Aside from stagnant wages, soaring unemployment and plummeting home values, the major tragedy of this recession is the havoc it has wreaked on the retirement incomes of millions of Americans who have planned and saved their entire lives, only to watch that money drain out of their accounts much sooner than they anticipated…
With rapidly dwindling savings and fewer opportunities for jobs than their younger counterparts, many older Americans are facing a very uncertain economic future.
“This is the undiscussed explosive bomb in all this, is all the pension benefits, all the 401(k) money that’s been drained out by workers trying to stay afloat until they find a job,” Rep. Jim McDermott (D-Wash.) told HuffPost. “There are a lot of people who, when this is over, are going to have nothing. They will have lost their house, they will have used all their pension money.”
What’s missing from the piece is the fact that most people’s 401(k)s had already lost much of their value when the market tanked in 2008:
But the stock market downturn has exposed 401(k)s biggest flaw for all to see — all the investment risk is borne by the individual. Just before the stock market crash, more than 70 percent of the assets in 401(k) plans were in the stock market, according to figures from the Federal Reserve. Stock prices have plunged by more than 40 percent from the market’s peak in November 2007.
“For too many Americans, 401(k) plans have become little more than a high stakes crap shoot,” said Congressman George Miller (D-Calif.), who chaired a Feb. 24 hearing of the House Subcommittee on Health, Employment, Labor, and Pensions. “If you didn’t take your retirement savings out of the market before the crash, you are likely to take years to recoup your losses, if at all. We are realizing that Wall Street’s guarantees of predictable benefits and peace of mind throughout retirement was nothing more than a hollow promise.”
When I was laid off in February of 2009, I liquidated my 401(k) and my wife liquidated her IRA, so we could pay off our bills and get out from underneath the mountain of debt we had accumulated.* As a result our taxes this year were ridiculously high, and now that both of us are out of work, we’ll have to start over from scratch when we eventually become employed again.
Of course, there are people in much worse shape than us:
Marguerite DiGaetano, 58, says she is confident that after two years of solid unemployment, despite having worked her whole life, she will never be able to retire.
“I think the person who invents the cubicle where you can discreetly hang your walker where it doesn’t trip anybody, that person will be very popular with the baby boomers,” she said. “Who’s gonna be able to retire at 65? That’s only seven years away. Not me. I’ll be working until I die.”
In addition to creating a new hobo class of permanently unemployed or unemployable people, the Bush Depression has destroyed the expectations of millions of people that they would have a comfortable retirement, and that their children would do as well as, if not better than, they did. Maybe those expectations were unreasonable to begin with, but they certainly held true for most Americans, once WWII ended and the middle class began to grow and prosper, for quite a few years.
Reagan’s election began the slow, steady, inexorable decline of the middle class, and the enrichment of the plutocrats and their enablers. The gap between the haves and have-nots began it’s comically exaggerated growth, reaching truly ridiculous proportions. The S&L crisis and the housing and tech bubbles prefigured the bankster bailout and mortgage meltdown of 2006-08.
Meanwhile, the rich were taxed less and less, and the biggest corporations not at all in many cases. And we are now at the point where the American Dream is just another bullshit slogan. Somehow “Work ‘Til You Die!” doesn’t seem quite as catchy as “Only in America!”
So, is this what “American Exceptionalism” is all about? Fuck Yeah!
*Not that the debt was anyone’s fault but our own, but jeez: it’s not like we were living like kings. We were both high-salaried “professionals,” living in a modest 3-bedroom, 1-bathroom house in a suburb of San Francisco; we had one fairly new car and one old one; our high-school age son had his own particular set of expenses; and we had acquired a number of toys, gadgets, and appurtenances that gave us something to look forward to when we got home from our soul-crushing 9-to-5 jobs. We had two cats, one of whom became sick and cost us thousands of dollars in vet bills. We had been on exactly two vacation trips in twelve years. We ate out occasionally, went to movies in the theater infrequently, and splurged on a good bottle of wine every so often. But it did not feel like we were living so wildly beyond our means that we needed somebody to come and take away our credit cards.