By David Cay Johnston

Failed Policy — The 401(k) Shrinks In A Growing Economy

September 5, 2013 12:04 pm Category: Economy, Memo Pad 93 Comments A+ / A-
Failed Policy — The 401(k) Shrinks In A Growing Economy

Disturbing new evidence that government policies are propelling us toward a poorer future turns up in a first-ever government examination of retirement savings plans like 401(k)s.

The report, from the Internal Revenue Service, shows that even though the economy is improving, the number of workers saving out of their paychecks for old age is shrinking. So is the amount they save, down 6 percent in real terms from 2008 to 2010.

Additionally, the number of Americans deferring part of their wages into 401(k)-type plans fell in 2009 and again in 2010.

Two-thirds of taxpayers with jobs saved nothing in retirement plans.

Among twenty-somethings, only 1 in 8 or so saved.

While chock full of important new facts, this pioneering IRS report has not prompted a single news report except for this column at The National Memo. How can it be that the major newspapers, wire services and broadcast outlets all missed this?

The answer is simple: Wall Street pours a lot of money into keeping financial journalists focused where it wants attention. That most certainly is not on groundbreaking first-time reports like this one from the IRSStatistics of Income division.

With the economy supposedly on the mend, we would expect to see the number of people saving part of their pay for old age rising, not falling.  And we would expect people to save more of their pay.

But the number of people with work is down, too, by 3.8 million from 2008 to 2010 as measured in the IRS report.

That the number of workers fell more than the number saving may seem like good news, but it misses the larger point that for more than a decade the U.S. population has been growing much faster than jobs.

Since 1999 the median wage, when adjusted for inflation, has been stuck at a bit north of $500 per week. Average wages have grown, but that is due to raises for those making $100,000 to more than $50 million, W-2 wage reports show.

The data also show that, to the extent Americans do have retirement plans, they tend to be used by older workers, who usually earn more and are not burdened by student loans.

Census surveys show that only a third of workers in their twenties have any form of retirement plan at work, compared to 62 percent of workers in their fifties.

But having a retirement plan and actually getting benefits are far from the same. Among all adult workers, only 43 percent say they have a vested right to either their own money they saved or money their employer set aside for them.

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Comments

  • Sand_Cat

    Pensions are worthless so long as the law allows companies to skim off the surplus (if any) or otherwise “loot” the plan, as I believe is now legal in at least some cases.

    • davidcayjohnston

      Columnist here…
      Congress has tightened the rules on plundering pensions, but not nearly enough.
      It has also let companies underfund plans. The problem is laws and regulations that undercut the fundamentally sound economics of pensions, a disaster brought to you by politicians dependent on donations from those who seek their own benefits more than good policy.

      • dtgraham

        Thanks for coming onto the blog amongst the riffraff and doing this Mr. Johnston.

      • charleo1

        I second dtgraham. And while we’re on the subject of pensions.
        Your thoughts on the coming war aganist public sector pensions,
        would be greatly appreciated. It seems, the same powers that have destroyed the pension in the private sector, have now set their sights on this final vestige of the once flourishing, American Middle Class.

      • gmccpa

        Mr. Johnston…are there any statistics on the employer matching component of the 401K? In my limited experience, I’ve noticed that compared to the early 401k years, fewer companies match employee deferrals. I could be wrong….but it does seem to be the case.

        • davidcayjohnston

          EBRI.org has some data

      • elw

        David, I agree that the underlying middle class economic problems can be traced back to political dependence on Corporate funding for Political campaigns but that underlying problem also helps the very rich to have too much power over who actually ends up running for office. I would love to see an article on what kind of actions, besides donating and writing their elected representatives, an average person can do to help change that.

      • Russell Byrd

        In simple terms, if a dollar exists somewhere, greed, and the greedy, will seek to grab it. It does not matter who it belongs to, where it is, the effort it took to make, or the overall cost or damage to society As many have noticed, American businessmen spend more time figuring out how to plunder their own companies and their employees, rather than build for the future. Of course, when you can freely buy politicians, you can get laws that allow this cycle to continue.

    • charleo1

      One of the foremost reasons Mitt Romney is a very wealthy man, is the
      ability to fold the company contributions into the total net worth of company’s
      assets in any bankruptcy settlement. Part of Bain Capital’s takeover of a
      particular business involved running up the debt of a business, declaring
      bankruptcy, then being the major creditor. Thereby taking advantage of a
      government program designed in the 70s to strengthen company retirement
      plans. It makes up some of the money to the now jobless former employees. Mitt, and company put in their pockets, on the front end of the deal.

    • Eleanore Whitaker

      That’s exactly what Enron did. They looted billions from their own employees 401Ks. And isn’t it great how Kenny Boy Lay magically dies one month before he was to be indicted for fraud? Skilling got a lousy 6 years in prison. Meanwhile, 33,000 Enron employees with 2 or more decades of longevity lost every dime they had saved in their Enron 401Ks. Skilling’s out of prison and no worse for the experience. In fact, Skilling is already working on yet another “HAVE” boy financial project. Anyone who’d deal with him after his years of pigging out on his employees 401Ks needs their heads examined.

      • paganheart

        No one will admit it but I am fully convinced that Lay killed himself so he wouldn’t have to face the consequences of what he’d done.

        Worthless little coward.

        • Allan Richardson

          Or, like Judah’s son Er on his wedding night, he “sinned before the Lord, and the Lord took him” maybe.

        • Eleanore Whitaker

          Nah…I’m a true conspiracy theorist…Lay was a bosom buddy of Bush. Bush’s father was once head of the CIA and had ties to those who could put someone like Lay in one of those federal witness protection programs.

          Here’s why I believe this. 6 weeks after Lay’s supposed death, his old lady got TX government to expunge his records of his indictment. Now just why might you expect Old Lady Lay was in such a hurry to do that? Smell all that money Lay had hidden in banks? There would have been no way for her to have access to it without that expungement by TX slimeball judiciary.

          Tell me that somewhere in South America there isn’t a funny looking old guy with tons of Enron profit in his pockets enjoying a whole new life with his old lady. I know…I know…it sounds too bizarre to be true. Truth, as we all know, is stranger than fiction. Who better to hide Lay in a witness protection program than the son of a former CIA chieftain?

        • silas1898

          It was fake and he’s living on a private tropical island somewhere.

    • Russell Byrd

      What is worse to me, is the entire concept of a 401k is designed to make it, and its hostage owner, fail. If the stock market crashes, one day after the closing date for changes, I will have to wait FOUR months (less the one day) to make any changes to my account. At the least, I will have to wait three months.

      Right after “W” took over, I worked with a guy that lost 40k in that slump. All he could do was watch his money disappear. (At the time, I had already lost my savings and was not in a 401k.) Of course, the fat cats were moving their money to safe harbors, often literally, while working people lost their shirts.

      I wonder if this is entirely by design. We work like crazy to build up substantial sums of cash, and then there is a “market adjustment,” where the brokers, bankers, investors, etc. “harvest” the surplus.

      • Sand_Cat

        Don’t know if it’s stioll allowed, but Enron and many other companies also forced employees to invest a substantial portion of their 401Ks in company stock, thereby guaranteeing employee losses as well if the company went bankrupt.
        From another point of view, someone I said this to replied that many of the “victimized” employees knew about the fraudulent and other illegal and unethical practices of the company and deserved what they got.

        • Russell Byrd

          That is the main reason I have such utter comtempt for the trash like tax payer, Ed, angelsinca, lana, etc. Except for just raw luck, they could find themselves in exactly the same position. I think all of them are sociopaths, and like a sociopath, they do not realize that is not a good thing to be. Of course, when you are totally amoral, you have not a care in the world about what happens to your fellow human.

  • Self sufficient

    only the government can save the citizens from their consumptive selves. What a transparent money grab using flawed logic. Terrible journalism.

    • charleo1

      Alright. Let me keep your money for retirement. I’ll make the promises,
      and I’ll make the rules. We’ll leave the government out of it. What do you
      say? Look, there’s plenty of evidence the problem is not enough consumption,
      not too much. The problem is there is too little money in the hands of
      consumers. Not too much spent foolishly. The media is not responsible for
      a poor consumer class.

      • Self sufficient

        My 401k has worked quite well, thank you. I don’t need you, the government or this hack professor to tell me what to do with my hard earned money. Your answer to too little money in the hands of consumers is to deny them tax free savings? The financial illiteracy of some is no reason to punish others who know how to live within their means, something your sacred government could learn themselves.

        • davidcayjohnston

          Columnist here…
          You and many others have done well with your 401(k) and no one, including me, suggests taking away your ability to invest in a 401(k). My column above is about OVER reliance on the 401(k) and other defined contribution plans, which violate classic economic theory (see Smith, Adam, on specialization).

          If just anyone could invest wisely the average Wall Street job (including clerks in the measure) would not pay nine times the national average for all private sector work.

          You call me a hack — obviously you are not familiar with my decades of work. The record shows I have saved taxpayers literally hundreds of billions of dollars (as measured by Congress), saved lives, hunted down an especially vicious killer the cops failed to catch and prompted the adoption of rules and laws that made it harder for dishonest bosses to steal their workers 401(k) money, as well as revealing how little known rules pushed by the Democrats require companies to UNDERfund the pensions of some workers. I could go on here for enough to fill a book…..

          Never assume that because something works for you it is good for all or is good policy overall. There is a place for 401(k)s, but even those who market them acknowledge that they were an accident of legislation and were never intended to bear the burden now placed on them.

          • Self sufficient

            then you should tone down your rhetoric with regard to what the issues are. You are clearly going for shock value at the expense of intellectual honesty. You use terms like “Disturbing” with social security as the only viable option, you give 401ks no room for consideration in your “solution”. And you call it a superfluous health insurance industry, but it must also be part of the solution, not kicked to the curb in favor of an unproven public alternative. Is it that unusual that with high unemployment, a shift to part time labor, and still emerging from a financial crisis that savings have suffered? Maybe you should also attack savings accounts, money markets and CDs, fixed and variable annuities, etc. You are perpetuating the ignorance that is at the root of a lack of savings in your piece.

          • davidcayjohnston

            I called for strengthening SS, which currently is in surplus but which applies to a much smaller slice of wages than it did under Reagan, not for making it the sole leg of what used to be called the 3-legged stool (SS, pensions and individual savings). And I also urged Congress and the states to enact better rules for pensions, which have been around for hundreds of years and are sold in the markets every day as individual annuities (which like 401(k) plans have high costs). They are economically efficient, unlike the 401(k), which is quite literally an accident of policy.

            Yes, health insurers are a superfuous industry. We spend $2.64 per capita for each $1 the other 33 modern econonies spend on a purchasing power equity basis (see http://blogs.reuters.com/david-cay-johnston/2012/09/11/a-tale-of-two-healthcare-plans/). This unnecessary industry is a serious drag on our economy and helps explain why by some measures Cuba of all places is ahead of us.

            You can read about the subsidies that made health insurer billionaires who got rich by paying bonuses to doctors who denied care, resulting in deaths in my triology on the economy. One of these health insurance billionaires even wrote a book before he died saying we need to junk the system that made him so rich, a story I tell in FREE LUNCH

            In 2010 the extra amount we spent on healthcare over what is widely regarded as the best system — France — equalled all of the individual income taxes we paid in 2010. (see referenced column above).

            Nothing in my piece attacks people who save, as you seem to think. What my column does is show that we need a better system with better rules and far less reliance on what was a supplement, not the foundation, of old age finance, as my column clearly shows. And the decline in 401(k) savers and amounts in a study the government should have done decades ago shows that current government policies are sending us into a future that will be poorer when we could with the same money be better off.

          • Self sufficient

            you can’t call 401ks both failed policy and one of the 3 legs, make up your mind. And if you want to wage a crusade against accidental policies that would have real financial consequences for millions of middle class Americans, focus on AMT. How you can turn what is a simple tax free savings vehicle into something that has contributed to worrisome retirements for millions is pure fantasy.

          • davidcayjohnston

            Gosh, I wonder which journalist wrote THE story that put the AMT on the map way back?

            I have “concentrated” with so many pieces on the AMT it would take you a day to read them all, including my work showing how the press routinely MISdescribes the AMT and its history by confusing it with the old MT.

            Who told the American people that it raises taxes on the sick — and that since 2001 that revenue is used to cut taxes for those at the top? Or how it discourages many people from being landlords?
            Hmmmmm…..

            Below is the link to the piece that made the public and Congress aware of what an outrage the AMT is, sans the great photo that was splashed across the top of The New York Times Sunday biz section almost 15 years ago: http://www.nytimes.com/1999/01/10/business/funny-they-don-t-look-like-fat-cats.html?pagewanted=all

          • Self sufficient

            better

          • Russell Byrd

            Go below and burn. You are exactly as I predicted. You NEED everyone else to say what is pleasing to you the way you want to hear it. You DEMAND the conversation agree with your views and placate your sensibilities. Even in an on-topic conversation you exhibit the characteristics of a troll.

            Have at, as I have no further time to waste on you.

          • Russell Byrd

            I hate to burden you, but since I am in a posting mood. As well, this is not completely on-topic.

            Today, I received a CD offer on a new bank that was having a branch “grand opening.” All I had to do was keep $5k in my checking account to get the high dollar interest rate. The minimum that I could invest was $50k. There was the standard statement that there would be “substantial penalties for early withdrawal.”

            Then I read the what the “preferred” interest rate was: 0.9%. The penalties are probably higher than the interest rate.

            My 401k, at my bank, has been at 0.1% interest for some time. That’s per annum, not per day. My employer’s 401k has gradually dropped from 6%, four years ago, to 0.1%. As I have direct deposit, all of my spending moves through my checking account, but last year I made a whopping TWO
            cents on my “interest checking.” I have not had a raise in six years, but I am lucky. I got a statutory raise six years ago, but we have people that have gone twelve years without a raise.

            My question to you is: How can all these good capitalists afford to be so generous? :-)

        • charleo1

          I’ll defer my response to Mr. Johnson. Who is an invaluable
          source of information to help regular Americans improve their own finances. As well as bringing attention to the almost always
          immensely complicated injustices in our tax, and investment
          laws. Which, by the way, many experts along with Mr. Johnson
          has pointed to, as a substantial contributor to our worsening
          wealth inequity in this Country.

          • Self sufficient

            It’s Johnston, with a T. Stroking him would be more effective if you spelled his name right.

            Anyone who tries to convince you that a 401k will “propel you to a poorer future”, and therefore the government needs to control even more of your savings and income than they already do cannot be considered to be helping regular Americans. Educate yourself.

          • charleo1

            Right Like I’m listening to you? Get real.

          • Russell Byrd

            Some of us are hoping that you might just be “stroking out.”

        • metrognome3830

          Mr. Self deficient, where did you ever get the silly notion that your 401k savings were tax free? they are tax-deferred, not tax-free. If you believe they are tax-free, you have a big shock coming once you begin withdrawing that tax-free” money when you retire. And you will withdraw it whether you want to or not, because at age 70-1/2 you will be required to withdraw a set amount anyway and pay the taxes on it. Don’t plan on making any substantial purchases with your tax-free money unless you want to be taxed full bore for the money you withdraw. I don’t wish you any bad luck, but your financial literacy may not be as sharp as you think. And people who sit and gloat over other’s misfortunes and brag about their superiority are really annoying.

          • Self sufficient

            Tax deferrals? We can’t have that can we? The bureaucrats need more money now to pay for their own pensions, healthcare, vacations to Africa and wardrobes. Abolish this failed policy!

            It is as bad to gloat over others misfortune as it to devise ways to penalize those who have earned their good fortune.

          • Russell Byrd

            He is another no-information kind of guy that is probably doing pretty well. He probably had luck getting a good job and feels he is smarter than everyone of his “inferiors.” The underlying vitriol and contempt that is thinly veiled, is just waiting to explode. Of course, I may be totally wrong. As well, I may be much too harsh. Yet I have most often been correct. Much too my own dismay. I would prefer that the world were different.

          • Russell Byrd

            I wonder if that is one of tax payer’s alternate nicks?

            Self sufficient . . . maybe.
            Insufficient (mentally) . . . absolutely.

            And sorry, if I offend, but may I offer a variation on your post. Instead of ending with ” . . . are really annoying,” how about “are really b*st*rds.”

            Stay well.

          • metrognome3830

            I guess I was in a good mood at the time. I get that way every once in awhile. :-)

          • Russell Byrd

            Today, I received a CD offer from a bank that was having a “grand opening.” All I had to do was keep $5k in my checking account and invest $50k to get the high dollar interest rate. Of course, there would be “substantial penalties for early withdrawal.”

            Then I read the that the “preferred” interest rate was 0.9%. The penalties probably cost more than the interest I would make.

            My 401k, at my bank, has been paying 0.1% interest for some time. That’s per year, not per day. My employer’s 401k has gradually dropped from 6%, four years ago, to 0.1%. As I have direct deposit, I spend everything through my checking account, but last year I made a whopping TWO cents on my “interest checking.” I have not had a raise in six years, but I the lucky one. I got a statutory raise six years ago, but we have people that have gone twelve years without a raise.

            My question to you is: How can all these good capitalists afford to be so generous? :-)

          • metrognome3830

            It just make the heart swell, doesn’t it? They are right there to take care of us. Especially our money. They don’t want us to run around spending the money foolishly. They will do that for us.

          • Russell Byrd

            Well put.

        • Russell Byrd

          I think Self deficient, you miss the simple humor, and the huge truth of charleo1′s remarks. We are FORCED to put our future into the hands of people that can make that future disappear. No long winded diversion into puny exceptions is necessary. One of the major problems is the wolves are all too often in charge of the hen house. Disaster at some point is inevitable. Maybe, the totalitarian regimes had/have a point. If they were going to swiftly be taken to the nearest wall for a little target practice, we would have a lot less financial problems.

          I realize you are just another hate-filled, arrogant, wind-bag that came here to bully and whip up on the “untermensch,” so go right on and have at. . . .

    • tdm3624

      When the complexity of an issue is beyond the grasp of the average American then government experts should step in.

      • Self sufficient

        funny. So we need a commission working on extending the time until the sun burns out? Do you remember the day/time that you became a sheep, or did it creep up on you?

        • Russell Byrd

          Seems “the creep” has creeped up on tdm3624. . . .

  • charleo1

    Well, there is also the unfortunate event of 8 out of every 10 dollars ending up in
    the bank account of the top 1%, after a brief turn around the economy for basic
    commodities, like food, gas, and utilities. With a lot of month left, at the end of the
    money. Wise advise used to be, pay yourself first. But, paying yourself before
    feeding yourself, seems a bit ridiculous.

  • paganheart

    My retirement plan is pretty much a loaded .38 and a cyanide tablet, to be used when I am no longer able to care for myself. 401k’s are a pathetic joke, period. The rich get richer, the rest of us get sh!t on and there’s not a frigging thing we can do about it. The system has failed. Buckle up, folks. It’s gonna be a long, bumpy, painful and ugly ride to rock bottom. In the very near future, “retirement” will be yet another luxury that only the little pigs at the top can afford. The rest of us will be putting ourselves six feet under.

    • charleo1

      Please! Enough of the happy talk! Just give it to us straight. No sugar coating!

      • dtgraham

        Before I scrolled down to your reply, that’s exactly what I was thinking of posting after reading paganheart’s post. Sick minds think alike I guess. Now that’s funny.

        • charleo1

          Sick is right. For every troubled soul, for whom all hope is lost.
          Standing on a ledge of the 22nd floor. Nature dictates there
          must be one in the crowd hollering, “Jump!” “You worthless Rat!”

          • Allan Richardson

            And asking the other spectators for a donation to his Tea Party campaign for Congress.

          • charleo1

            Funny only because it’s true!

    • Sand_Cat

      I’m hoping for a massive heart attack and stroke at my desk so my life insurance will still be in force and my wife may be able to get something out of Workers’ Comp as well.
      Does this make me a “taker”?

      • Russell Byrd

        Yeah, you, you, @#$%^& Liberals will even drop dead just to scam the system. Oh crap, I have been around Ed too long. Sorry. :-)

        I might add that I am also pondering the positive effects of just that possibility. Not that I would love to die at my desk, but it sure would simplify life, . . . and death.

  • tdm3624

    “But until voters tell the politicians to fix the pension system and strengthen Social Security, the oligarchs and their highly paid servants in both finance and the policy-formulation business will benefit while everyone else gets stuck with the burdens.”

    Exactly. But finances/investments are complicated for the average person so the tendency is to ignore the problem. It is easier to focus on simpler issues like gun-rights or gay-rights then delve into the world of 401k’s, IRA’s, pensions, annuities, securities, and bonds.

    • charleo1

      You mentioned the perfect issue of gun rights. This issue for me, is clearly one of those canary in the coal mine’s. Here’s why. Somewhere north of 90% of the American public thought requiring a simple background check, like the one many gun owners themselves had taken, and passed, was a good idea. Not a cure all. And not the evil Government coming for our guns.
      Just a sensible idea. Well, the NRA didn’t see it that way. And this rather puny, and not all that well funded lobby, was able to defeat a 90% plurality of Americans. So, now criminals can continue to access their guns without background checks. But more importantly, other lobby groups that represent banks, investment, and insurance cos. the oil cartels, etc. can be assured that even though the vast majority of the people want SS shored up, the cap raised, and funded. And other laws, to help, and protect everyday, Americans. They feel they have the final word, and that word is very often, no. My conclusion here, is what we are seeing is we the people, have lost a good deal of control over our government. And worse, or as result, they no longer represent our interests here. And even though I’m no expert by any measure. I truly believe our economy, who it favors, and the pretty sorry shape it’s in, is because regular people have ceased to matter very much. And, this can be traced directly back to the same reason we don’t have the gun control legislation the overwhelming number of us thought was a good idea. Make sense to you? It sure does to me.

      • dpaano

        We can certainly thank Citizen’s United for most of the problems!! Thank you Supreme Court…..what a bunch of idiots!

        • Russell Byrd

          I got a letter from (Let’s Ditch) Mitch McConnell. I wrote to say that what I thought of the Citizen’s United decision. He did surprisingly reply to me with a form letter. I was informed that he has worked “tirelessly” to restore the civil rights “that had been denied to certain individuals and groups.” I guess he thinks we are stupid or something. I would have more respect if he just told he “to go f*ck off and die.” In so many words, that is exactly what he did.

      • Russell Byrd

        Have you read about the N. Carolina Senate overriding the Governor’s veto of a bill that would stop any law enforcement agency from destroying guns. Someone called it the “save the guns law.” Now the poor little things are no longer in danger.

        They even tacked on a passage stopping judges from issuing orders allowing the destruction. They are hellbent on saving those guns. What is wrong with some of our citizens and our politicians?

        • charleo1

          No I hadn’t read of the latest. But, N. Carolina is really quite
          the hotbed of Right Wing radicalism. To the utter disbelief, and horror of the majority of it’s inhabitants. As to what is wrong. Those who understand such things, say the residents may be in for as much as a decade of this, due to gerrymandered redistricting. As bad for democracy as the Citizens United decision is. It will not cause the probable crisis, where the most radical politicians are the ones most likely to win primaries. The moderates are being purged by having their districts changed to be made up of a solid block of the most hard core “Conservatives.” While other more moderate, and Democratic areas, are either concentrated into a large single district. Or their numbers are diluted, by splitting a more moderate district into two solid Conservative districts. Thereby, negating their votes. For instance, the most popular primary weapon used aganist House Republicans in the 2012 election, was their, “caving,” by voting to raise the debt ceiling, and thereby avoiding a catastrophic bond market crisis. That again, those that know, say would have caused a world wide economic calamity. So, this Right Wing excursion into radicalism, when mixed with the largest economy in the world, that holds the world’s trade currency, blowing up the bond market, could get real serious, real quick.

      • tdm3624

        I think regular people have ceased to matter as much because many Americans don’t really get involved in the process. They might answer a telephone poll and say, “yes I support gun control” for example, but the politicians know that those folks will probably not go to the polls. A more engaged America can demand change.

        • charleo1

          I agree. I think that is exactly the calculation they make.
          The thought process goes something like, Okay, I have
          popular support for this gun regulation. But, this lobby
          that threatens to target me in the next election. So, I
          don’t know if the people will vote for me, for supporting the
          gun control legislation. But, I do know what the NRA will do.
          A greater amount of public activism would counteract the
          lobbies. But it’s really tough. People are so busy. I know
          my daughter works 9/10 hours, then it’s basketball practice,
          plus the regular games X two kids, and she teaches at the
          local university. She has said, Dad I call you to find out
          what’s happening in the world. And I think that is fairly typical.

  • Eleanore Whitaker

    Let me see if I’ve got this right. I worked for the first company that implemented and beta tested the popularity of the 401Ks back in the late 1970s. Then, the company matched by 50% any deductions for 401Ks made by employees. Later, CEOs figured out they could “manage” how the choices in 401K deductions would be split in these plans AND they could reduce the amount of the company match. It’s barely at 3-6% in most companies in 2013. The idea all along was to get rid of the employers’ having to provide ANY pension and to dump more and more of the employee benefits costs back onto employees. The only remaining strategy left was to reduce salaries by not giving employees cost of living salary increases. You know any CEO living in a ghetto or driving a jalopy? No? Of course not. These are the “HAVES” who only know how to take from everyone else. The dirtiest word in their world is “Give.” All take, no give. But they don’t call that greed?

    The idea is to make employees work longer, harder, for less and drop dead at their jobs. This is why the same “HAVES” hate SS. It’s the only bastion of security workers in the US today have to rely on for their retirements. Because SS has trillions just sitting there waiting to be claimed, the same “HAVES” see that as a waste of our payroll deductions they could better spend gambling on Wall Street investments. Ideally, in the “HAVE WORLD” the peeons get to work till they drop. Dead employees don’t need pensions, do they?

    • Bill Thompson

      Eleanore the said truth is that there is not trillions sitting in Social Security it has all been used to give the wealthy tax breaks and paid for by pieces of paper called IOUs. Social Security is in effect broke and with the problems of the national debt those monies that were given to the wealthiest of Americans has essentially been robbed. read the book the looting of Social Security by Alan W Smith it lays out how this theft occurred and how it is going on to this day to make the debt look smaller than it actually is.

      • santaferider
      • dpaano

        YEs, Bill, we can thank ex-president Johnson for that…..he’s the one that passed the bill to allow the so-called “borrowing” from the Social Security fund. Unfortunately, when it gets paid back, if ever, it’ll be the taxpayer’s money that pays it back one way or the other. We’ll be paying back IOU’s on our own money that we didn’t get to use!

      • Justin Napolitano

        Sorry the tell you but you are wrong. The money collected for SS, in excess of what is spent for pensions, is used to buy special issue treasuries. This was a part of SS since the law was passed. the money is there and as it is needed the treasuries will be cashed in and Congress will have to raise the money to pay them off just like it has to raise the money to pay off maturing treasuries sold to China and the rest of the world. Please get your facts straight.

        • Bill Thompson

          JUSTIN The government issued IOU’s called “special issues of treasury”they are posted to the account of the Social Security trust fund the special issue securities have no commercial value because they cannot be sold in the marketplace. When the Social Security benefits are paid out a corresponding amount of securities is deducted from the trust fund in essence the only thing in the Social Security trust fund is non-marketable government IOU representing a promise by the government that it will obtain resources in the future equal to the value of the securities when ever such resources are needed to pay Social Security benefits. These IOUs are supposed to be earning interest but the government pays the interest on funds borrowed from Social Security trust fund with non-marketable special issue securities just like the ones posted when the money was borrowed.( This means that both the assets any interest earnings of the Social Security trust fund are in the form of government IOU that has no commercial value). Simply said the government has borrowed money from the Social Security trust fund that should be earning interest., In an attempt to make the deficit look smaller on a yearly basis the money is gone. By the way this is not a sports event this is reality and your tone sucks!

          • Justin Napolitano

            You have contradicted yourself thought-out your message.
            Yes, he money is in special issue treasuries and the government will honor them and pay the money when it is needed. In fact it has been doing so for a couple of years already. You see, I have faith in the US government and believe in it. You, on the other hand are nothing but negative. Please tell me of one single Federal Government obligation that has not been honored, or shut your mouth. And to be clear I do have a problem with people, like yourself that spread crap on the internet and that has a lot to do with my “tone”.Also please tell me of any security that is more highly rated than US treasuries; special issue or otherwise?
            Furthermore, congress will issue regular issue treasuries to pay the money back for special issues so your argument is moot.

      • medford_resident

        wow, how utterly deluded. The fact that society’s bottom thinks SS is in trouble because the people paying for everything got a tax break is sickening. A glaring example of our least intelligent buying the left’s lies hook line and sinker.

        • Bill Thompson

          Don’t take my word for it just try reading something maybe you’ll come up with the same answer. But then again that would require Reading a book or an article that you may not like the outcome of.

          • medford_resident

            I await any credible link you’d like to provide. talk is cheap. especially from the bottom.

          • Bill Thompson

            The looting of Social Security by Alan W Smith . Also the the link above will give you a idea of what has gone on. http://www.sociodesic.com/soci… .I fail to see why you need to call people names if they differ from your opinion take the time and look on the net with a open mind and find the facts for yourself .Be ready to be disappointed.The book is available at Amazon .Your pal Bill

          • medford_resident

            your link is 404.
            I’m disappointed.

    • dpaano

      Eleanore: I guess I’m pretty lucky…..I work for a multinational company (family owned) that not only matches our 401(K) deductions by 3-4%, they also give us an employer-paid pension. The pension isn’t a whole bunch (and I’ve been here for almost 7 years), but it keeps growing. As for my 401(K) plan, I put in 14% (because I get a military pension, I try to put in 80% of that so I don’t get taxed on it as income). So, I’m doing okay relatively; however, I wish they would have started the 401(k) plans back when I was younger…..I would have been able to save more for my retirement (in 3-5 years depending on my health). I also try to put money away in an “emergency” savings account, but don’t have near enough to cover 6 months of my salary, which is what they recommend. But, I think I will be okay…..or so I hope. Unfortunately, not everyone can work for a company that cares about their employees like the one I work for. That’s a bad thing!

      • Eleanore Whitaker

        The company I worked for who started the 1st 401Ks had very young employees in their early 20s. That was in the days when companies kept employees for decades and didn’t ship their jobs offshore. Some of those became 401K millionaires by the time they reached 35. That’s why you saw a fast turnaround in the laws about 401Ks and how much each employee would be allowed to contribute in a single year. All of sudden, it wasn’t such a good idea to have a 401K if it meant young people would become 401K millionaires. That’s when the legislation that hacked away at these retirement funds began in earnest.

  • itsfun

    Maybe people aren’t saving as much because of the economy and the cost of gas and such. Many people are becoming part time employees because employers won’t be able to afford Obamacare for them. Some companies and states have destroyed pension plans by forcing people to have 401′s for their pensions. But this doesn’t really address the problem of not saving. If anything it should add to the stats of people saving in 401′s. I think the economy and unemployment are the main culprits here.

    • Allan Richardson

      Employers CAN afford Obamacare in the long run, but they are crying poormouth in the short run to sabotage it, so they can keep the old system in which individual “choices” can be overridden by contrary corporate “choices” such as not covering life saving procedures, not even providing insurance, etc. The number of people dying because of lack of insurance is equivalent to 15 Nine-eleven terrorist attacks every year.

      If you are not paid enough to save, you cannot save. And if you have no control over getting cancer, having an accident, being shot by a criminal, and the like wiping out what you HAVE saved, you do NOT really have “freedom.”

      • charleo1

        That’s exactly right isn’t it? Should it be about their freedom, at the
        expense of our own? One thing those shouting discouragement to
        others working on the life raft must never do. Is inspect the condition
        of the boat they are insisting on everyone’s staying aboard.

      • Eleanore Whitaker

        You want to hear a really good one? In my state, the HMO have already figured out their losses in profit because they know many of the people will automatically opt for the less expensive ACA plans. This is also what they are doing to people who buy alternative fuel cars. They figured out that these hybrid owners aren’t buying gasoline and that reduced the amount of revenue from the gasoline tax they were using to repair roads in my state. So guess what the boi geniuses are up to now? They are pushing for federal legislation to allow states to charge hybrid owners by the miles they travel because they can’t charge them a gasoline tax that has increased every single year. Watch the HMOs do the same when people stop needing to run to ERS and to expensive network doctors.

        • Allan Richardson

          I understand your point, and I also understand the point of the highway departments; that situation is not exactly comparable to health insurance.

          All vehicles inflict some damage on public highways, the heavier, the more damage. Traditionally, at least since the death of the original steam and electric cars of the early 1900′s, all vehicles used petroleum-based fuels. Damage to roads being proportional to miles traveled multiplied by weight of vehicle, and fuel usage determined by approximately the same formula, that was the best way to cover the cost of repairs. With extremely low fuel usage vehicles, fuel taxes no longer cover the cost. So there is a legitimate argument here that hybrid vehicles do not cover their own damage costs (at one time there was a claim by anti-trucking activists that the additional mileage taxes paid by common carriers were so low, because of subsidies, that they did not cover their own damage either; I don’t now for sure if they were right then, or are right now). Also, in most states the gas tax has NOT been increasing every year, since gas is taxed by the gallon, not by the dollar total like sales tax.

          However, HMO companies are not in danger, because going to an ER is not really profitable to anyone; indigent patients do not figure into insurance profits anyway, and they cost taxpayers; the ER is a public service that costs hospitals, rather than making them money; HMOs would prefer their policyholders to use FEWER medical services, except for preventive ones; and network doctors charge more because they only get a “retainer” monthly fee except when patients actually come in.

          So I wouldn’t worry too much about that. If it is proposed, facts such as the ones listed above can be used to rebut the idea before it is enacted. The road use tax is another matter, however. There actually ARE expenses caused by vehicles using roads, regardless of the type or amount of fuel used. And someone does have to pay for the repairs.

          So stay well and don’t drive more than you have to.

          • Sand_Cat

            The road damage should be more than balanced by the prevention of all the other damage internal combustion of carbon-based fuels inflicts.

          • Allan Richardson

            On a global basis, yes. But THIS pothole in THIS road still has to be fixed.

          • Eleanore Whitaker

            I would agree with you about the profits of HMOs regarding indigent patients if I had not recently been tossed off my employer’s HMO and forced onto Medicare because of age. One of my neighbors has worked as an ER intake clerk for more than 2 decades. The indigent actually do factor into HMO profits according to her 20 year experience. I’ll tell you how.

            All profits whether from paying or non-paying patients come from the billing. The devil is in the details when it comes to billing for the indigent as has already been seen in the fraud perpetrated by Healthcare South in the early 2000s. The initial billing is coded and submitted by the ER intake clerk who follows rules mandated by each hospital. That’s the reason for the variables in ER billing from one hospital to the next. Hip surgery in a northeast hospital an cost 6 figures. In the south, it may only be in the tens of thousands. I know this because I saw the difference in the Medicare billing, some of which I strenuously questioned, when my elderly mother lived with me and prior to that in NC. ERs in the US get away with the most expensive billing in the world. There’s virtually no standardization of costs from one hospital in the US to the next as there is in other countries of the world.

      • itsfun

        Its wonderful we have someone that say all employers can afford paying for Obamacare. If it is so wonderful, why has Obama illegally exempted some groups of people already? Why did the House and Senate beg for and get exempted from Obamacare. Maybe they don’t want to be treated like us common folks. I believe people with existing medical conditions and those that get a terrible disease should have complete medical insurance. That is a place for the government to help. The government should not be taking over the health care of every person in the US. I have been very happy with my care, why does the government need to ruin my care. I can’t keep my current plan, because Humana has already said they are leaving my state because of Obamacare. I probably will also lose my doctor. Health care reform is needed for many many people. I just ask leave me alone and keep out of my life. I am happy the way I am and don’t want the government dictating my health care.

        • Russell Byrd

          Shitsfun, go to the highest place you can find. A tall building would be good, but a rural hill or mountain might be better. Stand up on the top, fill your lungs deeply, and scream as loud as you can, O-BA-MA! Do that for at least six hours, then again every day following, for at least thirty days.

          Then maybe, you will have gotten the constant, off-topic, stupid, and insulting use of the Presidents name out of your system. Then maybe, you can move on to on-topic posting and possibly, make some sense.

          • itsfun

            After long and considerable thought, I have come to the conclusion you sir are a JERK. Any further communication from you will be deleted before even bothering to read.

          • Russell Byrd

            Cool!

            Well, first, I know you are LYING. I would be greatly surprised, but VERY gratified if you would quit replying.
            Second, you will lose that ALL IMPORTANT last word. I realize that you will not believe that is NOT important to me. What is important to me is you DO NOT get any joy by having the last word with one of your LYING, disrupting, insulting, unreasonable, and stupid balls of confusion you call a post.
            Third, “after long and considerable thought.” I rest my case right there. You are not even capable
            Fourth, if it is any consolation, I am willing to accept being called a jerk. Hmm?
            Maybe, because that is really a complement coming from you? Or is it that I have to stoop down to your level to try to get you to understand? (I know, I failed on that count.) Or could it just be that you are unable to cope with someone that strives to be honest, understanding, and sincere, and has an IQ about 70 points higher than yours? I am always willing to listen to honest suggestions. Of course, I despise dishonesty and bullying hatred of one’s fellow man.

            And you can shove the “sir.” You demonstrated long ago that you have no clue how to be a gentleman. . . .

        • Allan Richardson

          The Congressmen wanting to be exempted are the ones who want to kill the program. They are raising the issue to make people like you think it will fail, so it must be stopped. In the LONG RUN it will be an economic benefit to the nation, but not necessarily to ALL special interests, such as insurance carriers. The GOP Tea Party wants to stop it because they are afraid it will work SO WELL that they cannot stop it even if they have control of Congress and the White House in 2017: too many voters will like it.

          Or worse from their viewpoint, the benefits of having all of us help out will be so apparent that voters will demand a program like Medicare for all, which will save even more money and get even better results. Then Aetna and UHC and Blue Cross will have to go into another line of insurance.

          • itsfun

            Some things I read about obamacare this morning. I won’t like it because I am being forced to change insurance companies and my doctor, because my insurance company is pulling out of my state.

            Keep reading for a fascinating personal account of how the Obamacare
            trainwreck is playing out at the granular level, courtesy of a benefits
            professional tasked with unpacking and complying with the labyrinth of
            new mandates and regulations buried within the law. But first, more “anecdotal evidence” of a decidedly non-anecdotal phenomenon, this time in New Jersey. Thanks, Obamacare:

            The ill effects of Obamacare continue to add up. Towns in New Jersey plan to cut full time workers’ hours to avoid offering them health insurance because of Obamacare. The
            Middletown township has announced that it will reduce hours from 25 of
            its employees to prepare for the looming implementation of Obamacare.
            The school district will cut back hours as well. Toms River officials will also act accordingly to keep their costs low, due to the high expenses that Obamacare will impose. Sharing the same plight, the Berkeley township (the municipality devastated by Hurricane Sandy) is considering a similar move. The
            township says that Sandy left them deep in financial throes and that
            Obamacare costs are simply out of their already limited budget.

            Meanwhile, patients in New Hampshire are seeing their hospital options slashed as a direct result of the new law:

            Anthem Blue Cross Blue Shield, the only insurer approved to offer
            policies on the health insurance exchange created under the Affordable
            Care Act, has narrowed to 14 the number of hospitals for the ACA plans
            that will be offered beginning Oct. 1. Paula Rogers, the company’s governmental affairs director, said the move was made to reach affordable premium levels. “We
            are well aware the concept of a narrow network is new to New
            Hampshire,” Rogers said. “Do we need 26 hospitals to serve our plan? We
            decided we didn’t.” The
            network for Anthem individual policy holders who do not purchase through
            the exchange will be limited as well when current policies
            expire…Critics of the plan said it amounts to rationing health care. “Now
            we are not going to have the doctor of our choice, the hospital of our
            choice or the plan of our choice,” said committee co-chair, Rep. John
            Hunt, R-Rindge.

            Not only will New Hampshire residents enrolled in the Obamacare
            exchange see their hospital choices limited, so will Anthem’s individual
            policy holders at large, just as soon as current policies expire. So
            the rationing of options is bleeding over and affecting people in the
            private market. Democrats said people would be free to keep their
            preferred plans. That’s not true. They promised individuals and families could keep their preferred doctor. They now admit that the firm pledge doesn’t necessarily apply anymore. And now, private policy holders covered by the only Obamacare-approved
            insurance company in the state of New Hampshire will see their hospital
            options trimmed down, even if they’re not on the exchanges. Why? Cost
            containment by Anthem, as the company prepares for the Obamacare
            deluge. Higher premiums
            and fewer options. Welcome to Obamacare, America. I’ll leave you with
            a portion of an email I received from a human resources professional
            located in Arizona. She is the benefits specialist at a large
            manufacturing company with over 1,000 employees, where she administers
            health insurance plans. It seems as though widespread concerns about the qualifications and trustworthiness of Obamacare’s so-called “navigators” are very well founded:

            Every day is a new freak show when it comes to Obamacare and figuring
            out exactly what we have to do to comply. Right now we are working on
            the “employee notice” that every company is tasked with sending out to
            their employees by September 30th notifying them of the federal
            healthcare exchange. We were
            planning on including info in our notice about the “navigator” that’s
            been hired in [our area] to help people ‘navigate’ the exchange. But when
            I looked this person up, I discovered that not only have they not been
            hired yet, but the non-profit that’s hiring them is looking for someone
            with just a GED that they can pay $29k a year. To *find your health insurance for you.* Meaning they will be attempting to understand a bill that even the lawmakers who passed it don’t. Additionally, the
            government is not requiring these people to get background checks,
            which is truly incredible. (They’re going to be handling your tax info,
            SSN, even past health records.) If they don’t hire someone soon they’re not even going to be able to complete the shortened training by October 1.

            Readers may recall that the Obamacare overlords just recently cut down the mandatory training regimen for these navigators by 33 percent. Is another desperate reduction in the offing? Back to the correspondence I received:

            There’s one more issue here as well, which is the employer notice. There
            is verbiage on that notice that says “even if your employer offers an
            affordable health plan, you may still qualify for a subsidy.” That
            is simply a lie. And since Obama has now delayed the employer mandate,
            the feds have no way of knowing whether your employer offers you an
            affordable plan or not. In other words, they have to take my word for it
            and I can simply say “my plan is really expensive at work” and get a
            subsidy.

            Except…the way the law is written, employees who are offered “affordable” care at work are not eligible for subsidies, leading to anti-worker conundrums like this.
            Is that rule being rewritten on the fly, as well? If this verbiage
            isn’t simply an error, one wonders how many additional Americans might
            receive subsidies from the government thanks to this potential loophole;
            remember, the anti-fraud eligibility verification process has also been delayed
            by a year. How the administration would justify this move (including
            the inflated price tag) is beyond me, although they’ve been overtly uninterested
            in explaining their extra-legal actions in the past. They just do what
            they want to do. The more Americans dependent on the law, no matter
            how dysfunctional, the harder it becomes to uproot.

  • elw

    The truth is clear unless you make a 6 digit income it is hard to save, especially if you are raising a family. I’ve handled it by simplifying my life. I sold the big house and bought a small cute one for cash. I made sure my overhead would fit into my Social Security and have learn how NOT to buy “stuff” I do not need. It saves me money and is good for the earth. Recently I decided not to support the Corporation and their hold on our pocket book and have limited my shopping in the corporate own stores and instead always start in the 2nd hand shops. I will only buy at large corporate owned stores when I cannot find what I need in the 2nd hand stores. It has actually been fun and has opened a whole new world for me. It is true that they hold the purse strings and control where we work, what we live in, how we get paid, our health care coverage and what happen to us as we get older; however, they can only do that if you continue to support them by shopping in their stores and by buying their products. What they have forgotten is that the dollars spent by the Middle Class that made them rich and without those dollars their world will slowly and steadily fall apart.

  • Allan Richardson

    Gary Reber’s approach was promoted heavily during the Kennedy years in the book “The Capitalist Manifesto” by Steve Kelso and Mortimer Adler. If it were done right, by a Congress and administration actually working FOR the working public, it would turn the US economy into a downright Utopia (OK, I exaggerate). If it were done wrong, and it seems that the 401(k) and IRA plans WERE part of an attempt to do it wrong, it would accelerate the Biblicization of our economy (a few Herods, Pilates, and High Priests living in palaces, everybody else begging in the streets).

    We also need to find a way to keep the economy THRIVING without GROWING in absolute size, since the finite resources of Earth put a limit on growth.

    Dik Thurston mentioned other countries with more “individual control” of their retirement plans, where people are better off at retirement. I do not know of any, but I recognize the code phrase “individual control” as a Randian euphemism for “individual RISK.” Before Social Security, older people who DID save for retirement, but picked the wrong stocks, or endured a market crash (as in 1929 and 2007) just before retirement age, with high unemployment, had to TRY to keep their jobs for life, since their savings were wiped out. Either that or live as indigents with their children (who, beginning in 1929 and again in 2007, had their OWN financial limits).

    One reason for starting the SSA was to let these people who deserved to retire do so, opening up jobs for the unemployed young people; but another reason was to provide essentially an individual DEFINED BENEFIT plan, in which the nation as a whole took the risk of loss. In other words, changing a YOYO plan (you’re on your own) into a WITT plan (we’re in this together). Medicare added to this by helping that demographic who have, on average, the least income (and the least ability to INCREASE their income within their remaining lives), but require the most medical care, to be secure from financial disaster because of catastrophic illness.

    Obamacare, a partial step toward the national health plans in other nations, recognizes that NO DEMOGRAPHIC is immune to sudden exhorbitant costs for medical care, not even the young and healthy (undiagnosed congenital heart problems, what doctors call “juvenile” diabetes, arthritis and cancer, accidents, assault, including gunshots, etc.). It’s a stepping stone toward making sure that
    (1) everyone willing to work has the opportunity to succeed,
    (2) no one willing to work will lose EVERYTHING because of unpredictable random events such as illness, accident or market loss, and
    (3) everyone who has worked and saved, even if the savings were lost due to unavoidable factors, will be able to retire comfortably.
    The very small number of individuals who would be “lazy” their entire lives would not put more than a miniscule burden on the vast majority.

    But if the entire society has less need for economic work, yet can produce enough IN TOTO to make everyone comfortable, there is no need to tie prosperity to labor that is NEITHER NEEDED NOR WANTED by the market. And likewise, no need to shame the unneeded would-be workers by calling them “lazy” and having them and their families live in poverty. There is plenty of non-economic work to do (indeed, Kelso and Adler argue that some professions, such as medicine, teaching, leadership of religious and non-profit institutions, and politics, would be done better WITHOUT making them pseudo-economic activities, provided enough people competent in those “humanities” did not need an economic role to subsist; note that they were writing at a time when a doctor could take care of 99 percent of health needs, as opposed to maybe 60 percent today, WITHOUT the use of extremely expensive equipment). There is also plenty of PUBLIC work (as in Public Works) that is inherently economic such as repairing and improving infrastructure: roads, bridges, mass transit, high speed communication networks, and could and should be a public responsibility. Financing it would require higher taxes from those who CAN AFFORD to pay them, who would be rewarded by living in a BETTER country.

  • jointerjohn

    Over the past fifty years another element has eaten away at our ability to save for retirement. The constantly escalating prices of houses and the terms by which we finance them. In the 1950s mortgages were seldom more than twenty year term and paying your house off before you were fifty years of age was the middle class standard. Then that industry convinced us to play “the real estate game”, with longer loan terms, lower down payments and the temptation to parlay equity into bigger and grander houses. They encouraged us to buy houses at higher front-end ratios, (income to debt), and we fell for it. The banking sector convinced us we would “always have a house payment”. Add in the Federal Reserve Board’s constantly discounting interest rates and being debt-free and having conventional savings became unattractive and unproductive. My house is paid for (I purchased with a fifteen year mortgage), and the former mortgage costs are now flowing directly to retirement savings. That money will serve me better in retirement than a big fancy house.

    • Russell Byrd

      In my line of work, I come across this phenomenon all the time. People constantly buy about 20% more house than they can ever afford to pay for. They stay broke for years and the first hiccup, they’re dead.

      Unlike “Self delusional,” I do not put the blame completely on the home buyer. The builders and developers do not see any massive profits in building modest homes. As well, I see this as an effective tribute to American advertising and Capitalist pressure, that you’re a nobody if you do not have an ultra fine house, in a select neighborhood . . . with an incredibly large, life long payment. Sort of like, “you’re not a man if you don’t smoke the same cigarette as me.” Or something similar to that in the old Rolling Stones song.

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