In a time where people are having trouble paying for their mortgage, a recent behavioral finance expert is attempting to place yet another required agenda on our fiscal existence: Retirement Savings. As a business ethics speaker and author, when I read the suggestions from Meir Statman, finance professor and author of 
What Investors Really Want, it caused me to pause and wonder if it is ethical to force retirement savings? With all the controversy surrounding Obamacare, it is somewhat unimaginable what furor might erupt if citizens for forced to save for retirement.
In order to assist the financial future for the society which he separates into “savers” and “non-savers” as well as the latter’s retirement future as a whole, Statman suggests that 8 percent of every individual’s income must be placed in retirement savings in the form of a 401(k). Ethically the assumption is that individuals need this forced action due to their inability to naturally provide for a financially sound future. Instead of giving individuals the choice, Statman believes forced retirement savings should be required just like taxes or social security. “Non-savers” and challenges with Social Security’s solvency is used by Statman as justification as to why his plan is needed.
” People would resent it today, but be grateful later on. God knows, we all can tell stories about stuff our mothers forced us to do that we resented then, but for which we are grateful now;” Statman said.
Current economic situations aside, there is a very strong point made through this proposal. The current generation, it has been consistently reported, are not the greatest savers. Although, according to a recent poll the generation known as “Generation Y” is looking into retirement perspectives, the Baby Boomer Generation is a different story entirely.
Social Security is consistently endangered via the spending habits of the national government as well as the increasing number of eligible citizens. It’s easy to understand why mandated retirement savings has merit. The question here, however, is at what point is it ethical to force someone to make choices that may have a long term benefit at the expense of a short-term cost? Ethics are often defined as making the right choice today based on all the facts and circumstances.
So here are some facts: (1) as a nation we (the citizens of the USA) suck at saving. (2) Most Baby Boomers are ill prepared for their retirement financially. (3) The current generation of retirees (Baby Boomers) are living longer. (4) Social Security is in financial peril based on all the current data projecting forward. (5) Finally, the economic impact to the masses of a large group of folks ill prepared for retirement is unclear and certainly challenging. The question – well is Statman’s suggestion wise and do you think it is ethical?
How about you…care to be forced to save for your retirement?
YOUR COMMENTS ARE WELCOME!
