Regardless of what happens to the stock and bond markets in the next few months, people are not likely to forget the main lesson they have learned in the last couple of weeks:

You cannot rely on 401Ks or any other investment funds for retirement benefits. They may evaporate based on nothing but panic by people you don't even know.

On Monday we published a chart showing that after the crash in 1929, it took the Dow Jones Industrial Average until nearly 30 years to get back to its former high. That was a sobering insight indeed.

In private enterprise, old-age pensions are becoming a thing of the past. It's just as well, for what good is a pension in an economy in which the pension payer's future cannot be assured? You can't force a company to pay pensions when it has been ground into dust by worldwide competition. And the government can't be expected to take over pension promises for some people, those retired from failed companies, while leaving the bulk of the population unprotected. That would not be fair.

Building up Social Security benefits may seem like the logical alternative, especially now that the government has decided to nationalize part of the economy. But according to projections, the money isn't there to maintain forever even the present meager system, so increasing the payments so old people can live on them is hardly in the cards.

What's a better plan?

It may not seem practical, but the obvious answer is to save more money and put it in insured accounts or instruments where it's not subject to speculation. The reason it's not practical is that if you work for 40 years and then hope to live another 30, you'd have to save roughly half of your take-home pay all your working life in order to have enough saved to last through the final years of your life.

Most people can't do that. Instead they must hope that something will turn up. Now we have been reminded by a dose of reality that something can also turn down. (hh)