The US – Where Retirement Is a Leap of Faith

I like to flatter myself with the notion that Ragebot has some non-US readers. And so it may come as a surprise that retirement fills many of us here in Bush’s “Ownership Society” with a certain sense of dread. Though we have a quaint, quasi-state sponsored system know as Social Security, the plain fact is that, for any of us beyond the tail end of the Baby Boomer generation, Social Security probably won’t be around. Moreover, the kind of comprehensive, ‘defined-benefit’ retirement plan (what most people would call a ‘pension’) is exceedingly rare in the US these days. All that’s left are ‘defined contribution’ plans that allow most, but not all, of us to save for our own retirement tax-free. If we fail to put away the money or make poor investment choices, well…that’s our own problem.

But here’s the thing, access to decent retirement savings plan in this free-market paradise depends largely on the what kind of worker you are. Are you a company man…company woman? Well then you probably get to take advantage of a 401K or 403B that allows you to sequester around $15,000/year of your income pre-tax. In other words, your retirement dollars are not taxed by the Feds and investment gains grow tax-deferred. Your company may even provide matching funds as a benefit.

But…if your self employed, a part-time worker, seasonal employee, contract employee, or work for a small business, all you get is a paltry $5000 yearly contribution to an individual retirement account.

Where’s the god-damned equity in that?

This country supposedly values entrepreneurial spirit. Yet when it comes to planning for retirement, our government says: “You want to go it alone? Well then you better be successful, cause we’re going to screw you.” Should we find that strange? Not really. Though the United States was supposedly built on the notion of individualism, what we see today is corporatism given preference at every level of government—from tax policies to environmental regulation—and the real irony is that the broad, stable job base that once bolstered an expanding middle-class has been sacrificed in favor of a small core of financial service jobs that benefit (and benefit greatly) a very small slice of the working populace. So in a not so subtle way our government is saying that the only way to ensure a comfortable retirement is to shackle oneself to a low-pay, low-skill job that, at least, has decent retirement benefits.

Sort of like religion, huh? Sacrifice now for the chance of comfort later.

11 thoughts on “The US – Where Retirement Is a Leap of Faith”

  1. We need a new New Deal. I just keep thinking, if McCain wins, it’s over. But it’s over anyway. You can’t do what the last administration did and recover… not in our lifetimes. A lot of people are just going down. Retirees are the first to go–the tragic cost of national stupidity.

  2. Hey, my job is low-pay, MILDLY-skilled. Get it right. We’ve got computers and water fountains and everything!

    My dad is self-employed. He’ll be working until he croaks precisely because of that: there’s nothing to retire on, not enough to live relatively comfortably anyway. Of course, he’ll still vote for The Maverick® because Dems are commie pinkos or whatever they are this week.

  3. Look, I’m worried about all those people ‘going down’. Is it healthy? Wouldn’t you get a crink in your neck?

    Look, I was going to move to the U.S., that land of Milk and Honey, but after reading this post I’ve changed my mind. I can starve where I am, thank you!

    Thanks for the warning.

    P.S. On my blog I’m advocating Hugo Chavez for America’s next President! It he a goer, do you reckon?

  4. Hello, Kvatch.
    I’m not so pessimistic about social security myself.
    But I know that I won’t rely on it.
    I’m a member of a the 2nd highest paid trade union, and I have a really good pension plan (with annuity). Current pension pay-outs for full retirement run around $3200/mo.
    The biggest part of the benefits amount is the Health & Welfare Fund, which covers every penny of my health insurance. Not sure how that’s handled for retirees. In some locals, retirees no longer pay dues (my dues are $34/mo.).

    Now, I was looking at some charts here recently, and I found that the value of the dollar in terms of the dollar of 1984 is right around 45 cents. That’s an average rate of inflation of 3.5% over 23 years.
    The future will be much more costly.

    You state:
    “[T]he broad, stable job base that once bolstered an expanding middle-class has been sacrificed in favor of a small core of financial service jobs…”

    Well, before that, there was this preference for the low-level white collar middle class over the blue collar manufacturing base.
    And so, the way I call it, their chickens have come home to roost. They got what they wanted, and if the entirety of what they asked for seems less appealing than the part, not my problem.

    I see the baby boomers as the great villains of our day, worse even than the religious right, and with the middle class not far behind them.

  5. SA… Well said. Undoing Bush damage is going to be the biggest challenge for an Obama or Clinton administration, and I don’t think either is up to it. (Clinton may not want to even try.)

    Randal… The ability of the ‘Thuglicans to get people to vote against their own interests is truly astounding. My father-in-law votes Republican because he thinks of Bush as the kind of millionaire you could just sit down and have a beer with.

    …and good health care. Something else the little guy gets screwed on.

    Frogette… Indeed!

  6. Cognitorex… Depressing and dangerous. When all the people have left are scraps to eat and labor for next to no pay, revolutions follow.

    DavidG… I think Chavez would be much better on ‘Dancing With Stars’ rather than ‘Dancing With Congress’. He likes that whole rule by decree thing way too much.

    PT… I’ll probably have no health care in my dottage. So I guess I’m jealous. I save like a sum-o-a-bitch for my retirement, and it still won’t be enough because of exactly what I stated above–arrived on the work scene too late. 401Ks were all that was left for technology workers, by the time I entered the workforce, and often enough we don’t even get that.

  7. Well, we had some money in a 401K. Not enough to retire comfortably, but we were on track. Never in our wildest dreams could we afford to put away the max, though. Then came the stock market crash. So there was a lot less. Then there was a serious illness, career crises and other things that can happen to people, so there’s a whole lot less. So, I’m a bit skeptical about how great a system it is even for people who are supposedly in the best position to do it.

    I do have to ask progressive traditionalist what is so villainous about baby boomers? Worse than the religious right? We’re not even monolithic. We’re a generation – a whole lot of people born in a certain time. Why all the hate?

  8. So in a not so subtle way our government is saying that the only way to ensure a comfortable retirement is to shackle oneself to a low-pay, low-skill job that, at least, has decent retirement benefits.

    Kvatch – it’s the modern form of serfdom you’re talking about here. But those 401k plans aren’t all their cracked up to be because while most people can save up to $15k with matching funds, the sad fact is that most don’t. In fact, with rising food and fuel prices what they are, you’ll see fewer people saving for retirement. Worse still is that one can also borrow against these plans, which is another story unto itself.

  9. Zenyenta… It’s a great system if what your government is after is giant enriching of the financial industry. In other words, too much money chasing too few investments. Other than that, it’s a huge risk. As to PT’s comment on the Boomers (and I speak as a Boomer…1964, after all, the last year): I think that what he’s expressing is frustration with a generation that has the size, clout, and will to have things their own way. This is starting to play out now in major policy decisions on things like Social Security and Medicare. The great political battles of the next 40 years are all going to surround Boomers vs. the three generations after wrangling over government benefits.

    Spartacus… Indeed. No retirement plan is valuable if you can’t take advantage of it, and borrowing from one’s retirement is crazy. Can’t do that with an IRA.

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