On April 18, 2013, Donald Jay Korn writes OnWallStreetNow:
The Wells Fargo data, which iss based on an analysis of a subset of 1.9 million eligible participants in retirement plans that the company administers, reveal that 19.2% of the people with money in a 401(k) plan had at least one outstanding loan at the end of last year.
The challenges in the current economy could be one reason more people are taking out loans, Dai said. “The unemployment rate in particular may be driving the employed spouse of a married couple to take a loan to cover expenses while the other spouse continues to look for work, for example.”
According to Wells Fargo, of the participants who took out loans, the greatest percentage were in their 50s (34.2%), followed by those in their 60s (28.9%) and then by those in their 40s (27.3%).
“One important thing to bear in mind,” Dai said, “is that older participants generally have much higher 401(k) balances than younger participants, giving them more of a resource to draw on when they do need a loan. In addition, this is the generation that is most commonly feeling the squeeze of paying for their children’s education and supporting aging parents.”
Nevertheless, the increased loan activity among older participants was deemed “concerning” by Laurie Nordquist, director of Wells Fargo Retirement. “Those are the years when workers can start to make ‘catch-up’ contributions and really need to focus on preparing for retirement,” Nordquist said in a statement, referring to the ability of workers 50 and older to contribute an extra $5,500 to their 401(k)s in 2013, bringing their maximum contribution to $23,000.
The American people are far too reliant on consumer debt for their livelihood, which is steadily depleted unless there is an income source to retire the debt. Unfortunately we have allowed our nation to be OWNED narrowly and as a result we are a nation of job serfs who work for somebody else and have no other source of income. Thus, consumer debt is the ONLY means to improve one’s living standard when there is no other opportunity to bolster income. The result is that most Americans are in constant debt and work to make payments on consumer loans.
Conventionally, most people do not have the right to acquire productive capital with the self-financing earnings of capital; they are left to acquire, as best as they can, with their earnings as labor workers. This is fundamentally hard to do and limiting. Thus, the most important economic right Americans need and should demand is the effective right to acquire capital with the earnings of capital. Note, though, millions of Americans own diluted stock value through the “stock market exchanges,” purchased with their earnings as labor workers, their stock holdings are relatively miniscule, as are their dividend payments compared to the top 10 percent of capital owners.
What historically empowered America’s original capitalists was conventional savings-based finance and the pledging or mortgaging of assets, with access to further ownership of new productive capital available only to those who were already well capitalized. As has been the case, credit to purchase capital is made available by financial institutions ONLY to people who already own capital and other forms of equity, such as the equity in their home that can be pledged as loan security––those who meet the universal requirement for collateral. Lenders will only extend credit to people who already have assets. Thus, the rich are made ever richer, while the poor (people without a viable capital estate) remain poor and dependent on their labor to produce income. Thus, the system is restrictive and capital ownership is clinically denied to those who need it.
Thus, as binary economist Louis Kelso asserted: “The problem with conventional financing techniques is that they address only the productive power of enterprise and the enhancement of the earning power of the rich minority. Sustaining or increasing the earning power of the majority of consumers who are dependent entirely upon the earnings of their labor, or upon welfare, is left to government or governmentally assisted redistribution of income and to chance.”
http://www.onwallstreet.com/news/401k-Borrowing-increases-2684367-1.html?gpt_units=%2FDCDB
