Poor Man Survival
Self Reliance tools for
independent minded people…
ISSN
2161-5543
A Digest of Urban
Survival Resources
We live in an age when unnecessary things are
our only necessities.
- Oscar Wilde
- Oscar Wilde
Most Americans will never be able to afford to
retire…The Coming Social Earthquake in America
Plus, My surprise prediction as to who will run
for president in 2020
Every
single state government is unable to deliver on their pension as each one over
promised and is broke as I’ve written repeatedly here…IL is among the worst.
An economic recession appears increasingly
probable within the next year or two, the disparty in prospects between
the 35 million future pensioners and the rest of the workforce will become
increasingly obvious.
Off-loading Of Retirement Risk By Corporations
Once
pensions had become commonplace, they were much less effective as an incentive
to lure top talent. They started to feel like burdensome cost centers to
companies.
As
America's corporations grew and their veteran employees started hitting
retirement age, the amount of funding required to meet current and future
pension funding obligations became huge. And it kept growing. Remember, the
Baby Boomer generation, the largest ever by far in US history, was just
entering the workforce by the 1960s.
Companies
were eager to get this expanding liability off of their backs. And the more
poorly-capitalized firms started defaulting on their pensions, stiffing those
who had loyally worked for them.
So,
it's little surprise that the 1970s and '80s saw the introduction of personal
retirement savings plans. The Individual Retirement Arrangement (IRA) was formed
by the Employee Retirement Income Security Act (ERISA) in 1974. And the
first 401k plan was created in 1980.
These
savings vehicles are defined contribution plans. The future payout of the
plan is variable (i.e., unknown today), and will be largely a function of how
much of their income the worker directs into the fund over their career, as
well as the market return on the fund's investments.
Touted
as a revolutionary improvement for the worker, these plans promised to give the
individual power over his/her own financial destiny. No longer would it be
dictated by their employer.
Your company doesn't offer a pension? No
worries: open an IRA and create your own personal pension fund.
Afraid your employer might mismanage your pension fund? A
401k removes that risk. You decide how your retirement money is invested.
Want to retire sooner? Just
increase the percent of your annual income contributions.
All
this sounded pretty good to workers. But it sounded GREAT to their employers.
Why?
Because it transferred the burden of retirement funding away from the company
and onto its employees. It allowed for the removal of a massive and
fast-growing liability off of the corporate balance sheet, and materially
improved the outlook for future earnings and cash flow.
As
you would expect given this, corporate America moved swiftly over the next
several decades to cap pension participation and transition to defined
contribution plans.
America The Broke
Well,
things haven't worked out too well.
Four
decades later, what we're realizing is that this shift from
dedicated-contribution pension plans to voluntary private savings was a grand
experiment with no assurances. Corporations definitely benefited, as they could
redeploy capital to expansion or bottom line profits. But employees? The data
certainly seems to show that the experiment did not take human nature into
account enough – specifically, the fact that just because people
have the option to save money for later use doesn't mean that they actually
will.
While the total number of people expecting a pension
isn't tiny, it's certainly a minority of today's workers.
31 million private-sector, state and local
government workers in the US participate in a pension plan. 3.3 million
currently-employed civilian Federal workers will receive a pension; as will
some percentage of the 2 million people serving in the active military and
reserves.
Combined, that's about 25% of current US workers;
roughly 13% of total US adults.
A
return to economic recession appears increasingly probable within
the next year or two, the disparity in prospects between these 35 million
future pensioners and the rest of the workforce will become increasingly
obvious.
The danger here is of festering social discord. The
majority, whom we already know will not be able to retire, will highly likely
start regarding pensioners with envy and resentment.
"Hey, I worked as hard as Joe during my career. How
come he gets to retire and I don't?" will be a common
narrative running in the minds of those jealous of their neighbors.
This
bitterness will only increase as taxes continue to rise to fund government
pension payouts, already a huge drain on public budget
It's not a stretch at all to predict the
divisive tension and prejudice that will result from the growing gap between
the pension haves and have-nots.
Any projected decreases in Social Security (benefit
payouts will only be 79 cents on the dollar by 2035 at our current trajectory)
will only exacerbate the ire, as the small governmental income the have-nots
receive becomes even more meager.
The growing potential here is for an emerging social
schism, possibly accompanied with intimidation and violence, not dissimilar to
that which has occurred along racial or religious lines during darker eras of
our history.
As people become stressed, they react emotionally, and
look for a culprit to blame. And as they become more desperate, as many elderly
workers with no savings often do, they'll resort to more desperate measures.
Broken Promises
And it's not all sunshine and roses for the pensioners,
either. Being promised a pension and actually receiving one are two very
different things.
Underfunded pension liabilities are a massive ticking
time bomb, certain to explode over the next few decades.
For example, many pensions offered through
multi-employer plans are bad shape. The multiemployer branch of the
Pension Benefit Guaranty Corporation, the federally-instated insurer behind
private pensions, will be out of business by 2025 if no changes in law are made
to help. If that happens, retirees in those plans will get only 10% of what
they were promised.
Moreover,
research conducted by the Pew Charitable Trusts shows a $1.4 trillion shortfall between
state pension assets and guarantees to employees. There are only two ways a gap
that big gets addressed: massive tax hikes or massive benefit cuts. The
likeliest outcome will be a combination of both.
So, many of those today counting on a pension tomorrow
may find themselves in a similar boat to their pension-less neighbors.
No Easy Systemic Solutions, So Act For Yourself
There's no "fix" to the retirement predicament
of the American workforce. There's no policy change that can be made at this
late date to reverse the decades of over-spending, over-indebtedness, and lack
of saving.
All we can do at this time is influence how we take our
licks. Do we simply leave the masses of unprepared workers to their sad fate?
Or do we share the pain across the entire populace by funding new social
support programs via more taxes?
Time will tell. But what we can bet on is tougher times
ahead, especially for those with poor income prospects.
So the smart strategy for the prudent investor is to
prioritize building a portfolio of income streams in order to have sufficient
dependable income for a sustainable retirement. Or, for simply remaining afloat financially.
Sadly, accustomed to the speculative approach marketed
to us for so long by the financial industry, most investors are woefully
under-educated in how to build a diversified portfolio of passive income
streams (inflation-adjusting and tax-deferred whenever possible) over time.
And in the interim, make sure the wealth you have
accumulated doesn't disappear.
During the Great Depression when Democracy and
capitalism seemed on the verge of failing the average family, America saw a
huge growth of Communism and Socialism among its people…the same is happening
again.
Source: Peak Prosperity
Final thoughts: Political Earthquake Coming-Guess Who Will Run
for President?
The
imbalances are extreme and obscene... Also the GOP
must get its act together in regard to women if it expects to succeed [more in
leadership roles for instance]
This
is why I think the GOP lost so much in the past mid-term elections. The Dems/Socialists are tapping into a
growing unrest in America between the haves and the have-nots. There is a coming political earthquake for
this nation.
Social unrest that will erupt more and more frequently
here and around the world if the economic and political elites continue to
behave as they have. Wealth and power have been stripped from the public and
been concentrated into the hands of fewer and fewer people.
In a Pew Research Center study of Americans age 22-37, 57% called
themselves “mostly” or “consistently” liberal. In a Gallup poll of Americans
age 18-29, 51% had a positive view of socialism. And in a University of Chicago
survey of Americans age 18-34, 44% said they would prefer to live in a
socialist country.
Kids today, few of which ever had to fend for themselves or had that
opportunity removed from them by the Nanny State, are drawn to
socialism…they’re broke, they can’t afford today’s high cost homes and autos,
they’re tired of living in basements, they want to make the world a nicer place
– with your money!
Earlier this year…
In the Democratic primary election for New York’s 14th district earlier
this year, democratic socialist Alexandria Ocasio-Cortez trounced incumbent
Representative Joseph Crowley, the fourth-ranking Democrat in the House.
Clearly overconfident, Crowley barely even campaigned. Since then,
Ocasio-Cortez has become a media darling, appearing alongside Vermont Senator
Bernie Sanders, a self-described socialist who narrowly lost the Democratic
presidential nomination in 2016. While much of the energy among Democrats is on
the far left, the party has made a point of selecting candidates with a real
chance of winning in November.
A revolution is
probably coming and the younger generation will likely lead it. That revolution will see several things which
I predict including:
·
A quadrupling of our income tax
·
A national sales tax
·
A single payer health system
·
A $15 minimum wage for everyone across the board
nationally
·
A forgiveness of all student debt combined with some
kind of free tuition for college
·
More rights will be eroded such as free speech, gun
rights & even the ability to carry cash over certain amounts [it is already
limited at airports & border checkpoints].
All of this will be in response to the vast growing
inequality income gap in this country which has seen huge declines in our
middle class during the past generation or two.
Many blame the GOP and old line Democrats for maintaining this status
quo.
The
middle class has been steadily shrinking, but most Americans still believe that
they are a part of it. Perhaps this is due at least in part to the
egalitarian values which have been pounded into our heads for most of our lives. Very few Americans would
have the gall to define themselves as “upper class”, and I have never met
anyone that would describe themselves as “lower class”. In place of
“lower class”, many politicians now like to use the much more politically
correct term “working class”, but a more apt description might be “the working
poor”. Today, half of all American workers make
less than $30,533 a year,
and you certainly cannot support a middle class lifestyle for a family with
children on that kind of income.
Our
incomes have stagnated as the cost of living has soared, and the middle class
has experienced steady erosion as a result. But despite all that, 68
percent of all Americans still consider themselves Middle Class …
In reality, the middle class
now makes up just over 50 percent of the total U.S. population, according to
a recent report
from Pew Research Center, which used 2016 data. That’s compared to 61 percent in 1971.
CitiBank research indicates Americans are once
again at record credit card debt levels not seen since 2009 and more people are
being denied loans and new credit card applications…they’re even at record
levels of upside down rates in auto loans.
Here’s my big prediction for the next election…Michele
Obama will run for president! Her
current book tour has been in reality, a
trial run. It has been overwhelming
successful. The media and the public
gushes over her every move. With the
backing and blessing of Oprah [which she’ll undoubtedly get] her odds of
winning against any opponent are outstanding.
Yours
for a brighter season,
Bruce
‘the Poor Man!’
Final Notes…
Contributors and subscribers enable the Poor Man Survivor to post 150+ free essays annually. It is for this reason they are Heroes and Heroines of New Media. Without your financial support, the free content would disappear for the simple reason that I cannot keep body and soul together on my meager book sales & ecommerce alone.
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Stop Saving for Retirement
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Recession Warning Signs to Look Out For and Tips to Protect Yourself
Smart financial practices will serve you well no matter what the economy does.
How to Prepare for a Natural Disaster…
California
Wants to Tax Your Text Messages. Here's Why
Kansas Family Warns Others That Medicaid Can Take Your House
Kansas Family Warns Others That Medicaid Can Take Your House
Why
Are Schools Banning Parents from Lunchtime Visits?
University Policy Allows Expulsion for ‘Mean’ Facial Expressions
University Policy Allows Expulsion for ‘Mean’ Facial Expressions
Police
Use Facial Recognition Doorbells to Create Private Watchlist Networks
Your Apps Know Where You Were Last Night, and They’re Not Keeping It Secret
Your Apps Know Where You Were Last Night, and They’re Not Keeping It Secret
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4 comments:
As always I think you nailed it on several key points. State and local governments have been overly generous with taxpayer dollars in handing out benefits and pensions to government workers and that is coming home to roost...finally. The same has happened to the post office which is why [as you pointed out in a previous issue] postage continues to head toward the sun.
Finally, today's youth has no upward mobility and they see socialism as the only path despite its failure in countries to our south and even now in Europe which can barely afford to continue as it has [especially as its welfare state has absorbed so many Muslim refugees who don't work just as Leftists here want to do with unemployed drifters at our southern border]...the free lunch doesn't last without someone picking up the tab and just as most US corporations left the middle class to pick up the government tab when they stopped paying their share of the taxes in the US...where will the cash come from when the well dries up?
Terrific observations as always and your prediction about Ms. Obama is interesting & would not surprise as her other half wasn't done implementing his socialist agenda so why not have her finish the job and the mindless automatons in this country will blindly follow without question, bowing at her feet...who knows, perhaps she will be the anti-Christ we keep hearing about?! She sure thinks she's a smart one...read this:
Michelle Obama Explains How She’s Smarter Than Every Person She’s Ever Met
https://flagandcross.com/michelle-obama-explains-how-shes-smarter-than-every-person-shes-ever-met/
Insightful reading.
Spot on and relevant-times are changing and as you point out everything is cyclical. Socialism is attractive to young people who have no real life experience and people like the Obamas appear to them like the messiah leading them to the holy land of milk and honey just no ideas as to how all these goodies will be paid for. Idiots such as these learned their disruptive methods from Saul Alinsky & his "Rules for Radicals" but mainstream morons haven't a clue about this philosophy and how Mrs. Clinton and the Obama's became apostles of these Communistic methods...we're in for a rough ride my friend.
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