Reality Check: Some People In 401k's May Be Screwed
Under this terrible Bush administration, even more bad news for Americans who have 401k's.
From Jonathan Tasini at Working Life: "I happened to see a cartoon recently in which one person says to another, 'My 401(k) feels like a 201(k)'. That is, indeed, one of the other, less-talked about facts that many people are facing in the more-visible credit-crisis gripping our economy.
He points out this from the WSJ:
Tasini, writing about a panel discussion on pensions, "...Damon Silvers, associate general counsel of the AFL-CIO and a real expert on the issue, had these facts to chew on:
* Only 21 percent of private sector workers have a defined benefit pension plan, 29 percent have only a defined contribution plan, 50 percent have nothing.
* The median 401-k plan balance in 2003 was $18,000, the average was only $51,000. Remember, the average will be pulled up because the top ten percent of income earners have the ability to put in the extra $10-$15,000 at the end of the year, while most wage earners are deeply in debt. Translation: if you've got a 401-k, you are screwed.
* Median 401-k account balances for workers between 55 and 64 was $61,000 as of 2004. Translation: if you are headed for retirement, you are in trouble.
* If current trends continue, we are heading into a period when income for retired Americans falls for the first time since the Depression, just when retired Americans are becoming demographically and economically dominant.
He continues, "A related point is the continued nonsense being regurgitated about Social Security--it is nonsense that undermines the notion of a defined benefit because Social Security is a defined benefit. If we're constantly being told that Social Security is not something that people can count on--and most Americans under 50 think just that, thanks to political rhetoric and the media's foolish treatment of the topic--then, people begin to believe that they are on their own.
"In fact, the chance that people won't see Social Security is about the same chance that you will be Elvis' love-child: close to zero. The system is more sound than it has been over most of its history and, as my colleagues Mark Weisbrot from the Center for Economic and Policy Research puts it, "Social Security's projected shortfall over the next 75 years is less (as a percent of national income) than what was fixed in each of the following decades: 1950s, 1960s, 1970s, and 1980s." So, get over it."
And Marie Cocco's December, 2007 "The 401(k) Myth,"
"Projecting retirement savings based on those currently participating in 401(k)-style plans, the GAO found that the youngest workers—those who’ve been told from the start that their jobs would provide no traditional, fixed-benefit pensions of the sort that their grandparents or parents might rely on—face the prospect of paltry incomes in old age. More than a third of those born in 1990 could be predicted to have no savings at all in retirement, the GAO found. Among the lowest-income workers, 63 percent would have no savings in their plans when they retire.
"What about more diligent savers? Overall, the GAO found that as a group these retirees would have an average income of about $18,784 a year, or just over $1,500 a month. Among the highest-income workers, a fund balance that is used exclusively for monthly income—not for extravagant extras—would be $50,098 a year.
“ 'Some will have very little, some will have almost nothing, and some will have nothing when they retire,' says Rep. Robert Andrews, D-N.J., who chairs the House subcommittee on health, employment, labor and pensions."
401k's became more common under the Reagan administration, gained steam under the Clinton wannabe-like-the-Republicans DLC administration, and ran flat out during most of the Bush administration which praised and promoted this instrument of financial hocus pocus. Think about the 401k's invested through Bear Stearns and their Wall Street ilk!
Here's what regular hardworking Americans get from the Bushites: "We made sure our super wealthy corporate cronies and have's and have more's are sitting pretty; the rest of you are on your own; work until you drop dead, suckers!"
From Jonathan Tasini at Working Life: "I happened to see a cartoon recently in which one person says to another, 'My 401(k) feels like a 201(k)'. That is, indeed, one of the other, less-talked about facts that many people are facing in the more-visible credit-crisis gripping our economy.
He points out this from the WSJ:
"Now, The Journal article doesn't take the next step, which would be to argue that 401(k)s have been a failed strategy to insure a decent retirement, that really what 401(k)s did was simply shifted the shared responsibility for retirement, from corporations and the workers who made the profits of corporations possible solely on to the back of workers, and, finally, that the decline in the power of unions can be directly tracked to the worsening ability of broad numbers of people to leave work and retire with dignity.""Over the past three decades, the 401(k) plan has gradually supplanted pension plans as the main source of retirement coverage for U.S. workers in the private sector, according to the Employee Benefit Research Institute, a nonprofit group. In 1979, it says, 62% of U.S. employees participated only in a pension plan. By 2005, 63% of workers reported that they participated only in a 401(k) plan.
"Another big motivation for older workers to stay on the job: scarce health benefits for retirees. Between 1988 and 2007, the percentage of large companies offering retiree health benefits fell by half, to 33%, according to the Kaiser Family Foundation."
Tasini, writing about a panel discussion on pensions, "...Damon Silvers, associate general counsel of the AFL-CIO and a real expert on the issue, had these facts to chew on:
* Only 21 percent of private sector workers have a defined benefit pension plan, 29 percent have only a defined contribution plan, 50 percent have nothing.
* The median 401-k plan balance in 2003 was $18,000, the average was only $51,000. Remember, the average will be pulled up because the top ten percent of income earners have the ability to put in the extra $10-$15,000 at the end of the year, while most wage earners are deeply in debt. Translation: if you've got a 401-k, you are screwed.
* Median 401-k account balances for workers between 55 and 64 was $61,000 as of 2004. Translation: if you are headed for retirement, you are in trouble.
* If current trends continue, we are heading into a period when income for retired Americans falls for the first time since the Depression, just when retired Americans are becoming demographically and economically dominant.
He continues, "A related point is the continued nonsense being regurgitated about Social Security--it is nonsense that undermines the notion of a defined benefit because Social Security is a defined benefit. If we're constantly being told that Social Security is not something that people can count on--and most Americans under 50 think just that, thanks to political rhetoric and the media's foolish treatment of the topic--then, people begin to believe that they are on their own.
"In fact, the chance that people won't see Social Security is about the same chance that you will be Elvis' love-child: close to zero. The system is more sound than it has been over most of its history and, as my colleagues Mark Weisbrot from the Center for Economic and Policy Research puts it, "Social Security's projected shortfall over the next 75 years is less (as a percent of national income) than what was fixed in each of the following decades: 1950s, 1960s, 1970s, and 1980s." So, get over it."
And Marie Cocco's December, 2007 "The 401(k) Myth,"
"In the 1980s and, especially, the go-go 1990s, the 401(k) was the wondrous new invention that was supposed to make assembly-line workers capable of becoming rich, in retirement, through their own industriousness and, lest we forget, the magic of the stock market. The myth began to fade amid Wall Street’s uncertainty during the past decade. It should be buried—deeply—with the latest Government Accountability Office report on the savings plans that have become the primary form of pensions available to that half of the private work force that has any pension at all.
"Projecting retirement savings based on those currently participating in 401(k)-style plans, the GAO found that the youngest workers—those who’ve been told from the start that their jobs would provide no traditional, fixed-benefit pensions of the sort that their grandparents or parents might rely on—face the prospect of paltry incomes in old age. More than a third of those born in 1990 could be predicted to have no savings at all in retirement, the GAO found. Among the lowest-income workers, 63 percent would have no savings in their plans when they retire.
"What about more diligent savers? Overall, the GAO found that as a group these retirees would have an average income of about $18,784 a year, or just over $1,500 a month. Among the highest-income workers, a fund balance that is used exclusively for monthly income—not for extravagant extras—would be $50,098 a year.
“ 'Some will have very little, some will have almost nothing, and some will have nothing when they retire,' says Rep. Robert Andrews, D-N.J., who chairs the House subcommittee on health, employment, labor and pensions."
401k's became more common under the Reagan administration, gained steam under the Clinton wannabe-like-the-Republicans DLC administration, and ran flat out during most of the Bush administration which praised and promoted this instrument of financial hocus pocus. Think about the 401k's invested through Bear Stearns and their Wall Street ilk!
Here's what regular hardworking Americans get from the Bushites: "We made sure our super wealthy corporate cronies and have's and have more's are sitting pretty; the rest of you are on your own; work until you drop dead, suckers!"
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