Tuesday, November 8, 2011
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The Generation That Can't Retire
Baby boomers are the first generation since the 1930s to be worse off than their parents in their older years. A full 66 percent fear they won't have enough money to last throughout their retirement. That's 10 percent more who voiced that same fear a mere decade ago.
The fact that baby boomers would strain the system as they aged was well known. The first of their generation turned 65 on January 1, 2011. Beginning on that day, and for every day over the next 19 years, 10,000 baby boomers will reach the magic age of 65.
Who is considered a baby boomer? It's the 76 million Americans born in the United States between 1946 and 1964. As troops returned home after World War II, they quickly settled down and started having babies.
These sheer numbers alone are enough to put a burden on the even the best-planned social programs.
So while it was known that these folks would eventually need to rely on retirement benefits, nobody could have foreseen the enormity of outside factors that have turned this American dream into a nightmare.
Traditional pension plans have disappeared, along with the tradition of working for a single employer long enough to benefit from one. In 1975, 40 percent of private-sector workers qualified for a traditional pension plan. By 2006, that number declined to 17 percent according to the Employee Benefit Research Institute.
Instead, retirement savings are invested in a 401k plan. These plans fluctuate along with the stock market. With the market's annual rate of return at 10 percent, it was an excellent investment. At the time. The current global recession has made investors think twice before putting their money in equities.
A high number of Americans do not qualify for 401k plans. Those who work part-time, the self-employed, small businesses and seasonable workers do not have access to a workplace savings program.
What's the alternative? Are your savings more secure in a money market fund or savings account? FDIC insurance guarantees you won't lose money placed in a savings account up to $250,000. But you won't earn much interest on that money, either. Savings rates that once neared 10 percent are now closer to .10 percent.
Those savings need to last longer, too. Each generation tends to live longer than the preceding. And seniors are more active than ever, keeping them in good health.
That's a good thing. Spiraling healthcare costs add another burden to an already-strained budget.
Many Americans have to continue working longer than they planned because they need the income. That takes potential jobs away from the marketplace. This certainly doesn't help solve our high unemployment problem.
Among those having the hardest time landing a new job are aged 55 and above. Companies that are hiring often choose younger candidates who are more easily groomed to their programs rather than set in their ways. And it helps that they don't demand the same salary level as those more experienced have earned over the years.
So here we come full circle: More people are filing for Social Security benefits at age 62 when they first become eligible than ever before. Not because they necessarily want to, but because they cannot find a job. They're forced to collect the lesser amount offered with early retirement than they would have otherwise.
And they're retiring with debt. They still owe money on their home, credit cards or other debt accrued merely to get by day-to-day. They must stretch lesser dollars further than ever before.
There is nothing left to save in that account that no longer grows with interest.
Now that I've got you all concerned that you'll have to work forever, you may also be wondering if it's too late to fix this crisis. It probably is too late, as the answer lies in whether Congress wants to take some hard actions.
Like exempt themselves from the current Social Security/Medicare programs. With the severance package we give legislators once they're voted out of office, they don't need the average Social Security income of $14,000 to survive.
Should they feel this is not an option, it's time to rework that severance package so they're not entitled to any more than that Social Security income stream. They earn enough during their terms to save for a comfortable retirement. The American taxpayer should not be supporting them from both ends.
It may also be time to enforce qualifications for Social Security or Medicare benefits besides merely age-based. Perhaps income or asset limits should be set as well. Program reform does not necessarily have to affect the needy. Yet lawmakers dwell on that aspect to sway public opinion towards whatever stand they promote.
Why does the only option ever presented raise the retirement age and lower benefits? Why not restrict benefits to those who have earned below a stated income level over their working years?
While every American pays FICA taxes to fund these programs, not everyone relies on them for survival. Every American taxpayer funds the welfare and food stamp programs, green energy initiatives, the Fannie Mae/Freddie Mac bailout and countless other government expenditures. Yet not many benefit from those items. We all contribute towards the greater good. Our retirees deserve to be considered as such.
I don't know how far these ideas will take us. They may not completely solve our problem but they sure can't hurt. I'm not an economist, I don't crunch numbers. I'm merely a writer who should be nearing retirement age, but won't have that opportunity. To me, this is mere common sense. And if I can come up with a couple of new ideas, surely those we elect to ensure our country's best interest can do the same.
Honoring Our Veterans
Friday, November 11, is Veterans Day here in the U.S. We set aside this special day to acknowledge the sacrifice these brave men and women have made for our country.
There was a time Americans needed a special day to do so. Our veterans were taken for granted. Once they returned from active duty, they were expected to resume civilian life as it had been before they were deployed.
Yet it wasn't the same. They couldn't survive in harm's way and not become a changed person. They couldn't take each step with the fear of detonating an explosive device one day, and walk carefree the next. They couldn't sleep with one eye open watching for the enemy one night, and sleep nightmare-free the next.
Vietnam era vets did not return home to a hero's welcome. The American people held them responsible for the travesties of a war they did not believe we should have been fighting. We had a military draft at the time, not volunteer like we have today. A good deal of our servicemen did not want to be there either. But in fulfilling their civic duty, they were vilified.
Today's military are greeted by cheers, parades and various expressions of gratitude upon their return. Support organizations help with their adjustment back to civilian life. Non-profits help make the wounded feel whole again. Volunteers pitch in to help families with their unique needs when a member is deployed.
Today, we've come to recognize the extreme sacrifice our veterans make for the safety of our country. We don't wait for a particular day to honor them - we do it all year.
For all the differences in how we respond to these heroes, a constant remains. Returning vets, and their families, face challenges the rest of us will never know.
Post-traumatic stress disorder, PTSD, is common among members of our military. The statistic reports one in four returning military members suffer from this disorder. It makes me wonder about the three who don't. How does one live under the constant threat of sniper fire, battle fatigue and desert conditions without having an adverse effect?
Suicide is rampant among our troops. The number of active duty service members who have taken their own lives is nearly half of the total killed in combat since January 2001. Relationship issues, work-related problems, financial pressure, legal concerns, alcoholism and substance abuse are all factors. Access to mental health professionals has helped reduce these numbers, as has Internet outreach. Being able to conduct video chats with loved ones back home has helped ease some of the stress factors.
Many soldiers returning from Iraq and Afghanistan are experiencing unexplained breathing problems. They may have been exposed to unknown toxins while serving in southwest Asia.
The wounded undergo significant rehabilitation before they can resume any semblance of the life they once knew. Groups like the Wounded Warrior Project offer resources and work to foster the most successful and well-adjusted generation of wounded warriors in our nation's history.
The Senate is weaving benefit for returning veterans into President Obama's job bill proposal. Tax credits of up to $9,600 will be granted to companies hiring disabled veterans who have been jobless at least six months if the bill passes. Employment counseling and other job-hunting services will be provided to veterans as well under this bill.
Welcome Back Veterans is a group committed to providing PTSD treatments to our veterans and their families in a partnership with the Veterans Administration, Department of Defense, Major League Baseball Charities, the McCormick Foundation, the Entertainment Industry Foundation and a network of hospitals throughout the country.
Soldier's Heart offers healing for the emotional, moral and spiritual wounds of veterans, their families and communities.
We no longer need a special day to honor this nation's veterans. But it sure is nice to set one aside. Take this time to reflect on the sacrifices made and honor a past or present member of our military.
U.S. equity markets rallied strongly today on news of the Italian Prime Minister's resignation. Say what? This is a strange correlation indeed. So why would a European leader's resignation create a burst of optimism in the U.S.?
The answer is rather sad: U.S. equity traders believe the current Italian government to be so incredibly fiscally irresponsible that the leader of that government's departure lessens, albeit slightly, the risk of a broad-based European debt default.
Perhaps now neither Greece nor Italy will be the spark that ignites the European debt powder keg since both countries appear to have adopted tough, yet essential, austerity measures.
Keep an eye on Spain and Ireland, both countries with deficits greater than 10 percent of GDP. Ireland has an unemployment rate of over 13 percent and a stunning 1 in 5 Spaniards can't find work.
Only Germany has any semblance of fiscal prudence, running deficits, albeit small ones when compared to the other EU countries. Many believe Germany is the only EU economy strong enough to keep the others from sinking. Winston Churchill must be rolling over in his grave!
The lesson to learn from this? If you don't believe that cradle to grave social engineering is bad for business, look no further than across the big pond.
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