Bernie Sanders tells it like it is on GOP shutdown

MB360: Looming U.S. retirement disaster

In this context, cutting Social Security makes even less sense.  Just like with health insurance, the private sector has foisted this responsibility onto its employees, and the federal government.  

Pension disaster looms over the horizon: In 1980 60 percent of Americas participated in a pension program. Today it is less than 10 percent and the amount saved for retirement is startling.

Posted by mybudget360 | September 15, 2013

Americans are on the verge of a retirement disaster.  As pension plans slowly go extinct Americans are not saving enough for retirement.  The figures point to a looming pension and retirement disaster.  Retirement for most Americans is largely a mirage.  As organizations switched from pensions to 401ks it was expected that most Americans would save money. This trend started in 1980 and over 30 years have now passed.  We now have enough data to see if this transition has been beneficial to most Americans.  Unfortunately the answer highlights an American population that has not saved enough for retirement.  Most Americans will make Social Security their default retirement plan.  Pension issues also loom as many state governments contend with deep underfunding for retirement benefits.  In the end, there is a disaster looming.

The disappearing pension

Very few Americans now have access to a pension.  This wasn’t always the case:

Today, less than 10 percent of Americans have access to a pension.  Most however have access to 401k plans and other retirement options.  Unfortunately as the middle class shrinks more Americans are finding it more difficult to save any money.

Social Security unfortunately is going to become the default retirement plan for many.  Many current pension plans are setup with unrealistic returns.  Many states are underfunded in spite of the dramatic returns in the stock market:

Keep in mind there is simply no way the stock market can continue producing returns as it has. It is simply impossible and already ratios are getting inflated showing a slight exuberance.  As the chart above highlights, many state pensions are underfunded and if the market even has a slight correction, this will exacerbate the problem.

Beyond the above data that only impacts a small number of Americans, most simply do not have enough (or anything) saved for retirement.

The lack of savings in retirement accounts

Without pensions many Americans are left to fend for themselves via retirement accounts.  How has this worked out?

These are disturbing figures.  The median amount saved by all Americans is $3,000 for retirement!  Even those nearing retirement in the 55 to 64 age group have roughly $12,000 to get by in their later years.  In other words, many are going to be working deep into old age.

A lot of this can be attributed to the lack of income being made by most Americans.  As we have seen income inequality is at record levels, even higher than it was prior to the Great Depression.  It is simply hard to get by when the per capita wage is $26,000 and the cost of living continues to increase without any wage increases.  Getting by is priority number one, not a far off retirement.

Retirement dreams pushed out

As you would imagine the retirement age is being pushed out:

It is becoming tougher for Americans to retire and there is less of a safety net.  Since the retirement amount saved is so low, many are going to depend on Social Security as their main income stream in their later years.  Much of this money is going to be paid by a younger and less affluent generation.  You can already see this disaster lining up.  As young people struggle, how will they feel when they see pensions going out while they struggle to find work?  If you think you have heard the last of this think again.

MB360: Americans unprepared for retirement

MB360 brings us some shocking figures on U.S. retirement savings:

What we find in the above chart is that most Americans are flat broke when it comes to saving for retirement.  You might say that those 25 to 34 years of age have simply avoided dealing with the future.  However, this is the most indebted young cohort of Americans we have ever seen largely due to student debt.  Yet look at the other age brackets.  The median amount saved for those 35 to 44 is $1,400 (one month of rent and food in many parts of the country).  Those 45 to 54 do a little bit better coming in at $10,100.  Those 55 to 64?  About $12,000.

In total, the median saved for retirement by all US households is $3,000.

Even those with retirement accounts (obviously a small figure) have a median amount saved of $40,000.  The $3,000 figure should shock people into realizing that programs like Social Security are going to become the default “retirement plan” for millions.

But should we really be surprised?  How many U.S. generations have experienced what is now considered a real, comfortable retirement, where savings combined with Social Security and Medicare allowed them to live out the last 20 or so years of life in comfort and security?  One generation?  The Baby Boomers are entering retirement now.  Let's see how well they do.  But it doesn't look good for them, not good at all. 

We need to re-think classical retirement, which is not classical at all, just an ideal that one or two generations of Americans managed to enjoy, and which now, thanks to demographics and cuts to Social Security, the Great Recession, fewer pensions and rising health costs, will soon cease to exist entirely.  

The epic crisis in retirement savings: Vast majority of Americans unprepared for retirement. Median retirement savings for those 25 to 34? Zero dollars.

Posted by MB360

August 21, 2013

URL: http://www.mybudget360.com/epic-crisis-retirement-median-retirement-amount-americans-average-savings/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+mybudget360%2FQePx+%28My+Budget+360%29

Rosenberg: Obama wanted to cut safety net all along

Rosenberg "uncovers" an Obama "conspiracy" that Tea Partyers and liberals alike don't want to acknowledge: he's been plotting to cut Social Security and Medicare without raising taxes to Clinton-era levels since BEFORE he was inaugurated, before the Tea Parties even existed.

Then, when Obama proposed cutting Medicare, exactly as Republicans proposed, they attacked him for it. He doesn't understand he's playing a losing game.

Or maybe he doesn't care?:

But, of course, Obama is not going to be running again. He will be collecting speaker's fees from the donor class. And they like what he is doing just fine. Obama's real base, it turns out, is exactly the same as George W Bush's: the have and have-mores. This budget is for them and them alone. To think otherwise is to continue living in denial.

Read it and weep, everyone.

Obama's imaginary budget-cut mandate

By Paul Rosenberg

April 18, 2013 | Aljazeera

URL: http://www.aljazeera.com/indepth/opinion/2013/04/20134186829216639.html

14 million Americans collect disability

Did you know that, "The federal government spends more money each year on cash payments for disabled former workers than it spends on food stamps and welfare combined"?

Funnily enough though, "There's no diagnosis called disability:"

As far as the federal government is concerned, you're disabled if you have a medical condition that makes it impossible to work. In practice, it's a judgment call made in doctors' offices and courtrooms around the country. The health problems where there is most latitude for judgment -- back pain, mental illness -- are among the fastest growing causes of disability.

Unfortunately, "disability has also become a de facto welfare program for people without a lot of education or job skills." But just like regular welfare, it's not all glam and gold:

But going on disability means you will not work, you will not get a raise, you will not get whatever meaning people get from work. Going on disability means, assuming you rely only on those disability payments, you will be poor for the rest of your life. That's the deal. And it's a deal 14 million Americans have signed up for.

Basically, the number of adults -- and kids -- pulling disability checks has more than made up for the decrease in welfare recipients since Bill Clinton's Welfare To Work bill in 1994 that "ended Welfare as we know it."

Unfit for Work

By Chana Joffe-Walt | NPR

URL: http://n.pr/Z1KId4

Ryan's budget either dumb or disingenuous

BOO-ya! Miller can't miss with this shot at the demographically challenged Congressional GOP:

Did I mention that Ronald Reagan ran the federal government at 22 percent of GDP when the country’s population was much younger, and health care consumed about 11 percent of GDP?

Now Paul Ryan says we can run the federal government at 19 percent of GDP as the massive baby-boom generation retires and when health costs (largely for seniors) have already soared to 18 percent of GDP.

Sorry, but Ryan is either deeply confused or doing his best to snooker us.

Miller puts in other words, same upshot:

In 1989, when President Reagan left office, there were 34 million people on Medicare and 39 million on Social Security. In 2025, according to these programs’ trustees, there will be 73 million on Medicare and 78 million on Social Security.

This is not happening because we’re stringing up the “hammock of dependency” that Ryan often invokes. It’s happening because our famously big postwar birth cohort is getting older.

Ryan obviously knows these facts. This means he’s disingenuously trying to use the aging of America to force a severe cutback in the non-elderly, non-defense portion of government, which is already headed toward historic lows as a share of GDP.

And here's what would happen if Ryan got his way:

At 19 percent, Ryan’s vision is an America with 50 million uninsured ... forever. Of infrastructure and R&D investment that trails other advanced nations ... in perpetuity. Of a nation that assigns its least effective teachers to poor children . . . permanently. (Amazingly, Senate Democrats have fallen prey to Ryan’s gravitational pull, with the budget they put out Wednesday coming in at 21.7 percent of GDP in the years ahead, a tad below Reagan-era spending.)

Ryan thinks we’re too dumb to see what he’s up to.

Well I'm not that dumb. Are you? 

Paul Ryan is no Ronald Reagan

By Matt Miller

March 14, 2013 | Washington Post

URL: http://www.washingtonpost.com/opinions/matt-miller-paul-ryan-is-no-ronald-reagan/2013/03/14/bf1bddfc-8ca2-11e2-9f54-f3fdd70acad2_story.html

Myerson: Re-secure U.S. retirement

You tell me what's wrong with this scenario:

• "Greedy old people" are poorer than they were 30 years ago;
• Old people are working longer than they did 30 years ago;
• Fewer retirees receive a defined-benefit pension than 30 years ago;
• Retirees rely more on Social Security than ever to avoid poverty;
• Medical and drugs costs for seniors continue to climb, making Medicare more necessary than ever. 

         Meanwhile, 

• U.S. corporate profitability and productivity are at all-time highs;
• "Fix the Debt" CEOs, the American Chamber of Commerce and other "pro-business" groups keep telling us we need to cut Social Security, Medicare and Medicaid... or else.

Here's how Harold Myerson sums it up:

Just as U.S. businesses have been able to raise the share of corporate profits to a half-century high by reducing the share of their workers’ wages to a half-century low, so, too, their ability to reduce pension payments has contributed not just to their profits but also to the $1.7 trillion in cash on which they are currently sitting.

Myerson, Paul Krugman, Rep. Alan Grayson, et al are right: this entitlement- and debt-cutting fetish in the aftershocks of the Great Recession is total bullshit.  It's a scam. It is complete opportunism by corporate big-wigs and bankers who see a way to cut their costs and attract more SS money into financial markets for them to gamble with, while they enjoy both real and implicit subsidies and government guarantees in case they f**k up (again). 

Let's face it, our national 401-k  experiment has been a disaster for this generation of retirees and near-retirees.  This is not to mention the young and middle aged: "Today, more than half of U.S. workers have no workplace retirement plan" at all, according to Myerson. And yet Republicans want to cut younger workers' future SS and Medicare benefits "so that Social Security and Medicare will be there for them when they retire"?!  

Sorry for my potty mouth, folks, but that's called "getting f***ed at both ends," there's just no other way to describe it.

UPDATE (03.16.2013): I usually don't loop back like this, but I can't get this one phrase written by Lynn Stuart Parramore out of my head, it was such an eye-opener for me, and it totally relates to this antedated article: "There was no imagined past where people saved up for their old age."  What we are going through, we are the first people in the history of the earth to go through, not to mention the history of the United States. We need to cut ourselves a little slack here.

This is so, so important for Americans to remember when they're feeling financially stressed out and inadequate in the face of global financial markets and contradictory investment advice, not to mention getting lectured at by rich businessmen and their pocket politicians about how underpaid, overworked Americans need to save more and depend on government less.

Steering America toward a more secure retirement

By Harold Myerson

March 7, 2013 | Washington Post

URL: http://wapo.st/13HEvYz

Deficits are not a problem; actuaries are not oracles

Worrying about U.S. federal deficits in this down economy is like worrying about what your lawn will look like in 20 years when you're house is on fire right now.

The Deficit Hawk Delusion: What the Krugman-Scarborough Slugfest Is Really About

By Derek Thompson

February 15, 2013 | The Atlantic

The showdown between Joe Scarborough and Paul Krugman over our debt is interesting and important, not merely as a media skirmish, but also as a keyhole into the way deficit "hawks" and deficit "doves" misunderstand and talk past each other. A great deal of the animosity and confusion between both sides of the debate would be improved with an honest assessment today's economy and tomorrow's debt. 

Basically, this is a discussion about (a) what we know about the economy and (b) what we think we know about the economy.

WHAT WE KNOW

Here are six things we know about the economy. [1] We know that unemployment is still high. [2] We know that inflation is low. [3] We know that 4 million people have been out of work, and looking, for more than a year. [4] We know that GDP growth has been fine for normal times, but awfully weak for a recovery following a steep recession. [5] We know that cutting government spending takes money out of an economy. [6] We know that government spending cuts in the last few years have coincided with hundreds of thousands of lost government jobs, which has kept our unemployment rate from falling further.

And here are four things we know about our debt. [1] We know that government borrowing rates are low. [2] We know that global appetite for our debt is high. [3] We know we borrow in our own currency, and not, like Europe, in a common currency that we don't control. [4] And we know that makes us less vulnerable (but not invincible) from a debt crisis.

Out of these ten things we know, how many of them suggest that we should cut our deficits today? Basically, zero. And that's Paul Krugman's point. Everything we know about the economy today provides a clear argument for elevated deficits.

WHAT WE DON'T KNOW

Joe Scarborough understands this. He says he wants higher deficits and a game-plan for cutting our long-term debt (which is the accumulation of our deficits). But he doesn't fully understand -- or properly communicate -- how the argument for long-term debt reduction rests on assumptions about the future that are exquisitely sensitive to change. The precise dimensions of our 2020 debt are calculated from a matrix of variables (e.g. immigration, productivity growth, hospital construction growth, MRI inflation rates) whose very nature is to fluctuate, sometimes dramatically, on a quarterly or annual basis.

Here are four things we think we know about our future debt -- which is almost entirely a health care spending problem. [1] We think we know that the cost of caring for Americans will continue to grow faster than the economy. [2] We think we know that demand for this increasingly expensive care will grow along with our aging boomer population. [3] We think we know that tax revenue will grow about in line with the economy. [4] Thus, we think we know what the gap between future taxes and future spending will be, and how much we have to start saving today to cover it.

It's possible that the deficit hawks have it 100 percent right. But it would also take a rather astonishing clairvoyance for anybody to foresee the next ten years with even slightly useful clarity. Scarborough and Mika Brzezinski often talk about "math" when they talk about debt ...

... and our debt projections look like math, what with all of those numbers. But math is a law. Actuarial projections are not. They are smart guesswork facilitated by multiplying current trends over many years. There's an important difference.

For example, what if health care inflation slows down?

Actually, that's not a "what-if." Two weeks ago, CBO revealed that health care spending has "grown much more slowly than historical rates would have predicted." It cut estimates of federal spending on Medicaid and Medicare in 2020 by "about $200 billion." That's a lot of money. It is much more than Washington would save by raising the Medicare eligibility age from 65 to 67. If you thought raising the retirement age was enough to calm the market's appetite for debt reduction, then guess what? We just got 2X those savings by doing nothing.

It's generally considered goofy for somebody to pretend he can see the next 75 years in robotics, or software, or bio-sciences.  But somehow it's not goofy for Joe Scarborough, Steven Rattner and other serious, well-intentioned media people point out that we have $60+ trillion in "unfunded liabilities" to Social Security, Medicare, and federal pensions in the next seven decades. That statistic isn't wrong. It's just kinda ... goofy. Medicare actuaries are legally obligated to predict the future of their program past 2070.But the press [and the public! - J] is not legally obligated to pretend that our actuaries are oracles.

Paul Krugman isn't an oracle either. He's just a very smart economist with an astonishingly good track record. And even he isn't saying that debts don't matter. In fact, he's saying almost exactly what Alan Blinder -- an economist Scarborough cites approvingly -- wrote in The Atlantic: Don't worry too much about deficits now, and put aside some worry about the future total cost of health care.

Deficit reduction is sometimes framed as stimulus. It's not. It's insurance -- insurance against the possibility that the market will turn against U.S. debt and drive up interest rates and badly hurt the country. Insurance isn't bad. But it's expensive. And money taken out of the economy too soon could prolong an unemployment crisis that is creating structural deficiencies in our atrophying workforce. Deficit doves should concede that there is a risk to doing nothing for too long. But deficit hawks must concede that there is also a risk to taking out that insurance policy too soon -- or distracting attention from everything we know about the economy.

_______________________

Please don't say that our debt is exactly like global warming. It is true that both global warming and debt are arguably subtle and gathering forces whose impact on the world could surprise us somewhere down the line. But unlike our 2020 debt, global warming isn't just an actuarial projection. It's a scientific finding about the world right now. And whereas even deficit hawks allow that there is good debt (right now) and bad debt (in ten years), there is no analogous argument I'm aware of that says global warming is great for the world today -- or that we actually we need more of it! -- but bad for the world tomorrow. 

Simpson debases himself before kids for his CEO paymasters

Hey, you kids, get hip to the national debt, yo!  'Cos nothing is more ironically cool than an old fogey lecturing at you while pretending to care about youth culture!

That's right, get with it, and then "start using those precious social media skills" to convince everybody to slash Grandma's Medicare/Medicaid and cut their Social Security benefits and hand them over to Wall St.  

And don't forget to Instagram it for ex-Senator Alan Simpson as you throw Grandma from the train!

Former Sen. Simpson dances to 'Gangnam Style' to raise debt awareness

December 6, 2012 | FoxNews

Former Sen. Alan Simpson is going to new lengths to wake up Washington to the need for a debt deal -- this time, dancing to "Gangnam Style" in a viral YouTube video. 

The sharp-witted, sharp-tongued, 81-year-old budget guru played along for a video by The Can Kicks Back, a group that aims to enlist young Americans in pressuring Washington to reach a deficit-reduction deal by July 2013. 

In the video, Simpson tells today's youth: "Stop Instagramming your breakfast and tweeting your firstworldproblems and getting on YouTube so you can see Gangnam Style." 

Nothing if not a good sport, Simpson proceeds to imitate the limber moves of South Korean rapping sensation PSY while his "Gangnam Style" hit plays in the background. 

Simpson urges young American to put "those precious social media skills" to good use. "Take part or get taken apart," he says. 

Simpson co-chaired President Obama's deficit-reduction commission, whose findings were left on the shelf by the White House and Congress. He has since expressed frustration at the virtual standstill in Washington when it comes to striking a meaningful debt deal.

Reagan on Social Security and the deficit

Even a broken clock is right twice a day.  Here's what the Gipper had to say on October 7, 1984 in Louisville, KY:

"Social Security has nothing to do with balancing a budget or erasing or lowering the deficit."  

Quick, somebody tell Erskine Bowles, Alan Simpson and the "Fix the Debt" CEOs!  

[HT: Exiled]. 

Ronald Reagan: "Social Security has nothing to do with the deficit."

uploaded by WeAreSocialSecurity

November 5, 2012 | YouTube

Baker: Why isn't Social Security an election issue?

Why Big Bucks Donors Don't Want President Obama to Champion Social Security

After stock market shocks and the housing bubble, social security more vital than ever before. But the money men hate it.

By Dean Baker

October 25, 2012 | AlterNet

URL: http://www.alternet.org/election-2012/why-big-bucks-donors-dont-want-president-obama-champion-social-security

Median, middle and 'moochers'

MB360 has given us some hard income data to mull over:

• 2011 Census data says the the median U.S. household income is $50,500; that means half of U.S. households make more, and half less than $50,500.
• 2010 Social Security data says the median worker's income is $26,000.
• An individual making more than $250,000 is in the top one percent of all earners in the U.S.  
• A household making more than $250,000 per year is in the top two percent of all U.S. households. 
• A household making more than $100,000 is in the top 20 percent of all U.S. households.

$250,000 and $100,000 are common cut-off points in political discussions about who is really middle class, and who deserves a tax cut or a tax hike.  

Mitt Romney told ABC that, "Middle income is $200,000 to $250,000 and less."  (A person making $200,000 or more is in the top four percent of U.S. income earners.) Obama more or less agrees with Romney.  By their definition, 96 percent of Americans are middle class.  That's ridiculous on its face.

More to the point, do average Americans believe that the top 1-2 percent need and deserve a tax cut right now?  Both Obama and Romney do.  I don't.  

Does it even make sense to regard a household earning $100,000 -- double the median household income -- as middle class?  Probably not, relatively.  

Meanwhile, we have 46.7 million Americans receiving food stamps, and 56 million receiving Social Security.  That's about one-third of the U.S. population. That's not to mention 48 million Americans on Medicare, and about 4 million on Medicaid.  Meanwhile, 60 percent of those 65 or older receive at least 75 percent of their income from Social Security. How low would U.S. median income be without these programs?  It's frightening to think about how insecure most Americans are, financially.

Here's what these programs cost, or, to put it in Republican terms, how much wealth they redistribute:

• Food stamps, unemployment insurance, welfare: $210 billion
• Medicaid and CHIP grants to states: $265 billion
• Medicare: $550 billion (2011)
• Social Security: $778 billion

          TOTAL:  $1.8 trillion

But what about the deficit?  As a Bloomberg study revealed, "the rise in the deficit -- from an average of 1.9 percent of gross domestic product in the pre-crisis years (2005 to 2007) to 9.3 percent of GDP post- crisis (2009-2011) -- is almost entirely due to the economic decline, which drove down tax receipts and pushed up spending on unemployment, food stamps and other support programs."

But we already knew that, right?  We must know that 33 percent or 47 percent or whatever share of Americans didn't suddenly become lazy moochers while Obama went on a wild spending spree.  No, it's that suddenly our economy got very, very bad: shrinking 6.3 percent in 2008 alone, erasing $15.5 trillion in U.S. wealth, costing 8.8 million U.S. jobs, and dunking 24 percent of houses -- most Americans' most valuable asset -- underwater.  

Given all this, it is madness to suggest that the answer to our economic malaise is to cut spending for needy Americans while reducing taxes for Americans making $200,000 or more.  

Cutting 'welfare' won't fix the deficit

It has become an article of faith among many of you conservatives that "welfare" is driving our federal deficit.  Peter Goodman points out, however:

Between 2001 and 2011, the tax cuts delivered by George W. Bush and continued under Obama have cost roughly $2.8 trillion.  That is about 17 times the roughly $165 billion that has been spent on the primary federal grant that funds welfare.

Indeed, conservatives don't understand how we spend our money or why we have such a big deficit.  My man Paul Krugman calls the U.S. "an insurance company with an army" because "the vast bulk of its spending goes to the big five: Social Security, Medicare, Medicaid, defense, and interest on the debt."  

Prof. Krugman instructs conservatives: "if you want smaller government, either you're talking about cuts in the big five, or you have no idea what you're talking about."

In Romney's America, Welfare Is for Losers

By Peter S. Goodman

August 13, 2012 | Huffington Post

URL: http://huff.to/RMyVxD

Those poor, greedy Boomers

Turns out the Baby Boomers aren't greedy, they're just poor: the median annual income of both Social Security and Medicare beneficiaries is about $25,000.  

So entitlement reform at their expense is impossible because they can't survive without their current level of benefits.

Those (Us) Greedy Boomers

By Jared Bernstein

July 31, 2012 | Huffington Post

URL: http://huff.to/PlcTMm

The coming crisis of elderly poverty

It's good that older teabaggers suck at imposing their political views on younger generations; otherwise, we would slash their Socia Security, Medicare and Medicaid and make them spend their golden years in squalor and indignity.

But we're not gonna do that, because our progressive principles are too strong.  Sorry to break it to you, old-timers, but because of you, "Social Security and Medicare are going to have to be more generous, not less, than these programs are today."

Broke Boomers and the Coming Crisis of Elderly Poverty

By David Callahan

June 19, 2012 | Huffington Post

Most of the coverage last week of the Fed study on household wealth focused on the gigantic financial hit taken by nearly all Americans since 2007. Dig deeper into the report, though, and it makes for even scarier reading, as many of those people losing lots of wealth are older and don't have much time to recover before retiring.

In 2007, near the boom's height, older households (between 55 and 64) had a median net worth of $266,200. That figure included everything -- home equity, savings, 401(k)s, etc. -- and is hardly the kind of money people need to get through their golden years. By 2010, though, the nest eggs of Americans approaching retirement had shrunk dramatically, falling to $179,400 -- a 33 percent drop. The main reason for this, of course, was the collapse of the housing market, with home equity accounting for the lion's share of older Americans' net worth.

Older workers also experienced a drop in earnings, making it harder for them to stash away cash and make up for losses to their net worth. Indeed, barely over half of all families in the 55 to 64 group reported to the Fed that they saved money in 2010. You heard that right: Half of all workers hurtling toward retirement aren't putting away for the future. Yikes.

Another scary finding of the study: Only 60 percent of families, 55 to 64, even have a retirement account where they take advantage of tax breaks for retirement savings. And the median amount of money in such accounts is $100,000.

Of course, that's no surprise to us here at Demos, as we have recently been documenting the many shortcomings of the 401(k) system. Foremost among the faults of 401(k)s is that so many employers don't offer such plans to their workers. Another major problem: most workers don't build up a very big nest egg, even after decades in the labor force thanks to low contribution levels, stock market meltdowns, and loans taken out against their 401(k)s.

Not surprisingly, also, there is a huge disparity in who has access to a 401(k). According to the Fed report, 70 percent of Americans with a college degree have a retirement account -- compared to just 41 percent of those with only a high school diploma. The report shows, moreover, that such coverage for all groups declined somewhat between 2007 and 2010 -- reflecting a broader trend of more employers choosing not to offer 401(k)s.

Beyond the paltry assets of many older Americans, there is also the problem of debt among those in their fifties and early sixties. The Fed report shows that a great many older Americans carry credit card debt -- a worrisome trend that Demos documented a while back in our report, Retiring in the Red. Needless to say, it's not good to be scrambling to pay off your Amex bill when you should be putting away money for retirement.

Again, no big surprises from this data. Just more warning signs that the 401(k) system isn't working and that America is facing an epidemic of elderly poverty in the decades ahead -- a crisis that will make it very difficult to cut the big entitlement programs for seniors, which tends to be the linchpin of most centrist and conservative deficit reduction plans.

Indeed, it's hard to look at the data on how the broke the Baby Boomers are without concluding that Social Security and Medicare are going to have to be more generous, not less, than these programs are today. Strangely, few leaders in Washington seem to be tuned in to this grim reality -- or ready to deal with it.

DC Johnston: SS is not going broke

Social security is not going broke

By David Cay Johnston 

May 4, 2012 | Reuters

URL:  http://blogs.reuters.com/david-cay-johnston/2012/05/04/social-security-is-not-going-broke/

Social Security ain't bankrupt

Here is a very good commentary on the annual report of the Social Security Trustees on the current surplus and future solvency of SS:  Before you write that Social Security is bankrupt….  What is clear is that SS will run a surplus until at least 2033; and under its current construction have enough money to pay 75 percent of promised benefits.  That doesn't sound like "broke" to me.

This commentary on the Trustees' report by the Center for Economic and Policy Research also makes the excellent point that, "The main reason that the program's finances have deteriorated relative to the projected path is that wage growth has not kept pace with the path projected."  In other words, since the 1980s, U.S. wage growth, which is the source of SS financing, has been stagnant. And since Dubya's Great Recession, employment and wages have fallen further, causing a short-term shortfall in revenues.

But even better to read are the comments of learned readers on CEPR's site about the myth of SS's insolvency.  Wrote one reader,  Barkley Rosser, identifying himself as a teacher:  

I also note that [my students] are being asked to support cuts now to their future benefits on the basis of the argument that if those are not cut now, they might have to be cut in the future.  When that is posed to them, they also rather shake their heads in disbelief about how seriously this whole thing has been misrepresented to them.

Another reader, pete, repeated a point I've made several times that SS was never meant to be a pension system:

Most critical is, as skepto is suggesting, to completely end the facade of framing SS as a defined benefits program (it is not, you can read this in your annual statement), and simply re-frame it as old age and disability insurance, with some base levels and trickling off for the wealthy (a SS Buffet rule).  That was the original intent, only modified to bring in the Republicans in the 30s, while ignoring demographics. Then the funding can be done optimally, rather than fraudulently confounding the benefits with the payroll deductions.  

I would only add that the glut of Baby Boomers moving through the SS and Medicare/Medicaid system, like a golf ball through a garden hose, is a problem we have seen coming a long way off, at least since the 1980s.  It's like one of those cheesy scenes in every action film where the hero shouts "Nooooooooooooooo!...", only slowed down to about 40 years.  Enough.  Even if all the Baby Boomers live to be 90, they'll all be dead by 2055.  We just have to let the system gets back to demographic balance, and not dismantle and/or privatize one of the most successful anti-poverty programs ever designed out of fear of a hypothetical.  And it is certainly not the fault of the young that Social Security is the main source of income for most present retirees, aka those "affluent" and "responsible" ones who preach to us about the need to live within our means.

MB360: Boomers have no savings, live on SS

We shouldn't let grumpy old Boomers, who are over-represented in the Tea Parties, lecture younger generations about responsibility, work and savings, because they have no savings and rely on Social Security for almost all their income.

We'll still take care of you old timers, because we're well-raised and we're all in this together, but please: no more sanctimonious lectures.

The Coming Demographic and Financial Disaster – Median income of Americans 65+ is $19,167. What happens when less affluent youth move back home and clash with older generations?

Posted by mybudget360

February 2, 2012

What happens when a society that prides itself on a middle class and self-sufficiency suddenly starts losing both? For over a decade the middle class in the US has been shrinking. This isn't some speculation but is reflected in the stagnant household income data. You also have a giant demographic train in that many baby boomers are now retiring in mass. Over 10,000 baby boomers enter into retirement each day and many have an inadequate amount of savings (if any) to get them through the leaner years. Couple this with a less affluent younger generation and you have a recipe for financial and social turmoil. Many of these younger Americans, many saddled with large student debt, are moving back home with parents that have seen their entire home equity evaporate. Do you think these are happy households especially when the median income of those 65+ is $19,167?

Median income of the old

There seems to be this misconception that older Americans are simply well off. The data shows us otherwise:

Source: US Dept. of Health

What is troubling about the above data is that during some of the most affluent decades in US history, most Americans have very little income in older age. In fact, most rely on Social Security as their primary source of income:

"Social Security constituted 90% or more of the income received by 34% of beneficiaries (21% of married couples and 43% of non-married beneficiaries)."

How is this even possible? Keep in mind the average Social Security payout is roughly $1,000 per month and this is fixed. Since the government has juiced the CPI data most of these fixed income Americans are seeing their energy and healthcare costs soar all the while they are told inflation is virtually non-existent. Try arguing that after going to the grocery store.

There is also this sense that since many older Americans own their home, they are somehow immune to the housing bubble. That is not true:

"In 2009, 48% of older householders spent more than one-fourth of their income on housing costs – 42% for owners"

Many older Americans still spend a lot of money on housing even if they are owners. Much of this comes from property taxes and costs associated with owning a home. Since many older Americans do own their home this housing bubble crash has harmed their largest asset.

As time presses on more and more of our population is going into retirement. Lower birth rates and more Americans making it into older age conjure up memories of Japan:

Source: Baby boomer stats

-There are approximately 77.6 million baby boomers in the U.S.

-The baby boom phenomenon is responsible for over half of all consumer spending in the United States

-80% of all leisure travel is taken by boomers.

-Every 8.5 seconds a baby boomer in the U.S. turns 50 years old.

-The baby boom generation is the largest generation in American history.

-On January 1st, 2011 the very first Baby Boomers turned 65

Baby boomers tended to also be big spenders (at least they were during the debt bubbles). But what now? The strongest spending group is losing a large part of their wealth with the housing crash and many are exiting their peak earning stages. From the Social Security data, we realize many did not save in what was likely the most affluent times for America. With many younger Americans carrying major debt loads and finding items like pensions disappearing, how will they prepare for retirement? What access to savings do they have? Homes are still expensive for many younger Americans and that is why millions have moved back home:

A society that has preaches independence and pushes out young at 18 will have a hard time dealing with boomerang kids coming back home. Many younger Americans will feel the strain as well especially if they "did the right thing" and went to college but now find a tough employment market and being back home. This demographic train has left the station and nothing will slow it down.