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Most Americans Will Never Be Able to Retire

April 21, 2013

Rep. Keith Ellison (D-Minn), co-chairman of the Congressional Progressive Caucus, laid it out very clearly and succinctly recently:

“Why Cutting Social Security Benefits Is Such a Big Deal” ( 4/16/13

“To understand, here’s some context. American families have traditionally depended on three legs of a stool to support them during their retirement: retirement plans from their employers, private savings, and Social Security. But over the past 30 years, two of those legs – personal savings and retirement plans – have been rotting away for the American middle class.

Americans used to be able to depend on their jobs to provide a stable retirement. In 1985, about 80 percent of employees at medium and large-sized companies had guaranteed pensions for their employees. Now that number stands at less than a third. Today, most seniors depend on savings from plans they contribute to, such as 401(k)s. But these are a poor substitute, as employer contributions to individual plans are much stingier than defined benefit plans. In addition, investments are subject to the whims of the market, costing workers $2.8 billion dollars from their 401(k)’s during the financial crisis.

The story is even worse when it comes to personal savings. One in four households has insufficient net worth to subsist at the poverty rate for three months if they lose their jobs or income. The vast majority of Americans’ wealth is in the equity in their home. Yet American homeowners lost more than half the value of their homes during the Great Recession for a total loss of $8 trillion.

As a result of this collapse of the first two legs of the stool, Americans now depend on Social Security more than ever. One third of all widowed women rely on Social Security rely on Social Security for at least ninety percent of their income. And in an area of increasing income inequality, Social Security is the only lifeline many middle class seniors have.

Chained CPI would be a direct cut to the last leg of the stool.”

“Washington refuses to close a single loophole for special interests.”

I think Ellison summed it up well (but what does he know—he’s not a Fox News pundit). I’d like to remind everyone that the median income of all Americans age 65 or older now stands at $18,000 a year from all sources. For about two-thirds of all seniors, Social Security is most of their income. With the disappearance of pensions and evaporation of life savings in a crashed economy, no one 50 or older has time in their life span to recover from the losses, losses that were beyond their control. Social Security will increasingly be their only lifeline in their later years.

I come from a working class/lower middle class background. The only relatives of mine who didn’t have to work until the day they died were those who had a government pension (civil service) or a government-relgulated, government-supervised, government-guaranteed pension, such a a retired school teacher has. The private sector has abandoned their workforce and abandoned the field. No wonder people are upset at the proposal to cut Social Security,now or in the future.

Is this the New American Dream–work until the day you die?

We men especially like to fantasize that our later years will be shaped by our own choices, we will be captians of our fate, and will live a robust, vigorous, self-sufficent old age, then suddenly drop dead while doing what we love, around age 90. Such fantasies aren’t always a good guide to reality. Declining energy & health, forced curtailment of econoimically productive activities, and gradually increasing dependency is, to be frank, the more likely scenario.

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