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Guest Post: Retirement Account Fantasy And Middle Class Erosion – 1 Out Of 3 Americans Has Zero Dollars In A Retirement Account
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.
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:
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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You mean Barack O'Bama really won't pay my mortgage? Now they tell me! Yeesh....
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This bubble is going to burst with a big f**ing sound no later than spring and all longs will be obliterated!!!!
And the picture's even rosier for state/federal government employees, who're forced to pay 7% or more into a fund that the private sector is screaming to steal from them. How the hell are they supposed to save for retirement? Can't save money in a bank account or a mattress, inflation steals it. Can't buy stocks, corporate swindles it away. Can't get a job with a pension, have-nots form a lynch mob to punish you.
What kind of plans do you think that 2/3 of the world's population (who lives on $3/day or less) have?
Focus on producing something meaninful (food, shelter and water) and don't look back (else get turned to stone).
What the hell does it matter what poor and uneducatable idiots in the sahara do or don't have? And you're going to tell me that subsistence living is all that's meaningful? Thank God you weren't consulted by Henry Ford, Bill Gates, or the people who started NASA.
The shit will really hit the fan for those who get old enough where they cannot even be a walmart greeter and they need some sort of in home care or go into a nursing home. Those costs can easily hit 50-80k a year. If they have no money then they are really screwed.
Pink Floyd sang it best:
Time
(Mason, Waters, Wright, Gilmour) 7:06
Ticking away the moments that make up a dull day
You fritter and waste the hours in an offhand way.
Kicking around on a piece of ground in your home town
Waiting for someone or something to show you the way.
Tired of lying in the sunshine staying home to watch the rain.
You are young and life is long and there is time to kill today.
And then one day you find ten years have got behind you.
No one told you when to run, you missed the starting gun.
So you run and you run to catch up with the sun but it's sinking
Racing around to come up behind you again.
The sun is the same in a relative way but you're older,
Shorter of breath and one day closer to death.
Every year is getting shorter never seem to find the time.
Plans that either come to naught or half a page of scribbled lines
Hanging on in quiet desperation is the English way
The time is gone, the song is over,
Thought I'd something more to say.
And exactly how much money does our fearless brave government have in savings? We are indebted for generations. So, not only do many Americans have no savings but they actually have multi-generational debt obligations. Because of bailouts some of these obligations are indirectly owed to bailed out banks and financial houses.
The next hammer will be when inflation kicks in again as it is beginning to do. Then even the paltry $2k you have in the bank will buy next to nothing. Another form of government sponsored theft.
I'm not sure paying back multi-generational debts with monopoly money is that big of a problem... bi-flation is presently making that a huge problem, but bi-flation is a temporary phenomenon... if we break on through to the inflation side *jim morrison voice*, then you can whip the ox to pull the cart full of monopoly money to pay off those debts... if we break through to the deflation side, then we'll get a temporary reprieve on government sponsored theft (the theft of devaluation at least). Pick your poison.
Look on the currency you are holding- Federal Reserve Note!
You agreed to play this game. It's a Ponzi game, that the Govt was a player has really little to do with the bigger picture. We were warned a LONG time ago about usury, which is no more than a means to promote a Ponzi.
But... if it means sitting around in some corner planning to "get even" with the govt, by all means continue.
Don't have time to read all the post which are valid up to a point. Sorry.
This post merely rehashes the line that 'the rich get richer and the poor get poorer' with graphes and charts and all. Lies damn lies and statistics...and still doesn't get to the heart of it.
Question to you all? Why do the poor stay poor?
I am appearing heartless. What needs to happen is everbody pull their weight and keep things in proportion.
Don't worry. History shows that the Rich will be looted, pillaged and redistributed to sustain the poor, angry masses that say must eat now!
All the White House has to do is snap the fingers (Or clap twice...) and the Internet is finished. Kaput. We would have to resort to mooching Proxys off other computers in other lands around the world to get online.
As far as the inflation is concerned, Bring it. I want to go back to the warm and fuzzy days of the early 80's where a bank deposit account paid 15% interest. I'm ready. The food and gas? Screw it we can grow some and reduce the need for the other. And walk/bike the rest. That will keep us lean, mean and fit for really bad times.
All Your Assets Are Belong To Vampire Squid.
oh well we'll have to trade till we die or blow our heads off when we're broke.
Nice story line