Forget terrorism, Ebola or even climate change — the most dangerous threat to this country is an epic retirement crisis.
We will soon see tens of millions of Americans reduced to poverty, bringing an end to the United States as an economic superpower.
Unlike attacks and pandemics, this crisis is an absolute certainty, one with a clear, near start date. But the media is hardly mentioning the imminent retirement crisis. So politicians haven’t even begun to think about it, much less take it seriously.
Actually, “retirement crisis” is a misnomer. The problem isn’t that people won’t be able to retire or will be living on a shoestring, though those things are true. We’re staring down the barrel of an epic old age crisis. For the average American, to be elderly will mean not mere belt-tightening, but real, grinding poverty: homelessness and hunger.
Throughout the last few decades, vulnerable people living from payday to payday have gotten battered by the shredding of the government safety net, a lack of accumulated savings caused by the boom-and-bust cycle of capitalism, and a lackluster real estate market.
Now members of the poor and lower middle class in their 50s and 60s are heading into a retirement crisis created by a perfect superstorm.
Traditional defined-benefit pension plans have been replaced by stingy 401(k)s and similar programs which employers no longer pay into, cap how much you can contribute (assuming you can afford it), take a beating during downturns in the stock market, and allow workers to tap when they’re laid off or run into financial trouble. After years of sketchy raids and outright theft, workers with old-fashioned corporate and government pensions can’t be sure their money will be there when they need it. The first Generation Xers — many of whom never had the opportunity to accumulate wealth due to several long recessions that impacted them particularly hard — will reach the traditional retirement age of 65 in the year 2024.
The facts are brutal:
No savings: The average Gen Xer only has a net worth of about $40,000 — enough to live on for a year. Maybe. In Akron. 36% of Americans don’t have a dime saved for retirement.
Later Social Security: Thanks to that lovable wacky Ronald Reagan, the Social Security retirement age was quietly raised to 67 for Gen Xers born after 1960. When you finally get Social Security, it doesn’t pay enough. The U.S. ranks third to last in social security benefits among developed nations.
Age discrimination: The continuing post-2008 recession hit those in their 50s especially hard; employers want cheaper, younger workers. 25% of Americans over age 55 now have no savings whatsoever.
About those pension plans: When journalists mention the retirement crisis, they focus on problems with the defined-benefit system. But that’s irrelevant to most Americans. 90% of private-sector workers don’t have one. Most government workers do — but 85% of Americans work in the private sector.
401ks suck (if you have one). Three out of four workers have no pension plan. What they might have is a 401k. The average Gen Xer who has a 401k — 69% don’t — has a $63,000 balance.
Financial experts say 92% of U.S. workers fall significantly short of what they’ll need to live decently after retirement. “In the decades to come,” Edward Siedle writes for Forbes, “we will witness millions of elderly Americans, the Baby Boomers and others, slipping into poverty. Too frail to work, too poor to retire will become the ‘new normal’ for many elderly Americans.”
This is about you — not some theoretical lazy Other.
“At some point,” Siedle says, “lack of savings, lack of employment possibilities and failing health will catch up with the overwhelming majority of the nation’s elders. Let me emphasize that we’re talking about the overwhelming majority, not a small percentage who arguably made bad decisions throughout their working lives.” [Emphasis is mine.]
America’s army of starving old people will drag down younger people too. “Public finances will be pushed to the limit, crowding out other priorities such as education,” Christian E. Weller predicts in The Hill. “Moreover, economic growth will be slower than it otherwise would be because employers will have more workers whose productivity is declining, while many older families, who could start successful new businesses, will forego those opportunities.”
And the pols?
Useless, Siedle concludes. “Conservatives are trying to pare back so-called entitlements that will mushroom in the near future and liberals have failed to acknowledge the crisis or propose any solutions.”
We can hit the streets to demand action now — or we’ll be living on them later.
(Ted Rall, syndicated writer and cartoonist, is the author of the new critically-acclaimed book “After We Kill You, We Will Welcome You Back As Honored Guests: Unembedded in Afghanistan.” Subscribe to Ted Rall at Beacon.)
COPYRIGHT 2014 TED RALL, DISTRIBUTED BY CREATORS.COM
17 Comments.
Finally, someone who gets it. Usually it’s “oh, you guys wont get any money from Social Security when it’s time for you to retire!” then we all shrug and say that sucks, we can’t do anything. We know 401Ks are a scam and should never have replaced defined benefit plans(pensions).
Greedy bastards convinced us they were the best option.
Let’s start a movement before it’s too late.
It’s already too late.
Ted is right, monster crisis. The cause – the death of unions. Reagan, that was his goal, from the start. First thing he did was start killing the unions. It has continued unabated since. Only way to get it back, rebuild the unions. Strike. Be militant. On the way to the revolution. First up against the wall, all those who do nothing but take from those who work, and give to themselves.
Me, I’m lucky. Depending on how you define it, I’m a late boomer, early gen xer (1961). I work for the state, will retire with guaranteed pension, social security, my wife has a great job with a 401K that will have actual money in it when she retires. The company she works for actually does try to take care of their workers, but it’s a massive outlier – the owner is an old lefty, his favorite album of all time is Sandinista. We’ll be fine, lots won’t. Whats Ted doesn’t talk about here is that forget people my age, the young kids coming up now can’t even get started, forget about retiring.
It never ceases to amaze me the way the right wingers have been so successfully conditioned against unions. I can understand why the oligarchs are against ’em – unions take the caviar right out their children’s mouths.
But Joe working-stiff? Hell, unions gave him a life outside of work. Saturdays! Sick Leave! Overtime! Safe working conditions! Who in their right minds could possibly be against such things?
Every once in a while some wingnut will raise his ugly little head & blame unions for the fall of Detroit. They see a train wreck and immediately assume it’s the passengers’ fault. Me, I kinda thing the blame lies with the guy driving the damn thing.
Crazy, I mostly agree, but I’m starting to feel that If part of your plan is not to eventually buy the company from the owners, you are not a real union.
*Only way to get it back, rebuild the unions. Strike. Be militant. On the way to the revolution.*
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That resonates with an interview I saw recently of Howard Zinn (RIP) by Bill Moyers:
http://www.pbs.org/moyers/journal/12112009/watch2.html
Der,
It’s the truth. Chomsky takes it a step further and talks about forming a tapestry of democratically controlled economic units; employee-owned enterprises, unions, cooperatives etc etc.
I’m not so optimistic to believe this vision can break the looping feedback cycles ensuring and enforcing the privilege of concentrated wealth, but there is some encouraging science about the relative efficiencies of certain cooperatives over traditional capitalist firms, and the superiority of non monetary motivation over monetary motivation in increasingly important lines of work.
One thing I take comfort in from all this? As the middle class implodes, the banks, the companies, the newspapers, all the groups that helped this all happen will discover they no longer can get enough users to remain afloat. At least the dying middle class will take the bastards with them.
Simple test that 401(k)s are bullshit? There’s no guarantee to them. You lose your shirt, you lose your shirt. Buh-bye. No government bailout. Too bad your 401(k) took an 8% “correction” and you’ll now have to put in at least two more years at work. Tee-hee.
401(k)s should work like savings accounts. Guaranteed return rates. “We offer a 6.4% return.”
“Fine. Here’s my 401(k) account.”
“Great.” (Two years later.) “Yeah, we’re now going to offer only a 5.9% rate.”
“That other firm offers a 6.3% rate.”
“**chirrup, chirrup**”
“Hello? I said that the other firm offered a better rate. Can you match it?”
“Uh, no?”
“Great. The invisible hand of the free market tells me that you’re not ‘efficient’ so I’m going to almost-invisibly remove my account and transfer it to the people who can earn me more money.”
But don’t take my word for it. Try it out yourselves. Call your 401(k) and ask about the managed accounts. “Yeah, I admit I don’t know enough about the world of finance to make sensible choices. So I’d like you to take it offer for me.”
“Sure sir. We can do that.”
“Great. What guaranteed rate of return do you offer?”
“Oh, we don’t guarantee anything.”
“What? So you claim to be experts, but you’re so unsure of your suggestions and strategies that you won’t offer even a nominal base return of say, 3%?”
“Nope. Sorry. We take none of the risks, we get paid either way, and we call that managing your account.”
Shakespear pegged it way back when: “A man may smile and smile, and be a villain.”
You guys ever stop to think that we have the biggest welfare states in all history and western civilization is still going down the drain? You think ideas like “Too big to fail” are the end result of capitalism when in fact they are socialist ideas. We saved GM, AIG et al. for the PUBLIC GOOD. A capitalist would never be rewarded for incompetence. At the end of the day, every socialist/leftist/collectivist (or monarchist/fascist) just wants free things and someone else he can force to pay for them. What a brilliant recipe for a sustainable society!
Jack,
I don’t think that’s exactly it. In a socialist system, the banks would not exist to generate profit for shareholders. Much of Goldman Sachs’ evil would not have happened mainly because no one would be getting a nine-figure salary. The banks in a socialist system would exist as a government-controlled entity to provide people with banking services. Not as something with a fake coloration of government oversight.
I know you know that banks have not done a great job of serving shareholders. What we have today could hardly be further from a free market. Government intervenes everywhere for the benefit of our aristocracy of pull in which incompetents exchange favors with other incompetents. Big government = corruption. Out and out fraud is overlooked. Laws are created precisely to obstruct justice. Swaths of people make careers of government looting. Law should be so simple an ordinary man could win against a behemoth without worrying that he would be outspent in the lawyer department. Laws should be objective and not designed to favor one group over another. In a free market, a bank could only profit as well as it served customers. Profit incentive would benefit all. I do not have money in the stock market. I do not have accounts or loans with big banks. I have a couple credit cards I hardly use. It is stupefying how many people complain about big companies and then use all their products and services. I did not buy an Xbox One. I do not buy Apple products, etc. Government created HMOs. Government created 401(k)s. Government runs the VA and certainly not for the benefit of veterans. The socialist countries of Europe are crushed with debt and taxes because people wanted something for free. Ayn Rand was right: at the end of every trail of someone advocating against a free market and society, is someone who wants to despoil others using government guns. And the sickest part is that so few people understand what a free market is today that many elites/pols/oligarchs can claim they are capitalists or libertarians when nothing could be further from the truth. And despite their flaws, what kind of modern society would we have today if 19th century had told Edison, Rockefeller, Carnegie that they would be working for the government and public good and would not be allowed to work for themselves or enjoy any other rewards than perhaps the gratitude from others. Their desires for THEMSELVES are what drove them to create modern life.
If the label socialism for the rich in America today doesn’t suit you, it is beside the point. There’s plenty of socialism to go around from top to bottom of the economic classes. One day X is for the public good, tomorrow it’s Y. Some industrialists used the force of law for their own benefit so now we need to do the same! All these things happen because nearly no one thinks the government has no business passing laws regarding the economy. People need to recognize that any such law should be illegal, null, and void. Incredible transparency. “Oh, did you hear that corporation A is lobbying for a law to Z but union B is going to stop them with law…” “What are you talking about? That’s all illegal.” Statism is statism.
Jack, Concentrated wealth interests form, control and locate within states for stability, security and benefits. Investments are made in political outcomes, for which there is a measurable, material return.
What sort of Bolshevik scheme are you cooking up to upset this arrangement?
Communists are perhaps even more dangerous and loathsome than those in power in America today. We will never have a healthy, sustainable civilization until a majority of citizens believe that the only obligation they owe each other is to deal rationally with one another without resorting to force or fraud AND the only job of government domestically is to guarantee this. The problem with concentrated wealth today is not that it exists, but rather that it was not EARNED through productive work and even when it was, it is often maintained otherwise. In a free market, a man or company cannot stay wealthy if enough people decide what he is selling is not worth buying. Sadly, free markets have never been enacted, as far as I can tell because so many people don’t want to lose the power to put one over on each other. And this parasitic elite, same as any other sort, can only exist so long as they have willing victims they can loot. Socialism is not the answer since their premises and means are the same. They just simply change the roles of looters and victims. I concern myself with the freedoms and rights of individuals. Socialism is antithetical to these. As a HUMAN BEING, I love being productive, but I will do my best not to support our current system and as soon as my abilities and resources allow, I will not support it in any way at all. The problem with any sort of leftist answer to our current situation is that they would set up a system that also redistributed unearned wealth to the undeserved. The progressives I know often work hard and hate lazy coworkers. Anyone productive resents having to pull another’s weight. I wonder that they do not see that the policies and systems they advocate can only benefit the unproductive at the expense of the productive. Our government today already takes as its right to steal the wealth of citizens to give to others, repress rights, and murder. Almost anyone can see that our elite remains rich by despoiling others with fraud at home and force abroad, but then they make the mistake of saying it’s just the result of capitalism. The elite can only do this by using GOVERNMENT. In a free market, the government would have no economic say-so. None of this exploitation or subjugation would be possible.
olegna78,
As Ted (and many libertarians as well) says, our elite is destroying themselves. We need only wait and do our best to prepare to protect ourselves. Be conscious consumers and do as little as possible to support the system. Remove ourselves entirely if possible a la Atlas Shrugged. Be ready for the day when we may successfully answer force with force…or simply watch poolside. I can fault neither option. It is up to the individual.
Jack, don’t you kind of suspect that since government is merely an instrument of concentrated wealth, we need realize what we mean by government _is_ concentrated wealth?
When we formulate the problem soberly, we are less likely to hold this coercion simultaneously scandalous and neccesary because it’s clear concentrated wealth/power is in charge, always has been and is not to be trusted to “ensure” or “garaountee” anything on our behalf.
Another sea change in our understanding of the problem which would result from proper formulation would be that we would never make the mistake of thinking any other interest’s impact on policy outcomes overrides that of concentrated wealth.
China has a looming age crises coming too. In China the children are a parents retirement plan and with only one child…problems are the way. Many B students and children without the proper connections never got a job that will enable them to take care of aging parents.
So my bet is the global age crises will be another race to the bottom, the global elite of capital will blame the victims , then their children, then ignore homeless car parks or shacks in abandoned fields at the edge of town as long as they don’t get close to their property or investments. If/When shanty towns areas become racked with diseases they will fence them off.