Better Living Through Derivatives

The Wall Street Journal 09/09/04
author: David Wessel
(Copyright (c) 2004, Dow Jones & Company, Inc.)

President Bush says his "ownership society" will let you "make your own choices and pursue your own dreams." If he can persuade Congress, he says, "More people will own their health plans and have the confidence of owning a piece of their retirement."

Put another way, Mr. Bush would have government and employers take less financial risk -- and American households take more. In the "ownership society," your retirement will depend even more than it already does on picking the right mix of stocks and bonds, correctly anticipating inflation and prudently projecting the length of your life.

There are arguments for the shift Mr. Bush advocates. People who know their retirement depends heavily on their saving will save more than those who count on Social Security and corporate pensions, and the economy's prospects would be better if Americans saved more. People who pay more of their health-care costs may be more judicious in spending, and the U.S. economy would benefit if Americans were smarter health-care consumers. And the elderly in a society with two workers per retiree will have to share more risk of bad times than those lucky enough to retire in an era with seven workers per retiree.

I never understand why nobody mentions just having a savings account option. Safe investments should be an option too. Why just have the risky investments. Have CDs, guaranteed interest choices, bonds, & stocks - give us a full selection of options, and give us our money. I like owning my social security money, but I want a true full range of investment options available to me when I get it.