What if there is a market downturn?
There is no need to be afraid of market fluctuations. Saving for retirement is a lifetime project. Even though the market has good and bad years, a downturn in one year—even if it is the year you decide to retire—will not destroy a lifetime of wise saving and investing. There would also be certain restrictions that would limit the types of funds or the mixes of stocks in which a PRA could be invested, thus reducing risk. Even if a retiree were to fall upon particularly hard times the government could still provide a guaranteed minimum benefit so that all retirees have financial security. Plus, don’t forget that the current system provides you a negative return as it is. Forget the market: you lose money no matter what with the current system. If our generation could open retirement accounts now, we would have the opportunity to spread risk over our entire working lives, so the chances of not having enough money to retire on are slim to none.
