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[narrator] In 2019,
a social media craze swept the internet:

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the age challenge.

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People shared photos
of their faces decades older,

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using the aptly titled FaceApp.

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Even celebrities hopped on the bandwagon.

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People were seeing their future
in focus for the first time,

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and they were…

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[laughing] My God!

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-[narrator] …a little freaked out.
-[all groaning]

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[laughing] Oh, my God!

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Bro, I look insane!

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[narrator] Younger people generally
don't like to confront the fact

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that one day, they'll be old.

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The pictures were like meeting a stranger,

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and that disconnect?

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Researchers have actually measured it.

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In one study,
people were put in a brain scanner

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and asked to think about four things:

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themselves today,

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a stranger today,

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that stranger 10 years in the future,

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and themselves 10 years in the future.

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Their brains lit up when they thought
about their present-day selves,

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a lot less so
when they thought about the stranger.

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And our brains didn't care much
for our future selves, either.

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I'm Hal Hershfield, I'm a professor
at UCLA's Anderson School of Management.

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[narrator]
He was the lead researcher on that study.

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Psychologically, people don't identify
with who they'll be in the distant future.

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That future person seems like a--
like a stranger to them, almost.

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[narrator] And so Hal started researching
something he never thought he would,

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retirement savings.

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I'd sort of said,
"That sounds incredibly boring."

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But then that sort of led me to start
digging in and thinking about, you know,

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what are the things that stop people
from making the decisions

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over the long run
that could really help them?

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[narrator] If you look
at the numbers around the world,

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we haven't made the types of decisions
that look out for our future selves.

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In most wealthy countries,

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the average 65-year-old has saved enough
to keep their current quality of life

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until their early 70s,

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but they're expected to live
until their mid-80s or longer.

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That translates to trillions of dollars
in missing savings.

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And by the time Millennials retire,
it's expected to be a lot bigger.

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In the US, over $100 trillion bigger.

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Most people will not be able to maintain
their standard of living into retirement.

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Many people will sink
from a middle-class life

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to a near-poverty experience
into retirement.

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I feel pretty horrible,
to be honest with you.

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[speaking Spanish]
I haven't had the chance

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to save for my retirement.

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It's really tough to be sure whether
what I'm doing right now is enough or not.

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I'm very frightened.

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We really have a crisis on our hands.

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[narrator] Experts suggest
that to retire comfortably,

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a middle-class American
should save at least $1,000,000.

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If that sounds wildly out of reach,

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you're not alone.

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In the US, a quarter of the workforce
doesn't have any retirement savings.

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We might dream that in our golden years,

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we can kick back and relax,

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but what's the reality?

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Can we even afford to retire at all?

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[man] Thanks to the advancements
of medical science,

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men and women in the autumn of life
enjoy better health

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and can expect to live longer.

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Ninety-two percent of Americans are not
meeting their retirement savings target.

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We have to work to do more to ensure

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that every older American has

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the resources and the support
they need to thrive.

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[woman] Price of food's gone up,
price of where you live's gone up.

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Where are you gonna
get the money to live on?

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[film reel clicking]

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[narrator] In 1933, America was
in the grips of the Great Depression.

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Almost a quarter of workers
didn't have a job,

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and half of the country's seniors
were living in poverty.

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Like never before, the country's miseries
spilled out onto the streets.

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That's what
Dr. Francis Townsend saw one morning

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as he looked out his window
in Long Beach, California.

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And the view moved him
to draft a radical proposal,

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a plan to eradicate old age poverty.

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Well, Earl, now that you've
thought it over and studied my figures,

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what do you think?

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We'll call it the… the Townsend Plan,
what do you say?

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Fine.

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[narrator] Townsend thought
every American over 60

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should have a guaranteed income
from the government of $200 a month,

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which would be around $4,000 today.

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Townsend went on the road,
spreading the good word

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that everyone had the right to retire.

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You see, back then, for many people
the retirement system was…

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You worked 'til you died.

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[narrator] Some lucky people had pensions,

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but that depended on your job.

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The idea of a pension is pretty simple.

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In exchange for your loyalty and service,

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your employer would
support you financially

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from the day you retire
until the day you die.

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First, they were offered to the military,

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and later in a variety
of other Industries.

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If you think of our modern-day
retirement system as a stool,

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pensions were the first leg.

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But since most people
didn't have access to them,

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Townsend's plan took off.

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Within two years, 7,000 Townsend Clubs
had popped up across the nation,

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with 1.5 million members.

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It was a whole movement,

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and it pushed the president
to sign into law

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the most sweeping social reform
in American history.

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This social security measure

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gives at least some protection
to millions of our citizens.

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[narrator] Basically everyone who makes
a paycheck now pays into Social Security.

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You're literally paying it forward,

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and when you go to retire,

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you can expect the current workforce
to do the same for you.

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This is the second pillar
of the retirement system.

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And at the time,
it redefined the role of government,

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as a safety net for its citizens.

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But it definitely wasn't Townsend's plan.

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Everyone wasn't going to get 4K a month.

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The Social Security system
replaces on average

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about 40% of your pre-retirement earnings.

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[narrator] If you make the average salary,
which is around 4,000 a month,

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you can expect Social Security
to pay you something like 1,500 a month.

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Social Security is only
going to get you so far in retirement.

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[narrator] Even paying out that much

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takes up almost a quarter
of the federal budget.

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There's no way around it.

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Retirement is expensive.

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Which is why there's a third support,

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your own personal savings.

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This three-legged stool
once seated many retirees comfortably,

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and a new industry emerged
to cater to this new group of people:

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retirement communities
designed to look like a resort.

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The first one, Sun City,

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boasted a Riviera-sized swimming pool,

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social activities,

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a cheer team.

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Retirement as an idea had only
really existed for a few decades

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when it got a new brand
as a second childhood,

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a time of leisure.

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This is a vision of retirement
many of us grew up with,

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even if most people could never afford it.

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And then a discovery in 1980
started to shake this system up.

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Okay, hey, my name's, uh, Ted Benna.

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I'm commonly known as the, uh,
father of 401K.

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[narrator] In 1980, Ted was working
as a benefits consultant in Pennsylvania,

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when he stumbled upon
a new section of the tax code.

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Section 401, paragraph K,

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which let employers give cash bonuses
to their employees at a later date,

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pre-tax.

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And Ted realized

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that meant employees could give
some of their salaries to themselves

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at a later date, pre-tax.

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To encourage employees to do this,

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employers could promise
to match some of that money.

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He'd invented
a whole new kind of retirement account,

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the 401K.

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But unlike a pension,
which guarantees you a certain payout,

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with 401Ks, the only thing
you can guarantee is what you pay into it.

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How you invest it and the stock market
affect what comes out the other end.

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The 401K system shifted responsibility

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from the employer
directly to the employee.

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[narrator] Many employers
ditched their pension plans,

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while 401Ks took off.

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[Teresa] Basically because workers
lost bargaining power in the 1980s,

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it grew to be
a substitute for good pensions.

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[narrator] Today, about half
of American workers have access to a 401K.

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401K was never intended
to be our national retirement system.

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[narrator] Otherwise it would've been
called something like…

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National Retirement System.

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401K, actually, is a fluke, legislatively.

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[narrator] And there's
pretty mainstream consensus,

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it hasn't worked out.

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The 401K has-- has not been
a good deal for most Americans.

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Most Americans don't have
enough saved for their later years.

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Thirty years later,
how are the 401K plans doing?

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Jill, I think it's time
to declare the 401K a failure.

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[gasps]

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[narrator] The core problem
with this 401K-based system

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is that it's basically on you
to save for your retirement.

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Do-it-yourself retirement.

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[narrator] Which means
you have to be financially savvy enough

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to grow your own investments,

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and also make sure you're not
being charged high fees in the background.

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We also need to save
a lot more money than we used to.

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Back in the glory days
of the three-legged stool,

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retirement was often
just five or 10 years.

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Now, it can be decades.

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That's a lot more years of living to fund.

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Ultimately, everyone finds a different way
to pay for those extended years of life,

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based on the jobs they have,
the money they make,

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and what they do with it.

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But if you're an average person hoping
somehow to reach that $1,000,000 goal,

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first you'll need
an individual retirement account,

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and a 401K is just one of many options.

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I have four different types
of retirement accounts.

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[woman] There's the 401K,
there's a traditional IRA.

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I have a Roth IRA.

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Index funds that are equities-heavy.

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[Bianca] I have a SEP-IRA.

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[woman] An HSA.
There's traditional brokerage accounts.

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The whole concept of how to do it
can be really confusing.

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[narrator] And overwhelming.

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The scoop from financial experts is that

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if your employer offers
a 401K with a match,

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you should do that.

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But bottom line,

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the most important thing
is that you save at all,

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starting as soon as possible,
and ideally automated,

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so money's put away
each week or each month

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without you having to think about it.

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But deciding to do that
for your future self,

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that's the hard part.

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[Hal] I'm given a choice between

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doing something
that I want to do right now

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or not doing that and making
a sacrifice for my future self's benefit.

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Well, why should I do that?

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That guy is a stranger to me.

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I started thinking with my collaborators,

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how can we get people to better identify

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with who they'll be when they retire?

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One of the things we hit on was,

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"Well, maybe we can try
to make that future self more vivid."

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"Can we actually get people
to meet their future selves?"

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[narrator] So Hal conducted an experiment

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where he made old-age
3D avatars of the study participants.

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This was in 2011. Technology wasn't
quite as good as FaceApp then.

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We tested to see whether or not being
exposed to these age-progressed images

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could motivate people
to want to save more.

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That's exactly what we found.

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[narrator] Afterwards,

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the study participants wanted
to save twice as much for retirement

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as a control group did.

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The reality is, we make sacrifices for
other people we care about all the time.

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We make sacrifices
for our kids and our parents,

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our spouses,
because we empathize with them.

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And so if we can provoke a sense
of empathy for our future selves,

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then we may be more willing
to make sacrifices today

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for their benefit later on.

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[narrator] But psychological tricks
will only get you so far.

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Sixty percent of the American workforce
earned less than $50,000 per year.

242
00:13:04,575 --> 00:13:08,370
The average cost of childcare
is about $9,000 per year.

243
00:13:08,454 --> 00:13:12,333
If you add food,
rent, other utilities, bills,

244
00:13:12,416 --> 00:13:14,084
the numbers just don't add up.

245
00:13:15,461 --> 00:13:19,173
[narrator] And for many people,
the numbers have never added up.

246
00:13:19,924 --> 00:13:24,094
Even in the heyday of pensions,
most workers never had one.

247
00:13:24,178 --> 00:13:26,889
And when Social Security
was first rolled out,

248
00:13:26,972 --> 00:13:30,851
agricultural and domestic workers
were excluded from benefits,

249
00:13:30,935 --> 00:13:33,604
jobs that Black people
were more likely to have.

250
00:13:33,687 --> 00:13:37,441
And today, many undocumented people
are paying into a system

251
00:13:37,525 --> 00:13:39,735
that has no plans to pay them back.

252
00:13:39,819 --> 00:13:43,489
[speaking Spanish] I pay my taxes
and contribute to Social Security,

253
00:13:43,572 --> 00:13:48,160
but because I'm undocumented,
I can't reclaim anything.

254
00:13:48,244 --> 00:13:49,954
Over the past 40 years,

255
00:13:50,037 --> 00:13:55,251
where we had the rise of tax-favored,
do-it-yourself individual accounts,

256
00:13:55,334 --> 00:13:58,587
that really benefited
the top 20% of workers.

257
00:13:58,671 --> 00:14:02,174
[narrator] Because they had
the extra money to put into those accounts

258
00:14:02,258 --> 00:14:03,884
and get the tax breaks,

259
00:14:03,968 --> 00:14:05,970
so that money grows even faster.

260
00:14:06,053 --> 00:14:08,097
But poorer people can't.

261
00:14:08,180 --> 00:14:10,558
[Teresa]
Because of this do-it-yourself system,

262
00:14:10,641 --> 00:14:14,061
middle-class workers won't be able
to keep their standard of living,

263
00:14:14,144 --> 00:14:18,899
and people who are working at low incomes
will be quite poor when they retire.

264
00:14:18,983 --> 00:14:22,361
We have millions of people
working incredibly hard,

265
00:14:22,444 --> 00:14:24,947
and they still cannot make ends meet.

266
00:14:25,030 --> 00:14:29,535
When I have real tensions between
things I need to save for right now,

267
00:14:29,618 --> 00:14:32,955
or spend on right now,
versus save for in the future,

268
00:14:33,038 --> 00:14:35,124
it can be understandable
when a lot of workers,

269
00:14:35,207 --> 00:14:37,960
especially at the lower end
of the income spectrum,

270
00:14:38,043 --> 00:14:40,087
need to spend that money today.

271
00:14:40,170 --> 00:14:43,674
[narrator] And even if you do
everything right and save all your life,

272
00:14:43,757 --> 00:14:47,303
you could still find your life savings
slashed by a recession,

273
00:14:47,386 --> 00:14:49,263
like we saw in 2008.

274
00:14:49,346 --> 00:14:51,599
This morning's
steep declines on Wall Street

275
00:14:51,682 --> 00:14:54,351
hit Americans
with already battered 401Ks.

276
00:14:54,435 --> 00:14:58,355
Stock market drops have eroded
the value of retirement accounts.

277
00:14:58,439 --> 00:15:02,151
[woman 2] One was 88,000, and then
it went down to, like…

278
00:15:04,111 --> 00:15:04,945
50.

279
00:15:05,905 --> 00:15:08,991
I've been a career girl all my life,
and I don't deserve this.

280
00:15:09,658 --> 00:15:10,701
[weeping] I'm sorry.

281
00:15:10,784 --> 00:15:11,702
It's all right.

282
00:15:12,328 --> 00:15:13,370
[sighs]

283
00:15:14,330 --> 00:15:17,875
Because we've had
this narrative or this belief

284
00:15:17,958 --> 00:15:21,128
that retirement was
your own responsibility,

285
00:15:21,211 --> 00:15:27,217
we have, in America,
a huge group of people reaching 65

286
00:15:27,301 --> 00:15:30,846
with a deep sense of shame and anxiety.

287
00:15:30,930 --> 00:15:35,059
I have to depend on
the charities and the organizations

288
00:15:35,142 --> 00:15:37,853
that I used to be able
to abundantly give to.

289
00:15:37,937 --> 00:15:40,230
Do I feel shame and embarrassment?
Absolutely.

290
00:15:40,314 --> 00:15:45,569
I'm looking into the possibility
to return to the workforce

291
00:15:45,653 --> 00:15:49,490
so that I can pad my retirement
just a little bit more.

292
00:15:49,573 --> 00:15:51,784
Because of the setbacks
I faced in my life,

293
00:15:51,867 --> 00:15:54,787
I see myself working until I'm 70.

294
00:15:54,870 --> 00:15:57,331
[narrator] Some experts think
we should be working longer.

295
00:15:57,414 --> 00:15:58,582
It's good for the economy

296
00:15:58,666 --> 00:16:02,461
for the simple reason
that it grows the labor force.

297
00:16:02,544 --> 00:16:04,838
People should, if they can,
be working longer.

298
00:16:04,922 --> 00:16:07,633
And the fact that
older people are working longer

299
00:16:07,716 --> 00:16:10,260
will be good for the economy,
boost productivity,

300
00:16:10,344 --> 00:16:11,637
make everyone wealthier.

301
00:16:11,720 --> 00:16:14,181
I really hate that formulation.

302
00:16:14,264 --> 00:16:19,395
Just because we're all living longer
doesn't mean we have to work longer.

303
00:16:19,478 --> 00:16:22,731
At a certain point,
people should have the option

304
00:16:22,815 --> 00:16:27,403
to rest and to spend their time
doing something else besides working.

305
00:16:27,486 --> 00:16:31,949
And in America today,
it's simply not a choice for many people.

306
00:16:33,867 --> 00:16:37,454
[Teresa] The other problem is
that we're not all living longer.

307
00:16:37,538 --> 00:16:40,666
We've had such unequal longevity gains

308
00:16:40,749 --> 00:16:45,295
that this whole notion is an insult
to most people in America.

309
00:16:45,379 --> 00:16:48,549
[narrator] Most of us will never
be able to save a million dollars,

310
00:16:48,632 --> 00:16:50,592
no matter how hard we try.

311
00:16:50,676 --> 00:16:53,929
Our security in old age
is the accumulation

312
00:16:54,013 --> 00:16:57,182
of all our privileges
and all our hardships.

313
00:16:57,808 --> 00:17:01,895
Student loans, credit card debts,
bouts of unemployment, low wages,

314
00:17:01,979 --> 00:17:06,191
medical bills, never owning a home,
the inheritance you didn't get…

315
00:17:06,275 --> 00:17:07,359
They stack up.

316
00:17:08,736 --> 00:17:12,197
Almost 100 years ago,
a movement swept America.

317
00:17:12,281 --> 00:17:15,117
We declared it a national goal

318
00:17:15,200 --> 00:17:21,707
that everybody deserves to reach old age
with well-being and security.

319
00:17:21,790 --> 00:17:24,793
We must face the fact
that in this country,

320
00:17:24,877 --> 00:17:29,173
we have a rich man's security
and a poor man's security,

321
00:17:29,256 --> 00:17:32,551
and that the government
owes equal obligations to both.

322
00:17:33,844 --> 00:17:36,472
In the 1980s, when we were experimenting,

323
00:17:36,555 --> 00:17:39,433
or started our experiment
with a do-it-yourself system,

324
00:17:39,516 --> 00:17:40,809
the UK did, too.

325
00:17:41,477 --> 00:17:45,189
[narrator] And by 2000,
reports like this started to come out.

326
00:17:45,272 --> 00:17:48,484
My state pension is £87.50 a week.

327
00:17:49,026 --> 00:17:52,821
And on that money, I'm supposed
to rent accommodation and survive.

328
00:17:52,905 --> 00:17:54,323
[woman 3] I've got a good family.

329
00:17:54,406 --> 00:17:57,451
Mother's Day and Christmas,
I have to ask them for clothes.

330
00:17:57,534 --> 00:18:00,329
They reversed course
from the American system

331
00:18:00,412 --> 00:18:04,875
and mandated that employers
provide a pension system.

332
00:18:04,958 --> 00:18:06,877
And their pension system is called…

333
00:18:06,960 --> 00:18:09,713
[narrator]
The National Employee Savings Trust,

334
00:18:09,797 --> 00:18:11,090
or NEST.

335
00:18:11,173 --> 00:18:13,467
Which has a wonderful image of a nest egg.

336
00:18:13,550 --> 00:18:15,969
[narrator] It's like a mandatory 401K,

337
00:18:16,053 --> 00:18:19,223
where you're forced
to save 8% of your salary,

338
00:18:19,306 --> 00:18:22,601
5% from your paycheck
and 3% from your employer.

339
00:18:23,644 --> 00:18:27,272
If you earned a median income
of about $49,000 a year,

340
00:18:27,356 --> 00:18:29,733
and invested that much over 40 years,

341
00:18:29,817 --> 00:18:34,154
you'd likely not only hit
that million-dollar marker, but exceed it.

342
00:18:34,238 --> 00:18:37,908
We could fix
our American system overnight.

343
00:18:37,991 --> 00:18:42,371
We could institute a mandatory
savings system for all workers.

344
00:18:43,122 --> 00:18:45,499
[narrator]
Or we could expand Social Security.

345
00:18:46,250 --> 00:18:49,253
Remember, it's funded from your paycheck.

346
00:18:49,336 --> 00:18:52,631
Right now,
about 6% is taken out to fund it.

347
00:18:52,714 --> 00:18:55,217
But high earners aren't paying
Social Security tax

348
00:18:55,300 --> 00:18:57,136
on a lot of the money they make.

349
00:18:57,219 --> 00:19:01,974
Because after you've made
$137,900 that year,

350
00:19:02,057 --> 00:19:05,477
they stop taking money out
for the rest of the year.

351
00:19:05,561 --> 00:19:07,563
That's known as a regressive tax.

352
00:19:07,646 --> 00:19:11,108
And if you're super rich,
you could hit that cap in a week,

353
00:19:11,191 --> 00:19:14,695
or if you're ridiculously rich, a day.

354
00:19:14,778 --> 00:19:18,157
They're still getting over their hangovers
from their New Year's Eve party,

355
00:19:18,240 --> 00:19:21,410
and they've already paid their taxes
to the Social Security system.

356
00:19:21,493 --> 00:19:23,495
[all] Happy New Year!

357
00:19:24,788 --> 00:19:29,751
If we just taxed their earnings
like we tax everybody else's earnings,

358
00:19:29,835 --> 00:19:32,504
so much more money
would come into the system,

359
00:19:32,588 --> 00:19:35,591
and we could solve poverty
and expand benefits.

360
00:19:35,674 --> 00:19:37,926
The retirement savings crisis

361
00:19:38,010 --> 00:19:41,096
is actually a lot easier to fix
than most of our problems.

362
00:19:41,180 --> 00:19:43,682
It's easier to fix than climate change.

363
00:19:43,765 --> 00:19:46,518
It's easier to fix than--
than health insurance.

364
00:19:46,602 --> 00:19:50,981
I think we just need to start approaching
these questions in a more holistic way.

365
00:19:51,064 --> 00:19:54,651
The question of retirement security
doesn't just affect retirees.

366
00:19:54,735 --> 00:19:57,237
It affects everyone in the family.

367
00:19:57,321 --> 00:20:01,742
There has been
really amazing innovation in recent years

368
00:20:01,825 --> 00:20:05,162
around what it means
to live well as you age.

369
00:20:05,245 --> 00:20:08,290
[narrator] Like this old folks' home
in Seattle that made the news

370
00:20:08,373 --> 00:20:11,001
for joining forces with a nearby daycare.

371
00:20:11,084 --> 00:20:13,337
[news anchor]
Where the very old and the very young

372
00:20:13,420 --> 00:20:15,297
spend their days together.

373
00:20:15,380 --> 00:20:19,009
I love to hug them and squeeze them
and sing songs to them.

374
00:20:19,092 --> 00:20:21,136
I've seen the Village Movement emerge…

375
00:20:21,220 --> 00:20:24,932
[narrator] Which has over 300
registered chapters across the US.

376
00:20:25,515 --> 00:20:28,018
[Ai-Jen Poo] …where older people
pool resources

377
00:20:28,101 --> 00:20:31,396
and gets access to services collectively.

378
00:20:31,480 --> 00:20:33,857
[narrator]
So they can afford to do the things

379
00:20:33,941 --> 00:20:35,609
you'd see at a retirement community

380
00:20:35,692 --> 00:20:37,486
while living in their own homes.

381
00:20:37,569 --> 00:20:42,574
[Ai-Jen] In Hawaii, many communities
are living intergenerationally,

382
00:20:42,658 --> 00:20:45,577
where elders are
actually culturally revered.

383
00:20:46,245 --> 00:20:50,165
[narrator] Across the US, that kind
of family structure was once common,

384
00:20:50,249 --> 00:20:54,044
but right around the time retirement
resort communities were taking off,

385
00:20:54,127 --> 00:20:55,629
it started to decline.

386
00:20:56,838 --> 00:20:58,966
We were sold a dream,

387
00:20:59,049 --> 00:21:04,596
but the reality is, a lot of us will need
to rely on our families and friends.

388
00:21:04,680 --> 00:21:08,558
That's really the fourth leg
of this stool, and always has been.

389
00:21:08,642 --> 00:21:13,605
[Ai-Jen] In this country, our attitudes
around retirement and aging

390
00:21:13,689 --> 00:21:17,985
have everything to do
with the fear of aging and disability,

391
00:21:18,068 --> 00:21:22,322
and the way that we've culturally
solved for it is to just be in denial.

392
00:21:22,406 --> 00:21:27,077
It actually reveals
a lot of things about our society,

393
00:21:27,160 --> 00:21:30,914
our politics, our culture that we've
needed to change for a very long time.

394
00:21:32,416 --> 00:21:36,253
[narrator] While most of us will never
live out that sunny version of retirement…

395
00:21:36,336 --> 00:21:39,840
If we solve for the people
who've been hardest to solve for,

396
00:21:39,923 --> 00:21:42,801
who've really fallen through the cracks
for the longest,

397
00:21:42,884 --> 00:21:46,596
we will secure everyone.

398
00:21:51,435 --> 00:21:53,437
[theme music plays]