On a visit to see my mother recently, our conversation turned to finances. She divulged that she doesn't know how she's going to retire, something that will likely happen within the next ten years. When she first started teaching at a public school, she had a decent retirement plan and put money toward it. But then she left to teach at a private school and spent it. She explained to me that she grew up in such a time of prosperity that it never occurred to her that she'd have to stockpile her own funds to live a comfy old age. This was bewildering to me. I've been putting money away for retirement since I left college and can't imagine spending it before I hit 65 without a really, really good reason. As my generation lives through the Great Recession, we know that no one can be counted on to help us retire -- not the government, not our employers, not the stock market.
And we're right. Both the Simpson-Bowles plan to reduce the deficit and the report from Obama's fiscal commission address Social Security, and in doing so diminish it for people just like me. As Ezra Klein reports (and the figures hold true for the deficit commission's report):
Under current law, a medium-income worker (someone making about $43,000 a year) is projected to get about $15,000 a year in Social Security benefits in 2050. Under the Simpson-Bowles plan, he or she will get about $12,700.
That's me they're talking about. (Eerily so. It would only have been more directly targeted if they had also cut benefits for women 5 feet and under.) The original amount isn't a ton of money -- our program is "actually among the least generous offered by any developed nation," Klein points out. But it's going to get knocked down even further, particularly for people at my salary level. He wonders that with diminished Social Security, what will we expect seniors to do -- work longer? That's not always an option for those in physically demanding jobs or who lose their job and can't find another (39.4 percent of unemployed older workers were jobless for 27 weeks or more in 2009, compared to 23.3 percent of younger workers). Other retirement products, like the 401(k), aren't cutting it either. Klein reports that "experts say average workers approaching retirement need about $250,000 in their 401(k)s to maintain their standard of living... The number is closer to $98,000 -- not much more than a third of the recommended amount." Visions of our elderly citizens eating catfood spring to mind.
But risky retirement prospects breed another problem. There's a lot of talk about uncertainty in business -- particularly in regards to government policy -- holding companies back from investing and expanding. Whether or not that's the case, a similar mindset occurs in people when they're uncertain about their economic futures. When a young person is faced with the prospect of no assistance for retirement later in life, that narrows her possibilities. She might not risk her financial stability to create a business, or work for a cause, or take a job that pays lower than investment banking. She knows the responsible thing to do is make as much money as possible, because the future may be bleak. So it's little wonder that many of my college peers went to work on Wall Street without a second thought. My mother's generation took it for granted that someone would be there to help them retire; my generation knows the rug is being pulled out from under our feet as we speak.
That's not a good situation to put our young people in. But it's also not a good situation to put our country in. Economically, it won't create growth to have young people scared to take risks and try new ventures. Innovation will stagnate. Who will come up with the next medical cure, discover a new source for renewable energy, create a product like the computer that completely changes how we live? Socially, it's hard to breed transformational change when everyone is too concerned about their finances. Writing about the hippie generation and the sexual revolution of the 60s, Gail Collins points out in "When Everything Changed," "[A] large number of relatively privileged young people felt free to plan the reinvention of the world... They had an unprecedented amount of time to devote to the task because the still-booming economy made it easy to drop in and out of the job market at will." The cost of living was dirt cheap, as was travel and housing. My mother and her friends had the time and sense of financial support to change the way we think about race, war, gender, and a host of other critical issues. Whether or not you're keen on seeing a bunch of tie-dye sporting hippies milling about again, our country lacks a strong and organized movement to transform. This may be due in part to economically challenged young people sitting the social change game out.
Cross-posted from New Deal 2.0.
How about young black men?
This free trade is imprisoning them! Young black men 25 years ago would be working in factories being productive citizens! Now they are in jail. Compare unemployment of young black men today and 25-35 years ago. Compare the numbers of black men that are in the criminal justice system!
We are as a nation like an owner of a car! It's like that old commercial pay me now or pay me a lot later! Either change your oil regularly or change your engine later. We are buying cheap products from over seas and think we are getting a deal but states keep raising taxes to pay for more and more jails!
You can't see the connection?
Then you too are qualified to serve in congress!!!
Yourself...
After all, she is YOUR MOM.
She gave birth to you and as far as I'm concerned she's your responsibility and not the governments.
For a person your age, forget social security, as you most likely have.
I know I have.
The way I see it, Social Security is nothing more than a penalty for my hard work. A promised pipe dream stockpiled with IOUs from our trusty elected officials.
Years from now when I do "retire," if I happen to actually GET any SS then I can be pleasantly surprised...
However, by the time that comes our trusty elected officials will have raised the age to retire to 75, making sure that a large number of people who have paid in are taking a dirt nap before they can actually collect.
Why do you think they long ago picked 65 as the age you could retire in the first place?
I am guessing that Bryce's mother is about the same age as I. With that said, I would be surprised if her mother agrees with her daughters statement as quoted above. We felt that someone was going to be there for us when we retired? Really? Maybe my parents felt that way but I don't think the baby boom generation would agree. Yes, college was cheaper. Yes, travel was cheaper. However, we had our own life changing challenges including go off to a war that no was behind by the time 1968 came around. In 1970, everyone was eligible to be drafted by a lottery number. We didn't have a voluntary draft then. College or no college, you were available to serve. Today, we have a so called "volunteer" armed forces. I put volunteer in quotes since most of the volunteers are very similar to those that were drafted to Viet Nam. While the late 60's and early 70's were more ideal for protests and sit in's, that doesn't excuse the present generation from getting off their duffs and expressing their discontent with our political structure. I guarantee, if social security becomes an object that senators and reps think they can negotiate, the baby boomers will draft themselves to defend. Hell No We Won't go.
Social security IS working people taking personal responsibility for their own retirement.
The fact that the government administers the program simply means 20-30% of my premiums don't get siphoned off for obscene CEO pay and bonuses.
Urgent energy needs can sharply stimulate the economy. The threat of widespread, long-lasting, blackouts is little known and could become a lever to accelerate necessary changes.
See the Human Investment Tax Credit Program on the same website. That is aimed at creating up to 6 million jobs and assisting as many as 4 million entrepreneurs.
Now read 20 Hours of Toil on the same Aesop Institute site. Automation is removing entire career fields and corporate profits are soaring with less employees. Reducing the hours of toil, defined as work not freely chosen, is an option that needs far more attention.
Replacing the other 20 hours from a nominal 40 hour week can be done with diversified investment that is not dependent on savings. That's a tall order, but the late Louis Kelso invented the first such technique with the Employee Stock Ownership Plan (ESOP). About 11,000 firms now have ESOPs. Kelso believed the average American needs to derive half of their income from the mailbox as automation eliminates multitudes of jobs.
The ESOP was the first tool in what he believed needed to be a diversified toolbox. See the Center for Economic and Social Justice: www.cesj.org for the continuation of his work.
Work that people choose, as opposed to toil, is another story. People will work far beyond 40 hours a week at tasks they love, no matter how difficult.
Good hunting!
The Republi-cons are planning on replacing S.S. with "poor houses", just like we use to have for the elderly who could no longer work.