Guest Post: Retirement Account Fantasy And Middle Class Erosion – 1 Out Of 3 Americans Has Zero Dollars In A Retirement Account

Tyler Durden's picture

From MyBudget360

Retirement account fantasy and middle class erosion – 1 out of 3 Americans has zero dollars in a retirement account.

From 1950 to 1989 top 1 percent earned roughly 7 to 8 percent of nationwide income. Today it is inching closer to 20 percent resembling pre-Great Depression levels.

Many Americans live precariously close to the edge of financial
insolvency flirting with economic disaster daily.  If you casually
browse mainstream articles and watch any amount of television you would
think that the US still had a vibrant and strong middle class
When we pull back the covers on the current financial situation we
realize that many Americans are merely getting by and many would like
to live in some 1984 Orwellian fantasy world where suddenly things are
back to financial equilibrium.  43 million Americans
are depending on government food assistance to get by.  But many more
millions are merely living paycheck to paycheck hidden in the cellar of
the headlines.  1 out of 3 Americans has zero in any retirement account
(not one slowly eroding dollar).  Half of Americans have $2,000 or less
which puts them one month away from needing government assistance. 
With the volatile job market and turbulent Wall Street
middle class Americans are feeling the once prided stability being
slowly washed away.  Let us examine how retirement is now becoming more
of a fantasy for many Americans.

standard of living

Many Americans especially young adults realize that saving large amounts of money is a key to a sustainable retirement:


Over 84 percent of 18 to 29 year olds surveyed feel they need at
least $1 million saved up in order to stop working some day.  60
percent of those 30 and older feel that they will also need $1 million
saved up.  Yet the actual figures are somewhat disturbing in contrast
to the perceptions of many:


Source:  Census

The median retirement account for US households is $2,000
This is why the vast majority of retirees depend on Social Security as
their primary source of funds in old age even though Social Security
was never designed to be a long term pension system.  You’ll notice
that the average retirement account is closer to $50,000 a year but
this is heavily skewed by the top 1 percent that keep most of their funds in stock wealth.

The reason retirement is slipping through the fingers of many like
sand is the disjointed income equality in the country that has grown in
the last decade.  If we look at income growth it has been heavily
tilted at the top:


Source: Census, Chart: Wikipedia

There has been virtually no real income growth for most Americans. 
The real significant wage growth over the last 50 years has occurred at
the very top 10 percent of income earners in the country with this
inequality accelerating in the last bubble decade.  What is more
important is that 75 percent of Americans largely depend on a job as a
primary source of income which seems rather obvious:


Source:  Federal Reserve

If you examine the chart closely, it is only the top 10 percent that really benefit from a buoyant and thriving stock market.  As we have mentioned earlier 1 out of 3 Americans has zero, nada, or zilch in their retirement account.  The movement of the stock market
is like watching the score of a football game where the outcome means
nothing to the individual.  Yet the problem is that Wall Street has
taken the one item that was stable like a rock for Americans, housing and turned it into another commodity to be gambled and speculated against.

The share of income flowing to a smaller and smaller group of Americans is draining the life blood out of the middle class:


“From 1950 to 1989, nearly 40 years of data the top 1 percent earned roughly 7 to 8 percent
of all the nationwide income.  Today it is inching closer to 20
percent, a figure resembling the massive income inequality seen during
the Great Depression.”

Even within the top 1 percent the difference in incomes is striking:

top 1 percent of income

This kind of income inequality is coming at the cost of the middle class
Banks and the financial press would like you to believe that this isn’t
the case but just look at how far your dollar is now going.  If you are
fortunate to have a retirement account it is likely you don’t have the
gambling devices of options, hedges, and other items that are largely
new casino devices for Wall Street
Most Americans are comfortable with income discrepancies but not at
these levels and not when much of the gains are based on bets that hurt
the overall economy.

The problem as many are now seeing is the financial sector is largely rent seeking by pilfering the future of many middle class Americans
The banking system extracts wealth by devaluing the US dollar, by
charging interest or fees on retail banking, and ultimately suckering
many Americans to dump money into a stock market that is operated like
a casino.  Washington Mutual, a once popular bank used to offer free
checking for life.  JP Morgan Chase took over Washington Mutual in a
government shotgun wedding.  Now, Chase is looking to extract $10 to
$12 per month merely for having a checking account.  Of course they’ll
waive this if you have $5,000 saved in a handful of their accounts. 
Look above again.  1 out of 3 Americans have no savings so how will
this be accomplished?

As we mentioned Social Security is largely becoming the retirement
account default of many Americans.  Yet the growing number of
beneficiaries is now putting strain on the system:

The above chart will only continue to show expansion.  Where will
all this money come from?  We have a smaller workforce with the young
that are already having a tough time saving any money in this economy. 
Many of the good paying jobs of today require a college education and
college has largely entered its own student loan bubble
Many of the future middle class are merely trying to service their own
massive debt even before they begin their careers.  To save that $1
million will become a daunting task moving forward.  Also, if the Federal Reserve has its way $1 million 30 or 40 years from now may not be much.

With 17 percent of Americans unemployed or underemployed many are
simply looking for that next paycheck let alone planning for a
retirement where they can sip margaritas in some picturesque beach
location.  Wall Street
has pilfered the pockets of the middle class through bailouts for their
reckless gambling and incredible excess.  Many Americans now understand
this yet the current political class is merely interested in protecting
the established plutocracy by pillaging the American village.  Most
Americans are becoming exhausted by both political parties and their
pandering to Wall Street that provides a revolving door of money, jobs,
and connections.

The younger generation is seeing their ability to grow their net worth diminishing:


This figure has only dropped even further in the last few years. 
Retirement was once thought of as a place where one would reach a
comfortable existence after many years of hard work.  Not an
extravagant lifestyle but one in where a home was paid off and enough
money came in for food and daily necessities.  But now with Wall Street
turning housing into a giant commodity
and stripping bear the employment base of the country; many are
wondering if retirement is even an option especially when the stock
market is at the same level as it was one decade ago.

Ultimately what needs to happen is to get money out of politics and
to split up commercial and investment banking.  The answer is obvious
but the plutocracy is relentless
in keeping this game going as long as possible.  As this continues,
retirement will continue to look more and more as a fantasy to millions
of Americans.

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Xibalba's picture

Governments raising the retirement age doesn't help to assuage any fears 

Bearster's picture

Except, somehow, every statistic implies a need for socialism.

The problem is not what percentage of "the nation's" income is earned by rich people.  There shouldn't be any caps on how much one can produce.

The problem is that high incomes on Wall Street are a direct transfer from American taxpayers.  This is the dynamic of a banana republic, not of a free society.

RaymondKHessel's picture

You’re all pretty much fucked. You don’t know it yet. But, you are the NINJA generation. No Income, No Job, No Assets. You got a lot to live for too. Someone reminded me the other evening that I once said greed is good. Now it seems its legal. But folks, its greed that makes my bartender buy three houses he can’t afford with no money down. And it's greed that makes your parents refinance their two hundred thousand dollar house for two fifty. Then they take that extra fifty and go down to the mall. They buy a plasma TV, cell phones, computers, a SUV, hey why not a second home while we are it, cause gee whiz we all know the prices of houses in America always go up, right? And its greed that makes the government of this country cut interest rates down to one percent after 9/11 so we can all go shopping again. And they got all these fancy names for trillions of dollars of credits, CMOs, CDOs, SIVs, ABS . You know I honestly think that there’s maybe only seventy five people in the world who know what they are. But I’ll tell you what they are - WMDs, weapons of mass destruction! That’s what they are. When I was away, it seems greed got greedier with a little bit of envy mixed in. Hedge funders were walking home with fifty, hundred million bucks a year. So Mister Banker, he looks around and says my life looks pretty boring. So he starts leveraging his interests up to forty, fifty to one, with your money, not his, yours, because he could. You’re supposed to be borrowing not them. And the beauty of the deal, no one is responsible. Because everyone is drinking the same Kool-aid. Last year ladies and gentlemen, forty percent of all American corporate profits came from financial services. Not production, not anything remotely to do with the needs of the American public. The truth is we are all part of it now. Banks, consumers, we’re moving the money around in circles. We take a buck, we shoot it full of steroids. We call it leverage. I call it steroid banking. Now I’ve been considered a pretty smart guy when it comes to finance and maybe I was in prison too long. But sometimes it’s the only place to stay sane and look out through those bars and say “Hey, is everybody out there nuts?” Its clear as a bell to those who pay attention, the mother of all evil is speculation, leveraged debt. The bottom line is borrowing to the hilt. And I hate to tell you this, it’s a bankrupt business model. It won’t work. Its systemic, malignant, and its global, like cancer. It’s a disease and we got to fight back. How are we going to do that? How are we going to leverage that disease back in our favor? Well I’ll tell you. Three words, “Buy my book!” Prices and profits work.

BobPaulson's picture

Here's the problem: if the majority of the voters are debtors not savers, who will the politicians opt to favour (grasshoppers win over the ants I'm afraid). One of the reasons I think the lower classes are just cranking up the debt, apart from the obvious shortsightedness, is that they see it's their only way to get a share of what the crooks at the top are getting. They see their financial leaders systematically stealing and say: why should I pay my mortgage instead of just buying everything I want on credit? If they all buy the plasma TV's, guess what? There won't be enough collection agencies to take them back. I'd say the medium term problem is that there is an entire consumption economy that requires this wasteful spending just to maintain employment (China). 

The only way it can end, IMHO, is China stops underwriting the consumption. It looks like it will be a while before that happens. I hope I'm wrong though.

Saxxon's picture

One last fling with the the great whore, her mascara running down her face, lipstick on her teeth.  The eastern horizon is starting to glow and the last few stars winking out to the west.

What you describe is very much analogous to the reasoning of a meth addict.  There is a wall past which such behavior simply cannot proceed.  That wall will be reached and hit.

The attitude of the people set in charge of the nations is criminal, demonic; this will all be set right as sure as the sun rises in the east and sets in the west. 

Of this I am absolutely assured and that is why I will not change my ways, participate in the ways of the great whore and receive of her plagues.

Raymond K Hessel's picture

Great quote from the movie.


Now use another profile name, douche.  This one's been taken.

midtowng's picture

Which comes first? The lack of freedom causes wealth inequality? Or does the wealth inequality cause lack of freedom?

I'm more imcline to believe the latter, but few will disagree that both feed on each other.

B9K9's picture

Completely off topic, but perhaps Tyler can re-print this tour de force by Chris Hedges:


Confused's picture

Hey, thanks for the link. Was a pretty good read. 

Seer's picture

Thanks dog!  Great to see you around again.  Best wishes for the new year.

Milestones's picture

Thanks for the re-post. Good to hear from ya again. You were missed.    Milestones

trav7777's picture

garbage: I wonder if Hedges ever read BNW or just cribbed it.

The two works, 1984 and BNW, are miles apart and not even related.  And Bernard Marx was not the protagonist of the latter work; nobody who'd read the book would make that mistake.

WaterWings's picture

Great post!

Happy Holidays. Missed you on the open forum.

hugovanderbubble's picture

Important: HSBC implied in same bad practices like BoA. Julian Assange could reveal that

Julius Baer



Credit Agricole

Are involved in fraud.

MarketTruth's picture

Yet not a single American would riot if Congress raised the retirement age. France, Greece and other riot, yet American Sheeple are easy to slaughter (especially the older ones thanks to the Obama health 'care' bill).

Enkidu's picture

Agreed. Viewed from the outside Americans are being sheared alive yet are unbelievably passive. Even the poor Greek fisherman knows he's been had by the world's bankers and puts up a fight but Americans still believe in the 'American Dream' - that damnable intoxicant! Staggeringly, when Wikileaks comes along to actually dump the evidence in front of them the only thing they think of is how to blast WikiNews to smithereens too. They are left with just blasting and bombing - and still with the idea that they are the top dogs and run the world, even though their own situation is that of abject misery.

MachoMan's picture

This is due, in large part, to the most massive manipulatory scheme ever devised and its purveyors have been at the game so long that they have become master artisans.  The other issue is that many people have yet to truly feel the pains of a greater deleveraging process due to governmental safety nets.

something fishy's picture

Some pain can be a good thing. It sharpens the senses and forces people to deal 

with real problems instead of the 'extend and pretend' bullshit. Gov't safety net

is helpful and I'm not saying there shouldn't be any, but in the end learning to be

smarter and more self-sufficient is the best way out of this mess.

MachoMan's picture

I agree.  The problem in this case comes from the magnitude of difference between the present population and the ability to become smart and self-sufficient in the time required...  It's more or less a tidal wave coming.

Nostradumbass's picture


"Viewed from the outside Americans are being sheared alive yet are unbelievably passive."

But it is believable:

>Tee Vee



> Shallow Culture

>Public Education

>Poor Critical Thinking Ability

>Sports Fanaticism

>Isolation From Community (need more pubs)

>Infinite Distractions


So, to me, I see little prospect of an 'awakening giant' here.

Time will tell...


Enkidu's picture

Yes, I agree. The other day I caught a bit on one of the popular 'news' channels and he was trumpeting 'arresting' Assange, 'espionage', 'treason', blah blah blah. Somehow these TV foghorns seem to think that we (people on earth) adhere to American laws and whims. Julian Assange is an Australian and he is living in the UK. He will not be doffing his cap to the Great American Republic - nor will we let him.

Raymond K Hessel's picture


Excellent post.  I agree 100%

Enkidu's picture

Thank you Raymond - so good to hear.

jeff montanye's picture

wasn't he replying to nostradumbass?

Manbarepig's picture

>Tee Vee



High Fructose Corn Syrup, awesome.


I get the argument but what is with foreigners obsession with this? The fact that our teeth dont all look like this?

>Shallow Culture

From Jersey Shore to Beverly Hillbillies we cover it all

>Public Education

Meh, ours sucks, but where are the cultures where education equips it students with strong critical thinking skills? Definitely not the emerging economies. Rote memorization is for fail.

>Poor Critical Thinking Ability

With all respect to George Carlin we're like the rest of the world; a couple of winners and a whole lot of losers.

>Sports Fanaticism

Umm, Soccer? Nothing in America can touch the rapaciousness of the ROW and its futball.

>Isolation From Community (need more pubs)

Its a big country, this is easier said than done. A big + on needing more pubs however ;)

>Infinite Distractions

Like commenting on blogs?

Mariposa de Oro's picture

Re:  Flouride

Its been liked to underactive thyroid function.  The thyroid controls ALL metabolic processes, including mental function.  The teeth may be cavity free but at the expense of the mind and body.  My experience with underactive thyroid leads me to believe it is due to flouridated water.  I can't prove it and don't feel the need.  Very quickly, I've suffered from mild hypothyroid symptoms for almost 20 years and was on the low end of normal on blood tests.  Three years ago I moved to a tropical island.  We are not authorized to have personal motorized vehicles.  This means we all either ride bikes or walk everywhere.  For the first three months I was here, I dropped 20lbs.  I was drinking lots and lots of water.  Then I stopped losing weight.  Then started gaining it.  My skin become even drier and puffier.  The muscle cramps appeared.  My nails became dry and brittle.   Later, my hair began to fall out and I was exhausted all the time.  Thyroid tests showed lower end of normal range.  I finally convinced a doctor to put me on medication.  In two and half months, I've stopped gaining weight.  My skin is better, nails, too; hair stopped falling out, and muscle cramps are improved.  Best of all, I have some energy again.  Still not 100% but much improved.  Saw the doc yesterday.  He upped the medication.  So, hopefully this will do the trick.  When I get back to being more active and start drinking more water, I'll make a note if my symptoms return and my blood tests change.

I know this doesn't prove anything.....

Waterfallsparkles's picture

Do you clean a lot?  Maybe it is the Chemicals in the Cleaning Products.

jeff montanye's picture

i spent decades on the other side -- too much thyroid.  it is beyond amazing the number and variety of symptoms that can occur.  very easily fixed if one's thyroid level does not jump around a lot.  

Oh regional Indian's picture

Say hello and thank you to the Tavistock Institute.

They've been our master's for well nigh the last 6-7 decades?

Edward Bernays, Public Relations and propaganda.

The old 1-2-3. Powerful stuff, hard to resist.

The mobile phone is their wet dream adn we've all been had.


Gene Parmesan's picture

Which groups are rioting in Europe though? The communists? Students upset over a nominal increase in tuition?

When people do get upset enough to take to the streets en masse here in the US it's not going to be a molotov cocktail thrown here and there between rocks and bricks. We're not at that point yet.

TheBillMan's picture

The student "riots" in the UK were becuase the government TRIPLED tuition fees.  Wonder what would happen here if they tried that?  Don't worry.  We'll find out soon enough.

Gene Parmesan's picture

My bad, and thank you - that's far from nominal, but it still only puts the cost at $14k/year. Sure it hurts, but any worthwhile steps toward "austerity" are going to hurt, and their something-for-nothing university system was probably a sensible place to start.

Clycntct's picture

Tripple it not a fkn problem.

That will just turn the 20% failure of the dummies failure to pay rate on up to the free ride rate of 60%.

Plus it might just increase the dummies to increase sign up.

More freeeeeeeee$$$$$$$$ for your expanding space.

Citxmech's picture

Riot? What a waste of time and energy, not to mention a risk to one's health. I'm way to busy stacking my larder to worry about trying to replace the corrupt shills in govt. with new corrupt shills.

I've known I couldn't rely on SS since I was friggen 16. People can kick and scream all they want demanding more entitlements but that's not going to get them anything but more inflation. We've passed the point of no return on that front a long time ago.

Face it: You will get less and less benefit from you taxes every year. Eventually, you will get no benefit. That's just the way it is. Pay unto Caesar what is his: Fiat crap. Take what you've got left after taxes and turn it into real assets: Food, land, PMs; the means for self-reliance.

The writing's been on the wall for more than long enough for anyone with half a brain to figure out they better start getting themselves and their families prepped for a more self-reliant future.

Revisit the Fable of the Ant and the Grasshopper... All the grasshoppers in the field could gather together to cry and moan and riot and that wouldn't get them the food and shelter they'd need to last through winter any more than handouts of fiat currancy would if there's no food or housing to buy.

Rioting is what people do when they're out of options and realize that they're completely fucked. Get yourself out from between the rock and a hard place using the time you've got left and you won't be in a position where lashing out uselessly is your only option.

melachiro's picture

I'm way to busy stacking my larder to worry about trying to replace the corrupt shills in govt. with new corrupt shills.

So true.  BTW, I am using that as my new email signature!

Oh regional Indian's picture

MarketTruth, I have a slightly twisted take on what you're saying. And I speak from some experience (12 years in the US working from senior management in fortune 50 to silicon valley start-up grunt), Americans don't really work too hard. Lot's of party time. Slow mondays, TGIF, 3 hour lunches, lot's of talk, meetings. Pretty shocking actually (this is 1995 through 2006).

So, really, no one should mind too much. The 80/20 rule is alive and well in the US of A.

Throw in the fact that FIRE was on fire the years I was there, it' seven less like work. Lot's of net surfing, time-wasting is what I saw.

Maybe the sharp downturn has changed things, but somehow I doubt it.


sgt_doom's picture

Excellent point, Xibalba.

Whenever they post this types of articles, they conveniently neglect to mention how many endless layoffs these Americans have been victim to; how many endless pensions have been stolen from them; how many endless numbers of jobs have been offshored, severely curtailing wages, and dramatically shrinking their jobs base.

A friend of mine, an individual who has contributed mightily to American IT tech, has watched his jobs, and said technology, offshored endlessly. (His longest-lasting job, prior to being offshored, over the past 20 years was 19 months!)

And they act as if this was something quite recent, although it has been going on for over 40 years, with exponential increases every 5 to 8 years.

101 years and counting's picture

401K's, IRA's and pensions....are great vehicles for Wall St to rape the middle class.

It encourages putting savings into the markets.  At this point, the criminals are able to steal at will.


John Law Lives's picture

I am retired with zero debt and living reasonably well on fixed income (GNMAs and munis etc.).  I had a moron advisor at Morgan Stanley advise this week that I rotate $$$ into the stock market.  I laughed her off the phone.  I wonder if she is married to Robo...

Kreditanstalt's picture

She wasn't too far off the mark.  Better be in the market, somehow, somewhere.

You planning to sit in bonds and munis through raging price inflation?

John Law Lives's picture

I have modest annual health insurance premium hikes and rising food and gasoline costs (I only drive about 2,500 miles a year) and property tax hikes.  Other than that, my cost of living doesn't go up very much.  I don't have house payments or car payments or credit card debt etc.  I still have plenty of cushion re. fixed income.

Yes, I plan to stick with this formula.  No way am I throwing money in the stock market now (though I do own some physical silver and gold).

Good luck.

MachoMan's picture

Nothing wrong with investing in local businesses either...  obviously some are better situated to handle the flood, but at least you know what you're buying...

oh_bama's picture

She is 100% right. It is all about "buy the fucking dip" now... hehe

you don't have to commit your capital forever, as long as Ben is heading the fed.. hehe


Anyway, this piece is no news. Nothing new. We can find every piece of data on wiki. Keep saying "American is not rich anymore" won't help anyone.

High Plains Drifter's picture

I know you are sweating and worried.   I would be.  So let us play a game of "what if" and see where it leads us. The things you talked about are paper. Paper is paper. Do not trust it. It may work and it may not.  These are the days we live in and these are the times we are in now. Could there be defaults. You damn right there could and there will be. I would hope that you are heavily hedged against calamity. There is only one way that I know of to do that and do it safely. Be your own banker and your own bank guard too. Such is the life we must lead in the 21st century in this land, where fiat is dying.

spartan117's picture

I hope you are not in California munis...

John Law Lives's picture

California munis?  No chance.

Texas GO bonds.

malikai's picture

I think Texas would probably default on its bonds the day after Alaska does. Which is to say, never.

Seer's picture

Yes, and housing prices NEVER go down...