Posts Tagged ‘retirement’
Tags: elderly, jobs, retirement, workers, young
Right now, it’s a drag both to be getting old and being young because, as Floyd Norris explains,
What appears to be happening is that many people are postponing retirement if they can, while younger people are having trouble getting jobs.
In other words, when we compare the summer of 2013 to the summer of 2007, older people—who should be allowed the freedom to retire—are being forced to continue working much more than before, while young people are unable to find jobs that might someday allow them to have the freedom to retire.*
And there’s no yellow pill that will help them on their way.
*The two charts show the ratio of employment to population for each age group of men (in blue) and women (in red), regardless of whether those without jobs were seeking employment.
Tags: American Dream, college, healthcare, immiseration, retirement, ruling-class, United States, workers, working-class, youth
The other day, in an interview with NPR’s Marketplace, I made the argument that the American Dream was over.
Basically, I explained that working people (which I decided to talk about, although they started the interview by focusing on the so-called middle-class) were being squeezed on both ends: on one side, they were being squeezed by stagnant wages (if, that is, they were fortunate enough to have a job); on the other side, they were being squeezed by rising costs for healthcare, retirement, and their children’s college. What that meant is the working-class could no longer count on getting ahead, either themselves or their children. Only one group, the tiny minority at the top, was enjoying the American Dream.
Now, that’s a pretty standard argument, and one that Robert Putnam eloquently makes by focusing on Port Clinton, Ohio:
the story of Port Clinton over the last half-century — like the history of America over these decades — is not simply about the collapse of the working class but also about the birth of a new upper class. In the last two decades, just as the traditional economy of Port Clinton was collapsing, wealthy professionals from major cities in the Midwest have flocked to Port Clinton, building elaborate mansions in gated communities along Lake Erie and filling lagoons with their yachts. By 2011, the child poverty rate along the shore in upscale Catawba was only 1 percent, a fraction of the 51 percent rate only a few hundred yards inland. As the once thriving middle class disappeared, adjacent real estate listings in the Port Clinton News Herald advertised near-million-dollar mansions and dilapidated double-wides.
But here’s my question: how do we make the argument that for the majority of people the American Dream has ended—with all that implies for the contrasting fates of the American working- and ruling-classes—without romanticizing and putting a shiny gloss on the postwar period when the American Dream did in fact exist? How do we talk and write about the relative immiseration of the working-class and, at the same time, criticize the conditions of life for the working-class even when the American Dream was something people believed in? In other words, how do we invoke the end of the American Dream as a powerful metaphor of the current crises and still avoid a nostalgia for “the way things were”?
Tags: 401(k), corporations, pensions, profits, retirement, Thomas Friedman, Wall Street, workers
Friends often ask me when I plan to retire. My response is, in 6 years—or perhaps 16 years.
That’s because I and hundreds of millions of my fellow citizens now live in what Thomas Friedman refers to as a “401(k) world.”
For Friedman, it’s a world of individual promise:
We now live in a 401(k) world — a world of defined contributions, not defined benefits — where everyone needs to pass the bar exam and no one can escape the most e-mailed list. . .
If you are self-motivated, wow, this world is tailored for you. The boundaries are all gone. . .Your specific contribution will define your specific benefits much more.
But for the rest of us, the 401(k) world—a world of defined contributions retirement programs, instead of defined benefits—is just a giant scam in which employers have managed to shift all the risk of saving for retirement onto their employees and the financial industry captures a new set of fees. Sure, employers (some of them at least) have to distribute some of their gross profits to their employees’ retirement accounts, and the employees have to come up with another portion out of their wages and salaries. But the risk is all with the employees, since their actual retirement savings depends on what happens in equity and bond markets. Once their initial contributions have been made, employers no longer have to worry about coming up with the funds to keep pensions fully vested. All the risk falls on the employees—and the gains accrue to the lucrative area of managing both employer-mandated and 401(k) retirement accounts.
Matt Yglesias has some sense of what’s going on:
the problem with living in a 401(k) world is that Planet 401(k) is a pretty sucky planet. Here’s the essential shape of 401(k) as a backbone of the retirement system:
— Poor people get absolutely nothing.
— Wealthy people who would have had large savings anyway get a nice tax cut that offers no meaningful incentive effect
— For people in the middle, the quantity of subsidy you receive is linked to the marginal tax rate you pay—in other words, it’s inverse to need.
— A small minority of middle-class people manage to file the paperwork to save an adequate amount and then select a prudent low-fee, broadly diversified fund as their savings vehicle.
— Most middle-class savers end up either undersaving, overtrading, investing in excessively high-fee vehicles or some combination of the three.
— A small number of highly compensated folks now have lucrative careers offering bad investment products to a middle-class mass market based on their ability to swindle people.
Felix Salmon has an even clearer view of what’s going on:
a 401(k) plan is an icon of futility and the way in which the owners of capital extract rents from the owners of labor. . .the 401(k) is a way for both your government and your employer to disown you, and to leave your life savings to be raided by the financial-services industry and its plethora of hidden and invidious fees.
All of which means, in a 401(k) world, employers and banks are making out like bandits, while the rest of us are forced to have the freedom to rely on whatever we can save for retirement, plus the vagaries of financial markets.
In Friedman’s world, we get what we deserve. In my world, I’ll be able to retire in 6—or 16—years.