Fascism is the union of government with private business against the People.
"To The States, or any one of them, or to any city of The States: Resist much, Obey little; Once unquestioning obedience, at once fully enslaved; Once fully enslaved, no nation, state, city, ever afterward resumes its liberty." from "Caution" by Walt Whitman

Thursday, August 16, 2012

Lower standard of life: 2012-08-16 "What We’ve Come to: About Half of Retired People in the U.S. Die with Less Than $10,000 in Financial Assets"

by Michael Lombardi, MBA for Profit Confidential
[http://www.profitconfidential.com/michaels-personal-notes/what-weve-come-to-about-half-of-retired-people-in-the-u-s-die-with-less-than-10000-in-financial-assets/]:
For the first time in its history, this generation of workers will be the first to pay more into Social Security than what they will be paid out during their retirement years.
Retirees in the 1960s received seven times more than what they paid into Social Security, with the assumption that women lived until 81 and men until 78. (Source: Associated Press, Aug. 7, 2012.)
According to the Urban Institute, a Washington independent think tank, even in 1985 retirees received more than they paid in, but just barely, as budget deficits from the 1960s to today completely wiped out that 7-to-1 ratio.
In 2011, a married working couple (with the assumption that the wife lives until 85 and the husband until 82) has paid $598,000 into Social Security, but will only be paid out $556,000 during their retirement years.
In the 1960s, there were 4.9 workers paying into Social Security for each retiree, so budget deficits were not an issue. Today, there are only 2.8 workers for each retiree and that ratio is set to drop to 1.9 workers by 2035, which makes the budget deficit in Social Security a growing problem.
The Congressional Budget Office believes social security will run dry by 2033 as budget deficits completely overwhelm it. However, with the municipal crisis and budget deficits reaching such levels that pension plans are being cut back dramatically today, forget 2033; the crisis is now, when we have budget deficits overwhelming the system.
The Urban Institute concludes that the budget deficit will only widen in the future, which means either benefits will have to be reduced, so retirees get even less than what they paid in taxes, or taxes will have to rise.
Since the financial crisis began, private pensions, retirement savings and home values reduced the money retirees were banking on. This means that since the financial crisis began, more and more retirees have had to fall back on Social Security to make ends meet or close their personal budget deficits. The problem is due to budget deficits; retirees get less from Social Security than they did in the past.
In all, 25% of married couple retirees and 50% of single retirees rely on Social Security for 90% of their income.
As a result of this mess stemming from the financial crisis, 46% of Americans in 2012 will die with less than $10,000 in financial assets. (Source: CBS, Aug. 8, 2012.)
What this distressing picture means, dear reader, is that the financial crisis has taken away a lot of wealth from the average retiree, placing them in their own budget deficit troubles. Their only hope is Social Security, but its budget deficits are so bad that the average retiree for the first time in the history of Social Security is getting less than what they paid in!
As a result, retirees are working more and cannot afford to retire at 65 like previous generations. This also implies that, since retirees are worse off, they can’t contribute to consumer spending like they did in the past. Those multiple vacations are a thing of the past. The splurging on restaurants and nights at the theater is a thing of the past, as retirees have their own budget deficits to deal with.
Retirees will continue to make up a larger portion of the population here in the U.S. than working people, as baby boomers retire. Now that Social Security doesn’t have the purchasing power it did in the past thanks to budget deficits, the current retiree is left with a lower standard of living, leaving the U.S. economy on a lower growth path for years to come.

Where the Market Stands; Where it’s Headed:
Over the last 14 days, the Dow Jones Industrial Average has gained a paltry 89 points. If we look back further, the stock market trades today at the same level it did five months ago. What’s happened?
The stock market is discounting the global economic slowdown. It realizes S&P 500 companies will suffer greatly as the economies of Europe and China deteriorate. But, at the same time, it is supported by the fact the Federal Reserve has stated it will provide more liquidity if the U.S. economic situation gets worse.
In other words, the stock market rally that started in March 2009 is losing steam. The market is very fragile.

What He Said (summation of the article):
“’Home sales down 8.4%, could be the bottom,’ read the headline in last Friday’s USA Today. What do they know that I don’t? They know what realtors and their associations tell them, and that’s about it. Unfortunately, the real estate news is predominately written by reporters—not real estate investors with years of experience to share. The hard facts about the real estate market in the U.S. are truly scary. How can the U.S. economy escape the hard landing in U.S. home prices? As we’ll soon find out, it simply can’t!” Michael Lombardi in Profit Confidential, January 31, 2007. While the popular media was predicting a bottoming of the real estate market in 2007, Michael was preparing his readers for the worst of times ahead.

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