‘Til death do us part. . .
from David Ruccio
Americans already work longer than in most countries. Now, it looks increasingly likely they won’t be able to retire. That means they’ll have to continue working until they die.
U.S. workers already have a higher retirement age than most of the rest of the developed world.
And that’s before advocates of the New Austerity try to raise the official retirement age to 70.
They—and their friends in the IMF—also want to cut social security benefits, which will force workers to rely even more than before on their savings and private retirement plans.
The problem is, a significant number of U.S. workers—Early Baby Boomers, Late Boomers, and Gen Xers, alike—are likely to struggle to meet basic expenses after they try to retire. Over 40 percent of people with the lowest incomes face prospects of depleted savings within 10 years after retirement, with that number climbing toward 60 percent after another decade, according to the Washington-based Employee Benefit Research Institute.
The best they can come up with at the EBRI is advice to the effect that workers should increase their savings now in order to make up for the projected shortfall later on. But stagnant wages, falling home equity, and the switch to defined-contribution (instead of defined-benefit) plans are making that impossible for all but those at the very top of the distribution of income.
Unless there’s a radical change in the way we think about and finance retirement, many Americans are simply going to have to work until they die.
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Real-World Economics Review Blog 
this is not the spirit Mr.Ruccio.
Pesions are ours, not gov. or other private funds.
we are not to be “good boys” to get same left in the soucer.
We shall fighth for something is ours.
We certanly need a raical change, but not in the way we “think”finance retirment, but in the way we get OUR money back and put in jail the managers make that unprofitable investments (for costumers, not for them)
Nothing wrong with working until one dies if the job is good, the problem is most jobs are awful and you can’t do most of them past 65 as it is. We can’t all be tenured professors or CEO’s (that’s only for the very smartest, right ?)
The middle class in many countries now has been robbed…..how did that happen?. You shouldnt work all your life to have someone raise the goalposts, extend your working life, leave nothing for your kids….remove your life savings before you die.
It isnt all about business and the concessions they want. It isnt all about the financial firms and the concessions they want. It isnt all about letting a few get away with the money of many – fastest way I know to run economies into the dirt – working longer for less is just a symptom of an underlying disease.
Cure the disease – dont treat the symptoms. Those who have been operating in the era of de-regulation and lower taxes for the wealthy and learned all the tricks to escape unscathed with other people’s life savings need to be unmasked, prosecuted and sent to jail (and the money returned).
Do we have any authorities up to the task?
As a practical matter we need to understand the impact of greater longevity on retirement. Left of center reaction cannot always be so ‘knee jerk’ when it comes to discussions about how to pay for it. Framing all alterations to retirement as an ‘attack’ on the middle class both ignores the problem of longer living and plays into the hands of opponents of socially provided retirement by eliminating any possibility of common ground: the discussion simply becomes one of affordability, rather one of balancing affordability with desirability.
It is precisely the politicization of the discussion that has prevented us from solving the issues longer life spans are creating. If we are to defend social programs, as I hope we can, we have to be constructive about how to pay for them.
Well, I can’t apologize for my knee-jerk reaction: something is seriously wrong when take-backs are occurring throughout working-people’s lives, from stagnant wages and unemployment to threatened pensions and social-security benefits.
As for greater longevity, don’t forget that society’s wealth has also increased. That makes it possible to support retired workers at a higher, not lower, standard of living. The question is, how do we finance it, that is, how do we recognize our communal obligations and utilize the surplus to support people who either can’t work or spend their entire lives working?
I completely agree about there being something seriously wrong. Your earlier post about income and wealth distribution hits right at the root of the problem.
With respect to longevity: I agree that wealth has increased, but I also think that the increment is insufficient to offset the higher health and retirement costs associated with longer lives. Increased productivity seems to have been too little to cover the that disproportionate cost.
And, of course, productivity improvements seem to have been channeled away from workers anyway.
The problem of retirement and sustainable living post retirement is a reflection of a much larger question facing all of us. Will we continue with the existing economic model or not? Katrina vanden Heuvel, who is not an economist but editor and publisher of the Nation has an op-ed in the Washington Post today in which she lays out 5 transformative ideas to build a more just economy. These are the 5 ideas.
The answer is ‘B’
Corporations are compelled to pursue a single objective: maximize profit. In fact, a company can be sued for following goals that veer from that statutory obligation.
That’s why Maryland State Sen. Jamie Raskin sponsored the Benefit Corporation legislation that was signed into law this spring. It gives businesses the option to register as a “B corporation,” an entity legally obligated to maximize both shareholder value and advance a common public purpose such as cleaner air, open space or affordable housing. The B corporation’s stated public goal is vigorously monitored by independent, third-party groups. It’s a new business model with social consciousness in its DNA.
B corporation legislation has also been passed in Vermont, and it is being considered in New York, Pennsylvania, New Jersey, Oregon, Washington and Colorado.
Banks for the people
Hundreds of billions of public dollars have flowed to bail out Wall Street banks, which, in turn, have rewarded us by resuming the practice of giving obscene salaries and bonuses while failing to get credit flowing again. One bank that didn’t need to be bailed out, though, was the state-owned Bank of North Dakota. The bank, which was created in 1919, avoided the subprime and derivatives debacle and has $4 billion under management to meet its customers’ credit needs.
The state-bank model looks increasingly appealing to states and residents who are tired of giving their money to giant multinationals that fail to reinvest in their communities. Proposals for state-owned banks are being considered by Massachusetts, Virginia, Washington, Illinois, Michigan, Hawaii, Vermont and New Mexico, and they were championed by gubernatorial candidates in Oregon and Michigan.
Move your big money
Arianna Huffington’s Move Your Money campaign handed consumers a creative tool with which to hit the big banks. It encourages them to divest their money from those banks and open accounts at smaller community banks and credit unions. Last week in New York City, the most powerful local union presidents and city Comptroller John Liu took another step when they let Wall Street banks know their response to the mortgage crisis is unacceptable.
The threat made implicitly in a letter — and explicitly by some of the union leaders — is that these institutional investors will move their pensions to more responsive financial institutions if the banks don’t improve mortgage-modification efforts immediately. The banks have until Sept. 1 to take specific steps, such as developing a plan to increase the number of modifications involving principal write-downs.
These unions represent over 500,000 working families, and New York City has a few bucks at its disposal, too. Civic and labor leaders can use this model to let banks know that if they don’t behave as good corporate citizens, they will move their big money to institutions that do.
Taxing the casino
The high-speed wheelers and dealers of stocks, derivatives and currencies in the Wall Street casino were major players in bringing our economy to its knees. That kind of short-term trading serves no useful purpose, and a financial speculation tax is one way to rein it in.
A tax of 0.25 percent or less on each trade would be negligible for regular investors but significant to those looking for the quick score. It would also generate significant revenue at a time when resources are slim; an Institute for Policy Studies report points out that such a tax could bring in an estimated $180 billion annually — more than any other revenue-raiser on the table.
There is also global support for the reform. Britain imposes a 0.5 percent stock “stamp tax” on each trade on the London stock exchange. Also in favor of the tax are French President Nicolas Sarkozy — who will chair the Group of 20 in 2011 — and German Chancellor Angela Merkel.
Worker is boss
The Post reports that non-financial companies are “hoarding” $1.8 trillion in cash while they continue to “hold back on hiring.” Not so the Evergreen Cooperatives of Cleveland — community-based, worker-owned operations supported by a mix of private and public funds. The Evergreen Cooperative Laundry and Ohio Cooperative Solar are already up and running, and 10 other such enterprises are slated to open in the city this year.
Workers buy equity in the co-ops through payroll deductions and earn a living wage working at green jobs. The businesses focus on the local market — meeting the procurement needs of “anchor institutions” such as large hospitals and universities in the area. Each co-op pays 10 percent of its pretax profits back to the umbrella organization to help seed new enterprises.
Other cities considering this model include Atlanta, Baltimore, Pittsburgh and Detroit. And other towns around Ohio are considering it as well. At a time when so many jobs are being slashed or outsourced, the Cleveland cooperatives show us how we can create local jobs and reinvest in our communities.
Those who believe the financial sector should serve rather than dominate the economy will welcome these reforms. They are radical and achievable. But they will demand determined idealism and tough organizing in the years ahead.
It seems these might help address not only retirement but quality of life across the board and the future of the “middle” and all other classes in the US. Maybe we’re speaking of Nirvana here. Perhaps making such changes as these are just beyond us and we’re destined to suffer with massive income inequality, selective austerity, and a political system corrupted by money. I’d like to think not. As an Anthropologist I never assume I know what is better or best for others, economically or otherwise. Economists, on the other hand seem to always assume they not only know what is better/best for others but that’s it’s their responsibility to ensure necessary changes are made. Perhaps it’s time to listen to the “grassroots” about economic problems and solutions. The results may not match-up with theory but may work, in each aspect of humans’ living together.