurance. I hadn't had to deal with it before: either I was unemployed and too broke to buy insurance or my erstwhile employer did the heavy lifting. I think I've about got it sorted, but it's been a closely run thing.

Odds are that most of these people who feel they were hard done by spent hours, weeks, months reading about car models when they intended to buy one. I'll bet they pored through catalogs of stainless steel kitchen tables and swimming pools when they upgraded their new house. What about their investments for retirement? So boring. They had a plan at work, it was somebody else's job to look after it.

Except for Vanguard (a brokerage I have great respect for), "The Retirement Gamble" implies that mutual funds are bloodsuckers. They found the perfect patsy, too, a retirement executive at JPMorgan Chase. The interviewer asks him about fees at his shop and index funds; the guy looks like a cobra about to be zapped by a mongoose.

A portion of the mutual fund and money management industry does have a good deal to answer for. But it is simply not true that they are all out to squeeze the customer dry. To give you but two more companies I'm familiar with, Fidelity and T. Rowe Price are low-cost brokerages that can offer you just about any kind of investment you could want if you're sane. I've had an account at Fidelity for 25 years and can scarcely fault them on anything.

Too many choices? It's hardly a secret that one key to successful investing, including for retirement, is diversification. Having lots of possibilities is good. You don't want to place all your chips on number 11 before the wheel turns -- investing like that is gambling. You want potential sources of profits (and, of course, losses) in many kinds of ETFs, index funds, individual stocks, active mutual funds and -- if it's your thing (it's not mine) -- bonds. In that order.

Don't tell me it's all too complicated for ordinary people to understand. Value Line and Morningstar, to name only two services, have every bit of data you could want to know, and in the case of Morningstar, analysis written in straightforward, literate English. I don't have an MBA or a background in finance. If I can manage my own portfolio, you can too. Not that I haven't made mistakes; everyone does at times; that's part of the game, and your tuition for learning.

The second point the program seemed to be trying to make was that the government is the answer, as it is for every problem. Ideally (for leftists) we should be forced to put our retirement savings in a government annuity run by "experts." Or at least, there must be more regulation.

That's the scariest thing about the retirement crisis (and I don't deny there is one) -- a cry will arise for the federal government to do something! Whatever it turns out to be, it will be the wrong thing. It doesn't matter if the president at the time is our current demagogue, or a fresh demagogue; this year's self-serving Congress or next year's; which political appointees run the nation's financial regulatory agencies. None of them understand the first thing about sound economic principles.

Look after your own retirement finances. And pray the government doesn't rescue you.