Actions have consequences. When the entire retirement plan of everyone in the country able to set money aside in a 401k (which isn't applicable for a lot of low-wage employees) is tied to the stock markets, politics is effectively held hostage by the companies in the S&P 500 - politicians simply can't risk enacting any policy that could send these stocks tanking.
The US is in for a really, really wild ride for the next decades as a lot of things that have to be done simply to keep the planet able to support human life will be things that massively complicate or, in the case of anything fossil fuel related, make impossible the business of a lot of large companies, which will send their stocks tanking.
(Edit: as a matter of fact, recently the President has been actually advertising going into debt for new cars. And it works! My poor-with-finances brother wants to buy a $38,000 truck, and he's got less than $500 in savings and rents an apartment.)
I'm between 25-30 and I'm not even remotely planning on having enough money when I retire. My plan is to have kids, teach them to be clever and resourceful, and then live with them. If they won't have me, I'll live as a pauper in the grand new order when I have to retire. Greater men than I have died penniless.
Back in the Ford era, it was at least commonly understood common sense that people need to be able to afford products. Today? The people are held poor so that they can't afford to strike, much less openly revolt, and nickeled-and-dimed by the credit industry.
The advice from Ramsey and friends makes sense and is objectively the best thing people can do, but at the same time its messaging is clear: miss out on the fun everyone else has achieved by debt.
> Today? The people are held poor so that they can't afford to strike, much less openly revolt, and nickeled-and-dimed by the credit industry.
I think it's less that they're held so "poor" (i.e. not having access to a lot of cash) as that they are so completely effectively barred from any kind of sustenance outside of the Debt System that striking would mean the total abandonment of any kind of life they're used to. A real revolution would mean complete blockage from almost every public space and service--unlike the past, there's not anywhere for you to go if you're at odds with the banking system. You'll starve, or you'll be tracked and thrown in jail to suffer the wrath of the stupid, uncivilized drug-addicted gangs. There's not even food in the lands surrounding the towns and cities, it's all single-crop cash yields that get exported.
People are also very carefully manipulated (not necessarily deliberately--it's just the net result of all aggregate manipulation) to be extremely suspicious and cautious of anything that would upset the life they're used to. If you talk to anyone above $140k/year household aggregate about the possibility of living 2-3 families in one home or never travelling by air again they look at you like you're speaking a foreign language.
The system is headed for feudalism, where majority of the population will never own land/home, and will have lesser rights than those that do.
People who think this is a fantasy, should check what percentage of the population can afford a lawyer. it's like 20-30% tops
On the whole, the problem isn't that people are buying $70k trucks and escalades that's keeping them poor. It's not having enough income.
The difference personally between $70k and $90k is massive and the difference between $90k and $120k is massive. That's the difference between underfunding my retirement and no savings and still being fairly tight on fun money, and having all of those things and still being able to pay that surprise $2k vet bill and just not save as much that month.
And I pay less to own than I did to rent, in a nicer house, and I'm building equity when I do it.
Was there an attitude change towards savings/etc there too? Sure. But like, the biggest difference was just having more money. You can't save when you don't have money coming in.
And at $70k I was making more than the median family with kids. People have to make do with a lot less than that. And that becomes "can't fix the car" or "can't afford to go to the hospital" or "kids don't eat breakfast" at the bottom end. $40k with kids is poverty, and that's an awful lot of people. When your shitty insurance drops you a $40k bill for a weekend in the hospital you're not paying that and it will take the rest of your finances with it.
At an individual level yes, acting wisely with money is all any one person can do. But it comes off as entitled when you tell people that they personally are doing it wrong, when the overwhelming majority of people in the economy are losing. The middle-class lifestyle as we have come to know it basically requires you be in the top 10% of income earners in your local economy. At some point it's a society-wide problem, people respond to the incentives you give them as best they can with the resources they have. But a talk-show host saying "just buy more money" isn't going to fix those social-level problems. The problem isn't people, and if your system requires magical rational-actors who will wageslave for 50 years without the occasional vacation or other nicety and die penniless in retirement after cutting social security, then your system is going to fail.
At a societal level, there is no "one weird trick from a talk-show host" to bypass the incentives we've set up or vastly increase the amount of resources any one person is allocated. Well, crime I guess.
> The middle-class lifestyle as we have come to know it basically requires you be in the top 10% of income earners in your local economy.
Absolutely true. I've found that to not worry about any of (health, retirement, surprise bills, vehicles, housing) you need about $100k/year post-tax, and that's in a heartland state with "low" COL.
> The problem isn't people, and if your system requires magical rational-actors who will wageslave for 50 years without the occasional vacation or other nicety and die penniless in retirement after cutting social security, then your system is going to fail.
Amusingly, this is one of the reasons I'm not too worried about the inevitability of the system crashing. The current system is bound for failure. It's practically designed to fail. Once it fails, something will have to take its place. I think there's just enough civilizational inertia that the US isn't headed for total anarchy, as is always a risk for less-developed places when the currency and the food importation falls through.
I mean I just feel that on average you get what you incentivize. Yeah for any one person, advice can help them break the average but on the whole people respond how the system has encouraged them to respond. It's the same as the critique people make about communism... if your system requires people to go against human nature, it's not going to work. Individuals may, but on the whole, humans are gonna act like humans. Implying that people are doing it wrong personally because they're failing in a system in which the overwhelming majority of people are failing becomes personally offensive and that's why people react negatively.
The crushing underlying fact of american society is that the middle class isn't middle anymore, probably over half of people are working-poor at this point and there's really only a handful of middle-class left in america (in the "own a house, go on vacation once in a while, not worry about surprise bills" sense). And maybe that's part of why people react viscerally negatively to it too... nobody wants to think of themselves as lower-class and that's rubbed in your face when Ramsey tells them to live within their means. You can't afford that vacation and neither can your friends, you're all wage-slaves, just like 90% of america. Back onto your treadmill, hamster.
Building local communities and building for resiliency is really important, as another commenter was discussing. I have this early 80s tractor that I inherited from my grandparents, it's nothing special but it's had very little wear since my grandpa got alzheimers soon after and they started having it mowed by a service, and it's had some basic preventative maintenance (oil changes once a decade, new tires, etc) and I've found myself thinking that I probably should keep it around even if I upgrade to something newer. Because it's got a briggs+stratton 2-cyl boxer motor on a steel frame and it's going to be something I can find parts for forever and repair it if it comes down to it, and that's kind of a novelty in a world of cheap throwaway junk. Same for appliances, I have old 90s washer+dryer that came with the house and it's nothing particularly special, it's worn out and needs at least a couple hundred bucks of parts each, but I hear nothing but horror stories about the newer stuff. Or cars are another one... everything is digital now and not really intended for user service beyond changing the oil and brake pads and such. There is a small crossover between ESC (which is really important around here in winter) and the point everything became unserviceable and that "window of repairability" seems very desirable.
Societally we are just getting to this place where reliability and durability is something that's starting to nag at me, and it's interesting to hear I'm not the only one.
I have a veteran friend who is working to get his translator from afghanistan and his family a visa and get them moved over here... he's got a little farm so he'll have a place to put them. Same thing. I think people are starting to look over the cliff and worry about what comes after. And building local communities is going to be the ticket.
Saving $1,000 for an emergency fund. Paying down debts one at a time with the “debt snowball” approach.
His advice doesn’t appeal to people who are making a lot of money at all and most of the push back is from people who will give you speeches about compounding interest rather than paying debt.
“Live like no one else, so you can live like no one else.”
I would say these are the sources from which I draw a lot of my opinions about the financial system:
- Max Dama on Automated Trading (57-page PDF written by a quantitative trader)
- Out-Sourced Profits: The Cornerstone of Successful Subcontracting by Dr. J. L. Hart-Smith (memo written by a Boeing employee about why Boeing was failing to make money and simultaneously driving down quality in the airliner industry)
- The Big Short by Michael Lewis
- Hipsters on Food Stamps Parts I-III by The Last Psychiatrist (blogger whose blog, "The Last Psychiatrist", is my favorite source of writing and whose advice I orient most of my life and behavior around. Many of his other articles touch on the credit-based financial system)
- WTF Happened in 1971? (Website showing trends in American life after the gold standard was abandoned in 1971, it's not necessarily well-researched and they draw a lot of conclusions that more experienced researchers would contradict)
- Wikipedia (some great reads on the history of the joint-stock corporation, dollar, credit card, 401k, home loan, auto loan, credit score, etc.)
There's a lot of other things I've read, but they're not explicitly about the financial system. I feel very strongly about the structure of civilization and the process of creating engineered goods, and I find that most of my complaints about problems with those two things in modern times resolve back to "the people incentivizing work to happen in modern civilization are amoral, corrupt, and actively destroying the historical incentives that people had to work towards ends that could be described as 'common good'". This leads to my constant sniping about the credit system and 401ks.
The beginning of https://thelastpsychiatrist.com/2012/11/hipsters_on_food_sta... seems very promising ...
Grandparents help raise the grand kids instead of day care and baby sitters. Kids take care of their aging parents. Communities pull together to help each other.
There are complexities to it, but without a lot of the artificial financial structures that we have in place (loans, insurance, stocks, government programs) that’s probably what society has to revert to and in many ways it’s the most efficient long term way for society to function.
Obviously this plan is made much easier by remote work and good earning potential for tech workers and I suppose some parents will be more attached to where they currently live than my mom is. But multi-generational is not outright impossible, I'd wager a significant chunk of the population could pull it off to varying degrees in one way or another.
Trylly modern thinking is, if the Market disagrees with Gravity, then Gravity is wrong.
In Germany, we have a "rollover system" - you pay a government-mandated fixed percentage of your income into pensions system in exchange for pension credits. The contributions from all current payers (plus a sizable chunk of tax money) are then distributed to current pension receivers, and the worth of a pension credit point ("Rentenpunkte") is regularly-ish adjusted for inflation.
And yet, we here don't really need private pension savings. It'd be interesting if someone with a better understanding of USSS could chime in for the reasons.
So what is the alternative? Is there one? If you want to eat a steak, either you slaughter the cow yourself, or someone else makes more than they need and chooses to sell it to you. The way a retirement is funded might change whether someone with more than they need choose to sell it to you, but it isn't going to make steaks exist.
The only way to care for unproductive populations is to make personal sacrifices and care for them, at a loss/to the detriment of your own possible financial and lifestyle returns.
There's no way to beat a game by its own rules when the rules are set up specifically to allow certain parties to take advantage of the game. Apologies for sounding like a high school libertarian, but I can't think of any simpler way to say it than that.
I have a lot of ideas about what could be done, but it's all armchair revolutionary theorizing.
And yeah social security is running a deficit and will have to reduce payments by a whole 25% or 30% in another 20 years... unless we just remove the payment caps. Wow.
Like at the end of the day the resources are present in american society to take care of the elderly in retirement. We are not physically running out of green bean casserole. It's just a question of allocation. At the end of the day the money needs to be allocated and just like day 1 of the social security program, there's going to be a lot of people who don't have time to pay into a system before drawing out. The resources will need to be allocated to pay for the wageslavery of the last 30 years.
Boomers are going to get theirs regardless, they will make sure of that, but, they're intent on pulling the ladder up behind them like they've done on every other major social issue.
Boomers don't care if Xers or Millenials don't have anything saved up, they got theirs and they got social security on top. But if things don't change, there's gonna be an awful lot of starving grandparents again when X and Millenials hit retirement, cause we don't and they're making sure we won't have social security either.
My "retirement plan" therefore is something between conventional wisdom and prepping. Put some money into savings for emergencies and the remaining possibility that stocks may have some growth in future, but diversify into self-reliance. Buying land and tools that can be used to live off at low cost (i.e. no rent, do my own maintenance, grow some of my food and fuel) and assume that I probably won't ever afford to retire but hopefully will afford to just be able to work less and less over time.
Your last statement is certainly a good and humbling thing to remember. What's the point in amassing all this wealth anyway, since we certainly can't take any of it with us when we go. Giving your children the wealth of knowledge they will likely need in times to come is probably much more practical.
Like, I've got some acreage, the skills to warm my old house through the winter on the woods, and enough knowledge to garden through the summer. But what about food in spring and fall? What if a band of 200 raiders from the city walks down the groomed road my driveway is off of and decides they want to live on my patch?
And even if civilization doesn't fall, do you really "own" land when your ownership claims are validated by paid police and the people who don't own land not thinking to come and take your land? I wouldn't say civilization "fell" between 1900 and 1930, but surely those Russian landowners assumed they "owned" their land before the Bolsheviks started peacefully discussing their ideas with the Tsarist government.
You start thinking about this stuff and realizing that these problems have been solved over and over again, since before writing. All of the stuff in history that seems so antiquated (like needing elaborate gift-giving rituals when meeting neighboring foreign nobility) suddenly seems clever and meaningful when it's juxtaposed against the context of starvation, enslavement, death by the plague, and no electricity.
Build a community of people around you that you can depend on and who can depend on you, a mutual aid network. Strong relationships are what's needed when state/societal or bureaucratically demanded relationships break down. But in a less extreme setting, like if you lose your job or have a tragedy or catastrophe in your life/community, having strong support among friends can be the difference between getting back on your feet or ending up homeless or otherwise worse off.
Boomers who bought in the 80s-90s are in no danger of being underwater, but, there's going to be a lot of people whose houses are worth a lot less than they were in 2021. People who bought in the last 5-10 years are going to find that their assets at best are not going to appreciate very much, and sometimes investments do go down, that's the risk. It's not going to be an automatic escalator to the upper-middle class like it was a few decades ago.
And that's a good thing for younger generations (if landlord corps don't buy everything up) but the political power of boomers and of heartland states are really the elephant in the room with american politics.
More and more I think people need to plan for retirement around expense reduction versus capital growth.
Which means it has been astronomical during the last 100 years as the last century was the "rise of America".
School shootings, policing, our medical system, our political system itself (the uneven distribution of power between states), all of these suffer from the fundamental problem that we've got a system that's a solid 3/10 and we have no institutional interest in improving that. And yeah those systems grind up some dead kids every day and we shrug and move on. Thoughts and prayers is the meme, right?
Nobody wants to mess with the rail system because it will make the amazon packages stop. Let alone if there's a feeling (or a reality) of tipping back into the supply-chain issues of 2020 again. Can you imagine the reaction to a rail strike during midterm elections? People would legitimately have flipped their shit and voted in some completely vile motherfuckers who promised to at least make the amazon packages keep coming. So the union had to eat shit, and now your kids have to eat shit, because the union wasn't wrong about what they were saying, but it was all a complete political loser two months ago. Name a single ohio republican who wouldn't have leapt on the "biden picks the union over america and christmas".
And it works - people keep voting for this, based on actual revealed preference through voting patterns, people feel it's way more important to keep fighting the war on egghead intellectuals, this year's installement of the war on LGBT, and the war on climate science than to fret about some dead kids. Biden's doing a good job of understanding what america really wants - which is my god damn amazon packages to show up.
America is open for business, people want Norfolk Southern jobs and Duke Coal jobs and whatever else, and we're far too scared to make even those small leaps let alone reforming our whole healthcare system or retirement or redistributing power between states to something a little more sane. Those are truly big changes and we're not even willing to handle the little stuff. Jumping to the next thing is always scary, whether it's a job or anything else, even if the train is on fire it's the train on fire we know. Everyone has lingered too long in a job that was failing or with a partner that wasn't going to work out, but it's safe.
And America is the same way, by geographic and political coincidence we are essentially immune to external geopolitical pressure so there's nothing that's going to push us down. Which has allowed us to ignore underlying problems that would have pushed down other countries. A system that's designed to gridlock is fundamentally broken, people say "when you're not in power you'll appreciate it!" no actually I want someone always to be in the driver seat and empowered to make decisions, and we can go from there to making the political system actually represent what people want. Excessive checks-and-balances and a division between the executive branch and the legislature and not inherently positive things with no downsides, the PM being the leader of the ruling party is an overall positive feature of parliamentary systems.
The underlying problem is that this is not an issue the heartland of america wants to address, and the american system has (by historical circumstance and coincidences of fate) distributed a disproportionate amount of power to the heartland. The heartland wants to fight LGBT and thumb their nose at egghead intellectuals who want you to buy smaller cars to fight climate change, and they certainly don't want the unions to "win". That is what actually motivates people's votes. Again, name an ohio republican who would have "supported Biden and the unions" two months ago during midterms. It's fucking hard to make a system work when a group that has at least 49% of the power at all times is intent on being a deadweight or outright contrarian, if someone is willing to let your kids die to make bigger gains in midterms, and people keep voting from them, what exactly do you do about that? And not just on the trains either, it's all across american society.
But pulling the lever and diverting the trolley would decrease the political power of some farmers in Iowa, and deep down America is just not comfortable with that. "States should be equally represented" because haphazard admission of states across 200 years is a sacrosanct political bond even if it leads to 30% of the population controlling a supermajority of the political power. And if they do dumb shit with it oh well, shikata ga nai. The rest of the country has tried, we really have. What more can be done, could be done, that the heartland would possibly accept? The war on intellectuals and sexual freedom is just way more personally compelling than some dead kids who you probably didn't even know anyway. People just want their amazon packages to show up.
More kids will die next week, they always do. Shikata gai nai - thoughts and prayers. Nothing that can be done, says only country where this happens regularly.
Change is generational, but at some point we truly may run out of generations.
Another aspect of retirement should be figuring out how to lower the cost of living. Unfortunately the notion that housing should be a sort of investment goes directly against that. It can't be affordable and also be a good investment.
If you "invest" in your home/property by making it more durable and better you can have it go up in value and down in costs without needing infinite appreciation of land and structure.
For example, if you can spend $20k (random amount) and forever cut your heating bill in half, that's an investment that will continue to pay dividends "forever".
Look it up
The current financial system created the housing criss.