The new American retirement nightmare: Many Americans find they are completely unprepared for retirement.
Starting in late 2010, we reached a threshold where baby boomers were reaching the age of 65 at a rate of 10,000 per day. This will last into 2030. What was once thought of as a retirement age is no longer the case. The body has not evolved to adapt to financial circumstances but people are largely broke. Many older Americans are working into old age merely to keep the lights turned on in their homes and apartments. The troubles trickle all the way down. In fact, many are now finding their children boomeranging back home because of economic circumstances. The naïve dream of retiring to Miami with unlimited margaritas was just that. A dream. Many Americans are finding that older age and a weak economy has caught up to them. As it turns out, the idealistic vision of retirement is turning out to be a nightmare for many.
The Red Queen’s race and the real winners from Quantitative Easing: Celebrating the five year anniversary of redistributing wealth to the top.
The Federal Reserve is celebrating its 5 year anniversary of Quantitative Easing. As the stock market reaches record highs, it is useful to examine the real winners from QE. Luxury good purchases have done extremely well during this period as income inequality in the nation has reached levels last seen during the Gilded Age. Yet for the average American worker, salaries are stagnant and wage growth is nearly non-existent. After factoring in for inflation, many are stuck in having to run faster and faster just to stay in the same place. The Red Queen’s race in Through the Looking Glass involves a race where you have to run faster just to stay in the same place. Or in other words, trying to maintain a middle class lifestyle in an era of massive Fed intervention. QE has made it harder for savers and most American families to keep up while the leveraged top has been able to maximize all the benefits of QE. After 5 years, it is rather clear who the winners are.
The froth before another stock market crisis: Stock market is overvalued by 27 percent based on historical price to earnings ratio.
The stock market has once again become an overvalued casino where only the large financial players can use massive leverage to enjoy short-term rewards. Even looking at historical price-to-earnings (PE) ratios we find that stocks are dramatically overpriced. Yet the stock market is a sham for most Americans. In fact 53 percent of Americans don’t even own any stock outright. What is troubling is that for the first time in a generation, we are seeing real declines in household income occurring at the same time that the stock market is reaching all time highs. This is the first time in 30 years that this kind of pattern has occurred. This is playing out because the Fed has injected all sorts of liquidity into the banking sector expecting the financial segment of our society to responsibly guide the investment markets. Of course, all that has happened is a large amount of froth is now spilling over and signs of a bubble are all over the place.
The two-income trap for Americans: How dual income households are a financial necessity in a time when the median per capita wage is $27,000.
Recent Social Security data released this month revealed that income disparity is only growing in the United States. The released figures show that the median per capita wage in the US is $27,519. Given the costs for college, healthcare, and housing many households are simply falling out of the middle class. The two income household is now the common default for Americans. However, in many cases the two income household has arisen primarily for economic necessity. Many households today simply cannot get by on one income earner. Especially if a family has children, childcare is expensive and a good portion of any additional income is diverted into this expense. The decline of the middle class household would be more dramatic if it were not for the emergence of the dual income household. Given demographic trends, it appears that we have peaked in this category and many young Americans have no choice but to live in households with multiple streams of income. Many Americans learn the hard way that the two income household may actually be a trap.