There Is a Significant Need for Retirement Savings in the US
apolloacademy.com
apolloacademy.com
Social protections are something that not even conservative parties in Europe can challenge (at least for now, we’ll see if the US trend spreads there though).
As a European who has spent a decade in the US and has always had a speech for expanding the social safety net (and, BTW, I’m on the fortunate side of US society), it seems impossible to me that some people will ever understand this, especially and shockingly, those who need it the most.
While I generally agree we shouldn't look at all poverty from this lens, I'm simply pointing out that in some cases it's warranted.
No, because I agree with:
> Poverty doesn't mean you are lazy and unwilling to work and rich doesn't mean you are a genius
I think we are just talking past each other. You didn't think my nuance was necessary, and that's OK.
They could have actually sustained a decent lifestyle had they not routinely decided to drop large chunks of the settlement money at Vegas.
After many years of denying it, I've come to the realization that to solve social welfare in the United States we need to first solve racism and religion. So I agree it seems impossible.
We can't "solve" social problems with welfare unless we "solve" the problem of identity, where we can't even agree whether its the role of government to provide (or just fund!) services if there's a large group of people who believe such support is an attack on their ethnic identity, or something they have a religious opposition to.
Probably because we stopped distinguishing between the hard working poor and the indolent poor, among other reasons.
Nobody trusts the government not to throw the money away giving it to their friends who administer NGOs, or staff up huge offices of administrators, or give it away to encourage lifestyles the majority disapprove of strongly enough that they’re willing to go without themselves to prevent it.
It is not that they are opposed to social protections. It is just that the Republican party has succeeded in distracting them with more important topics: Guns and Jesus.
Trump voters were not significantly moved by these sells. The pushes were immigration and anti-wokeness, the latter intentionally ambiguously defined. (Compare Graham’s earlier works to this self-congratulatory nonsense [1].)
In the past, it was gay marriage and abortion; today, it's trans kids and DEI. Once these issues dominate the conversation, little attention is paid to the real priorities and actions of GOP and the Billionaires that bankroll them: cutting funds to Medicaid, food stamps and other welfare programs, cuts to health insurance subsidies, cuts to education, cuts to medical research funding, cuts to development assistance to the poorest in the world and so on, all to fund tax cuts for the wealthy.
Democrats have agency as well, and the ability to prioritize bread and butter issues over things like DEI or trans issues. I think their self-image as defenders of the vulnerable binds them to positions that are generally unpopular, and the GOP exploits this.
I think both parties suffer from a form of oppositional defiant disorder, where they have to stake out opposite claims. If one party says the sky is blue, the other has to disagree.
They don't decrease poverty. They increase dependence on the government, and they are funded by money that is taken from you at gun point.
They are already in a weak social position and were taught that asking for any kind of protection or assistance is a bad thing. The last thing you want when society is already looking down on you is give more reasons for it.
A lot of social protections for them were shams. Worker retraining after signing NAFTA, for example. Unions that turn into hereditary job pools outsiders can’t break into. Hell, public-school taxes for universities they can’t afford because their public-school teachers couldn’t teach their kids math.
If you have to go reaching back 30 years to a jobs program for an example of a sham social protection program, they are probably in great shape (a jobs training program isn't even really a social protection).
I know some unions have nepotism problems with jobs in the union (which is different than union jobs). I wonder if they are particularly worse than other political arenas though, where many value loyalty and control more than merit. And, of course, unions are not social protection programs. They are a response to the lack of social protections.
School funding isn't even tangentially related to social protections.
> School funding isn't even tangentially related to social protections
It’s a benefit paid for collectively. It’s not a social protection, but it’s definitely a social programme. You’re seeing the DoE attacked in the same swipe as Medicaid because they’re political similar to the right.
But unfortunately many workers have taken those as a given and therefore untouchable, rather than a societal choice.
The average salary in the U.S. is $66,622, and the average household income is $80,610.
The average housing cost is $2,715 per month, or $32,580 a year. Average food costs for a single person are around $9,000 a year. Average total utility costs are $7,200. Average healthcare costs per person are $14,570. Average car ownership costs are $12,182 per year.
These average expenses total $75532 per year, meaning the average single person with an average salary is $8910 in debt. You can do the math for the average two-car household yourself.
And we haven't even accounted for taxes. Or the costs of raising a child.
Now, admittedly, this average person/average houshold most likely does not exist. But simply looking at averages points out the problem that most people are already stretched financially too thin to stock away something for retirement.
Over half the United States population earns less than $100k a year, and the median income for all earners (the middle point, right smack in the middle of all earners of all ages and genders) is roughly $40k.
I'm sure all you folks earning over $150k a year with stock options are doing fine, but realize you guys are in the top 20% of income earners in the U.S. whether you feel like you are or not.
A quick search found between $1,500-$2,000 a month for median rent prices. If you adjust for a $1,600 rent, your above person is left with 3k, before considering that all the other expenditures are absolutely insane.
Options: - Live in a city, ditch the car. This gives you a $2,600 rent budget under the same other expenses. - Eat less expensive food. $9,000/year (>$8/meal) for food for a single person is high. No takeout.
People like to pretend the situation is worse than it is - some people have it bad, but tighten your purse and live less lavishly. Work on getting a better job (if you need to or can), and when you make more money don't increase expenses.
Too many people put retirement savings in bucket C, where it actually should be considered bucket A. It needs to come out before you even consider anything else. Your money left over after taxes, paying interest, AND savings, is what you have left to decide whether you can afford this apartment or that car.
And on GGP's mindset shift: Right away I put what my parents thought was an unusually high percent into my 401k, with the reasoning that if I never saw it then I'll never miss it. And it worked. I only see the amount that actually goes into my bank account and have managed all my costs based on that.
Most people cannot afford to save a lot of money for retirement, especially while paying into Social Security or other government programs. But that has never been possible in the entire world, and it generally still isn't. Even in cases where it was, such as the boomers, it still didn't really happen. To be fair the boomers fully expected that their taxes would go toward Social Security in their old age.
It's a bizarrely unique American notion that those who can most afford it are given the exemption and the burden falls to those who can least afford it. And that those who profit most from the system are given a pass on having to actually pay for it.
Point taken, but just to be clear to folks who aren’t familiar with American taxes, this cap is only for “social security tax” and does not apply to federal income taxes.
The wheels will keep coming off the cart.
https://www.gao.gov/financial-security-older-americans
https://www.visualcapitalist.com/a-visual-breakdown-of-who-o...
Broadly, wages are too low relative to living expenses, so people can't save on their own.
There's probably an argument that social security actually subsidizes low wages, as is often made with Medicaid. That isn't to say that we shouldn't have social security -- it's that it should be funded by corporate profits, shareholder returns, and executive pay.
We are currently taxing the young when they already are struggling on every front as compared to the previous generations. This problem will only get worse.
The fact that not only are we not doing that but that we are violently opposed to doing that is a fair weather barometer of our current justice quotient.
I think they’re saying most young people make less than $176k.
Insurance and Taxes Now Cost More Than Mortgages for Many Homeowners - https://news.ycombinator.com/item?id=42499267
It's the land, stupid: How the homebuilder cartel drives high housing prices - https://news.ycombinator.com/item?id=41259229
Like retirement savings, there is no will to directly address this problem.
What do you mean by this? My 401k is.... publicly traded stocks? What am I missing?
Private equity to lobby Trump for access to savers’ retirement funds - https://www.ft.com/content/dddd1752-789a-40b6-9aa8-d7cf6f408... | https://archive.today/HrDgt
The stock market is shrinking and Jamie Dimon is worried - https://www.cnn.com/2024/04/09/investing/premarket-stocks-tr...
Shrinking public markets mean growth in private markets - https://fsinvestments.com/fs-insights/chart-of-the-week-2024...
Interesting fact: As of the end of 2024, the Magnificent Seven stocks made up 35.4% of the S&P 500's value.
Social security doesn't work though, unless there are a dozen workers paying into it for every retiree, and no one's having enough children for that to ever be the case again.
> and no one's having enough children for that to ever be the case again.
However, take a look at your first item. How are these immigrants going to pay into social-security exactly, when there isn't a large jobs base to be had? Part of the de-industrialization that the United States underwent was predicated on the notion that if our population was going to shrink anyway, we didn't need that. Now with all those jobs gone and famously "never coming back", bringing in more immigrants to short up a defunct pyramid scheme seems sort of silly.
And as for your second item, where you say "just pay more in" doesn't much jibe with "means tested distribution" where if the government deems you too rich to need it, you don't get it. It really is just welfare at that point, and not a mandatory retirement program we'll all enrolled in. No one has time for that nonsense. Do you have any faith that when the next Trump is in office (which surely will be the case in a few decades, if not much sooner), that you will make the cut for "means tested distributions"? How is that any different than just cutting social security from everyone, if it were to become policy?
Key word: “for it.” We’re apparently fine raising taxes if we just call them tariffs.
Of course, because the current tariff strategy is intended to be a regressive sales tax targeting the broad populace who is already being extracted from, to avoid income tax increases.
Edit: It's also about control it appears.
Trump Press Sec Accidentally Blurts Out Real Goal of His Tariff Scam - https://newrepublic.com/article/192391/trump-press-sec-accid...
> Then press secretary Karoline Leavitt told reporters directly that if Canada wants to avoid tariffs in the future, it should become the fifty-first U.S. state. She revealed it: Trump’s tariffs aren’t about fentanyl or any supposed unfair treatment of the U.S. They’re about forcing Canada, with no justification whatsoever, to submit to his will.
> The pension programs were all going bankrupt due to various reasons
And my state is having this problem right now.
Further, since individual contributions aren't mandatory, that money is freed up for zero-sum competition over things like good schools for your kids (that is, housing in good districts) so if you don't choose "defect" and spend the money instead of saving it, your family's overall worse off than it would be if everyone had to contribute.
Also, a tax-advantaged savings/investment account isn't the same thing as a pension.
The money can be invested, and then at some age (55.5 i believe?) you can access the money without being taxed. There is a maximum you can contribute per year etc etc.
I am not old enough to ever have had a pension option in my entire life, but I believe 401Ks are overall worse, because pensions come w/ some amount of guaranteed payout + someone managing the fund to ensure that happens. a 401K can go to zero, and you can forget to contribute (and most of the money is your own money anyways)
Not quite - you're given a tax benefit (i.e., not taxed) on your contributions when you contribute them, but when you withdraw funds you pay income tax. If you withdraw before the 'retirement age' (55.5, as you say) then you pay an additional penalty.
The idea being that you would be in a higher tax bracket during your earning years, but in retirement you'd be theoretically in a lower tax bracket, therefore would get some tax savings. Additionally, since the tax savings is taken off of the 'top' of the bracket when you contribute and when you withdraw its added to the 'bottom'.
There's also Roth contributions (where you get no benefit now, but don't pay taxes on gains later when you withdraw), but not all plans offer this.
more people have access to a 401k today than ever had a pension as well.
This is actually completely optional, many employers do not. For example mine does not do any matching or contributions
> The money can be invested, and then at some age (55.5 i believe?) you can access the money without being taxed. There is a maximum you can contribute per year etc etc.
So the tax side of this depends on if the 401k was done as Roth or traditional. Traditional IRAs are tax advantaged but not tax free. Contributions are pre-tax from the employee's paycheck. Roth on the other hand is post tax and tax free on withdrawal (assuming no penalties).
That's a fairly popular belief, but even now (well, as of March 2023), several decades after the general move against them, 15% of private sector workers have access to a defined-benefit pension plan.
https://www.bls.gov/opub/ted/2024/15-percent-of-private-indu...
The general population is not smart enough to understand a 401k and raids it as soon as they can.
The Obama administration was big on the “gentle nudge” policies - so that for example they would enroll you in retirement, but you could opt out, but I don’t think that’s strong enough.
Firstly you'd rightfully realize that whatever I said they weren't your savings, rather it was my money that I was agreeing to let you have at some future date. Secondly I would come to the same realization.
I think social security is a far better setup than forced savings account. The fact that it's much harder to raid, that it's not really 'your money' locked up somewhere is a big reason why it has lasted as long as it has.
Unless you're the government and can 'borrow' the money, from yourself, as part of some creative accounting scheme. Thanks Reagan.
https://www.fedsmith.com/2013/10/11/ronald-reagan-and-the-gr...
A public pension is a "forced savings account" that pools a whole bunch of risks together across the entire population. It's forced savings plus an insurance policy.
Now someone will probably say that everyone should be forced to save with a private account and also forced to carry "old age insurance" or something, but hopefully people can see that's just a public pension but worse, because you're at the mercy of middle men and grifters.