Why Is Teresa Ghilarducci Considered "The Most Dangerous Woman in America"

Teresa Ghilarducci is a 51 year old economist who directs the Schwartz Center for Economic Policy Analysis at the New School in New York.

Why was Ghilarducci--who sure looks like a nice person in her picture--labeled the most dangerous woman in America in a recent US News & World Report column? 

The short answer is that she thinks 401k plans stink and she is not afraid to let the world know.

Ghilarducci is the author of a recent book titled: When I'm 64: The Plot Against Pensions and the Plan to Save Them.  Ghilarducci uses the book to lay-out the case against the 401k plan and to advocate an alternative which would involve a retirement system run by the government rather than the private sector.

Among her criticisms are the following:

  • 401ks are voluntary and not enough people actually participate.
  • Levels of savings for those who do participate are completely inadequate.
  • Mutual fund management fees are excessive and eat away at the savings of 401k participants.
  • Not enough employers make matching contributions to 401ks.
  • 401k plans are highly regressive.  In other words, those who benefit most from the system and the tax advantages are higher income earners.  Those at the lower end of the income spectrum benefit least.

These criticism are well founded and are not entirely novel.  What has the industry and certain parts of the media up in arms is Ghilarducci's proposed alternative to the status quo.

Ghilarducci advocates mandatory contributions from employers and employees that would total 5% of income.   The retirement program would be administered by the government, but the plan assets would remain private property of each employee.  The program also calls for the government to guarantee a return of at least 3% over the rate of inflation.

Pretty interesting and provocative ideas that we'll continue to follow--Ghilarducci must be on to something to have received the strong reactions that have surfaced thus far.

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Comments

IT'S ABOUT TIME SOMEONE STARTS LOOKING OUT FOR THE WORKING MEN & WOMEN OF AMERICA, ALOT OF US ARE TRYING TO DO THE RIGHT THING WITH OUR SAVINGS, BUT IT SEEMS THAT WE JUST AREN'T GETTING ANYWHERE, TERESA GHILARDUCCI KEEP UP THE GOOD WORK, I WILL BE FOLLOWING YOU..THANKS.

Please please please. Do you know what that would do to the very large Insurance Industry? And why does the government want to create all these insurance pools including Healthcare and retirment? So they can use the funds to furhter entitlement programs like this one and more. Stop the Spending!

What part of "the plan assets would remain private property of each employee" was too hard for you to understand?

Like most mindless "conservatives" (as distinct from the thoughtful kind) your knee-jerk reaction to every proposal for a government program is to scream "Socialism!", and then turn off your brain.

Are the Police, Fire and Sanitation departments Socialism? Are our courts, public prosecutors, interstate highways?

Socialism rejects the notion of private property. This proposal would make each account private property. Therefore, this is not "Socialism!".

Whether it's a good idea is a different question; one that can't be answered by knee-jerk responses, and mindless repetition of empty rhetoric!

The fact is this... It is a socialist program. It will be enforced as another social security tax that is already taken out of every worker's paycheck. It is forcing the worker into another 3rd party program which the government has control over - forcing us to directly fund another program that the American people wouldn't want anyway.

For you to bring police, fire, and sanitation into it is just plain stupid. Everyone knows that they're run by states and municipalities.

This program is completely different. It will be run by the federal government. They will take your money and put it into government owned companies like Amtrak and GM. Since the federal government also runs the federal reserve, they will simply print the money to cover the losses. (There WILL be losses) - This will only increase inflation and diminish the value of the dollar - driving this country deeper and deeper into the red.

"Are the Police, Fire and Sanitation departments Socialism? Are our courts, public prosecutors, interstate highways?"

Of course not, but what has that to do with picking the pocket of one person for the benefit of another, which is, most certainly, socialism? Also, the author specifically states that the goal is to "spread the wealth," and the only way to do that is to take from one and give to another, as in "from him according to his means to him according to his need." Sound familiar? I suppose you do not see that as socialism, either, but then I suspect that you would not consider anything as socialism that puts your neighbor's money into your pocket.

When the goverment is REQUIRED to see that the fund maintains a growth rate of at least 3% over the inflation rate, it becomes a social program. Why? Because then tax dollars are the only way to insure those kind of earnings, particulary in recessionary cycles. While her heart is in the right place, it's a bad idea.

I can't stand people who don't know how to set a budget for their lives. Hey, socialist pigs: keep your hands off my money. You need to spend less and save more. Americans need to learn the hard way that socialism will not save the country when the sense of entitlement is so high.

What part of "the plan assets would remain private property of each employee" was too hard for you to understand?

Like most mindless "conservatives" (as distinct from the thoughtful kind) your knee-jerk reaction to every proposal for a government program is to scream "Socialism!", and then turn off your brain.

Are the Police, Fire and Sanitation departments Socialism? Are our courts, public prosecutors, interstate highways?

Socialism rejects the notion of private property. This proposal would make each account private property. Therefore, this is not "Socialism!".

Whether it's a good idea is a different question; one that can't be answered by knee-jerk responses, and mindless repetition of empty rhetoric!

That is insanity. Giving the government any control over people's retirement would wind up in as big a mess as Social Security. We all know how well that's worked out. If they want to be pro-active, let them set regulation on the fees paid to administrate the 401K with a minimum return percentage. That should be the extent of their interference.

Actually Social Security HAS worked out...I'm getting it now. It's not a lot but it helps. I'm sure nobody would turn away a social security check. I put money in and now I am getting it back for the rest of my life.

I appreciate your candor and excitement over the possibility of getting a retirement plan from the government. After seizing all retirement assets privately worked for and earned. So, what if you make 50K for 20yrs you pay-in $2,500/yr or $50K. And I make $150K for 10yrs, I pay in $7,500/yr or $75K and $200K for 10 yrs anothee $10,000/yr or $100K, I would pay-in $300,000 in 20 yrs. Let me ask you, do you think we will get paid the same amount from the government if we are the same age and have the same life expectancies? Hmmmmmmmm. you'd outlive yours and I wouldnt, thereby taking rather than giving. Nice Ponzi Scheme dont you think? You see, we ran from tyranny and oppression to fen for ourselves, you and me included. The less they take from us, the better prepared you are to take care of yourself. THink first !!!

Where did you get the idea that Ghilarducci is planning on seizing any retirement assets (let alone all of them)?

What part of "the plan assets would remain private property of each employee" was too hard for you to understand?

Like most mindless "conservatives" (as distinct from the thoughtful kind) your knee-jerk reaction to every proposal for a government program is to scream "Socialism!", and then turn off your brain.

Are the Police, Fire and Sanitation departments Socialism? Are our courts, public prosecutors, interstate highways?

Socialism rejects the notion of private property. This proposal would make each account private property. Therefore, this is not "Socialism!".

Whether it's a good idea is a different question; one that can't be answered by knee-jerk responses, and mindless repetition of empty rhetoric!

So, when will you start "thinking for yourself", and stop being just another Republi-Con parrot?

Wow! The Govt. will force us to contribute to a "retirement plan" and the benevolently "redistribute" it to us as they see fit when we retire. Despite what her bogus claims are, the 401k is one of the most successful and important plans to help individuals save for retirement that we have ever had...far better the Govt. ponzi scheme, social security, which is going broke. The 401k is avaiable to all who work for a cmployee who provids one (and most do) regardless of income level. It is completely voluntary and individuals can contribute as they want or can afford. And, most can chose the type of investment. It's freedom of choice. What is most frightening is how many Americans are willing to give up even more of their economic freedom to government in the false name of security.

She's right - the 401(k) system as advertised is one big scam. It won't adequately prepare the average worker for retirement. In fact, it benefits the financial services industry much more than investors. Do your banking with a credit union. Invest directly with a company that operates on a not-for-profit basis, like Vanguard or TIAA-CREF (cut out the middle man, like a stockbroker). And when you hear the bloodsuckers in the for-profit segment of the financial services industry howl, tell them exactly where to go.

She has facts to back up her claim that the 401(k) system has failed. What do you have? Just right-wing "talking points" and ideology.

What part of "the plan assets would remain private property of each employee" was too hard for you to understand?

Like most mindless "conservatives" (as distinct from the thoughtful kind) your knee-jerk reaction to every proposal for a government program is to scream "Socialism!", and then turn off your brain.

Are the Police, Fire and Sanitation departments Socialism? Are our courts, public prosecutors, interstate highways?

Socialism rejects the notion of private property. This proposal would make each account private property. Therefore, this is not "Socialism!".

Whether it's a good idea is a different question; one that can't be answered by knee-jerk responses, and mindless repetition of empty rhetoric!

What's frightening is how many people (like you) believe ideology is a substitute for reality!

Sorry, that Comment was misplaced. It's supposed to be in reply to the Comment of Tue, 10/05/2010 - 12:59.

While high income people may benefit the most from the tax advantages of 401ks I think we should remember that there are great benefits for lower income people as well under our current plan such as the Roth 401k and Roth IRA. For people in lower tax brackets they have the huge advantage of being able to save in account that will allow both their contributions and earnings to be withdrawn completely tax free.

I am very sorry people, but America IS NOT A SOCIALIST COUNTRY!!! I WORK HARD FOR MY MONEY, AND UNLESS I CHOOSE TO GIVE IT AWAY, OBAMA WILL HAVE TO PRY IT FROM MY COLD, DEAD HANDS!!!! THIS IS WHAT DICTATORS DO - THEY DECIDE WHAT, AND HOW MUCH, YOU CAN HAVE, EVEN THOUGH YOU PAID FOR IT!!!! For all of you people who want to live under Socialism, there are plenty of countries you can MOVE TO (I will even buy your one-way ticket!), so STOP TRYING TO CHANGE AMERICA!!! I am a 53 year old woman, and I NEVER thought that I would some day, perhaps literally, be fighting against a tyrannical government in my own country!! But you can bet that I WILL, if necessary! And with each passing day, it looks more and more necessary.

You probably work for one of the big corporations or banks that are stealing us blind. Corporate Welfare is the problem. Not socialism. Take a graduate economics course!

You don't have to "take a graduate economics course" course to see that govt intervention "on our behalf" is a poison pill. You take graduate economics courses to brainwash yourself into thinking personal accountability is an obsolete notion and that corporations and banks are all evil, you elitist jackass.

So, all government intervention is a "poison pill"? I take it, then, you'd rather we never passed the Clean Air and Clean Water Acts. That way the "pure, perfect, sacred, and holy" free market could continue to poison us without that nasty "tyrannical" government acting to protect us!  

P.S., for those who pooh-pooh accusations of Socialism, Teresa Ghilarducci is an "on again-off again" member of the Democrat Socialist Party. Verifiable online.

To cmm912 , writing on Mon, 10/18/2010 - 10:36:

Since there's no such thing as the "Democrat Socialist Party" (anymore than there's a "Republi-Con Fascist Party"), you've just demonstrated more brain dead right-wing rhetoric, instead of rationality!

Again, please explain how a plan that creates private assets that will remain the private property of the employees constitutes "Socialism!"?

"The slow erosion of our freedoms." How so? If we, the voters of this country, choose to elect a government that creates such a system, isn't that an exercise of our freedoms?  

You do realize we are a republic and not a democracy, correct?  No, I don't feel that most of those elected are doing the bidding of their constituents.  I think they get elected on that promise, but most tend to end up fattening their pockets while in DC, voting for whatever creates more wealth for them.  So anything that most of them vote on and it becomes law is NOT what the constituents asked for.

Therefore, I would never trust those that cannot even run a Senate cafeteria, a post office, Social Security, Veteran's Affairs, on & on.........

Have you ever been to a Social Security office?  Have you called one?  It is the worst, most inefficient, archaic system ever.  The customer service is non-existent.  Try the VA, you get the same result.  So regardless of whether they are managing the program or not, if they are involved it is going to suck.  Why do you think the govt buys $40 hammers?  It is because no private company wants to deal with them.  They raise their prices to something ridiculous in the hope that the government sees the pricing and will go away.  They are too difficult to deal with.  Doesn't this tell you anything?  Why would you even trust the management of your retirement to the government?  We have FREE WILL for a reason.  Free will is what you exercise  when you decide how much you will save for retirement.  No one should make you do anything.  If you do, great, if you don't, it isn't anyone's fault but your own.  How ridiculous that we aren't taking responsibility for our own actions.

Considering that you are a liberal, can I ask one question?

I always was under the impression that liberals were very fervent for freedom of speech, tolerance for beliefs, and that it was patriotic for someone to be against or protest the government.  Why is it that this only works when a liberal agrees with the speech, the belief, and the message?

Please, enlighten me. :)

 

 

I CAN NOT believe what I am reading in this article. I feel like I've just woken up to a communist country or a George Orwell novel. Why is it that every liberal's answer to any issue is a government take-over of the private system? The Feds can't even figure out how to deliver the mail without losing millions upon millions of dollars (or social security for that matter), yet I am to believe that government can do a better job with my 401(k) that I can??!! What a joke!!

The very people who time and again prove beyond a doubt that they cannot manage money competently want to take over my retirement funds to "protect" me. How else can we attempt to wreck this wonderful country?

Actually, it's people like you who make me think I'm living in Orwell's 1984. For you any government program is a "take over" (even when it's not)!  

Why do you say, "Ghilarducci must be on to something" because she has provoked some strong reactions? Is that the litmus test for good ideas? Was Hitler "on to something" because he provoked strong reactions? I know that is an extreme example, but I think you present a logical fallacy to infer her ideas are sound because she has provoked a lot of reaction.

On to something in the sense that the basis for the case she is making is credible and factual.

Fact of the matter is that the defined contribution system is regressive and--in the current form--does not serve as an adequate pillar of retirement funding for the vast majority of Americans: http://www.annuitydigest.com/news/some-sobering-401k-statistics

Dear Bill:

At last! An intelligent Comment, that doesn't consist solely of empty rhetoric and brain dead ideology.

Yes, the fact that something provokes controversy is no measure of its validity. (Though I agree the comparison to Hitler is a poor one. There's nothing dictatorial about Ghilarducci's ideas.)

But the "conservatives" should also remember that popularity is no measure of validity either. However rich the Limbaugh's and Beck's of this world become by spewing their bile, it remains just bile.

(After all, going by popularity, both the ideas of FDR and Reagan are "valid"!)

"Ghilarducci advocates mandatory contributions from employers and employees that would total 5% of income."

Mandatory contributions. Nope, nothing wrong here, just the government forcing us to pay for retirement twice. During the fight to enact SS, the government swore it wasn't a tax, and yet when it went before the SCotUS, it suddenly became a tax (because that is something the government is actually allowed to do). Now, we'll have another mandatory tax to fund our retirement...oh hey, did anyone else notice that they didn't get their own private lockbox with their SS contributions in it? Wow, I wonder what happened with that whole notion...

"The retirement program would be administered by the government..."

And we believe that the government is going to be able to do this properly because....(crickets). The federal government is *always* more inefficient and less effective in these matters. Hence their need to mandate contributions. If the federal government had a better plan, they wouldn't need to mandate it, everyone would be lining up to take advantage of it!

"The program also calls for the government to guarantee a return of at least 3% over the rate of inflation."

Ahhh, and there's the kicker...how do you suppose that the government will *guarantee* a return of at least 3% plus inflation on a free market based economy, eh? Let me think...how does the government guarantee anything it does, hmmmm?!??!

Get your head out of your ass and realize that the only thing that the crooks up in the beltway care about is how to separate more money from your pockets to line their's. Control over funds of this nature ("administer") means power, and that's all they care about. Wasn't it the liberals from the 60s that were always warning us about "the man"...well, the federal government is "the man" and its grown huge (bloated beyond belief) and over powered.

Funding the federal government shouldn't be our primary goal in life. So, honestly, when will it be enough? When will the government be big enough for you beta-male sycophants slavering at the government trough? Maybe we'll get lucky and all of the evil rich people (read, productive people) finally leave this country and let the system collapse under its own (dead) weight....and good riddance!

Let's take a mandatory 8.5% of our paycheck and put it into these private accounts. Then, take a matching 8.5% from our employer, and put it into a public pool as a safety net. We could call the public part "Social Security." Oops, sorry, this skips the part where government expands, never mind.

Ms. Ghilarducci,

You need to keep your hands off my money! I will invest it, I will spend it how I see fit and I don't want nor will I accept you telling me I have to give the gov. 3% so you can invest it. Man up, take care of your life, your money and your family and keep gov. out of my wallet and my bedroom!

Isn't the Social Security Trust Fund full of IOU'S? - and the Country is broke! It doesn't take a rocket scientist to figure out how the Government would handle this idea of yours. No thanks Teresa. I'll (have) prepare for my own retirement. Your time would be better spent influencing people to understand the benefits of individual responsibility.

CHK

As someone in their late 30's who has been contributing to a 401k since I started working out of college and investing it wisely, why would I want to settle for a return of inflation + 3%? The time value of money (compounding, etc.) is what makes my 401k grow. The further away from retirement I am, the more risk and return I accept yielding greater growth of my 401k in my earlier years. Closer to retirement, I'm basically maintaining the balance and trying to keep up with inflation. Why would I want to do that from the beginning?

Also, considering rates are so low now, wouldn't it cost the Federal Government a ton of money to make up the difference? Wouldn't the fact that everyone was investing in the same vehicle drive down the yield and prices of government bonds, thereby costing the Fed even more money?

And how am I supposed to trust that the money will be there when I retire?

What happens to the other social security taxes I already pay? Am I supposed to pay that plus this new thing? Do I no longer get credit for all the money I've paid into the system that is not supposed to be there when I retire, anyway?

I'd have to sit down and run the numbers and see if it made sense to liquidate my 401k and pay the early withdrawal penalty plus income taxes to see if it would make out better than what I'd be "promised".

Can you imagine all the plan custodians and investment houses out there would lose all that fee revenue? I can't see how this could possibly happen.

Last point, I don't even come close to making $250k a year, but I'm tired of the "higher income earner" labels and such. If the government is really going to pursue such projects, then they should seriously consider making adjustments for cost of living across the country. $250k a year in the midwest is good living. $250k a year in Silicon Valley...well it means you can barely afford a basic home that costs $800k in an ok neighborhood with a crappy school system.

Thanks for listening.