Dwindling Retirement Savings 'Undiscussed Explosive Bomb' Of Recession - HuffPo

[WillyT]

Dwindling Retirement Savings 'Undiscussed Explosive Bomb' Of Recession
Laura Bassett
First Posted: 07-30-10 03:11 PM | Updated: 07-30-10 04:48 PM

<snip>

After working in executive management for over ten years with a steadily increasing salary, Rick Stephens, 51, was laid off from his job in June 2008. Two years of steady unemployment later, he has sold his car, moved in with his 75-year-old father and blown through all his retirement savings to stay afloat.

"I pay my bills with what is left of the savings I accumulated by being frugal all my life, but I'm going through that pretty fast," he said. "I have tapped my IRA, and the result of that is I will be heavily taxed on it next April. I honestly believe that there will be no recovery from this. If there is a recovery, it will be too late for me, as I will have exhausted my savings and my retirement that I had socked away by not living the high life."

Stephens' predicament is an increasingly common one. Aside from stagnant wages, soaring unemployment and plummeting home values, the major tragedy of this recession is the havoc it has wreaked on the retirement incomes of millions of Americans who have planned and saved their entire lives, only to watch that money drain out of their accounts much sooner than they anticipated.

Retirement statistics are grim. The percentage of American workers who said they have less than $10,000 in savings grew to 43 percent in 2010, according to a recent survey by the Employee Benefit Research Institute. Nearly a quarter of the workforce said they have postponed their planned retirement in the past year and a CareerBuilder.com survey reports that 61 percent of workers say they are now living paycheck to paycheck, as compared to 43 percent in 2007.

With rapidly dwindling savings and fewer opportunities for jobs than their younger counterparts, many older Americans are facing a very uncertain economic future.

"This is the undiscussed explosive bomb in all this, is all the pension benefits, all the 401(k) money that's been drained out by workers trying to stay afloat until they find a job," Rep. Jim McDermott (D-Wash.) told HuffPost. "There are a lot of people who, when this is over, are going to have nothing. They will have lost their house, they will have used all their pension money."

Many Americans seem to be losing hope. Only 16 percent of respondents to the EBRI survey expressed confidence in their ability to retire comfortably, the second lowest point in the 20-year history of the survey.

Marguerite DiGaetano, 58, says she is confident that after two years of solid unemployment, despite having worked her whole life, she will never be able to retire.

"I think the person who invents the cubicle where you can discreetly hang your walker where it doesn't trip anybody, that person will be very popular with the baby boomers," she said. "Who's gonna be able to retire at 65? That's only seven years away. Not me. I'll be working until I die."

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Link: http://www.huffingtonpost.com/2010/07/30/dwindling-retirement-savi_n_665484.html

:mad:

[snot]

1. Not to mention that many lost 25 - 50% of their savings in the crashes.

[dsc]

2. I know nothing about these individuals

but as a class babyboomers bought into this 401k nonsense with great enthusiasm. Now they don't have the pensions their greatest generation cohorts had.

[marmar]

3. Agreed. As a GenXer, I bought into it initially.....but I've seen the light.

I'd do just as well to go sit at a slot machine.......And pensions? What are those?

[northernlights]

24. Pensions are what they stole from a few generations ago

My aunt lost her entire pension to corporate thieves after working 50 years for shit pay at Woolworths. Luckily, her husband's railroad pension and social security kept her comfortable.

[lunatica]

6. Your knowledge of history is somewhat faulty

And your obvious disdain of baby boomers is pretty obvious.

The greatest generation came out of the Great Depression and went into WWII. Then they came back and because FDR created the New Deal which included The G.I Bill they were able to build the middle class and they created the unions to assure they had some power in the workplace. The Social Security program helped them when they retired and so did company pensions. People of that generation worked for companies that were small. Because of the labor of the greatest generation the companies were able to grow and expand.

The baby boomers have grown up and lived in a world where the small companies became gigantic corporations who have steadily and relentlessly conglomerated massive economic power. Baby boomers have seen the country their parents built become the property of Big International Business which have lately even been given personhood rights. Money literally talks now in the eyes of the law.

Perhaps your generation will see the demise of Corporatism. But it won't be without the help of the baby boomers.

[dsc]

7. I am 43 so I am just narrowly below the boomers and in some measures am counted with them

but regardless they voted in Reagan, they very much favored 401k's on the grounds that they could control their retirement and not have to fund losers. It is hard to escape that baby boomers became a very me centered generation as a whole. I am not saying every single person did, but a good majority did. And many continue to this day hyocritically collecting Medicare benefits while they go around trying to deny government health care to others. Baby boomers sadly have to look in some mirrors on this issue.

[Donnachaidh]

9. escuse me? Babyboomers as a *me generation*?

Don't think so matey -- the generation AFTER them are the premiere *me firsters* to the point that they blame EVERY problem in this country on the earlier generations, while doing more consuming, more preening, and more excess than the boomers and several generations before them.

They may have voted for Reagan, but their kids became a gloated, whiny, do nothing while expecting everyone else to pull the heavy loads bunch of toadies. and yes, the parent's may assume *some* of the blame, but there IS something called personal responsibility that the younger group refuses to apply to itself.

It's called growing up - many didn't in the first place.

[starroute]

16. The oldest boomers are 64 now and are not collecting Medicare

And according to http://www.ropercenter.uconn.edu/elections/how_groups_voted/voted_80.html, in the 1980 presidential election, 18-29 year olds -- which is to say, the majority of the boomers -- split almost evenly between Carter and Reagan. In contrast, voters 30 and older uniformly went 55% for Reagan and roughly 40% for Carter.

So you can't exactly say the boomers "voted in Reagan." The real problem was how deeply Reagan cut into traditional Democratic constituencies, winning 27% of Democrats, 28% of self-described liberals, and 45% of union households.

Also, my recollection of the 80's is that 401(k)'s were pretty much forced on workers because companies wanted to do away with traditional pension plans and saw this as a cheap alternative.

I was working as a financial coordinator at the time, and except for a handful of top-paid employees, the average IRA contribution even for those who took advantage of the opportunity was perhaps $100 a month -- certainly not enough to retire on by any stretch of the imagination. It was seen mainly as a tax shelter -- a way to defer taxes on income from your peak earning years to your retirement years when you'd be in a lower tax bracket -- which is one reason many of the younger and lower-paid employees didn't participate at all.

So you might try not making up stories -- or might perhaps look in some mirrors yourself.

[tsuki]

12. Part of the problem here is that many do not understand that there

was a generation between the Great Depression and the Boomers. And the Boomers are far more diverse in their political thinking than the Tyktovs. Boomers begin turning 65 in January, 2011. Those old folks holding "Keep your government hands off my Medicare are Tyktovs.

[tsuki]

10. This baby boomer told her friends that the 401K's would crash before

2011 in the 1980s. That they would be left holding empty paper. Nope, did not buy into it. Nope, do not have one. I manage my own.

[SoCalDem]

15. I said the same here many times & was roundly bashed and called a "Nervous Nellie"

or a "Doom & Gloomer"..Many optimists reminded me about how HUGE "the market" was, and how "vibrant" it was ..

Common sense told ME that as boomers stopped putting in, and started drawing out, the market would have to become less stable, especially as real wages have been dropping for a while now...and then of course once the wallstreet gamblers lost their untouchable slush fund, their greed would be showing. We also knew that sooner or later the housing crash would come....we just secretly hoped it would come AFTER most of us unloaded our houses..:(

[tsuki]

19. Dad was military. In the 60's, some military men supplemented their

income by selling a mutual fund. My parents bought in for $50 a month for 10 years when it was suppose to be worth up to triple what you put in. When my father dies, I found it for mom. Not only did the fund take 25% for handling, investing whatever, 14 years later it was worth $1000 less than they put in. Seems it crashed just as the 10 years payout was to begin. Co-inky-dink? I think not.

When the 401Ks started, I thought, yeah, family's been there done that.

[SoCalDem]

14. Most had NO choice.. Their EMPLOYERS said "take it or leave it"

:(

[northernlights]

20. I never bought into the 401K nonsense..but that's not what is wiping us out

Unemployment is wiping us out.

I was layed off from my 20 year high tech career in 2/2002, at age 48. There were absolutely zero jobs out there -- none -- for 2 years.

When W started making noise about Iraq, I knew we were cooked. I sold my condo, packed up my belongings and moved to Maine. I've been out of work more than in work for the last 8 years.

I went from earning as much as $100K at my peak, to making as little as minimum wage. I've been harrassed, poisoned by one employer, my animals assaulted, stiffed a paycheck (the state got after them for that), defrauded (my property has half the land I thought I was paying for), and nearly wiped out. I haven't collected unemployment since I lost my last "good" job -- here in Maine, they can fire you without cause and without notice and without unemployment.

I am 56 now and am back in school part time, with one year to go to get associates degree in MLT, which *should* get me a decent paying job. In the meantime, I'm working part-time in a call center. I started there at ~12/hour and am now closer to $15/hour.

Not the wage you can save on.

In the meantime, my house value is dropping like a rock. I've tried to sell it at a loss for 2 years running so I could pay off the school loans, but there is no market.

I've gone from been on track for a good retirement with a net worth of about 1/4 million to having lost more than half my savings -- not in the stock market, but in staying alive between shit jobs and in the roof over my head and paying to "retrain."

The bottom line is, there isn't a damn thing we could do. They get you one way or another, through unemployment, through "investments," through outright fraud. I recently had a small business owner a little younger than I am call in to cash out his small IRA -- to make payroll. I don't know how he made payroll this week.

For the record, decades ago my aunt lost her pension to shenanigans. It's all rigged. It doesn't matter what you do. If you save, they'll steal it. One way or another, they will own everything.

[On the Road]

22. As a Whole, the Next Generation to Retire

did not go from traditional retirement plans to a lump sum out of choice -- it was forced on them. When Bell Atlantic changed plans, employees filed a lawsuit. It was not successful. Even non-union federal employees changed plans.

Employers did have a problem with a cost of those plans, due partly to increasing life expectency. But those lump sums were never worth what the annuities were worth, and everyone who looked at them for any amount of time knew it.

[villager]

4. Why so serious? The bankers and arms merchants are being taken care of!

There's "hope" for them -- you didn't think you were supposed to have any, did you?

[pscot]

5. Are these folks really going to

vote the Republicans back into power? If the Democrats can't find a message that speaks to working people and the unemployed, they don't deserve to keep their jobs.

[raouldukelives]

8. The lucky ones will be working til they die

And increasing investments to 401k's (in vain attempts to play catch-up) which go directly to funding the war machine, big oil, deforestation and exploitation of third world labor. Lets face it, fund managers aren't investing your money in Tesla or wind farms and even if you win, the rest of the world losses.

[FooshIt]

11. What retirement savings

The Dow can hit 2000 and it wouldn't hurt me.

[Tierra_y_Libertad]

13. Not to worry. The Catfood Commission is going to "fix" Social Security for us.

[pitohui]

17. how can they force you to break your retirement to pay bills?

it was my understanding that IRAs and 401(K)s are protected, even if you can't pay your bills and go bankrupt, the court can't touch that money or give it to somebody else

the guy you quote is in his 50s, even if he gets another job that allows him to save for retirement (unlikely, no one wants middle-aged guys on their retirement plan, he'll more likely end up in
consulting hell w. no benefits going forward), he won't be able to save enough in the remaining years left to him before he's unhireable for good...

if he broke his retirement voluntarily, i think he made a v. unwise decision since he ended up living at his dad's house anyway

if he was forced to break it by court ordered bankruptcy, i would like to know how this could be allowed

the woman quoted who thinks she will be able to work until she dies, is just delusional, most people aren't retired in their 50s by choice, they're retired because they're disabled or because no one will hire them...women can live into their 80s now and nobody's hiring 80 year olds for anything but unpaid volunteer work

there are huge tax penalties for breaking your retirement fund before retirement age precisely because it's a bad thing to do

[northernlights]

23. so what you are saying is

since he's in his 50s, nobody is going to hire him. So he should have lived on what, air?, before he could take distributions from his IRA without the 10% penalty? And then live on a small distribution for another 3 years before he started collecting social security.

Look at what you've written and think about it. He raided the IRA -- TO STAY ALIVE.


"if he broke his retirement voluntarily, i think he made a v. unwise decision since he ended up living at his dad's house anyway"

Hindsight is 20/20 vision. Maybe he unwisely thought the economy would recover. Maybe he unwisely thought he'd land on his feet. Many executives work until their 70s and 80s. It's just that this recession is different because it's hitting executives too. Actually, this recession is different because it's not a recession. It's a depression. TPTB just aren't admitting it yet.

[Liberal_in_LA]

18. I know folks who have put off retiring due to lossed to pension accounts n/t

[amborin]

21. today's ny time biz section article says Soc Sec cuts are coming...

will further harm retirees

[Greyhound]

25. K&R, Bigmack put up a thread on this yesterday as well. Good topic.

If anybody's interested here's the link.
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x8851497
:kick: & R