Thursday, April 3, 2014

The pension problem: You're not making enough money

The reason most Americans don't have anywhere near enough money to retire is that they don't earn enough while they're working, not because they make bad investments.

A study last year found that only half of Americans saved more than $2,500 for retirement.

James Kwak at the Baseline Scenario blog takes down the entrepreneurs who make money by blaming the victim of wage deflation. He names names:
...from the personal finance gurus (Suze Orman, Dave Ramsey) to the variable annuity salespeople to the peddlers of real estate get-rich-quick schemes to Sesame Street‘s corporate-sponsored financial education programs. (Of them all, Jane Bryant Quinn is one of the few who generally come off as more good than evil.) 
A lot of what’s going on is just semi-sleazy entrepreneurs trying to make a buck, taking “advice” that is equal parts routine, wrong, and contradictory and packaging it into attractive-looking books, TV shows, and in-person events. A lot of the rest is marketing by the real financial industry, which either (a) wants to make a show of promoting financial education so people will think they are good or (b) wants to teach people that they need their products. (You pick.) 
Kwak points out that the problem with financial advice is that it generally doesn't work. And that the real problem is people don't make enough money to begin with at a time when necessities like housing, education and health care are getting way more expensive. He concludes:
Somehow we ended up blaming ourselves for the fact that we don’t have a decent minimum wage, real national health insurance, subsidized child care that made it easier to hold a job, or long-term unemployment insurance (other than in special circumstances). If we saw individuals’ financial struggles as a political issue—or a class issue—things might be different.
Read the whole thing here.