Having newly stepped into the American labor force, I’ve had to navigate the byzantine process of planning for retirement. Unlike in China where municipal governments control retirement funds, Americans rely on the financial markets to invest their retirement money.
Instead of letting your money accumulate over a period of time, the American investment companies put your money in the stock and bond markets and let the money grow until you retire.
Of course, same as the Chinese employers, the American employers will also contribute a matching portion to the employee’s retirement fund. But neither the Chinese employers nor the employee has direct control of the retirement fund. The municipal government does.
To decide which retirement plan to invest is fairly tough for me. I am a complete investment dummy. My philosophy never moves beyond one plus one equals two. That is, if I save one dollar every day, by the end of the week I will have seven dollars. But the American way is I should take some risks and I will probably get more than seven dollars by the end of the week. But how? There are a million probabilities and options there for me to choose. Ah—back to the unique character of American life—making choices.
For days, I was overwhelmed with financial jargon from the retirement plan literature. How will I distinguish Risk A from Risk B? How will I foresee I will gain instead of lose my retirement fund thirty years from now? The instruction says a conservative option is to join in the formulated 5-year increment lifecycle investment. I say, even this investment is too risky for me. Why can’t I just put aside the money without investing it for the future? Yes I can if this is my option. But my employer will not contribute their part if the retirement fund is not placed in the investment market. I guess I just cannot have a simple retirement in America, can I?