retirement

Growing old unequally

Published by Anonymous (not verified) on Fri, 27/10/2017 - 12:00am in

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Social Security may have decreased the rate of poverty among retirees in the United States.* But it certainly hasn’t solved the problem of inequality.

As is clear from the chart above, from a recent report from the Organisation for Economic Co-operation and Development, old-age inequality among current retirees in the United States is higher than in all other OECD countries, except Chile and Mexico.

But wait, it’s probably going to get worse. That’s because, within each generation of workers, inequality has been rising. For example, researchers tracked U.S. income inequality for four different generations—people born in 1920, 1940, 1960, and 1980. For each group, inequality has been more extreme than the previous generation.

The inequalities among people of working age are a primary reason for inequalities among older Americans. That’s because, with highly unequal current incomes, only households at the top are able to accumulate adequate retirement savings. Everyone else is forced to have the freedom to rely on Social Security payments.

But that’s not the only reason for rising retirement inequality. Ill health is another critical source of difference. It can cause problems at work and trigger the loss of earnings, and of course work can also damage people’s health. As the authors of the report note,

Americans are far more unhealthy than their peers in a number of other countries and people from low socio-economic backgrounds are particularly affected by bad health.

And if ill health follows workers into old age or strikes them after retirement, they will need some kind of long-term care—but the social support for such care is much lower in the United States than in other countries.

Someone with median income receiving home care for moderate needs in the some US states may have as little as 6% of the cost of their care paid by the social protection system. This compares to about 45% in the Czech Republic and Israel and almost 100% in Sweden, Iceland and the Netherlands.

As the authors of the report observe, “ageing unequally starts early and builds up from childhood to old age.” This is no more so than in the United States where severe and growing inequalities in different dimensions—such as education, health, employment, earnings, and wealth—reinforce each and grow over the course of people’s lives.

What we’re seeing, then, is high levels of inequality among older Americans. And, given current trends, it’s only going to get worse for future generations.

 

*But the poverty rate among Americans older than 65 years is still high, at almost 20 percent, and the depth of poverty—the amount by which the average income of poor older people falls below the poverty line—is greater than 30 percent. And, just as worrisome, the poverty risk appears to be shifting from the old to the young. For example, while poverty rates for the elderly have fallen since the mid-1980s (by 2.5 percentage points for Americans 66 to 75 years), they’ve increased for younger workers (by 4 percentage points for those 18 to 25 years).

Tagged: elderly, health, inequality, retirement, Social Security, United States, workers, youth

Cartoon of the day

Published by Anonymous (not verified) on Tue, 05/09/2017 - 9:00pm in

Almost Half Of Americans Die Nearly Broke

Published by Anonymous (not verified) on Tue, 06/06/2017 - 3:00am in

Above Photo: Popular Resistance, Revolution, Rebellion, Capitalism Americans aren’t known for being great savers. In a recent GoBankingRates study, 69% of adults admitted to having less than $1,000 in the bank, while 34% said they actually don’t have any savings at all. But apparently, this collective lack of savings doesn’t get all that much better with age. A study by the National Bureau of Economic Research found not so long ago that almost half of Americans die nearly broke. Of the general population, 46% of retirees die with savings of $10,000 or less. But that number climbs to 57% among retirees who are single. Now when we take other assets, like homes, into account, the picture gets a bit less bleak. Still, 57% of single-adult households and 50% of widowed households had no housing equity to show for when they died. The problem is that dying nearly broke isn’t just a matter of denying one’s beneficiaries an inheritance. Rather, it points to a frightening degree of financial vulnerability during retirement. If seniors are passing without much in the way of assets, it means that in the years leading up to their death, they’re ill equipped to handle a major unexpected expense, such as a significant medical bill. In fact, in that same GoBankingRates survey, only 37% of seniors 65 and older claimed to have $1,000 or more in the bank. Having an emergency fund, however, is just as crucial for retirees as it is for younger folks. And the sooner more people realize that, the less financial insecurity they’ll take to the grave. Will an unplanned expense catch you off guard? Though most Americans don’t have the means to cover an unanticipated expense, working folks have one advantage over retirees: the ability to earn more to cover their costs. But since many retirees don’t work, in the absence of savings, they’ll have no choice to but take on debt when a financial emergency arises. In fact, there’s a reason seniors 65 and older carry over $6,300 of credit card debt, on average. Because they don’t have much in the way of liquid assets, they’re often forced to resort to credit cards to cover whatever unforeseen costs come their way. But just as working Americans need a minimum of three to six months’ worth of living expenses available in an emergency fund, so too do seniors need that same sort of cushion, if not an even greater one. That lack of savings is causing a large number of seniors to not only die nearly broke but die in debt. Build your savings now If you’re still years away from retirement and don’t have much in the way of accessible savings, you should work on establishing your emergency fund early on, so that it’s available for you when you’re older. To start, create a budget that maps out your current expenses and find ways to cut corners. If you’re willing to make a series of smaller changes, like eliminating several restaurant meals each month or scaling back your leisure spending, you may come to find that you’re able to build that fund without making too many major sacrifices along the way. If small lifestyle adjustments don’t work, however, then you’ll need to start thinking big. That could mean downsizing your living space to a more affordable property or moving someplace less expensive overall. Or, it could mean selling your car and taking the bus every day if that’s an option where you live. If the idea of altering your lifestyle makes you miserable, then your next best bet is to earn more money to amass some savings. Working a few nights a week or a couple of weekends a month might put enough cash in your pocket to build savings quickly. Finally, make a point to stay away from credit card debt, even if it means working extra to ensure that your bills are always paid in full by the time they come due. Though avoiding credit card debt won’t help you build your savings, dodging interest charges will leave you with more money to put in the bank. Once you enter retirement without an emergency fund, your chances of building one are pretty much slim to none. And with that comes the risk of not only dying nearly or fully broke, but running out of options for paying your bills when they happen to catch you off guard.  

“Three bras and a bottle of Bombshell”

Published by Anonymous (not verified) on Fri, 02/06/2017 - 11:00pm in

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That’s what Mirella Casares gets as her “benefit” package from working at Victoria’s Secret. The package doesn’t include health or retirement contributions.

As it turns out, Casares is not alone. Far from it.

Many American workers, because of the precarious nature of their jobs and household finances, are concerned (as reflected in the word chart above) with “money,” “bills,” “health,” and “retirement income.”

According to the Report on the Economic Well-Being of U.S. Households in 2016 by the Board of Governors of the Federal Reserve System (pdf), about 30 percent—or approximately 73 million adults—are either finding it difficult to get by or are just getting by financially. Even more, almost half (44 percent) of adults say they either could not cover an emergency expense costing $400, or would cover it by selling something or borrowing money.

One of the major reasons is American workers simply aren’t being paid enough. That’s why more than half (53 percent) are forced to spend more than they earn and therefore don’t have the ability to save. They also face extraordinary health (approximately 24 million people, representing 10 percent of adults, are carrying debt from medical expenses that they had to pay out of pocket in the previous year) and education expenses (over half of adults under age 30 who attended college took on at least some debt while pursuing their education). Therefore, they have to borrow money and rely on family and friends to make ends meet.

The other reason is because of income volatility. About one third of American adults indicate that their monthly income varies either occasionally or quite a bit from month to month. Thirteen percent of adults (40 percent of those with volatile incomes) report that they struggled to pay their bills at least once as a result of income volatility. One of the major causes of that volatility is variable work schedules: seventeen percent of workers have a schedule that varies based on their employer’s needs, and just over half of those with a varying work schedule are usually assigned their schedule three days in advance or less.

One of the consequences of being underpaid and subjected to variable work schedules dictated their employers is American workers have found it necessary to turn to multiple jobs and informal work. According to the survey, 9 percent of all adults, and 15 percent of those who are employed, report that they worked at multiple jobs. In addition, 28 percent of all adults report that they or their family earned money through one or more of informal and occasional activities (such as babysitting, selling at flea markets, and performing tasks through online marketplaces) in the prior month.

The United States is now eight years into the recovery from the Great Recession and the benefit to American workers consists of little more than 3 bras and a bottle of perfume.

Tagged: benefits, bills, education, finances, Great Recession, healthcare, money, pay, precariat, retirement, United States, workers