Whether the economy is currently bubbling along or facing a slowdown, a slow-motion disaster is about to create a real crisis for the government, our future politics, and the shrinking middle class. Half of households have no retirement savings.
This is just one of many shifts in the economy that reflect the declining fortunes of the middle class. Wages have remained mostly flat for most workers—particularly those without a college degree—since the early 1970s. Recent high rates of inflation further cut into the ability of the self-identified middle class to make ends meet. But the biggest change has been the abolition of employer-provided pensions and their replacement with rickety and self-managed 401k savings plans.
**Wages have remained mostly flat for most workers—particularly those without a college degree—since the early 1970s. ** how is that calculated? In 1973, I entered the workforce earning a very good pay of $80 a week. My mother told me that my Post Office employee father, a letter carrier, had never earned that much. I retired at top pay of $55,000 in 2003. My son entered the workforce at the same time, earning $55000
ReplyDeleteNew hires at the warehouse I retired from after 25 years are starting at a dollar an hour less than what I was making 8 years ago.
DeletePay is higher but inflation, taxes, etc. negate that.
Delete80 dollars in 1973 is equal to 566 00 in 2024. In 1973 you were making 2264 a month, before taxes. Most warehouse workers are making that now....maybe a little more.
DeleteIt's called inflation.
Boomers fiddled while Rome burned, can't they just devise another tax on the rich to fix all this. That's what they vote for on everything else. 1 in 7 "workers" are now govt. employees - fed state, county, city - tax free with cadillac benefit plans and fat pensions, and all paid for by the other 6. The Federal govt. is a greater enemy of the US people than any foreign entity, but that's what the people vote for.
ReplyDeletePriorities. The author prefers to blame the corporations for not giving pensions to a populace too undisciplined to save. But at least they've got the latest model smartphones and body art. And a lawyer in every pocket to keep us safe.
Exactly. Instead of forcing them to save via company pensions, they were left to do their own savings. Most didn't, and the choices they made are causing them pain now.
DeleteLive high on the hog now, or high on the hog later.
The value of compounding interest is lost on most people.
Anon, you're a real Einstein.
DeleteAnon@10:04 What makes you think that working for the city is tax free? I was a firefighter for 30 yrs. EVERY paycheck I ever got had taxes taken out, both Fed, State and 12.5% for my “fat pension”…which is also taxed!
DeleteAnonymous @ 10.04
DeleteWhere is government employment tax free
Also I don't know any government employers that have cadillac plans. Around here they are generally pay less than private sector but have that 20 year retirement if you can live on 700 - 800 a month..
I'm against too much government sector jobs but let's not lie about the facts
JD
Govt. employees do not pay taxes, despite what they think. Because 100% of a govt. employees compensation is taken from private sector workers. That's the gross, not the net. Every single line item on a govt. employee's check is paid with other people's money - that includes SSA and all other "tax" entries.
Deleteooops, I meant to sign that one too
Delete--Anon @10:04
Anon, your thinking is so far out in left field that I'm not even going to try to make sense of it. Keep babbling, sir. I'm sure you get some enjoyment out of it.
DeleteMy dad had a Cadillac federal government retirement. 80% of his salary. He was a professional and retired a GS 14. I remember when I was about 30 and I compared salaries. I was making more than he was. He was pissed.
DeleteCurrent federal employees are on effectively 401K style retirement plans. The advantage of a 401ak plan is that you're not trapped by your retirement plan. When you change employers, the money comes with you (subject to vesting). With company retirement plans, you didn't dare leave and lose your pension.
Anon@10:04 - You’re going to be your own Fire Dept and you’ll be your own paramedic?
DeleteGood luck with that.
What a freaking moroon!! 🤣
Particularly infuriating is that while middle class Americans are disappearing politicians who entered office with little are filthy rich when they leave office
ReplyDeleteJD
Yes, and they all hate that one person became a rich multimillionaire without the govt. position, Trump. He is a real life Emmanuel Goldstein and the subject of our 2 minute hates.
Deletealso Anon @ 10:04
That was quite the kick in the balls when the company said no more pension. And by the way the govt said you can set aside 2K a year tax free (until you pull it out). Big wup. But we are savers so it went okay. The thing that irks me the most is the taxpayer bailing out other peoples pension funds. No way will I get a bailout when my IRA/401k goes belly up. I would have worked for the govt and their generous pensions if I knew then pension would go away in the private sector.
ReplyDelete"But the biggest change has been the abolition of employer-provided pensions and their replacement with rickety and self-managed 401k savings plans."
ReplyDeleteThat right there says all I need to know. Guy's a fucking commie. He's advocating defined benefit plans, which royally screw over the employers, rather than just paying people more and helping them set up Roth 401Ks.
Do you have ANY clue how much money you'd have if all the money your employer paid into your defined benefit plan was paid into a 401K, nevermind a Roth? It's insane. Add social security to that and it becomes REALLY FUCKING CLEAR that the goal here is, as it has always been, to screw over the workers.
Nevermind how screwed over the guy who gets injured or switches jobs 6mo's before "investing" in the plan, and loses EVERYTHING that he could have had.
Yes, I'm a certified investment planner (or was, rather. And I forget the exact term, because I don't care anymore.) and YES, defined benefit plans are a really really bad idea. Almost as bad as "whole life insurance" Seriously, get term insurance and an investment plan, and be 10x better off, for half the price. (Though the only company I'm aware of that does that is Primerica, which is a MLM. Screw them too, IMHO.)
(The only case where whole life insurance is a good idea is when it's single-payment whole life as part of estate planning, as a mechanism to pass your money on to your heirs while avoiding taxes. Life insurance benefits aren't taxable, you see. But even then, IMHO using an irrevocable living trust is a better idea. Just avoid probate altogether.)
John G.
I’m not a financial advisor….
ReplyDeletebut Roths are the way to go….
If I remember correctly….
You can’t do a Roth….if you’re covered by 401k….
but you can do an after-tax IRA (with profits taxable)…..
then convert the after-tax IRA to a tax free Roth…..
Good luck….
Ed357
You can do Roth IRAs (easy to set up at Fidelity, Vanguard, etc.) even if your employer offers a 401K or 401K Roth. My wife has a "spousal" Roth IRA and she doesn't even work. I set my 18 year old niece with a Roth IRA after her summer job last year.
Delete" Half of households have no retirement savings."
ReplyDeleteThat's no problem. Democrats will pay them for their vote, and will borrow it from the grandchildren we won't have because Kamala tells kids not to breed.
The cost of living has been inflated by our very own government, if they would stay the fuck out of free enterprise, things would prosper. There is no more free enterprise.
ReplyDelete