It's a sad, old refrain...the rich get rich and the poor get poorer.
It's not just an Epidemic of Retirement Insecurity. It's a snowball
gathering size and speed as it plows its way to Hell.
Many of the comfortable and affordable retirement facilities have
begun pricing themselves out of business. Long established apartments
have reduced their services to the bare bones, and then sold out to
larger national chains. These chains operate on tighter profit
margins, and the very first two things that happen is that the monthly
rent goes up and the services go down. Just following this one line,
residents, faced with costs rising so fast that they will spend their
last days under a bridge, locate cheaper and less desirable housing in
more affordable dwellings and cut their overhead by discharging care
givers. As the rise in the cost of existing continues, Seniors in
private homes also must cut back, no longer able to afford services
such as gardeners, house cleaners, and care givers for spouses or
elderly parent. All of those workers will be forced to cut back in
turn, continuing the downward rush of the snowball. And with most
communities, when customers begin to stay home, the stores do not
reduce prices, they reduce staff. At the bottom of the decline, when
the snowball splatters, former "middle class" towns will have been
transformed into Slumvilles
For most, the road back turns out to have been a one way road.
Carl Jarvis
On 3/3/20, miriamvieni@xxxxxxxxxxxxx <miriamvieni@xxxxxxxxxxxxx> wrote:
America Faces an Epidemic of Retirement Insecurity
Kevin Labianco / Flickr
The Dow Jones Industrial Average just dropped nearly 1,200 points in a
single day because of the coronavirus's impact on global trade, leaving
many
Americans sick with worry.
It's not just a rapidly spreading, mysterious disease that made Americans
feel vulnerable. The Dow's freefall erased millions of dollars from
retirement accounts and exposed another kind of epidemic-retirement
insecurity.
There once was a time when the combination of company pension plans, Social
Security and personal savings could carry retirees through their golden
years.
No longer. Most companies eliminated defined-benefit plans providing a
reliable income stream and implemented 401(k) plans that leave workers at
the mercy of stock market volatility, like the kind that rattled investors
recently and crushed workers in 2008.
Today, Americans have so much angst about the future that about 29 percent
of baby boomers, 36 percent of Gen Xers and 77 percent of millennials fear
they'll never be able to retire or will have to work past normal retirement
age.
Americans work hard so they can provide for their families and enjoy
retirement. But no matter how carefully they plan, their retirements depend
on factors beyond their control.
Patricia Cotton, a home health aide in Maryland, lost half of her $150,000
investment nest egg in the 2008 recession and retired 12 years later than
planned.
In all, Americans lost about $2.4 trillion in retirement earnings during
the
second half of 2008, and the average household lost a third of its net
worth.
Cotton was one of many who experienced losses so severe that they had to
work longer than intended. The memory of the 2008 recession still gives
Americans retirement jitters, and stock market drops like we've just seen
compound the fear.
Before 401(k) plans dominated the retirement landscape, companies provided
defined-benefit pensions. Workers earned specific-defined-amounts based on
their wages and years of service. When workers retired, the employer
provided those amounts no matter how the stock market fared.
But now, even workers and retirees with these plans can lose what they
earned. For example, 1.3 million Americans are in about 150 multiemployer
pension plans at risk of collapsing.
These plans, enrolling workers from two or more companies in fields such as
transportation and paper, lost investment earnings in the 2001 and 2008
recessions. Some companies also used bankruptcies to wriggle out of pension
obligations. Now, the plans owe more money to beneficiaries than they have
coming in.
Because of financial problems plaguing her late husband's plan, Mary Fry
saw
her pension cut by more than half, to $1,514 a month, in her early 70s.
"It's worrisome," she said, "and I don't think I need worry in my life
right
now."
The U.S. House last year passed the Butch Lewis Act, a measure that would
provide low-interest loans to save multiemployer plans, but Senate
Republicans refuse to consider it.
Instead, Republican Sens. Chuck Grassley of Iowa and Lamar Alexander of
Tennessee want to prop up the plans with higher taxes on workers and
retirees. Workers didn't create the problem, but Grassley and Alexander
expect them to fix it.
The senators also want to impose hefty new fees on multiemployer plans,
something that would push even the healthy ones into financial ruin.
Meanwhile, pensioners agonize about losing houses or paying medical bills
if
their plans fold. Others try to conserve as much as they can.
Alan Ebert, a United Steelworkers (USW) member who retired about four years
ago from a Louisiana paper mill, is in a multiemployer plan at risk of
insolvency in 10 years.
He wants to put off collecting Social Security as long as he can. Retirees
who delay collecting benefits after their eligibility dates get bigger
checks when they do tap into the system, and Ebert hopes to maximize his
Social Security in case his multiemployer plan fails.
But Social Security also is imperiled. Some Americans fear it won't even be
around when they're old enough to retire.
If Congress fails to bolster the trust funds within about 15 years, the
program will have to reduce benefits by about 20 percent. That would
impoverish millions of retirees.
Mass retirement of baby boomers stresses the program. By 2030, Social
Security will have 44 recipients for every 100 workers paying into the
system, up from 35 recipients per 100 workers in 2014. But that isn't the
only reason for the funding crisis.
Rich people don't pay their fair share in Social Security taxes. That's
left
billions in badly needed funding on the table.
Federal law ostensibly requires Americans to pay 6.2 percent of their wages
in Social Security taxes. However, earnings above $137,700 aren't taxed at
all. That means millionaires and billionaires really pay a Social Security
tax of less than 1 percent.
While average Americans pay Social Security taxes all year, a person making
$1 million stopped contributing on February 19. Bigger earners finished
even
earlier.
Making millionaires and billionaires pay Social Security taxes at the same
rate as ordinary Americans would stabilize the program.
Under the current, broken system, the rich feather their own nests at
everyone else's expense. They enjoy cushy retirements while average workers
struggle to provide for the present, let alone the future.
Because of decades of stagnating wages, many workers live paycheck to
paycheck. Some juggle multiple jobs.
They're saddled with medical bills and college debt and can't afford an
unexpected $400 expense.
Many Americans have nothing to bank for old age.
Roberta Gordon, for example, worked all of her life. But she held a variety
of low-paying jobs that provided no pension, meager Social Security
benefits
and zero savings.
So, at 76, Gordon spent her Saturdays working at a California grocery
store,
handing out food samples for $50 a shift. She got her own groceries at a
church food bank.
Passing the Butch Lewis Act is one step the Senate can take to ease
Americans' retirement insecurity. Making the rich contribute their fair
share to Social Security is another commonsense move Congress owes the
American people.
Right now, many worry that their resources will expire before they do.
This article was produced by the Independent Media Institute.
Tom Conway is the international president of the United Steelworkers Union
(USW).
