Campus Only Senior Thesis
Bachelor of Arts
© 2013 Chih Yun Lee
This paper seeks to examine the failures of the current retirement plan structure, focusing on the structure’s reliance on unpredictable future market returns and the unwillingness of the parties involved to negotiate in order to further enhance their own self-centered interests. Currently, both defined contribution and defined benefit plans encounter a funding crisis in both the public and the private sectors. This paper will discuss how retirement plans, by nature, rely on assumptions of market returns, which naturally depend on the volatility of the market and increase the risk and uncertainty in retirement plans. In addition, since defined benefit plans mostly exist in the public sector today, this paper will examine defined benefit plans in relation to the public sector’s funding crisis and hope to shed light on the politics and tensions between the parties involved in public retirement plans that are preventing effectiveness and efficiency. Finally, this paper will also present alternative retirement plan strategies for which academics and scholars have advocated. However, at the end of the day, as opposed to relying on others to dictate one’s future benefits, which are based on the goodwill of others and uncertainty in the market, Americans should recognize their lack of savings and improve their personal financial literacy and develop individualized savings plans.
Lee, Chih Yun, "Funding the Black Hole: The Ineffectiveness of the Current Retirement Plan Structure and Future Solutions" (2013). CMC Senior Theses. 629.
This thesis is restricted to the Claremont Colleges current faculty, students, and staff.