Hurricanes, Hoaxes & Home Plate

**Doug Pike** (0:01)
Remember when it was impossible to misplace the TV remote? Because you were the TV remote? Remember when music sounded like this?
Remember when social media was truly social?

**Doug Pike** (0:17)
Hey John, how's it going today? Good, man.

**Doug Pike** (0:19)
Well, this show is all about you.
This is 50 Plus with Doug Pike. Helpful information on your finances, good health, and what to do for fun.
50 Plus, brought to you by the UT Health Houston Institute on Aging. Informed decisions for a healthier, happier life. And by New Promise Neuropathy. Lose the pain and numbness. Get your life back. newpromiseneuropathy.com. And now, Fifty Plus with Doug Pike.

**Doug Pike** (0:52)
And five, four, three, two, one, let's go. Welcome to Thursday, or as Bill Murray once famously said on screen, Groundhog Day. Plenty of humidity to go around this time of year, more than enough to make you feel when you walk outside like you put on a wool overcoat and somebody dumped a bucket of hot water over your head. It's oppressive, it's staggering, and it feels like home.
I'm not sure I'd do well in a cool, dry climate, to be perfectly honest. I suppose I'd get used to all those mild breezes and cool temperatures to not having to turn on the windshield wipers on the way down the driveway in the morning to get all the condensation off of it. I've spent time in milder climates, but not a lot of it. Houston's home to me, and I can't say I just love diving into boiling cauldrons every morning, but at least it's familiar, and that has to count for something. And briefly, ahead of the newsy tidbits on tap, the National Hurricane Center says we've got another full week ahead during which it expects no development of tropical storms. Thank you so much, Saharan dust. If I could buy you a present, I would.
That dust keeps the storms away, and that's worth its weight in gold. Here's a crazy idea.
How about this? Go straight to the Sahara desert, vacuum up all the dust we can, the sand, store it in giant tanks all over the country, well, at least on the East Coast and the Gulf Coast. And then as soon as the storm begins to form out over the ocean or the gulf, drop a few loads of that dust on it and just kill it.
You know, that sounded a lot more plausible when I thought of it than when I said it.
So anyway, let's get started here. And I wanted to talk first this morning in kind of a little bit of a long form thing about pensions. The traditional retirement landscape in this country has undergone a pretty profound transformation over the last 40 years or so. And the cornerstone of the shift is the near total disappearance of kind of the defined benefit pension plan in the private sector. A long time ago, when my dad was growing up, when my dad was working, a worker could expect to exchange a lifetime of dedicated service to a single firm for a guaranteed monthly check in retirement. Today, that's dead.
I don't know of many, if any, companies. I can't think of one off hand. I'm sure somebody's got pensions somewhere, but not that I know of. And while culture, our culture, often blames corporate greed for this shift, the more clear-eyed analysis shows a different driver, really. The collapse of the corporate pension is a rational, predictable response to a fundamental breakdown in employee loyalty.
To understand why corporations drop pensions, you got to know what pensions were originally, I said correctly, designed to do. My mouth's getting a little head of my brain again. A pension plan was never a simple act of corporate charity. It was a very strategic, long-term investment in that company's workforce. And by promising a secure retirement tied to years of service, business actively incentivized longevity. The formulas for traditional pensions have heavily favored workers who stayed 20, 30, even 40 years at the same company. For corporations, though, this massive financial commitment made sense when workers reciprocated with steadfast loyalty. Business could invest heavily in training. They could promote from within, build stable, long-term corporate cultures.
However, the cultural shifts that came along, like in the late 1990s and the early 2000s, just absolutely shattered that whole thing. Employees began to view their careers as things to be eaten in smaller bites, if you will. Job hopping became the preferred strategy for making more money faster and for personal career fulfillment. And, as you might suspect, when workers signaled that they were no longer interested in staying at one place for life, the foundational economic logic of the pension plan collapsed. A business can't reasonably be expected to fund a lifetime guaranteed retirement for an employee who looks at their tenure there as maybe a three-year stepping stone at best. And as soon as that employee might be kind of launched, got off the pad, corporations had to adapt their compensation structures to fit in with reality, really. It became financially reckless for firms to carry these big long-term liabilities for a workforce that was constantly shifting and changing. Corporations didn't totally abandon the retirement, the thought-like retirement, but what they did was shift to defined contribution models like 401Ks. And from a conservative economic perspective, that shift represents a logical realignment of risk and responsibility. The 401K and the independent workforce are a match made in heaven. It offers the exact feature that modern, unloyal workers want, and that's portability. You work somewhere for a few years, get a little contribution into your 401K, and then take it with you when you leave. The 401K travels in the hands of the person who owns it too, it doesn't stay with that corporation you left, which is another big advantage for people who want to manage their own money.