Guest Post by Monty Pelerin
We are now well into the ME and NOW generation. They grew up believing saving was unimportant and debt was a proper way to gain access to the pleasures that they couldn’t afford, didn’t really need but believed they were due.
The insanity of this entitlement mentality wasn’t born in a vacuum. Government encouraged it every step of the way. You see, if you can convince people to spend, the GDP accounting reflects this spending as a boost for the economy. How can the economy be improving if the gains are from consumption financed by debt? All debt does is allow future consumption to occur earlier. Conversely, it means that future consumption will be lower by the amount of the debt service necessary to honor the obligation.
None of this was accidental. Every politician responsible for the economy has an incentive to “juice” the numbers. Modifying the statistical measures used in the calculation is one way to achieve this. By far, however, an easier way is to encourage citizens to use more debt. Lower interest rates below where markets would set them. Then lower the lending standards to qualify for a loan. Set up government agencies to guarantee loans that should not be made. All of these efforts pleased the financial industry and converted much of the population to debt slavery.
Want a new car? No problem, finance it over six or so years.
Want the latest and electronics — a large screen TV, the newest cell phone, etc? Again, buy the stuff on on credit. No problem.
Credit card line being exceeded. Get another credit card and use it to make payments on the first. Repeat by adding new credit cards whenever necessary.
Want to go to college? That’s free, for a time. Just borrow the money to pay for the overrated experience. It keeps you out of the workforce and provides great opportunity for partying, meeting sex partners, etc. Don’t worry, you know how much more college graduates make.
Haven’t been to Europe yet? What better time to go than when you have no job or other responsibilities. Just borrow the money and go.
This is the environment that government has created for the country. The young don’t understand the implications. The government is no better than the pimp used by a loan shark. Get em’ hooked while they are young and you will have them for life.
We are at least a generation into this foolishness. There are consequences beyond the occasional defaults and bankruptcies declared along the way. Much of society has been corrupted by the belief that debt is normal and necessary to live the good life. Few understand that a good life cannot be borrowed; it must be earned.
Now the consequences for those who followed the siren’s song are becoming evident. As these people approach retirement, they have wasted the most productive years for saving. They have put themselves into a box from which there is no escape. Many are oblivious to the mathematics and to the retirement poverty they have consigned themselves. Many are unaware that Social Security, as presently constituted, will be broke when they count on it.
Reader RFII sent the email below showing the inadequacy of savings. Even if these people suddenly woke up, many have too little time to create the nest egg necessary. Sadly, those who were prudent are unlikely to escape the fate of the profligate. That some have money while others don’t is not “fair” in our Brave New World. The government will likely plunder the prudent to further reinforce the behavior they encouraged.
THE RETIREMENT CUPBOARD IS BARE FOR MANY.
When we were growing up, those retirement dreams that were based on corporate pensions. They started to disappear in the late 1980s because corporate finance officers saw pensions promises as being a possible large liability (many underfunded already). Some law changes from Congress, and the stampede out of defined benefit plans to IRA type plans The defined contribution plans were switched to employee directed IRAs , etc.
Now we are seeing the savviness of those with IRAs in the 55-64 age group .FROM MY BUDGET: Of those 50 to 64, in the prime years before retirement, half have nothing saved up. You would think those with higher incomes would be doing much better but the figures don’t look so promising here either. You would have to go to the top one percent of the country to see where the real wealth gains have gone in the last generation.
Holy shit, Batman! Pension nationalization, SS and Medicare for all. It’s the socialist way.
When government takes 50% or more of an individual’s product, how can anyone save?
When the government takes that and spends 10% more, then the government comes under strain.
This generation is declining, and they will rely on the productive efforts of succeeding generations for their geriatric care. With wealth inequality being the order of the day, who will care for those less fortunate, and by what means?
New Retirement Plan
Smoke, drink and have a good time.
Don’t live past 70.
No problem.
If you can’t get done what you need to get done in 70 years, well you wasted alot of time.
But Winston, I was really looking forward to spending 20 years in a nursing home, drooling into a cup. It’s important that I spend all the best years of my life working and putting money into financial “products” in order to make sure I can afford the best possible diaper-changers.
Government encouraged it every step of the way. -MP
There are two sides to that coin;
The aim of the advertisements were simply to show people the products practical virtues, nothing more. What the corporations realized they had to do was transform the way the majority of thought about products.
One leading Wall Street banker, Paul Mazer of Leahman Brothers was clear about what was necessary. “We must shift America, he wrote, from a needs, to a desires culture.People must be trained to desire, to want new things even before the old had been entirely consumed. We must shape a new mentality in America. Man’s desires must overshadow his needs.”
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A sucker is not born every minute — they are made by sitting in front of a TV. -KB
God wanted me to live forever in the utopic Garden of Eden while that old Serpent wanted me to die in debt and misery.
Having what the top 25% have in retirtement accounts is not adequate for a comfortable retirement.
A couple with 55,000 per year income counting S.S. and a house paid off in California are not living very high on the hog.
Good News!!! I heard on NPR this morning that Obamao wants to turn the post offices into fucking banks again! Seriously! You can donate, I mean, deposit your Myra right there.
The way it looks my retirement will be making moonshine in the woods or maybe I will get brave and cook meth.Don’t laugh ,you may be doing the same.
I’m not planning on ‘retiring’…
I think ‘retirement’ is a fairly recent concept. A concept invented by us..
For most of human existence, you worked until you passed on. If that’s what will happen to me, then I’m okay with that. I’d rather go out doing something I like rather than hooked up to a pile of machines while my family stands around watching me die slow… fuck that.
So long as I pay off the house and see my son marry well, then I’m Mission Accomplished… My wife will be okay and have someplace to live, as well as my son and his family (if they want it). Along with the farm, I’ll be leaving them a great heap of human knowledge – the library I have spent my life building up – and the means to keep the farm going.
All I ask is that I be buried under that big chestnut tree. It’s a nice view from there.
Billy – I know you were severely injured in the service of your country, and are worthy of aid. But your comments leave out you and/or your wife will draw a check for as long as you draw breath.
That is kinda what they mean by retired.
Llpoh
A very good point. And absolutely true.
However, it was not my intention to appear disingenuous or dishonest. Yes, I do draw federal disability. But I also work as much as I am able. SOMEONE has to keep things going around here.
I disremember if you said you had any experience on a farm – if you do, then you know that there is ALWAYS something that needs to be done, or needs critical attention… it is a rare day when I can just sit on the porch and watch the world revolve. Hardscrabble knows what I am talking about…
We have “The List”. It is a list of shit that needs to be done around here, and it currently sits at 6 pages long (single spaced).
Fencing, the greenhouse, there’s rubble that needs cleared off the land (we tore down an old chicken coop and bulldozed the slab to make way for a new shed – the pile of broken concrete and other junk is still sitting in our west field). When we had the new fencing put in last year, we just bulldozed the old fence, which also took care of all the shit trees that had grown up too. That pile needs to be burned and the old wire cleared out. Barn needs modification. Barn also needs new doors, which will be built by me and my boy. Pipes need fixed. Our back door needs replaced. Windmills need put up. Trees need to be planted. Bricks laid.
All that shit is either going to be done by me, personally, or will be contracted out to a pro.
So it ain’t like I’m sitting here on the porch with a sweet tea waiving at folks as they drive by… I’m hardly “retired”…
BUT!! The good news is that I’ve found a place in Ohio that will take our fleece and wash, card and spin it for us… make anything we want, which will save us a whole truckload of trouble…
Billy, you strike me as a very hard worker indeed. Even a small plot, which I have (going to be a bigger plot shortly) is beaucoup work.
Good luck.
Llpoh
Thank you. I inherited my work ethic from my old daddy… and a good handful of Teutonic stubbornness..
I mean, yeah there’s stuff that I know HOW to do, but am physically unable… like sling rock and brick. I’ve got enough muscle to do it, but my back won’t hold up long. So, that’s gonna have to be farmed out to a pro.
One thing I’m looking forward to getting is a post-hole drill for the tractor… then I can fence off the pond and plant all the trees I want… what trees do you think I should get?
Take a gander… http://www.treesofantiquity.com/
A way government could help solve the problem is by making the 401ks independent of the company. Companies could offer 401ks, but when you switch jobs, that account will follow you to your new job and the only thing that changes will be the terms governing that account as per the new company’s policies. And make it mandatory for companies to auto-enroll their eligible employees in employer contribution plans of any kind unless the employee specifically opts out. It’s making good use of human inertia.
Billy – a post driver is easier, depending on soil characteristics.
http://www.postdriver.com/
Not cheap, but beats the hell out of drilling and concreting.
http://www.youtube.com/watch?v=DuRgQlfpD0U&feature=player_detailpage
Retirement indicates that at some point in your life the world owes you your own existence.
Bullshit.
TPC – not if said retirement is self funded.
Sorry, I do not mean that sort of retirement. I mean the people who think they can work 40 years pushing a broom and then think that they deserve to live another 40 years on someone else’s paycheck.
retirement is like when you quit work voluntarily or not but you weren’t fired, you were retired, still, you were let go….
what you call living on someone else’s paycheck is a pension from social security, unless you get one from your old employer.
I read an article recently concerning people’s conflicting views on liberal policies. Let me tell the same story my way, My boss phil loved rush. I said, phil, you are at best a conservaberal, you want less taxes but welfare for your ex…
TPC, you can retire anytime you like, a lot of people retired after working one summer in high school. the problem is funding that retirement.
http://www.youtube.com/watch?feature=player_detailpage&v=DGegWzI0Pvs
“Not cheap, but beats the hell out of drilling and concreting” — Llpoh
Thanks for the link… what I noticed is that while the driver is about $1800, what they don’t give you are the mounting brackets for your tractor. Those are another $300. Then there’s shipping.
If all’s I had to do was drive fence posts, it would be a justifiable purchase. But $2100+ just to drive posts and that’s it? Mmmm…. thing is, I can use a post hole drill to do more than just drill post holes. I can also use it to plant trees and bushes and help dig the foundation for the slabs for the windmills. I can get more out of a post hole drill for about half the cost… and I can drive my pickup down to Southern States or wherever and just buy one and bring it home… no waiting for shipping or anything…
can’t judge from the thumbs if people like a song or not but I am surprised Gloria Gaynor got 2 thumbs and the eagles none.