Sure, those were the wealthy ones with legacies to leave. But for the rest of Americans nearing retirement, it’s a different story. And according to one economist, Teresa Ghilarducci, it’s all because of “Our Ridiculous Approach to Retirement.”
Assuming for a moment that they’ve even saved the money to do so, our current voluntary self-directed system requires dabblers and neophytes to manage and maximize their investment portfolios. Ghilarducci calls it “denial and magical thinking” and “simply defies human behavior.” She likens it to “asking the family pet to dance on two legs.”
But now financial columnist Malcolm Berko says what others won’t say, “Parents should save for retirement, not children’s college.”
Why? First, middle-aged parents have no chance in hell of using compounding magic in time to pay for even one year of increasingly out-of-reach overpriced college tuition. Second, the retirement picture sucks for most middle-aged Americans. “You’ll need every penny you can beg, borrow and save, and even then, that won’t be enough,” Berko warns.
Third, kids should be looking for occupations and trades that pay better than a “worthless” sheepskin. Berko advises that instead of saving for one of those increasingly inutile college degrees, you should be saving every ducat you can for retirement. According to Professor Ghilarducci, as of 2010, seventy-five percent of Americans nearing retirement had saved less than $30,000.
Is it any wonder that just a couple of years ago it was already becoming obvious that the college emperors had no clothes? See, for example, “Some say bypassing a higher education is smarter than paying for a degree.”
A blue pig.
So Berko is only making the same point albeit in his patented irascibly humorous and pragmatically inventive way. “Most of today’s bachelor’s degrees aren’t worth a blue pig in a green huckleberry patch,” he explains. As for graduate degrees, they hardly make things better, serving merely to pile on even more long-term, non-dischargeable tuition debt.
Unsurprisingly, the question is being asked with more and more fervor, why isn’t there “An Anti-College Backlash?” Or why law professor Paul Campos warns “Don’t trust the boomers!” as he exposes as self-serving, the Baby Boomer promoted myth that “education is priceless.”
And don’t even bring up the well-beaten dead law school horse — again. Recently, yet another law school professor in classic ‘bite the hand that feeds him’ mode reaffirmed, “Law school — still a dodgy investment.” Vanderbilt law professor Herwig Schlunk reiterated his conclusions from a paper, “Mamas Don’t Let Your Babies Grow Up to Be…Lawyers,” that he wrote 3 years ago. “My overall assessment today is much the same as it was in 2009: Law school is a very risky (and expensive) investment; it should not be undertaken lightly.” Now, there’s a face-saving understatement. Playing off the same “Mama” riff, Schlunk’s reworked paper is, “Mamas 2011: Is A Law Degree A Good Investment Today?”
Jumping the shark.
Savvier parents are reconsidering the Kool-aid they’ve been drinking. Kids can earn a better living acquiring a trade or a vocational credential (but not the for-profit crap peddled on daytime television). Anyone who’s recently paid for an electrician or plumber knows this.
But even despite all common sense, if parents still yearn for the dubious bragging rights of raising a kid with a college diploma, as Berko sensibly points out, there are better alternatives than eviscerating an inadequate retirement nest egg or incurring insurmountable long-term debt. Have your kid enlist in the armed forces, he suggests. “Then when their hitch is up, have Uncle Sam pay for their college education.”
*A hat tip to Jay for introducing me to Berko’s well-reasoned, often hilarious and always informative columns.
Photo Credits: “Alfie Dancing,” by Hanumann at Flickr via Creative Commons-licensed content requiring attribution; “Bite the hand,” by Doug Geisler, Old Sarge, at Flickr via Creative Commons-licensed content requiring attribution.