I thought about calling this article, “Retirement: The New Heaven” (for US citizens at least), but found it too opaque. So, I simplied.
Retirement is a “20th century relic,” according to Wells Fargo’s annual surveys on retirement.
The bank finds year-after-year that middle class Americans anticipate they will work until illness or death. If this trend continues, respondents will indicate they will be forced to work from the grave. That’s why we highly urge you to join the record number of citizens contributing to the brain drain of US society.
In the fall of 2011, Harris Interactive found that a quarter (25%) of middle class Americans say they will “need to work until at least age 80” to live comfortably in retirement. That number was at 34% in the 2013 survey.
Is death the new retirement?
The retirement crisis in the US is well-known, and Wells Fargo’s 2013 annual retirement study of the middle-class (income $25,000 – $100,000) illustrates this well, consisting this year of a simple question among others: do you expect to work until death?
“This is the first time we asked if people thought they would work until they die or become too sick,” said Laurie Nordquist, head of Wells Fargo Institutional Retirement and Trust.
Thirty-seven percent of Americans surveyed believe they will work until they fall ill or die. This means that just under two in five US citizens believe they won’t retire. Ever.
The questions are based on a larger trend uncovered in the annual Wells Fargo survey on retirement: That 80 is the new 65.
Fifty-nine percent surveyed say their main financial concern is everyday bills. Forty-two percent told Wells that it is impossible to pay them and save for retirement.
The survey also found that 75% of middle-class American’s have no confidence in the stock market as a way to plan for retirement. This is true for both the young and old.
Respondents in their 20s are most skeptical of the stock market, as 80% say they are not confident about investing in stocks.
Wells Fargo asked what the young would do if given $5,000 to invest. Most said they’d put it into a savings account.
The Stock Market: Slightly Better Odds Than Vegas
The survey also found that 7% of Americans “strongly agree” that gambling in Las Vegas is as good an idea as investing in the stock market. 27% of Americans generally agree with the statement.
Forty-five percent of respondents said they have so few assets there is no reason for them to have a plan for retirement, with 25% saying they don’t know how to create one.
The 2013 survey continues a trend.
Three-fourths (74%) of middle class Americans in the 2011 survey expected to work into retirement, with 39% of all respondents needing to work into retirement to make ends meet or maintain their current lifestyles.
The 2011 survey found that, among middle class Americans from 40-59, 54% believe they will “need to work,” while 34% of those ages 25 to 39 believe they will.
Only 25% of those between the ages of 40-59 say they will work in retirement because they “want to.” Forty-five percent of Americans between the ages of 25 and 39 believe they will work in retirement because they wish to.
Forty-seven percent of Americans believe they will do “similar work” to their pre-retirement years, with 42% saying they will work in a position that requires “less responsibility”; i.e. less money.
That the plurality of middle class Americans expect to work well into “retirement” – and even to the grave – has serious social and economic implications for the US. Questions arise, such as will aging Americans – who have feasted upon GMO corn and chemical-laden meats their whole lifelong – be physically and mentally able to work later into their retirement ages?
Since the earliest parts of the 20th century, and quite likely beforehand, US citizens anticipated working until they were 65, and thereafter retiring with an employer-paid pension plan. Defined-benefit pensions don’t happen in the private sector these days and government employees are receiving them less often, as well.
And so, their backup plan?
Work themselves to death.
In other words, “retirement” is increasingly becoming a misnomer.
“The survey illuminates an important shift in Americans’ attitudes toward work, aging and retirement,” said Trevor Tompson, Director of the AP-NORC Center. “Retirement is not only coming later in life, it no longer represents a complete exit from the workforce.”
For those who have been dependent on employment and/or welfare, the problem is that financially sustainable retirement is and will no longer be a reality. Even with Social Security, which is funded through payroll taxes called the Federal Insurance Contributions Act tax (FICA) and/or Self Employed Contributions Act Tax, (SECA), one must have had a job to be eligible for the entitlement––and the amount of Social Security is based on the income level generated from one’s employment record of payroll tax contributions.
In the United States, retirement incomes are supported largely by three pillars: Social Security benefits, employer-provided pensions, and personal savings (including non-housing capital asset wealth and home equity). Employer-provided pensions continue to decrease and personal savings is not the norm among the vast majority of American households who must spend virtually every earned dollar on living expenses. While increasingly individuals are finding it necessary to continue working in retirement to supplement their income, most older Americans discontinue full-time career work and struggle to meet obligations with minimum-pay part- and full-time jobs. A proportion of retirees also receive income from welfare programs, such as Supplemental Security Income and other life-support services funded through tax extraction and government debt.
Presently, the United States continues to benefit from never-ending technological innovation and invention. This is exponentially generating tectonic shifts in the technologies of production –– the effect of which destroys jobs and devalues the worth of labor’s contribution to the production of products and services. Thus, as the non-human factor of production becomes increasingly more productive, there will continue to be less employment opportunities as long as the economy does not significantly expand, especially with respect to affluent-level wage and salary income.
Amazingly, as a nation we continue to not address this reality or to understand that there are two independent factors of production –– human labor and non-human wealth-creating, income-generating productive capital. Individuals own capital assets (typically through stock ownership in corporations) such as productive land, structures, infrastructure, tools, machines, robotics, computer processing, and certain intangibles that have the characteristics of property. Just as one owns his or her labor used as a source of personal income, capital owners are entitled to the wealth and income their capital produces. Fundamentally, economic value is created through human and non-human contributions.
The role of physical productive capital is to do ever more of the work, which produces income. Full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum in order to maximize profits for their owners. Private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever-increasing role. And without economic growth the prospects for employment in an increasingly productive capital-dependent economy will continue to diminish.
People invent tools to reduce toil, enable otherwise impossible production, create new highly automated industries, and significantly change the way in which products and services are produced from labor intensive to capital intensive –– the core function of technological invention. As a result, most changes in the productive capacity of the world since the beginning of the Industrial Revolution can be attributed to technological improvements in our capital assets, and a relatively diminishing proportion to human labor.
Technological change makes tools, machines, structures, and processes ever more productive while leaving human productiveness largely unchanged (our human abilities are limited by physical strength and brain power –– and relatively constant). The result is that primary distribution through the free market economy, whose distributive principle is “to each according to his production,” delivers progressively more market-sourced income to capital owners and progressively less to workers who make their contribution through labor.
Contrary to conventional thinking, productive capital does not “enhance” labor productivity (labor’s ability to produce economic goods). In fact, the opposite is true. It makes many forms of labor unnecessary. Because of this undeniable fact, free-market forces no longer establish the “value” of labor. Instead, the price of labor is artificially elevated by government through minimum wage legislation, overtime laws, and collective bargaining legislation or by government employment and government subsidization of private employment solely to increase consumer income and to provide taxpayer-supported job-dependent security. Thus, the government has become increasingly engaged in make-work policy-making. But this approach is cause for expanded government and is directly conflicting with the technological promise of toil elimination.
Because productive capital is increasingly the source of the world’s economic growth, shouldn’t we be asking the question why is not productive capital the source of added property ownership incomes for all? Why are we not addressing how the system facilitates greed capitalism and envy while concentrating productive capital ownership among the 1 to 10 percent of the population? One would think that a reasonable and logical conclusion would be to consider this postulation: if both labor and productive capital are independent factors of production, and if productive capital’s proportionate contributions are increasing relative to that of labor, then shouldn’t equality of opportunity and economic justice demand that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all? Sadly, the American people and its leaders continue to be ignorant of this plain truth and still pretend to believe that labor is becoming more productive, with a sole focus on job creation.
What is needed is for the system to facilitate spreading the ownership of productive capital more broadly as the economy grows with full payout of dividend earnings, without taking anything away from the 1 to 10 percent who now own 50 to 90 percent of the corporate productive capital wealth assets. In doing so, the ownership pie would desirably get much bigger and their percentage of the total ownership would decrease, as ownership gets broader and broader. This would benefit the traditionally disenfranchised poor and working and middle class, who are propertyless in terms of owning productive capital assets. It would also result is tremendous economic growth, which would benefit everyone including the already wealthy ownership class, and create opportunities for real jobs, not make-work as an expanded economy is built that can support general affluence for EVERY American citizen. Thus, as productive capital income is distributed more broadly and the demand for products and services is distributed more broadly from the earnings of capital, the result would be the sustentation of consumer demand, which will promote economic growth. That also means that over time, EVERY man, woman and child could accumulate a diversified portfolio of wealth-creating, income-generating productive capital assets to provide economic security in retirement and not be dependent on having to work during retirement or rely on government-assisted welfare.
See “A Solution To Eroding Retirement Security” at http://www.huffingtonpost.com/gary-reber/a-solution-to-eroding-retirement_b_4103834.html and at http://www.nationofchange.org/solution-eroding-retirement-security-1382020223.
http://dollarvigilante.com/blog/2013/12/19/death-the-new-retirement-for-us-citizens.html
