Half the U.S. makes under $27 K, and other signs the middle class is dying

Half The Country Makes Less Than $27,520 A Year And 15 Other Signs The Middle Class Is Dying

Submitted by Tyler Durden

June 5, 2014 | Zero Hedge

Submitted by Michael Snyder of The Economic Collapse blog,

If you make more than $27,520 a year at your job, you are doing better than half the country is.  But you don't have to take my word for it, you can check out the latest wage statistics from the Social Security administration right here.  But of course $27,520 a year will not allow you to live "the American Dream" in this day and age. After taxes, that breaks down to a good bit less than $2,000 a month.  You can't realistically pay a mortgage, make a car payment, afford health insurance and provide food, clothing and everything else your family needs for that much money.  That is one of the reasons why both parents are working in most families today.  In fact, sometimes both parents are working multiple jobs in a desperate attempt to make ends meet.  Over the years, the cost of living has risen steadily but our paychecks have not.  This has resulted in a steady erosion of the middle class.  Once upon a time, most American families could afford a nice home, a couple of cars and a nice vacation every year.  When I was growing up, it seemed like almost everyone was middle class.  But now "the American Dream" is out of reach for more Americans than ever, and the middle class is dying right in front of our eyes.

One of the things that was great about America in the post-World War II era was that we developed a large, thriving middle class.  Until recent times, it always seemed like there were plenty of good jobs for people that were willing to be responsible and work hard.  That was one of the big reasons why people wanted to come here from all over the world.  They wanted to have a chance to live "the American Dream" too.

But now the American Dream is becoming a mirage for most people.  No matter how hard they try, they just can't seem to achieve it.

And here are some hard numbers to back that assertion up.  The following are 15 more signs that the middle class is dying...

#1 According to a brand new CNN poll, 59 percent of Americans believe that it has become impossible for most people to achieve the American Dream...

The American Dream is impossible to achieve in this country.

 

So say nearly 6 in 10 people who responded to CNNMoney's American Dream Poll, conducted by ORC International. They feel the dream -- however they define it -- is out of reach.

 

Young adults, age 18 to 34, are most likely to feel the dream is unattainable, with 63% saying it's impossible. This age group has suffered in the wake of the Great Recession, finding it hard to get good jobs.

#2 More Americans than ever believe that homeownership is not a key to long-term wealth and prosperity...

The great American Dream is dying. Even though many Americans still desire to own a home, they are losing faith in homeownership as a key to prosperity.

 

Nearly two-thirds of Americans, or 64%, believe they are less likely to build wealth by buying a home today than they were 20 or 30 years ago, according to a survey sponsored by non-profit MacArthur Foundation. And nearly 43% said buying a home is no longer a good long-term investment.

#3 Overall, the rate of homeownership in the United States has fallen for eight years in a row, and it has now dropped to the lowest level in 19 years.

#4 52 percent of Americans cannot even afford the house that they are living in right now...

"Over half of Americans (52%) have had to make at least one major sacrifice in order to cover their rent or mortgage over the last three years, according to the “How Housing Matters Survey,” which was commissioned by the nonprofit John D. and Catherine T. MacArthur Foundation and carried out by Hart Research Associates. These sacrifices include getting a second job, deferring saving for retirement, cutting back on health care, running up credit card debt, or even moving to a less safe neighborhood or one with worse schools."

#5 According to the U.S. Census Bureau, only 36 percent of Americans under the age of 35 own a home.  That is the lowest level that has ever been measured.

#6 Right now, approximately one out of every six men in the United States that are in their prime working years (25 to 54) do not have a job.

#7 The labor force participation rate for Americans from the age of 25 to the age of 29 has fallen to an all-time record low.

#8 The number of working age Americans that are not employed has increased by 27 million since the year 2000.

#9 According to the government's own numbers, about 20 percent of the families in the entire country do not have a single member that is employed at this point.

#10 This may sound crazy, but 25 percent of all American adults do not even have a single penny saved up for retirement.

#11 As I noted in one recent article, total consumer credit in the United States has increased by 22 percent over the past three years, and 56 percent of all Americans have "subprime credit" at this point.

#12 Major retailers are shutting down stores at the fastest pace that we have seen since the collapse of Lehman Brothers.

#13 It is hard to believe, but more than one out of every five children in the United States is living in poverty in 2014.

#14 According to one recent report, there are 49 million Americans that are dealing with food insecurity right now.

#15 Overall, the U.S. poverty rate is up more than 30 percent since 1966.  It looks like LBJ's war on poverty didn't work out too well after all.

Sadly, it does not appear that there is much hope on the horizon for the middle class.  More good jobs are being shipped out of the country and are being lost to technology every single day, and our politicians seem convinced that "business as usual" is the right course of action for our nation.

Unless something dramatic happens, it is going to become increasingly difficult to eke out a middle class existence as a "worker bee" in American society.  The truth is that most big companies these days do not have any loyalty to their workers and really do not care what ends up happening to them.

To thrive in this kind of environment, new and different thinking is required.  The paradigm of "go to college, get a job, stay loyal and retire after 30 years" has been shattered.  The business world is more unstable now than it has been during any point in the post-World War II era, and we are all going to have to adjust.

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

Personal finance gurus are dead wrong

Thank goodness somebody is stating the obvious, as if people today are just so much dumber and profligate with their money, when in fact we're the first ones to deal with retirement and very old age all on our own!:

[O]nce upon a time, a majority of us at least had the possibility of receiving a pension when we retired. That’s no longer the case. We’re now expected to do this on our own. And, frankly, most of us aren’t capable of this task, and we have 30 years of evidence – that is, the lifespan of the 401(k) – to prove this fact. We do everything wrong we possibly can. We are unable to save enough money and we don’t invest it well. At the same time, we lack the crucial ability to see the future. We don’t really know when we will retire and why that will occur. We don’t know if our investments will pan out. We don’t know how the greater economic environment will either play out or interact with our lives.

I was reporting on this stuff 15 years ago and I can tell you just about no one said anything like “oh, by the way, you’ll need more than $200,000 just for medical expenses in retirement.” It’s just unfair to expect people – who are not financial experts – to be able to pull this off. The fact is Social Security and other such schemes were created for a reason. There was no imagined past where people saved up for their old age.

Here's another sacred cow slaughtered:

Financial literacy classes sure sound good. But students who take the classes don’t seem to retain much of the knowledge. And, when you think about it for a moment, that makes sense. The idea that taking a class on how finance works at the age of 17 can save someone from a predatory 100-page small-print mortgage when they are 40 is just preposterous. 

[...] Wouldn’t it just be a heck of a lot easier to not offer certain products, or design them in such a way so that they are easily comprehended, than to take on the seemingly hopeless task of teaching a consumer what a structured product is? Of course. So why isn’t this happening?  Well, a cynic might say that’s because financial literacy works quite well at what it was really designed to do and that’s head off legislative protection of consumers.

And here's the simple truth that the Suze Ormans of the world will never utter:

Our best hope for our personal finances is to realize we aren’t in this alone. There is a powerful culture of shame around money in this country, and it is so powerful it actually seems to prevent us from stepping forward, saying things aren’t working out for us financially, and asking not for charity, but for substantive legislation designed to help us all.

Everything You've Been Told About Personal Finance Is Dead Wrong -- Here's the Truth

By Lynn Stuart Parramore 

March 5, 2013 | AlterNet

URL: http://www.alternet.org/economy/everything-youve-been-told-about-personal-finance-dead-wrong-heres-truth

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

Work is getting old

The Republican Party keeps getting older, while old people keep getting poorer. Connection?

Old People Gotta Work Now

By Hamilton Nolan

January 25, 2013 | Gawker

The "American Dream," which is dead, is to work a steady job for four decades or so, buy a house, watch some football, make some pineapple upside-down cake, and then retire at age 65 with a little pension to enjoy your useless time before death. Every single part of that setup is now crumbling to pieces.

You can't find a steady job. If you can, you can barely afford to rent, much less buy. Football and cake will both kill you. Retirement is a pipe dream. What does this all add up to? The fact that these days, turning 65 means "Here is your Wal-Mart greeter training packet. Please familiarize yourself with its contents." From a new US Census report:

In 1990, 12.1 percent of the population 65 years and older was in the labor force, compared with 75.6 percent for 16- to 64-year-olds during that time. By 2010, the labor force participation rate of those 65 years and older had increased to 16.1 percent, a 4.0 percentage point change. For 16- to 64-year-olds, the national labor force participation rate was 74.0 percent in 2010 (1.6 percentage points lower than in 1990). Within the 65 and over population, 65- to 69-year-olds saw the largest change, increasing from 21.8 percent in 1990 to 30.8 percent in 2010, a 9.0 percentage point increase, compared with a 5.0 percentage point increase for 70- to 74-year-olds and a 1.0 percentage point increase for people 75 years and older.

That's number-speak for "lots of old people have to f**king work now." The only upside is that they're taking jobs away from teenagers (who will rob them) (then fill our jails) (paid for by your tax dollars) (then later be released without skills and unable to find employment) (and rob you).