Your Terrifying Retirement Future: Why Millions Risk Sliding Into Poverty As They Age

[xchrom]

http://www.alternet.org/maya-rockeymoore-racism-and-sexism-retirement-fiscal-policy



AlterNet: There’s a lot about America’s growing retirement security crisis that’s not fully appreciated by the public, especially when it comes to the harmful impacts on communities of color and women. Tell us how unless we as a country have an honest discussion about this, and expand Social Security, that tens of millions of people will literally slide into poverty as they age.

Maya Rockeymoore: There is no way we cannot have this discussion given the nation’s changing demographics. The rising majority will be primarily Asian-American, African-American and Latino-American. The fact of the matter is those people are already here. Of all the babies born today, a majority are children of color. By 2019, a majority of all children under the age of 18 will be from these racial and ethnic, quote-unquote, minority groups. And by the by 2043, the nation will be majority minority.

The benefit cuts that austerity proponents are talking about today will be fully shouldered, if they ever were to pass, by a nation that looks very different than it does today. And so when you’re talking about cutting Social Security now, most proposals are not talking about cutting it for current retirees. They’re talking about implementing changes that would affect today’s youth. You should understand that you are primarily cutting benefits for a generation of young people who the odds are stacked against them having any type of retirement security.

AlterNet: And that’s on top of what’s shaping up as a retirement crisis for baby boomers.

Maya Rockeymoore: We’re already a nation experiencing a retirement crisis. The private sector mostly does not have defined benefit pensions anymore. And 401Ks have been a failure. What many people fail to appreciate is that communities of color have less access to retirement savings vehicles on the job than do white Americans. And unfortunately, even when they do have access, they are either more likely not to take advantage of it, or more likely to take loans out of it. So what we have is a population, that by virtue of their inconsistent relationship with the labor market, which is rooted in historical inequities, are already disadvantaged when it comes to retirement security.

[chervilant]

1. And, how many of us, like me,

had to cash in retirement accounts just to survive long periods of unemployment?

[nightscanner59]

3. I hear you there!

I have had to cash out my savings accounts each time. I get worried about retirement time, how I'm going to survive it and enjoy anything at all on SS income.

[jtuck004]

4. I think you should stop at the word "survive". For tens of millions of people, that's where

it is today, and those numbers are going to grow for at least the next 15 years.

[chervilant]

6. Unless -- until? -- the uprising...

We're due for a revolution.

[N_E_1 for Tennis]

7. We are over due,

for a revolution, a systems change, if you will. But I'm afraid there is only a little time between commercials and shopping trips.

[Brigid]

16. I dunno . . .

Sooner or later, the bread and circuses will stop working.

[Egalitarian Thug]

21. Millions. There is no recovery when you've had to take that course. A fact conveniently

overlooked by the promoters of parasitism.

[daleanime]

2. K&R....

[marmar]

5. k/r

[Orrex]

8. Retirement. Heh.

Like a great many people, I've assumed for years that I'll need to work into my 80s just to afford a cardboard box to be cremated in.

What the hell is retirement?

[awoke_in_2003]

18. One nice thing...

about my wife being 10 years older than me is she may go before I do. If so, I won't have to worry about her survival, which makes the .45 solution easier to swallow.

[yellowcanine]

9. "And 401Ks have been a failure." Not really. As with SS, they do well what they were designed to

do - allow deferred compensation to be placed into an account reserved for retirement. The problem is when provision is not made for other contingencies (such as long term unemployment) and when people cannot put enough money into 401Ks so that the accounts grow enough before retirement. The real problem is access to good jobs which pay well enough to be able to set some income aside every pay period and no provisions for long term unemployment. Even SS by itself is not too bad if there are 35 years of employment at a decent salary. The real problem is good jobs and job security.

[TBF]

10. How Brokers can Scam your 401K

Lobbyists Rally to Ensure Brokers Can Scam Your 401(k)
Lee Fang on July 15, 2013 - 11:18 AM ET
Capitol Hill. (Courtesy of Wikimedia Commons)

On Wednesday, more than seventy-five businessmen and women arrived to Capitol Hill to make their case to regulators and other officials. There was little coverage of the event, other than a one-sentence Politico newsletter item claiming that this lobbyist-led trip was an example of a trade group “[hitting] the hill for small investors.”

But rather than going to bat for mom-and-pop retirees or other small investors, the day-long event on the hill was actually the latest salvo in a three-year campaign by brokerage firms to block regulations that would ensure that advisers to your 401(k) work in your best financial interest, or in other words, as your fiduciary. The Financial Services Institue, a trade association for broker-dealers, organized the trip, which included representatives from Pershing, FSC Securities, TransAmerica and other industy leaders.

While many Americans rely on 401(k) plans for their retirement, few are aware that their financial advisers are often working for commissions, and have no legal obligation to have their clients’ best interests in mind. The vast majority of 401(k) advisers, around 85 percent, are not actually fiduciaries. Critics say brokers often steer small investors into funds that may not be suitable, or are burdened by an array of high fees.

Since 2010, the Labor Department has proposed rules that would broaden the definition of fiduciary to “anyone who provides investment advice for a direct or indirect fee to retirement plans or holders of an individual retirement account,” according to PBS’s Frontline. The Frontline story shows how many Americans with 401(k) plans are reaching retirement with far less money than they anticipated because they have been prodded by their advisers into funds riddled with fees and other penalties that have eaten away at their nest egg. In many cass, as a report by The Nation Institute’s John Wasjik documented, retirees are encouraged to place their savings into risky funds sold to them as “similar to a CD” in terms of safety. Many retirees who have spent much of their careers saving through their 401(k)s are now taking up jobs well into their 60s and 70s just to get by.

The broker-dealer industry was swift with its attacks on the fiduciary rule.

Financial giants like Fidelity and Bank of New York Mellon Corporation were joined by corporate-funded fronts like the Competitive Enterprise Institute in lobbying the Labor Department. A lobby organization for brokers involved with the campaign says that it helped generate 5,000 letters to the White House, conducted 260 meetings with congressional representatives from both parties and “coordinated” letters from thirty House Democrats and fifty-five House Republicans urging then–Labor Secretary Hilda Solis to drop the rule. One of the leaders of the Democratic mobilization against the rule, Representative Carolyn McCarthy (D-NY), was later feted with a breakfast fundraiser by the Council of Insurance Agents and Brokers.

In September of 2011, the rule was retracted to be reworked. Fortunately for 401(k)-holders, the Labor Department says that it will re-propose the rule earlier this year. And as expected, the lobbying against the rule has heated up.

Congresswoman Ann Wagner (R-MO) sponsored a bill that would add new layers of red tape to the rule, potentially pushing it back for many years. The bill was opposed by the AARP, the Consumer Federation of America, and several other groups who said it will “leave American investors with significantly less protection.” Nevertheless, Wagner’s legislation passed the House Financial Services Committee last month with bipartisan support.

Although second-quarter lobbying disclosures are still trickling out, it’s clear big brokerage firms are helping to battle the re-proposed rules. Charles Schwab and Co. spent at least $50,000 alone helping to pass Wagner’s legislation. When the rule was debated in 2011, Columbia Financial Advisors, Fidelity, the Financial Services Roundtable, John Hancock Financial, AXA Financial, Ameriprise, Allianz of America, MetLife, Charles Schwab, LPL Financial, Hartford Financial, TD Ameritrade, and other financial firms spent several millions lobbying the federal government on the issue, according to lobby disclosures filed with the Senate.

John Wasik, a in a recent piece explaining how Wagner’s bill would tie down the Labor Department rules, says the effort “channels the spirit of Bernie Madoff” by subverting real investor protection.

More here: http://www.thenation.com/blog/175271/lobbyists-rally-ensure-brokers-can-scam-your-401k#

[Enthusiast]

11. +1 a whole bunch.......nt

[Silent3]

14. Even without scams, the returns on investment just haven't been there.

If your 401(k) did every bit as well as the overall stock market over the past decade, without anyone siphoning off excessive fees or tricking you into bad investments, the viability of 401(k)s is based on historic averages for stock market ROI, and that's just what we have not been seeing.

I've put more money into my 401(k) during the past decade than any other time in my life. These have been prime earning years for me. Yet my 401(k) is little better off now than if I'd been stuffing my savings into a mattress -- no special magic of compound interest turning my savings into a comfortable nest egg has been seen.

[yellowcanine]

19. I have TIAA CREF and it has been excellent.

Really I can't complain. I have 60 % stock and 40 % TIAA traditional annuities (guaranteed 3% but usually does better) and it has almost always outperformed the market - bull or bear for over 20 years. It has been way better than savings accounts, CDs over that period of time. Yes when the stock market goes down it is a little scary but it always comes back up and currently the returns are almost unbelievable. I may adjust the ratio somewhat when I finally retire but I will likely always keep at least 40% in stocks. Over the long term it works.

[Enthusiast]

12. Yes, really.

[TBF]

13. Unfortunately the idea of 401K - just like trickle down as a whole

looked much better on paper than it did in reality. Seems to be a theme with capitalism. Everything is always designed as a pyramid with just a few on top ... We must rethink that model.

[Enthusiast]

17. Right you are.................nt

[Warren Stupidity]

15. If "what they were designed to do" was to

maximize profits for wall street and transfer all pension risks to individuals from large corporations, yes they have done that. What they haven't done is provide a feasible pension system for people to augment social security.

[kelly1mm]

20. For those of us who have had multiple jobs, 401k's have been a blessing. nt

[Egalitarian Thug]

22. Yes, really. A retirement system that regularly fails 10% - 20% of its participants

is not a retirement system, it is a casino game.

And when you compare apples to apples, its doesn't even pay out as much as the slot machine it so closely resembles. Even if you could totally eliminate the vig, it would only be a marginally better confidence scheme.

[yellowcanine]

25. My point was it is not a retirement system. It is a retirement tool.

You don't blame the hammer because the house fell down.
The tool is being able to defer compensation and save it in an account. The "system" is how those accounts are structured. That is where many people have run into problems. But it is not the fault of the tool.

[myrna minx]

27. No, but you blame the poor design and the horrible building materials.

[madville]

23. I'm worried

And I have a military retirement, a federal civilian retirement, a 401k type fund, potentially social security and potentially a state pension if I work another job I have a line on after I retire from the federal job.

There is no gaurantee any of those will be there.

[Liberal_in_LA]

24. kick

[Douglas Carpenter]

26. this is the great ticking time bomb