In Retirement on the Rocks, Christian E. Weller gives us his views of the American retirement system. The book offers ideas for major policy changes and a proposed solution to the retirement crisis in the United States. The policy changes offer an integrated solution. There is an extensive analysis of the problems, supported by his own and other research. Some of the research uses data from the Federal Survey of Consumer Finance series. The book provides a strong case that many future retirees will be in trouble. Too many working age Americans have not done well through the usual working years, and have suffered from wage compression, loss of jobs, inability to get a decent job, and in some cases, disability. Many of these people will not fare well in old age. The book focuses significantly on labor market risk. It also focuses on financial market risk, the shift to defined contribution plans, and the move away from risk pooling. However, other Americans have worked for many years, have held regular jobs, and have saved for retirement and will do well. The book primarily looks at failures in the system and it does not represent a balance between what is working well and what is not.

The author points out the pitfalls of employer-sponsored retirement benefits, but not the advantages. Certainly, for people who have not done well with jobs, employer-sponsored retirement benefits will not do well either. But for others it will.

The solutions recommended include several improvements to Social Security including increasing minimum benefits, increasing benefits for people who are over age 85, and improving survivor benefits. There is no discussion of how the improvements might be paid for. At present, Social Security taxes are not adequate to pay for the benefits provided under the current law, and the taxes need to be increased or alternative funding found, or ultimately benefits will need to be reduced. These recommendations would worsen that situation. The second set of recommendations calls for creating new savings opportunities outside of the employer-employee relationship. The book supports state sponsorship of savings programs outside of the employer system. He suggests mandating participation in these programs unless the employer sponsors their own DB or 401(k) plan. He recommends auto-enrollment with a 2% or 3% contribution rate in these plans, but with the opportunity to opt out. Such plans are already under development in a number of states. There are a variety of pros and cons of such programs, as well as complexities. The idea is proposed but without much discussion of the challenges and pitfalls. The book points out the need for low-cost investment options and for focusing on payout options. The next part of the recommended new course is to change savings incentives so that they are more targeted to lower income households. He would use refundable tax credits to encourage lower income households to save. His recommendations also focus on risk protection with regard to investment risk and payout options. These proposals are not evaluated for cost or feasibility.

The book focuses on a range of risks. There is a heavy focus on a combination of financial market risk, housing market risk, and employment risk and the potential for them to interact, making the situation worse. The book does not focus on public policy risk. The risk interaction he describes is certainly possible, and he talks about these issues in his chapter on the prefect storm. However, public policy risk is also a major concern. If one views the period after the passage of the Affordable Care Act, and all of the attempts to change together with a totally uncertain situation at the beginning of 2017, that makes it clear that substantial expansion of government programs, if achievable at all, would also be very risky because it could later be reversed or amended.

My view is that the book offers a very interesting perspective and set of ideas to the discussion of national retirement policy in the U.S. Unfortunately, this is a discussion largely taking place away from Congress rather than with the involvement of Congress. (That is the responsibility of the Congress, not the author.) I agree with some of the ideas and not others. I did not find a good analysis of the proposals and a demonstration of how/why they will solve the problems. I also find lacking enough discussion of the pros as well as the cons of the current system. (Maybe these are the topics for the next book.) I encourage people to read the book to add to their inventory of ideas, but they need to do so remembering that additional information is needed to evaluate which will work and how. Many of the ideas would result in winners and losers, i.e. some people will get more benefits or pay less for them and others will get less or pay more.

Reading the book and thinking about what is next leaves me with these questions:

• • What should be the role of government? Other stakeholders?

• • How will the system deal with increased longevity?

• • How can the individual become more effective as a saver?

• • What should be done for lower income people in old age and for people with sporadic attachment to the labor force?

• • What risks should be pooled and how?

• • What should be done to offer retirement security to people who become long-term disabled during working years?

• • How much is our nation willing to commit to Social Security?

One can view the retirement system situation in the United States as half-full or half-empty. Experts who comment on the current system reach very different conclusions with regard to the both the successes and failures of the current system. Today's retirees are better off than those who came before them and many people have been able to retire successfully in the United States. Society of Actuaries and other research indicates that many retirees are well satisfied. There are concerns about whether future retirees will be as well off as today's retirees and what problems they will have. This book provides a good explanation of some of those problems and concerns.