News Story of the Day: New United States Census data suggest that American workers are less prepared for retirement than they were 15 years ago. A part of the problem, according to report authors, is that half of companies are offering company-sported 401(k) retirement plans as of 2013. up from 39 percent in 1999.
It’s reported that middle class professionals and managers are mimicking the behaviors of low-income Americans, which means more people are relying primarily on Social Security for their retirement. But the average Social Security benefit is around $15,000 per year for those in the mid-five and six-figure salaries.
And with a lot of people shafting bigger corporations in favor of small businesses and startups may prove disastrous for retirement savings.
“The current 401(k) system was designed for a workplace that doesn’t exist for most people: lifetime careers at big corporations that offer benefits,” said Teresa Ghilarducci, an economist at the New School. “Saving consistently — which you need to do for just a modest retirement income — isn’t remotely likely.”
The national savings rate is between three and five percent so that isn’t likely nowadays.
Chart of the Day: Preliminary evidence shows that Seattle area restaurants are already bracing for the substantial increase in labor costs. The American Enterprise Institute released a chart that found restaurant jobs dropped again in the month of September. As you may remember, the Seattle city council instituted a $15 minimum wage, with a $11 minimum wage beginning in April. It’s apparent companies are already trying to stave off the inevitable.
Illustration of the Day: Economic Policy Journal published this photo that looks at the Federal Reserve’s very first destroyers of the economy, er, board members. The image includes Charles Hamlin, W.G. McAdoo, Frederic Delano, Paul M. Warburg, John Skeleton Williams, William P.G. Harding and Adolph C. Miller.
Quote of the Day: With the Republican and Democratic primaries just a few months away, this quote from Friedrich Hayek on conservatism is quite timely and something that political junkies should take into account.
“Conservatism, though a necessary element in any stable society, is not a social program; in its paternalistic, nationalistic and power adoring tendencies it is often closer to socialism than true liberalism; and with its traditionalistic, anti-intellectual, and often mystical propensities it will never, except in short periods of disillusionment, appeal to the young and all those others who believe that some changes are desirable if this world is to become a better place.”
Video of the Day: Saturday Night Live did a parody of the Democratic debates last week. And the only one who did a fantastic job is Larry David and his portrayal of Bernie Sanders. Many have already compared the creator of “Seinfeld” to the self-identified socialist (SEE: Video: Does Bernie Sanders sound like Larry David’s George Steinbrenner in ‘Seinfeld’?). He hit it out of the ballpark.
Your $15,000 payment may be the average Social Security payment. But it is not the average for those in the mid-five and six-figure salaries. I have never made more than $26,000 per year, but my Social Security check will be $13,092 at full retirement starting in 2022. Counting my wife’s benefit, who never worked $6,546, Total=$19,638. My sister makes $55,000 per year working for an insurance company, many years she made a lot less during her working life. she started getting her Social Security in July $22,200 and when her husband gets his spousal benefit in 2 years it will grow to $29,970, because he is taking his benefit at age 62 it is reduced. If he waited to age 66 the total would be $33,300.
Anyone with a six figure income above $118,500 would of paid the max tax and receive the max benefit of $31,704, if they had a none working spouse or the spouse benefit from a job is less than $15,852, total benefit would be $47,556.
If both husband and wife had 6 figure incomes the total benefit would be $63,408. A very long way from the stories $15,000.
Also, these payments are adjusted up each year when the average workers salary goes up for future retirees. Regardless of COLA increases. A little research and the writers of these stories could provide real information. I feel so sorry for that 6 figure family getting only $63,408 per year in Social Security, NOT!