|Ubasute - Carrying the elderly off to die on the mountain.|
In that time the elderly have always been the minority in terms of numbers. Subsistence societies require members that are able to hunt, gather, find resources, rear children and so forth. Elderly are not necessarily able to do any of these things, yet they were revered in many cultures. (Though there are some instances, such as ancient Japan, where 姥捨て (Ubasute) caused the elderly that could not be supported to be carried off to die of exposure.)
Going forward from today in the US we will have the population of the elderly as the largest segment in society by number with 20% of society being in this category by 2030. This is in part because the total fertility rate (TFR) needed to maintain the populate, 2.1 children per family, has not been maintained in the US and, for that matter, the world.
If the TFR were above 2.1 then the population as a whole would be expanding with an ever increasing number of children. This type of society can be thought of as a pyramid, representing the age distribution within the population, with a large base of younger people at the bottom and an every decreasing number of older people reaching toward the top of the pyramid. However, with a TFR below 2.1 the pyramid becomes inverted with a large base of elderly at the top and the pyramid diminishing down to a small number of younger people at the bottom.
The later case, with the large elderly population at the top of the inverted pyramid, represent a very dangerous new frontier for the US, and perhaps the world.
If you google "societal collapse" you will find a large collection of resource-based discussions on how societies collapse - typically from over-consumption of resources, natural disasters, social problems, and so forth.
What interests me is the growing elderly population and how it impacts the distribution of resources within the US economy. For example, the "unfunded Medicare and Social Security" debt is approximately 46 trillion dollars. This amount is the amount funds the government will be required to pay out to those who become eligible to receive it going forward from today. That is, as more people reach retirement age and the elderly become the largest single segment of society the government will need to find 46 trillion dollars to meet its obligations under Medicare and Social Security.
The federal government is not required to track this number, nor even be concerned with it, because the federal budgeting process only considers current obligations, i.e., things its required to pay for in any given fiscal year. Future obligations, such as borrowing money for anything whether its a highway or Medicare, are only represented as current debt obligations. So, unlike you and I the federal government basically can borrow whatever it needs with no thought about the future debt so long as its able to pay its current debt obligations, i.e., make the payments on the debt it already has.
From a financial perspective this is certainly a wonderful way to go. Imagine a perfect credit score that allowed you to borrow money at will. Further, imagine that no bank would ever look at the money you had already borrowed but instead just looked to see if you've been making your payments.
This means that you can borrow money to make payments on existing debt.
This means that you can literally borrow money until there is no more.
This means you are a criminal.
This is a modern day version of what's called Ponzi scheme - basically the same system except that instead of borrowing money from banks the process is represented as an investment, much like Bernie Madoff, where early "investors" are paid with the capital (as opposed to the inventments earnings) of future investors.
In the case of the federal government taxation is effectively substituted for borrowing (though technically the government "borrows" money by selling treasury bills the bills are backed by the good faith of the government which intern collects needed revenue from taxes).
So lets compare my future as a retiree today with an anthropological man who lived before 1930 (I chose this date because before this time there was no concept of "social security" or "medicare" and the government was not engaging in the same criminal activities as it is now).
In the past the only financial investment I could make to support myself in retirement would be some sort of financial annuity. This is a program where, during my productive years, I would essentially put money into a fund (like a 401(k)) that I would draw from during retirement. I could also be a veteran and receive payments from the government.
Today as a retiree the US government promises to pay me based on my past payments into the social security system. Periodically I get a mailing that says how much I paid and what I might expect my benefit to be at retirement. (I say might because its carefully worded not to promise to pay me anything.)
Unfortunately it seems that with debt obligations in social security of trillions of dollars and the segment of society collecting social security expanding to the point of being a largest as compared with those that might pay into the system there is virtually no chance the obligations can be met.
Be this as it may I could also make payments in to a private retirement account in an attempt to secure my retirement future. However, I believe that its very likely the government of the US will next focus on taking over these 401(k) type savings accounts.
Whether you believe this or not is up to you - but you might want to think carefully about who's going to be ahead of you (literally and figuratively) grabbing for money before your retirement (say government union members) and now much of that retirement pie is going to actually be left before its your turn.
So if you are a prudent investor like me what are you to do? You must pay your taxes (though some have successfully argued no - specific arguments here as PDF). You're not going to see much, if anything from the already bankrupt social security system. Medicare, if it continues to exist, will not be able to afford to treat anyone, and, if they do, it will be with the lowest possible cost treatments.
Without the resources to pay as implicitly promised in your retirement the government will essentially be committing Ubasute. (From WikiPedia) "the custom allegedly performed in Japan in the distant past, whereby an infirm or elderly relative was carried to a mountain, or some other remote, desolate place, and left there to die, either by dehydration, starvation, or exposure. It "is the subject of legend, but [...] does not seem ever to have been a common custom". The practice was most common during times of drought and famine, and was sometimes mandated by feudal officials."
That's right. The government has taken your resources and left you an obligation that it will never fulfill. Your treatment in old age will be like that of the legends of ancient Japan - you will left to die. Of course it won't be called that, but others, who are more deserving to live, will be ahead of you in the line for resources and, of course, you won't want to make any trouble.
So what way is there for you to escape this otherwise certain death?
In the past you basically worked until either you couldn't due to some physical illness or other infirmity or you died. Beyond that there was not "social safety network" to support you save for one: your family.
In the past a family was large and those members that did survive to old age where respected and taken care of by the younger family members.
These are things that, so far, the government cannot take from you. While they can take things and money, they cannot take your family.
This is why I believe it is important to make, as Anthropological Man did, the ultimate investment in family - because any other investment, particularly as times get more difficult, will be seized by the government in the name of the common good.
So what is the ultimate save retirement model: Anthropological Retirement.
1) Work hard until you die.
2) Make your real investment your offspring.
This is also one reason why I rail against Modern Mom in my previous posts - because the familial results of Modern Mom are a bankrupt familial investment. Modern Daughter will not have the resources or time to invest in Modern Mom once she becomes aged.
Modern Mom will be the victim of Ubasute.
If Modern Mom has money, the modern daughter will survive, but Modern Mom will not unless the daughter has been taught the value of a familial investment. If not, the money will go to drugs, parties, toys, and other things of no value to Modern Mom.