BUZ LIVINGSTON: The Grateful Dead, John Bogle and a retirement train wreck

Published: Thursday, October 11, 2012 at 04:04 PM.

“We got two eyes but still don’t see” — “Casey Jones,” The Grateful Dead


Jerry Garcia’s ex-wife, Carolyn, aka Mountain Girl, successfully sued his estate after his widow/executor halted the $250,000 annual payments Garcia agreed to pay. The lawyers worked out all the details and Mountain Girl ended up in better shape than the typical baby boomer. At first glance, it may appear to be a giant leap from Workingman’s Dead to retirement planning but many don’t get the message.

At the Retirement Income Symposium Vanguard’s venerable John Bogle, like Jerry Garcia, sees trouble ahead. The combination of low yields on fixed income, underfunded pension plans and a flawed retirement system will lead to a train wreck unless we make changes quickly. Like the Dead warned, “It’s on the wrong track and heading for you.” 

Our current retirement system with self-directed IRAs and 401(k) plans potentially dooms everyone; perhaps we need to hit the reset button. Bogle, a lifetime conservative Republican, suggests combining all retirement plans into a single entity run by a board with fiduciary responsibility. The idea that you can plan your own retirement successfully while navigating the ebb and flow of markets and financial marketing hype leads people to expensive errors. 

Bogle echoes a prescient New York Times column (July 21, 2012) by Teresa Ghilarducci, who labeled our approach to retirement “ridiculous.” Ghilarducci enumerates the problems with our do-it-yourself approach. Understand you have to save 7 percent of every dollar you earned beginning in your mid-20s and earn 3 percent over inflation. Don’t withdraw any money if you get laid off, get sick or divorced, buy a house and need to pay college tuition.

You must asset allocate appropriately and avoid investment gimmicks while keeping fees low.

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