For Many of America's Aging Workers, 'Retirement Is a Distant Dream'
time.com
time.com
Even though he didn't need the money, he charged his normal rate, because he didn't want to depress the market.
If the friends of your parents are willing to work for birdseed because they don't need the money, then it drives down the salary for those who need a job.
People value the work by how much they paid for it.
I can't say whether or not individual funded retirement will work? But just back of the napkin sort of guesstimate at whether a lifetime of saving plus interest can net you 30 years of livable yearly interest or drawdowns (assuming social security) + the necessary medicare supplements/or health insurance? I don't know? It seems unlikely. And again, all that is under the rosy scenario where social security still exists. If social security is changed, the picture is even more bleak.
I could be wrong, but I think people are going to need to acclimate themselves to working through much of retirement. How much will likely depend on how well you did saving. But I suspect a sizable majority of GenX and Millennials will have no choice in the matter.
Watching the current retirees may make us sad, but these scenarios may be nothing compared to what's coming.
People don't save for 401ks. And why would they? The fact is, when you are living paycheck to paycheck, retirement takes a backseat to rent.
And even when they do save, we are currently looking at a market downturn. The last 5 years have been pretty rough in terms of the stock market with returns being much lower than you might count on.
There is an option, it's fully funding social security by lifting the income cap. It's silly that you get a tax break on SS simply by making too much money.
The biggest threats to the average person being able to retire is the government gutting, dismantling, and/or privatizing Medicaid, Medicare, and social security. With those gone, yeah grandma is going to have to work in the Foxconn factory to avoid eating catfood.
It's not completely hopeless, but people really need to be informed on this. We are running headlong into this problem because neither party wants to raise taxes to fund these essential programs.
This is a government problem to solve which is best solved by a government agency. It will be a disaster if private corporate leaches get involved, matching the current state of healthcare for anyone not disabled or younger than 65.
For anyone that advocates UBI. That's what social security is, UBI (with an age restriction).
But also yes it's too short of an interval for retirement savings
Elder poverty is already high, and will get much higher in the future
> The last 5 years
The last 5 years were freaking amazing for investments. Even including the current small downturn, s&p 500 total returns are up like +160% in the last 5 years.
After factoring inflation it's more like +80% or so? Which is over 10% real returns per year, which is wayyyyy above historical average (closer to 5-7% real returns).
That's nothing like what a UBI is, you have to "invest"[0] into social security while a UBI is just money from the free money tree or wherever.
The fact that the government turned it into a ponzi scheme by raiding its assets, thanks Reagan, doesn't mean it doesn't have qualifications beyond being a certain age, they send a letter yearly, I believe, which details your contributions and expected benefits.
[0] even though, by their own calculations, you are better off financially by putting your money in a literal mattress it is still an investment
Except - just like most progressive taxes, social security costs more for those who make more money and less for those who make less (beyond the income tax, but that's an aside). The only difference between UBI and social security is that, in theory, UBI would require no contributions what-so-ever to earn money out whereas social security requires contributions. The only difference is this makes UBI more progressively taxed than social security.
Remember that the definition of a progressive tax is that the rate goes up as your income goes up, a regressive tax is the opposite. Up to the current year's threshold, your OASDI and Medicare tax rate is constant, and then it drops.
oasdi is extremely regressive (no tax at all above like 2x median household income, vs e.g. income taxes which continue ramping up until closer to 10x median income after becoming flat).
Medicare tax is not capped, and is slightly progressive in that it jumps from 2.9% to (I forget like % higher) at somewhere around 3x median household income.
For example (a few scenarios I ran here) with a “full retirement age” set to 2035 (when you’d be 67)
If you earned a constant wage of $50k/yr, you would be able to draw $2044/mo in SS. Tax per year would be 6.2%, or $3100/yr.
If you earned a constant wage of $150k/yr, you would be able to draw $3843/mo. Tax per year would be $9300/yr.
You receive about 88% more benefits but contribute 300% more money. How is that not progressive taxation?
Progressive, flat, and regressive taxes are not about how the money gets used or redistributed. It's a simple thing: Is the tax rate constant across all incomes? Flat. Does the tax rate increase as income increases? Progressive. Does the tax rate decrease as income increases? Regressive.
OASDI is a regressive tax. Flat for the first $176k, then drops after that.
If you put more money in you get more money out. Easy peasy. Up to a point then you get to maximum contributions but this isn't something I'm familiar with so YMMV.
UBI is just "take from the rich, give to the poor" or, more likely, take from everybody by devaluing the currency and giving it to everybody but the rich, because we don't believe in "equal protection under the law", so they get nothing.
Yeah, go ahead and downvote me for not pulling the party line...
Even if you can't afford to save for retirement, you really can't afford not to.
> There is an option, it's fully funding social security by lifting the income cap
That's kinda correct. The income cap on Social Security is effectively a regressive tax. But it won't help fund retirements into the future.
By law, Social Security only invests in Treasuries. This can't provide the returns needed to fund retirements unless the worker-to-retiree ratio massively improves.
Social Security should be allowed to invest in VTI or some other broad-based investment vehicle. This aligns the incentives correctly. We don't want current workers paying for retired workers. We want rising productivity in the economy to do that.
> It will be a disaster if private corporate leaches get involved
+100 company 401k plans are effectively leeches that suck away returns. Detach 401ks from employment and make them like IRAs instead. Cheer as Vanguard drives away the parasites who charge high management fees.
It would be pretty awesome if they opened TSP to everyone
VFIAX S&P500 tracking mutual fund closed at $212.65 five years ago, and closed at $519.60 today. By my math that comes out to an annualized yield of 19.56%, a rate so incredible I'm worried I somehow did the math wrong.
So I'm curious, have I done the math wrong? Or are you saying making 20% per year in an index fund is a rough stock market?
It was VERY eye opening for me in a good way. I have verified my results with several other sources. Its no guarantee of course, but I got some peace-of-mind from doing this.
A) Retirement creates a better equilibrium, for the economy as a whole. Not just because you flush all the people who have lost a step and yet have enough social/economic power to hide it out of making decisions, but because it clears the way for ambitious younger people who are getting blocked out of advancement opportunities because the generation ahead of them just isn't #%@#$ leaving. Not that I have any experience with that, obviously. You can have a equilibrium where everyone works until they physically can't any more, but that's simply a worse one, for almost everyone.
B) If we're going to have retirement, it is a better equilibrium for our economy as a whole to do it through some sort of enforced group savings plans rather than individuals. The big risk with retirement is outliving your money. If you have a group of a hundred thousand people, you can statistically infer that X% of them will be dead at age 75, and X+Y% of them will be dead at age 76, etc. (1) So you don't need to save as if everyone is going to live to be 90, only some percentage of them. But if retirement is entirely individual responsibility, then everyone needs to save as if they are going to be 90, which leads to an unnaturally high savings rate and that leads to weaker current economies (2) and giant pools of money seeking high returns(3).
1: Yes, improved medicine might change the exact distribution here, but that is projectable, with a small fudge factor you can basically ignore it.
2: That money is saved, not getting spent and turning into your neighbors income!
3: This is what caused all of those boom/bust cycles in our economy over the past 20 years.
I am trying to make the case that something like social security is economically efficient even setting aside any moral case for taking care of vulnerable people. I believe social security pencils out as a huge positive to the overall economy, and that it is emotional "I don't want to help them with my taxes" nonsense that leads people to oppose it. As an example, look at all of the hard work, documented by Katznelson in _When Affirmative Action Was White_ and _Fear Itself_, by lots of racists to keep African-Americans from benefiting from Social Security when that program was created.
[and they liquidated all their assets at the bottom of a market against all mainstream advice]
All you have to do is hold bonds or treasuries for the next few years worth of expenses, and then let the federal government take a few years to pump up the markets again. If that doesn’t happen, then you have bigger things to worry about than your 401k balance.
Unless corp taxes are 3x US?
I think a starting rate for devs in a software shop is probably closer to C$75k/yr = US$26/hr, at least in this market. Still lower than I expected, but not US$20.
I just read a sobering TIME article about America's aging workers who can't afford to retire. It profiles 69-year-old Walter Carpenter, working physical jobs despite peripheral neuropathy, bad knees and hips - one of the growing percentage of Americans 65+ still in the workforce (19% today vs 10% forty years ago).
Here's what's interesting: This shouldn't be partisan. The systematic dismantling of retirement security (shifting from pensions to 401(k)s, stagnant wages, rising costs) has created a reality where people work 55 years and still can't stop. As someone who's 59 and facing this reality myself, it's deeply personal.
The most telling quote: "What will happen when, as a friend so aptly put it, I become 'too frail to work and too poor to live?'"
I suspect this post got no traction because:
1. It's uncomfortable - forces us to confront the human cost of our economic system 2. Doesn't fit neatly into tech-optimism or "just learn to code" narratives 3. Reveals the failure of the meritocracy myth many in tech believe in 4. Lacks an easy solution (auto-IRAs are mentioned but too late for current older workers) 5. Hits too close to home for many in their 40s/50s who fear the same fate
The discussion we're avoiding is: what happens when a lifetime of work doesn't guarantee basic security in old age? And what does that say about the system we've built?
It's been up for an hour and is still on the front page. Seems a bit early to declare "no traction".