“It’s crazy that we ended up with this as our retirement system,” said Alicia Munnell, director of the Center for Retirement Research at Boston College. The 401(k), she says, was intended as a supplement to a traditional pension and to Social Security. “It was supposed to be money that you could use to go to Paris,” she said. “Instead, it’s become our basic system.”

Because we depend on accounts like 401(k)’s, she said, we should strengthen them through measures like mandatory automatic enrollment and incentives for employee contributions of at least 10 percent of wages, with an employer match equal to half of those paycheck deductions.

At the Times, Jeff Sommer has been looking at the retirement savings crisis over the last few weeks, showing why a $1 million nest egg ($1 million being symbolic of American savings goals) may no longer be enough for retirees to live on without some other kind of supplemental income. The really sad part is that most of us are far from the $1 million mark (“the median financial net worth of American households of all ages, excluding homes and cars, is $10,890, as estimated by Edward N. Wolff, an economics professor at New York University”), and simply telling people they need to save more isn’t really going to solve anything. John C. Bogle, the founder of Vanguard, recently told The Philadelphia Inquirer that the American retirement system is “facing a train wreck.” We hear Australia has a pretty good model.

Photo: walknboston

I recently turned 30, got my first full-time job, and found out I have over $45,000 saved for my retirement.

I knew I had some money put aside. Since 1992, Australia has had compulsory superannuation (AKA “super”), which is somewhat comparable to a 401(k) in the United States. Currently employers in Australia have to pay 9 percent of worker’s wages (this is not taken from your wages, this is on top of your wages) into a nominated super fund. Soon this amount will rise to 9.25 percent and over the next seven years head on up to 12 percent. There are some exceptions to this compulsory payment—if the employee is under 18 years old, over 70 years old, or earning less than $450.00 per month.

I didn’t know I had so much in my super until recently, because it was spread over about five separate accounts. But when I got my fancy new full-time job, I decided to wind it back to just two accounts, and the combined totals from my various jobs started to look like real money.

I’ve had a little help from the government in building my retirement savings; there have been times when I have made a non-compulsory contribution to my own super and the government has made a co-contribution. There was a time when the government noticed I was very poor, and kindly made a contribution to help out. This all seems very generous and lovely but the government has a very good reason to do this. We are all getting old. We are all getting old, and if we are all poor when we retire we’ll all need a government pension. If they help people out building savings now then that will be less people to help down the track when a big section of the population will be retiring at the same time.

With a full-time job, superannuation is even more exciting! My employer already contributes the standard 9 percent, and then I contribute 5 percent from my pre-tax income, then my employer says, “Ok, here is some more money for your super because you did good, kid.” Or something like that…

Superannuation is complicated—this is just how it goes for me, everyone is different and it changes all the time. One of my friends has a salary package and that affects things again in ways I do not comprehend. Also, depending on who wins the next federal election here in September, it seems government co-contributions for low-income earners could disappear and the planned increase could be delayed.

Importantly, in regard to super being there for its intended use, super savings are deliberately hard, but not impossible, to access before you retire. There are ways people can, and do, access their money. I just don’t even want to know about these ways. I don’t want to be poor, old, and lonely when I retire. I’d much rather be financially comfortable, spritely, and hanging with my wrinkled buddies while sipping Mai Thais. And I plan to. Thanks, Australia.

Samantha Mee lives in Australia.

On that note, I’m also a fan of setting up savings accounts within savings accounts. If you divide your savings by the name of your goal for them, the hope is that you are more likely to achieve that goal – whether it is your children’s Harvard education or the bridezilla wedding of your dreams. It’s much more likely than if all the money goes into one pot. “It’s hard to find big banks who will do this for you, although the Meriwest Credit Union, headquartered in San Jose, California, offers something similar called the “You Name It Savings Account.”

In Alcoholics Anonymous, they call this “one-day at a time.” Financial guru Dave Ramsey calls it “baby steps.” Whatever. If it gets people on the road to savings, I’m all for it.

Helaine Olen tackles saving for retirement (or saving for anything, really) in her Guardian column today, and one of our very own editors makes an appearance.

Photo: grotos

My dad and I talked to John Hockenberry from WNYC’s The Takeaway yesterday, and here is our little convo. I was very very wary of Speaking For Our Generation, so it’s all about ME.

But though my own inability to think about retirement is largely influenced by smaller crises of my own making, I wish I’d emphasized that This Terrible Economy has really retarded all of our abilities to earn and save and plan. So just pretend I said that.

More from me and my dad here and here.

The last time I wrote, I was attempting to conjure March into the best month yet, hoping that Adam and I would be “a loving, positive, optimistic, hard-working two-monk team,” which was basically the opposite of what March turned into. We fought and argued frequently. Both of us felt a little panicked and stressed about our current situation and the future. We wound up spending more than we planned to and were in no way monk-like. But we didn’t lose control. We worked on things even though it was hard. We argued and made up, calmed each other’s fears, talked through our worries, and spent money on things that were good for our health—mentally and physically. March was rough in places, but we wrangled ourselves back together and fought for good things.

In March we spent more but we also got out and did more and it felt good. Our grocery expenses were $686.74, which was significantly over budget. Other big expenses included a month’s worth of yoga classes for me ($70), a membership to a weekend kickball league ($60), a used bicycle and new tires for Adam ($150), concert tickets for April ($70), and a few drinks and dinners out ($150). Our schedules usually conflict (he works retail hours, I work 9-to-5) but on one deliciously warm and sunshiny day in the middle of March, we both miraculously had the day off. Freezing temperatures snapped back within 48 hours, but in the interim Adam and I were able to spend the day together like we do in the middle of the summer: We woke up late, cooked up some brunch (~$5 worth of groceries for toast with jam, ham and onion omelettes, coffee), drove with the windows down, breezes flowing, chow chow panting away happily to the park for an hour or two (~$3 gas?), on to Videodrome to rent a few flicks ($12), a quick stop by the King of Pops cart for some popsicles ($5), then back home again to watch movies, catch up with each other, relax and unwind (priceless).

These extra expenses took us over budget but we still managed to put aside $500 for savings. Additionally I received a card in the mail from my uncle with a belated graduation gift inside: a check for $500. It was unexpected and much appreciated and I deposited it straight into our savings account the very next day. That brings our total savings to $4,500 now. That money could sustain us for about four months if we stretched it, if we really had to. We could also spend it on a summer traveling if we wanted. That security-freedom choice combo is a really great feeling. This is why I wish I was richer, because having money frees up options you wouldn’t have otherwise.

I’ve also decided to start paying attention to my retirement plan. Right now I have a 401(k) with around $1,000 in it and a Roth IRA with $1,600. I will keep squirreling away money into these accounts as I get older. I’ve been thinking about automatic payments or deductions from each paycheck so I don’t have to think about it.

Before writing this, I read back through all my monthly check-ins so far, which proved to be interesting. I feel like so much has changed! When I first began writing this column I was completely lost at sea. I thought I knew what I was doing but we spent all our money every month and I changed my mind three times a day about what I wanted to do with the rest of my life (cue drama) and I insisted that Adam and my friends take each half-baked idea seriously (“no, but what if…?!“) which was exhausting and pointless for both of us. I still occasionally get back on that crazy train but now I recognize it for the damaging mental state that it is and can put a stop to it in relatively short order.

Some things are still the same. I still feel a strong driving urge to do, go, see, etc. I know it’s good to put that fire-in-my-guts relentless struggle on the back burner once in a while for the sake of my (and Adam’s) health and well-being but giving it up completely and embracing inner peace and serenity would probably feel like death (she opines dramatically). When I get somewhere in my life that I feel good about—a challenging and interesting job, a cozy little home, the ability to travel and adventure often, doing something that matters—I will happily burrow in with great relish and contentment. I possess zero of those things right now. I unapologetically kill any occasional urges to give up and burrow in where I’m at. That said, I do realize that allowing myself to chill out and have fun and enjoy things here in Atlanta is good and healthy and makes me more successful and productive anyway.

In some of my check-ins I talked about attempting to start a business to bring in extra cash, and I guess I can file that under half-baked/incomplete ideas with the rest of them. I’m not going forward with it so I’m free to share the idea in case anyone wants to take it: It was to start a calligraphy business on the side! I even made a website, named the business Sweetgum Calligraphy, and worked up a few not-that-great samples of scripts. My enthusiasm for the project dropped off quickly as usual and I probably won’t pick it up again. I still think it’s a good idea, because established calligraphers seem to be able to charge good rates for work that’s quick to do. It requires a lot of skill (more than I have) to be good, but calligraphy is a skill you can acquire at a low cost. The job can be done from anywhere so long as you have a mailbox. Business might take a while to pick up, but as a side job it seems ideal, so someone should please use this idea, and may your profits multiply!

I mentioned in January that I wanted to cut out buying clothes for a month. It’s been two months now and neither of us has bought any new clothes, so we more than met this goal. This wasn’t a huge struggle for us, because I don’t like shopping that much and neither does Adam. I think working at the mall for a few years in college cured me of any affection for spending time in the place. I get pangs of desire when I open the daily emails from my favorite stores but I’m usually too lazy to get in the car and schlep through traffic just so I can spend money. Though, I do want to/need to go shopping soon.

My efforts to cut down on my former grocery expenses by meal planning and cooking a lot more at home have been my most successful to date. I went from spending $1,000 per month (insanity) down to ~$600 per month, which is still high for two people and a dog but I feel it’s reasonable for our needs and budget. If anyone wants to keep abreast of that process for whatever reason, I write weekly reviews and meal plans in this meal planning google group that a Billfold commenter started a few months ago, which I enjoy thoroughly even though I sort of doubt anyone else does.

These days Adam and I are still sending out applications and are waiting to hear back. I will be sending out a steady deluge of applications for English teaching jobs in other countries, as well as jobs I might be interested in here at home. I’m aiming for NYC or D.C. in regards to jobs in the U.S., but would only move to those cities with a job lined up ahead of time. My slowly forming plan at this point is to teach abroad for a year while Adam applies to master’s programs here and abroad. We will then move to wherever he’s been accepted, and life will continue from there. During his program or after he graduates I’ll start on my master’s. Adam is thinking about an MFA English/creative writing program, or writing workshop and I’m thinking about economics, international affairs, political science, or something along those lines. I support Adam’s dreams and he supports mine. I want us both to succeed.

Previously: See Amanda’s “Betting on Love” series here.

Amanda Tomas isn’t going to see her sister in Europe after all because of financial responsibility and contingency planning (cry cry cry).

We talked a little bit about why the 401(k) is problematic in my conversation with Helaine Olen yesterday. That conversation is also happening in other places, like at Counterparties:

The first generation of 401(k) holders is retiring. Duncan Black, in USA Today, reports just how bad things are looking: “According to the Center for Retirement Research at Boston College, the median household retirement account balance in 2010 for workers between the ages of 55-64 was just $120,000. For people expecting to retire at around age 65, and to live for another 15 years or more, this will provide for only a trivial supplement to Social Security benefits… And that’s for people who actually have a retirement account of some kind. A third of households do not.”

Americans have had more than 30 years to learn the ins and outs of this massive experiment in tax-deferred investing, but as Alicia Munnell, the director the Center for Retirement Research says, “we just don’t know how to do it”. What money people do save, they tend to manage poorly. They think they can do better than the market, or tend to choose financial professionals that are bad at beating it. More education isn’t going to fix the problem. As the Economist points out, financial education can actually lead to worse decision-making. And although the 401(k) costs $240 billion a year in tax deductions, research shows it doesn’t make people save any more than they otherwise would.

When David submitted an early draft of his essay on how young people are reframing the idea of retirement, I pointed out to him that there is a large population of people out there who are about ready to retire and would like to retire, but do not have the funds to do so. My father, who is in his early 60s, is in this boat. When the market crash occurred a few years ago, he about fell over when he looked at his 401(k) and saw the amount of money his account had lost. And he’s part of a generation who managed to stay at the same job for 40+ years, and tried to play things by the book, diligently setting aside a certain amount of his paycheck into his retirement account. He’d lose a lot more sleep worrying about what he and my mother would have to do if he didn’t come from a culture where parents can rely on their children to support them in their old age. I’ve got my dad’s back, but since I’m not as traditional, I’m wondering who will have mine.

My maternal grandmother is somewhere north of 90 (or as she rationalizes, she’s just been an 18-year-old for 70 some years), and she still works full-time as a sales rep for a resort and hotel. She’s brilliant, hilarious, and tends to be the one asking the questions, so when I finally worked up the courage to ask why she still works, her kind-yet-abrupt answer caught me off guard.

“I don’t play bridge, so I’d get bored if I stopped. You think I want to sit around with old people and play bridge? Here, have some more mashed potatoes.”

For all the studies about how work extends lifespans and keeps our older population fulfilled, I don’t think I’ll come across a better rationalization than Grandma’s. Mostly because the one thing that scares me more than death is deathly boredom.

I don’t want to retire. Ever. I spend a lot more time thinking about how I’ll keep working than what I’d hypothetically do if I stopped (and with time to go until I hit the quarter century mark, I probably shouldn’t be spending too much time on either). I like work, but I’ve also been lucky when it comes to work: I’m young, unmarried, and able to pick up and move for a job without worrying about uprooting a life other than my own. If and when I “settle down,” work will remain a productive outlet unlike anything I’ll get in the home. And if I find myself in a job I no longer enjoy, I hope I’ll be able to use that as motivation to wiggle into a new career. I don’t want to lose all that because I’ve racked up too many birthdays.

My situation is familiar to many of today’s young folks, but it’s a luxury often unthinkable to even the previous two or three generations. Our grandparents and even parents had arguably less freedom in choosing their professions, since financial independence was a requirement much earlier in life for a larger percentage of the population. Did they like the first jobs they took? Many, of course, did not, but putting in your 40 years and building toward a pension was what one often had to do. Before the age of telecommuting and “exploring yourself for a few years” after school, there was work in much plainer and simpler terms than today. And with new opportunities and unprecedented career flexibility, our generation is reframing the concept of retirement, just as many Baby Boomers shook up the notion that one couldn’t go back to school or switch careers mid-stream. If you truly love your craft, there’s less of an incentive to stop.

Retirement is a terrifying word for young people today because it holds a sense of finality, as if there’s a predetermined age when you’re forced to change from a normal person into greater society’s helpless, aging ward. There are enough young-at-heart seniors bungee jumping and Internet surfing to keep the blue hair stereotypes at bay, but even the “retired” label carries a connotation many of us would rather just avoid. To some, the word itself implies a person apart from purpose, someone with an identity defined by an absence of doing. A lot of “retired” folks do some pretty awesome things, and it’s a shame that label makes us think “golfs all day” ahead of “runs a philanthropic organization and coaches granddaughter’s softball team.”

But I’m no philologist, and beyond the above, there’s obviously a financial incentive to keep working. For many people, it’s a necessity, and a lifetime of hard work doesn’t guarantee us a comfortable nest egg into the golden years, especially since Social Security won’t fill a spittoon by the time we start getting senior discounts. Even for those who don’t want to work past a certain age — and I don’t disparage them in the slightest—packing up the desk might simply not be an option, and living on a fixed income could become even less of a possibility in future decades.

Of course, continuing a career doesn’t mean saving is a terrible idea, and the two will compliment each other ad infinitum, or at least until the banks burn down. Saving for later in life will still always be a fantastic idea. On top of creating a financial cushion to rest your conscious on, “retirement” savings will come in handy in the event that your relative income falls or you move to a lower-paying gig — one that pays less, sure, but lets you pursue that ceramics passion you’ve secretly harbored for six decades. And while I’m still a long way off from being a greying patriarch, there’s got to be boatloads of satisfaction in being able to leave something behind for family and favorite charities (on second thought, it’s probably a lot more fun to make it rain good fortune while you’re still alive and kicking…).

While I pray my desire for work will never decline, my ability to work likely will, unless science gets this whole “aging” think figured out pretty soon. That’s something to expect and prepare for, both financially and emotionally. And I’m sure future grandpa me will want to cut back hours in order to spend more time with the younger generation. But whether my later years means working a little less, switching careers late-stride, or even having to bow out of the workforce entirely, I sincerely hope I never willingly accept the proverbial golden watch and “you’ve been here too long” stares. If all else fails, I’ll spend my last few decades in a hilarious attempt to fashion myself into a nursing home crafts magnate. Just don’t call me retired.

David Thomas Tao is an editor and writer living in New York City (though his native Kentucky accent still slips out from time to time). He’s also the chief research officer at Greatist.

Helaine Olen spent several years as a personal finance writer and editor, beginning at The Los Angeles Times in the ’90s where she was the newspaper’s “Money Makeover” columnist. Over time, she came to the understanding that nobody in the personal finance industry really knows anything beyond very basic and common sense suggestions (i.e. live within your means). Olen says its empowering to learn how to manage our own money, but personal finance gurus like Suze Orman, Dave Ramsey, and Robert Kiyosaki, and networks like CNBC can’t tell you how the stock market or real estate will perform in the future, but are making a killing doling out conflicted advice and selling us complex financial products. This is just a small part of what’s wrong in the industry.

Olen’s book Pound Foolish: Exposing the Dark Side of the Personal Finance Industry, has been making waves since its release in January, and has received positive reviews, including praise from Jon Stewart, who had Olen on The Daily Show in February. “You guys should do an article about how Jon Stewart is the new Oprah,” Olen told me when I met up with her earlier this week. “Books really do sell. You could see the Amazon numbers after the taping—it jumped from 4,600 to number 22 in a day.” Here’s our conversation:

I thought your book was really terrific, and have been telling everyone to pick it up. I started my career covering politics in Washington D.C. and didn’t really think about personal finance until I started writing about it a few years ago. I remember picking up a few personal finance books to get myself acquainted with how it was being covered and not really being able to connect with a lot of the information. I don’t know a single person who decided to give up their coffee habit to fix their financial lives. I get a cup of coffee from Starbucks almost every day and I’m doing okay.

You know that’s part of the conclusion to the book that money advice is shrill, judgmental and absolutely oblivious. Just because David Bach can give up his lattes—which, by the way, I doubt, since he was profiled at a dinner party in 2004 ordering up food from Dean and Deluca, and I don’t need to tell you how expensive that is. It’s just oblivious.

And to be clear, you have no problem with common sense advice. Knowing how to manage and invest our own money is a good thing. But you also point out that pushing this idea that people aren’t saving enough or are spending too much money on lattes distracts us from the bigger things. For example, finding affordable housing and negotiating a bigger salary will do so much more for you than quitting your coffee habit.

What’s coming in is more important in one sense than what’s going out. We have this myth that we’re massive over spenders—and we have it for any number of reasons. I think in part because it can certainly seem that way. As I always tell people, you see me in a restaurant, but you probably won’t see me at a pharmacy getting a prescription, which is where my money is really going. It seems that way because relative to what it used to cost, things are much much cheaper. As I was pointing out to someone the other day, I don’t think in non-adjusted inflation terms that I could have gotten a T-shirt for $4.99 in 1971 down the street like I can right now. Stuff’s cheap and people buy it. And our salaries are falling—of course people aren’t saving money. There’s this whole idea that people are going to respond rationally—their salaries are going to fall and they’re going to save money. It doesn’t work that way. Certainly not in a society where your cost of health care, housing and education are skyrocketing.

Right, and the biggest reasons people get into deep financial trouble is not because they’re not saving properly, but because of these enormous costs associated with housing, education and health care, or a spiraling economy that results in job losses.

Could we all save better? We probably could. But it’s not what’s causing the problem. As I like to point out, in 1980, we had a 10 percent savings rate. I guess I find it hard to believe that in that 33-year period, we became collectively more financially ignorant and more irresponsible—that just defies reason. In fact, when you look at it, what happened was our salaries fell and our financial lives got more complicated. You hit a one, two. I was born in the mid-1960s when credit cards were less than 10 years old. Married women had no right to one, by the way, and wouldn’t for another decade. There were no retirement accounts and no ATMs. I swear, I remember when the ATM machine came to the Citibank on Nostrand Ave. in Brooklyn—it was really exciting! No gotcha mortgages—mortgages were very basic stuff. Second mortgages were not sold by the banks to people, or they were something you were supposed to be really embarrassed by because if you were desperate for money and got one, you never came out in public and said, “Hey I got this really cool thing, and look at the kitchen I redid!” It was just a different financial world.

Then there’s a turnaround where you blame people for the fact that the financial world changed on them. It strikes me as delusional at best, and outright wrong at worst. The banks had this idea that they’d invented all this stuff and gave people all these goodies, and we’re going to educate everyone on how to use them, and I actually don’t believe that. I think they know they’re not educating people on how to use their products. It’s not possible. And it became more complex, and at the same time, we needed the stuff, and by the stuff I mean yeah, people felt they needed to buy a house because they were told—well, they weren’t told not to buy a house beyond their means. Do you remember anyone saying that 10 years ago? Because I sure don’t. What I remember was, “If you don’t buy today, prices are going to go up tomorrow and you’re not going to be able to afford it, so here get this mortgage, and don’t worry, you’ll be able to refinance because housing goes up.” And this is what people were told over and over again: Housing doesn’t go down. You can go back and look at the literature. People weren’t saying, “You know, housing could go down, and it could go down by 40 percent. That nationwide crash? It can happen.” So, there’s this kind of obliviousness out there, and I think it’s in a lot of people’s interest for that obliviousness to exist.

So let’s talk about some of the financial gurus you discuss in your book. Suze Orman is one of these people who told people to run out and buy houses, and after the crash, she apologized and admitted that she was wrong. And you talk about this when it comes to people’s personal financial planners. They’re often wrong, but people will continue to listen to them. Why is that?

There’s a couple of things. These people present themselves as your friend for the most part. They’re not coming up to you and whipping you, at least, not initially. So that’s part of it—they’re going to give advice to you for your own good. Suze Orman is like the Jewish mother of personal finance. Second, we’re Americans and we want to believe! Personal finance exists in other countries, but it’s nowhere as big as it is here. And the reason is, objectively, we have some very deep income stagnation, we have huge disparities of wealth in this country, but people actually don’t know it, or don’t believe it if they’re told it. I’m sure you linked to that video last week that was on the PBS News Hour last year. And people don’t believe it. They think we’re Sweden, when in fact we’re actually Argentina or Chile. People are really sold on this idea that we are individuals in this society and that individuals can make it.

We’re not making it. So this culture of shame develops where people don’t want to admit that, “Oh I was born lower class and this is where I’m likely going to stay,” or “I’m really wealthy because I was born in Chappaqua”—to use a Bill Ackman example—and obviously he did a lot better than his parents, I feel sure about that, but he’s nonetheless, starting from a pretty high base to begin with. And we don’t like to admit to that in our country. So this industry really comes in and preys on that and the idea that we’re all individually responsible for our fate. We believe the myth of Horatio Alger in this country, but Horatio Alger wrote fiction. So it becomes this whole ideology where we’re sold on this idea that we can do it and we really believe this. We take a look at the economic situation out there, and we objectively know it’s pretty bad, but we internalize it as our own fault—and, because it’s our own fault, we’re pretty sure that there’s someone out there whose got the answer.

A number of people I interview in the book just fell for things again and again because they were so sure they could trust that somebody had the answer. I remember talking to one woman who was up in New Hampshire where she was just recounting to me these things: “Well, we were doing this, and then we went to this salesman at this free lunch and we hear that, so we put our money in that. And that didn’t work out.” And the advisor fired her after she started asking questions. And then they go to somebody they met through a church, and that doesn’t work out, and so on down the line. The reason it doesn’t work out is because if someone had the financial answer, would they come to either Mike or Helaine who could pay them maybe a couple thousand bucks, and say, “Hey, I got it!” or would they go elsewhere, say maybe Bill Gates, or even better, screw him entirely, get on a boat, hang out on the Caymans and start trading away happily because they don’t have to pay any taxes or tell anyone what they’re doing? So the idea that anybody out there is selling you the secret is absurd on its face. But we believe. And then we have things like CNBC, whose entire being is to convince you that they have answers. As I say in my chapter on CNBC, if Jim Cramer were saying, “You need to get out of the game!” they’d have no business model.

Another thing about “gurus” like Suze Orman and Dave Ramsey, as you point out, is that they’re trying to convince you that they were just like you once, and look at how they’re doing now! Suze Orman was once a waitress, and as the story goes, she really had to fight her way to success. Dave Ramsey bounced back from bankruptcy. And as you say, Orman and Ramsey did not become wildly successful because they saved better or invested smarter than everybody else—they became wildly successful because they were able to sell themselves and their products to people.

The whole genre of self-help depends on the story. It’s like almost being born again. You know: “I had my moment.” Suze has her moment with a waitress when she realizes the waitress is richer than her, and Dave Ramsey has this moment when he has to tell people that debt is bad. They’ve got the story, and people like that moment. And so we don’t ask the questions. And Suze Orman, to be fair, was a successful financial planner. She obviously had an ongoing business. Dave Ramsey was definitely in bankruptcy when he started. But we want to believe. And one of the things I find fascinating is the conflict of interest in their work. I work in a field where if I accepted coffee from a source, I have editors who could get quite angry at me. But people will say, but Suze and Dave need to make a living. First of all, do they have the right to make a living selling you conflicted advice? And second, Suze Orman’s got $30 million, doesn’t she already have enough of a living? What are you talking about? Dave Ramsey is worth lord alone knows what. It’s a conflict, and a basic conflict, and I don’t think they cop to it. Certainly Ramsey doesn’t. He still goes around telling people that you could still get 12 percent annual returns in the markets, and if you want to know how to do that, Dave has his “Endorsed Local Providers”, and you can go to them. I mean, you’ve got to be kidding. There’s no way to do that, that I’m aware of. There wasn’t a way to do that back in the ’90s during the bull market. You might have a year here, and a year there, but to plan on that is just absurd. And it’s not right. But people are scared, and they want to believe.

And to be fair to Suze and Dave, they’ve actually helped a segment of people who needed to be taught how to live within their means.

Yes, because certain people do need to be told very basic things. But that’s always true. I find it hard to believe that wasn’t true in 1980 or 1960. John D. Rockefeller’s father was a deadbeat, go look it up. So was Charles Dickens’s father. We’ve always had this issue, right? Mary Lincoln spent a lot more money on clothes than she should have when her husband was president. We’ve always had a certain percentage of people who do this. I don’t believe we have more than we used to. To the extent it’s easier—there’s credit—but that doesn’t mean that we’ve suddenly all lost it. And I think what these people are cautioning, is that that’s indeed what happened.

That we’ve somehow lost our way.

We lost our way. We used to live like the Waltons, and we had a house together. But the fact is that old people had this distressing tendency to end up in poor houses. And people who lost a parent were often placed in orphanages, and that was common basically up until Social Security. We have this false image about the past. Things like Social Security developed for a reason. They happened because we needed them. Someone didn’t wake up one day and say, let’s let people be irresponsible and not let them save for their retirement.

Let’s talk about retirement. The way we save for retirement now is a pretty modern invention in that it’s something we’ve tried doing just in my lifetime. As you mention in your book, with the 401(k) we sort of lucked out that it came into being during a time when we had a market boom in the ’90s, which generated an extraordinary amount of money. And then the crash happened, and people who were about ready to retire lost an extraordinary amount of money in their 401(k) accounts, which really shook our faith in the 401(k) system, which may not have been what it was if not for how the markets were when we started it.

It’s one of the great imponderables: Would this have happened the same way? You don’t have the answer and I don’t have the answer, but yes, it coincides with the great bull market. So you see this: “You know my little 401(k) is going to make me a millionaire, it’s the Little Engine That Could. Just keep putting your money in and—ka-ching—40 years later you’re going to be fine.” But there’s no comprehension that first, half the population didn’t have access to any of this stuff, that second, this wasn’t inevitable, and third, people believe this contradiction that market gains are inevitable and that their investing genius is responsible for their success, which of course made no sense.

And yet, this is the world I was brought into as a working adult: Hope that your 401(k) does well, and hope that your company offers you a match. What’s the alternative? Is there one?

If I knew the answer, I wouldn’t be writing this book. But there are a lot of different ideas out there. And I think, for me, this is why it was so important to talk about it. Because the conventional thinking right now is, well, we’ll go with the 401(k) because the pension system didn’t really work because a lot of people weren’t eligible for them, and companies were going bankrupt offering them anyway. Ellen Schultz actually disproved that one in her book Retirement Heist, which if you haven’t read, you should and do an interview with her.

Second, just because something didn’t work doesn’t mean the thing we have now that’s not really working should be kept, is my position. And you have to start from that premise. Most people don’t want to start from the premise that if something doesn’t work, we’ll just say we don’t have anything better. The first step to getting something better is to say it’s really not working. Suze Orman could probably tell you this. You have to have this moment when you recognize what’s going on. My moment is realizing that this is not working. We’ve had 30 plus years—if it was going to work, we’ve would have figured it out by now. And we’re starting to see things like the guaranteed pension plan, which is what California is looking into a version of now. You start to see things like in Australia where there are mandatory 9 percent contributions and employers are also responsible. England is moving in a similar direction. We’re concerned about fees, and well, England is banning commission sales, which is one way to knock out a certain percentage of conflicted advice. We need to start asking, “This isn’t working. What else is out there?” That’s the first step, and you go from there.

And that’s the thing Occupy sort of got, whatever people think of Occupy, and obviously I was a supporter to some extent, but they kind of got this idea that you have to get out there and say what’s going on. They were the first group that I know of in 30 plus years to take this instinctive leap that nobody else seems to have made. It’s astonishing to me. It was like, “Hey you have student loan debt, my house is being foreclosed on, he’s about to go bankrupt from his wife’s medical bills—maybe we’ve got a problem here.” And that was an amazing leap. And we’ve seen a change in the political discourse since that’s happened. It was extraordinary. A problem was being articulated. And of course “the 99 percent vs. the one percent” was just brilliant.

You need to begin to talk about this, and say what is right and not right. And what’s not right in my view—and I say this as someone who generally doesn’t like to judge money—is this idea of hectoring people about what they’re doing wrong. It falls into the, “if it was going to work, it would work.” It’s also offensive. There’s this disconnect where you see these people on television, where they’re wearing designer suits and they look quite wealthy, and they’re lecturing people on having smartphones. Smartphones have become the latte of our time, I’m convinced of that. Smartphones and premium cable channels are the new latte factor! It’s this bizarre combination of this Ayn Rand self-determination, “well, I made it, I’m better,” followed by this weird Victorian morality trap. There’s an oblivious factor, and it’s kind of offensive. I always think of the scene in Jane Eyre where she’s at the orphanage, and a guy comes in dressed to the nines and he’s bitching out all the little girls because all their hair are done up. It’s the same sort of thing, and yet we read Jane Eyre, and think, “Oh this is terrible, we’d never do a thing like that.” And of course we do it. We all do it, by the way, none of us are immune.

There were a lot of surprising things for me in your book, but one of the biggest surprises for me was discovering that financial literacy does not work. Let’s teach people when they’re young how to stay out of trouble! But as you say, the data shows that it’s just not working. One of the reasons why it’s not working is because financial literacy is usually supported by the financial services industry, which sounds good at first, until you realize that the financial services industry also lobbies against legislation that would make their products easier to understand by consumers.

The chapter on financial literacy broke my heart. The whole chapter started from one sentence from my book proposal: “I think in discussing some of the financial gurus—there is this explosion of information—yet the survey data shows that our financial knowledge had not moved the needle. What was going on?” I didn’t answer it in the proposal—I thought there was an answer! I start looking into it and thought, “Helaine Olen is going to discover why financial literacy doesn’t work—hah!” Well, yes, I did, and so did other people, and the answer is: There was no financial literate time, there was just less financial knowledge to be had. So by definition, a lot of people seemed a lot more financially literate in 1950 when you didn’t have to know what a gotcha mortgage was, or, to use a stupid example, you didn’t need to know how to use an ATM, so you didn’t need to know not to take out too much money from an ATM, because it didn’t exist. There’s no Golden Age of financial literacy.

So we’ve got this whole establishment saying, “Oh we’re going to teach people financial literacy.” And to be fair, hey, maybe there’s some way to do it at some point, but as of right now there hasn’t been any evidence that anybody has been able to do this. If you look at the data for other countries, the differences are marginal. There’s no country out there where you’ve got this incredibly financially literate population. That should probably tell you something right there.

Second, there’s a cluelessness factor—most people aren’t terribly interested in this stuff and are never going to be terribly interested in this stuff. It’s like going to a party and you run into a train aficionado (which I am) and they start talking and talking and your eyes begin glazing over, but they’re convinced if they keep talking to you you’re going to understand why it was really important that the Q train used to be called the D when Helaine Olen was growing up in the 1970s and the 1980s—and of course, you’re never going to give a shit. And people think because money is more important than that that it’s going to work, but guess what, it doesn’t.

And you have another problem coming in which is the most insidious of them all, which is who is supporting all of this? And the answer for the most part is not nice, general disinterested parties. This is an industry that is brought to you by the financial services sector. And you’ve got to think at some point, wait, so if this isn’t working, what’s going on here? And well, if you can say, “I can educate people to read a complex mortgage application, and maybe I won’t have to give them a plain vanilla one like they tried to get into Dodd-Frank,” which got rejected by Congress. So who is financial literacy really working for? Of course, if you want to be really cynical, financial literacy works quite well for some of the parties promoting it, but not for the reasons you think.

The final part, is that it sounds wonderful, right? How can you be against financial literacy? It’s like coming out being against teaching math, or apple pie. And the answer is on one level, if you want to teach it, whatever! We get taught all sorts of stuff in school. But that’s not what’s going on here. What they’re saying is that they’re going to teach it and it’s going to solve all this other stuff, and that’s just not true. The idea, in fact, when you think about it, that you could teach somebody about all of this stuff and assume that 20 years out they can read the prospectus for a product that might not have even existed at that time—it is absurd. And even if it did exist, it’s borderline absurd because think of all the stuff we learned in high school that we have no memory of now. The example I like to use is, “Tell me what the French and Indian War was and why it was so important to the American Revolution.” And everyone gives me these blank looks. If you’re not going to remember the Pythagorean theorem, how much will you remember of financial literacy? It just doesn’t work. I wish it did. The world would be a much better place if it did. And I feel like such a crank saying that.

Because the financial services industry has convinced us that we can only manage our money if we know how to use their products. And it starts right when we hit college.

I moved a couple of months ago and found this huge stash of files that we had to trash from the early 1990s, and we had all the checks to the supermarkets in Los Angeles. Because the supermarket didn’t take credit cards! And if you didn’t have cash, or the ATM was closed, you had to write a check. It was a different world. There’s no reason why people in college need credit cards.

But the financial services industry wants to convince them that they do, because they show up at college campuses, put out their tables, and convince you that you need to start building credit.

Why do you think they do that? That’s what I mean! And I feel like the meanest cynic in the world sometimes. So again, legislation is a huge thing. You probably also need campaign finance reform. And that’s one of the things I have in the book. You’d find these people, and they’d be fighting against quite reasonable reforms, and then you go look to see who was giving them money at Open Secrets, and you go, “Huh. How intriguing.” Of course that’s part of the problem. The financial services industry gives huge amounts of money to people in Congress.

Let’s talk about women and money. You have a chapter dedicated to the way women are specifically marketed to, and how they’re convinced they need help with their money to make their financial lives work. “Stop shopping so much!” they’re told. And again, that kind of discussion distracts from the big picture, which is a lot of the problems women have around money are because of things like pay inequality, or a lack of employer-supported maternity leave.

First of all, women are presumed incompetent and men are presumed competent. You look at the data and there’s really no difference: Both sexes are really equally financially incompetent. The kicker to this by the way is that men tend to get into more trouble because people who think they know more than they do actually are more likely to get into trouble. Women tend to ask more questions which seems to help them.

But women’s financial issues can really be explained not by the fact that they’re financially ignorant and going to the Barney’s warehouse sale. It’s because women earn less, have more responsibilities and live longer. One. Two. Three. There’s no epidemic of single dads out there. Nobody’s talking about, “Oh my god, these irresponsible single dads—how did they get themselves into this?” Women, by definition, even if they’re the most fiscally righteous person—they’re going to have a harder time pulling this off than men. If they’re earning less, have more responsibility, and living longer, this is not a point of contention. But it is. So the financial services industry has this issue about how they’re going to market to women, and so they say it: “You’ve got all these responsibilities and you work so hard, but you need to save more money, and then come to us and we’ll help you.”

The other part of this with women is there’s this weird language—it’s almost like simultaneous empowerment and infantilization. Men are presumed competent, but they’re also—just so you don’t think I’m overselling this—they’re also presumed incompetent and get sold on all the shit like The Money Show, and day trading schemes, futures trading, etc. This is a man’s world, and it’s not good stuff for the most part—understand that. Most people would be better off shoving their money into an index fund and moving on with their lives. But women are presumed incompetent, and it’s just not true. The data on women as spendthrifts is pretty nonexistent. Women do spend more money on clothes, but then on the other hand men spend more money on liquor and electronics and cars. We don’t talk about that.

And as some of the data shows in your book, it’s not that women aren’t fighting for themselves in the workplace. Women who ask for bigger salaries can be penalized by not being hired. It can be a very difficult thing to navigate.

So, after you wrote this book, did you change anything in your life?

Yes and no is the answer. I tend to get more enjoyment on what I spend now. But on the other hand, you think, oh god, you wrote this book, you either pulled all your money out of the stock market and buried it in the backyard. No. Or you’re really saving for retirement. And I am, but no more than before. It left me with this appreciation of how short life can be and how you do need to plan and be responsible—things don’t always work out. And, that had a more powerful impact on me than the fear of living in penury when I’m 90. I might not make it to 90. And I might regret that when I’m 90. And here’s the difference between me and Suze Orman: I understand this. I get the tradeoff I’m making here.

It didn’t change me as much as I might have thought. It gave me an appreciation of how uncertain things are. One of the things I really did learn that surprised me was that this whole idea of the stock market as this sort of guaranteed idea, for lack of a better phrase, which might not be true. Which makes instinctive sense. If you ever go to a geneticist, for example, about issues, they will tell you that they cannot be sure—at least this was true when I was looking at stuff when I was pregnant—if something really runs in your family for up to five generations. So why should someone be able to tell you about any certainty in the stock market? Just because you roll the die and keep getting double sixes, it doesn’t mean it’s going to happen the next time. That surprised me a lot, but it didn’t really change what I did.

I also walked away with this fundamental understanding that just because the stock market can crash tomorrow—and of course everyone thinks the stock market it going to crash tomorrow, right, it’s the recency effect, we all think history is going to repeat itself—one of the things being sold to people is—say that guy over there is a stock broker—”he’s got the secret.” Right? What he doesn’t say is that he could lose you more money that the stock market could lose you. We all assume if we’re going to buy it, we’re going to be the ones who figure out the trick that makes more money, so if the stock market loses 40 percent, we’re going to be fine when in fact, you can invest with a guru who loses you 80 percent. That doesn’t often occur to you because again, Americans are optimists. We don’t think that way. I think that way. I decided I’m going to stick with index funds.

This has been a fascinating discussion, and I really don’t want it to end. But one final thing. The last chapter of your book is about how we need to talk about our money. Occupy was one way to talk about it. Our entire site is devoted to the idea that we need to talk about money—all the good things and bad things and really ugly things. We encourage everyone to share their stories. And we post things like videos of Elizabeth Warren really going after the banking industry. And then—what comes next? What can we do in the face of these injustices? I suppose call and write to our politicians?

I say speak about it. Write about it. Talk about it. On a minor level, people ask, what can you do for you finances when you go to a financial advisor? Here’s a really easy one: Ask if they have a fiduciary duty to you. And people are like, “What are you taking about?” Ask if they have a legal duty to act in your best interest. Most people won’t do that. And people ask, “That a step?” Yes, it’s a major step because the industry is fighting really hard that they don’t need to have that for you. 401(k)s have fiduciaries. IRAs don’t always. Brokerages and broker dealers almost certainly do not. Basically, you’ve got to ask. That’s something you can do on a personal level.

On a bigger level: Be angry, be out there. When Occupy happens again, show up because it might help. People don’t know quite what to do. I guess I have a lot of faith that if you keep putting videos up like that, and I keep talking about this, and other people start talking about it, then something will eventually change. Because if enough people start talking, the status quo won’t hold up under those circumstances. I don’t know how it will happen. And I’m not a social activist in that way—I tend to be a very analytical person to a fault, and I admit that. That a lot of people realized that there is a problem after reading my book, that’s a step. People realized they had a problem, but I think they used to think it was an individual financial problem, and it’s clearly a collective one.

If you liked this discussion, you’ll love Helaine’s book, so pick up a copy, or borrow it from the library. (Find it on: Amazon | Indiebound)

SNL made a retirement ad for the pope, but the Vatican prepared a real retirement package for Pope Benedict XVI (the first retirement package in almost 600 years!) and here’s what he’s getting, according to Today:

• A monthly pension of 2,500 euros, or $3,300 a month
• All his living expenses covered by the Catholic Church
• A spacious home inside the Vatican
• Cooked meals and housekeepers
• Health care

The average Social Security check for Americans is $1,200 a month, and retirees typically have to pay for their own living expenses. We’d be jealous of the pope, but of course, not everyone finds living in the Vatican so ideal.

I’m a 20-something living in NYC, and I work full-time and freelance on the side here and there. I just filed my taxes, and I should receive a total refund of approximately $1,100. I don’t have any credit card debt (anymore), but I do have some student loan debt that I’m still paying off. I should mention that I’m in the process of moving to Chicago, and I might have to purchase a car once I’m there (although I’d rather stick a fork in my eye). I’m also trying to save for my wedding. So, should I throw my entire refund at my student loans? Or should I put my refund into savings? — K.

So I’m posting this question because a lot of people have been emailing me variations on this same question: I’m getting a refund this year—what should I do with it?

There’s no one right answer to this question because people earn different amounts of money, have circumstances that are unique to them, and have different priorities. Not everyone has student loans, or weddings or houses they plan on buying. If I were the letter writer above, I would not throw the entire refund at my student loans—I’d squirrel it away into savings and decide what to do with it after I made my move to Chicago. Moving is expensive, and it often comes with unforeseen costs, so that $1,100 will come in handy when the time comes (and that time will definitely come if it’s discovered that a car is indeed needed after the move).

Let’s talk more broadly about what we should think about when getting our tax refunds (if we’re lucky enough to be getting tax refunds this year). The first thing you should think about: Do you have an emergency plan in place if you lose your job? It’s a good idea to have at least $1,000 in a savings account just in case (emergency money). I’ve mentioned this before, but financial “gurus” usually say you need three months, or six months or a year’s worth of savings to fall back on if you lose your job. This is an arbitrary rule of thumb. What they really mean is: What would you do if you lost your job? Some people don’t have family or friends who would let them crash with them if they couldn’t make their rent or lost their home, so they absolutely need a pile of money to fall back on in those circumstances. But a lot of us do have people who could let us crash on their couch or sleep in a spare bedroom while we get back on our feet, so it’s not as necessary to hoard as much cash for “emergency savings.” So have $1,000, and then go from there depending on what your emergency plan is.

Next up: Retirement and debt. If you’re worried about what you’re going to do when you’re retired and don’t have a retirement account, open one up. That’s what you should think about next. See here. (Note: Personally, I save for retirement, but am not too worried about it. That’s because I expect to work past the typical retirement age of 65—not because I’m afraid that I won’t have enough to live on, but because I like what I do! It’s not like I’m going to stop writing once I hit 65.) If you have high interest debt, you should definitely pay those down, because investing in a retirement account won’t do you any good if you have, say, credit cards with killer interest rates. So make paying down that debt a priority.

If you have your emergency plan and debt/retirement in order, sure, you can use the refund to tackle your student loans if it really bothers you, or put it towards a down payment for a car or house, go on vacation, or buy yourself something nice. You know what’s important to you and what your priorities are. After you take care of the big things, you can do whatever you want with your money.