Saying goodbye to the middle class concept of retirement – many workers plan to work up until they are 80 well beyond the typical life expectancy of Americans. How long will $25,000 last in retirement?
The romantic concept of being able to retire on a sunny beach with endless drinks is a modern notion largely pushed by mainstream advertising. It is hard for many middle class Americans to imagine a world where retirement is a luxury for the very few. However that is the path we are now following. The ability to retire is being severely impaired for most Americans given their lack of savings but also the massive spending occurring by the government. Recently we have heard that Social Security is expected to run out of funding far quicker than was once expected. This information in itself is troubling but couple that with the incredibly low to non-existent savings rate for younger Americans and you realize the day of reckoning that is lining up. Even recent data has looked at pushing the retirement age from 65 to 80 for some workers which might be hard to do given it is beyond the normal life expectancy of most Americans. The new retirement model appears to be no retirement.
Educated and unemployed – majority of unemployed Americans attended some college. Top degrees in fields with little employment demand.
The higher education bubble is racing along to a tipping point especially when the value of a college education is now being questioned on multiple fronts. One of the more prominent arguments being thrown around is the return on investment or value of a college degree especially when the costs of attending a private institution reach upwards of $50,000 a year. The median household income in the US barely makes that amount to begin with. The issue stems with the number of Americans diving into ludicrous amounts of debt to finance their educational journey. Another recent revelation highlights another disturbing trend in that those with some college education dominate the ranks of the unemployed. In other words, those without a college degree have higher employment prospects in the current economy.
Using the young as a shield for hitting the deficit spending wall – the bill will come due for the young. Government spending prioritizes old American immediate needs and will send the bill to the young.
The level of government spending is mind boggling but has taken a backseat to the issues being experienced over in Europe. We are running trillion dollar deficits as if this was somehow customary in our history. For each dollar spent we are seeing less of a result in the real economy. Part of the issue with the stimulus funding mechanism is that it disproportionately favors the financial industry. The rhetoric being pushed out ignores the two-tier system in the US where older Americans have safety nets while the young are battling the fierce tiger of hungry capitalism. Money knows no boundaries and has no national ties. Just look at Facebook co-founder Eduardo Saverin renouncing his US citizenship in line with the IPO and his big payday. The 2012 elections should be centered on the health and future of our economy. Do we still feel that a middle class is central to the prosperity of the nation? The fact that so much money is being spent with so little results is troubling on many fronts.
Who will pay for the massive US public debt? 30 percent of those with incomes above $10 million audited.
Now that tax seasons is mostly finished for your average American and people can exhale and take a breather, some interesting data is released by the IRS. Audit data is fascinating because it highlights that in terms of those getting an audit, the more you make the more likely you are to be audited. It is useful to get a sense of how this plays out. The IRS is unlikely to audit the average American making $25,000 a year because in reality, the cost and return of going after this group is so minimal. As the famous bank robber Willie Sutton once replied to a reporter as to why he robbed banks, “because that’s where the money is.† The government is running lean and as many of you know, carrying over a $15 trillion in public debt is starting to become a burden. Debt ceiling talks are already out in the open as if we are already preemptively ready to spend more money we don’t have. Ultimately all Americans will need to shoulder some piece of this debt via cuts or tax increases and that is the painful reality.