Recently, in one news cycle, there were several stories that should be of concern to any of our senior readers, or those who may be facing retirement any time in the near future. Further, if this trend holds true, the future seems bleaker, even for those younger folks.
The date of the articles all came out on August 6, 2018. The first article was from the New York Times, and documented that the bankruptcy rate for those people over age 65 is presently three times the rate from what it had been in 1991. Further, that same group accounted for a far greater share of all filers, or in other words, the bankruptcy rate is disproportionately affecting those age 65 and over. According to the Times author, Tara Siegel Bernard, there were three main factors causing this surge:
- First, citing the consumer bankruptcy report, there has been a three decade shift of financial risk away from government and employers, onto individuals.
- Individuals are now bearing an ever greater and increasing portion of their financial well-being as the various social safety nets shrink. For example, healthcare is now rarely offered by employers, and if it is, there is greater amount of deductibility, greater amount of sharing of cost of premiums, and lesser continued coverage, post retirement.
- Another factor is that people are waiting longer and longer to take full social security benefits, and accordingly, start to deplete their own other retirement accounts, such as 401k accounts and IRA’s, to pay more and more of out of pocket spending on health care.
- Finally, declining incomes, both in retirement and leading up to it, compared to the rising costs of goods and services, compounds all of the above problems.
The second article in New York Magazine, author Frank Rich offered his opinion that “America has stopped believing in the American dream”. He goes on to argue that the Great Recession of 2007-2010, has proved to be a more lasting threat to the economy than the terrorists attacks of 9/11. To support his argument, he states that since 9/11 there have been no subsequent major terrorist attacks in America. There are no additional American troops now than there were on 9/11. The country is enjoying a healthy 4% unemployment rate. The investment class and 401k holders alike are beneficiaries of a rising GDP and booming stock market.
However, on the contrary, the mood in America is arguably as dark as it has ever been. The birth rate is at a record low. The suicide rate is at a record high; mass shootings and opioid overdoses are everywhere.
The third article was in the Wall Street Journal by Thomas Gryta. He notes that the economy, for the investment class is booming. In support of that he shows:
- Profits at the S&P 500 companies jumped an estimated 23.5% in the three months through June 2018. This rate was more than twice the revenue growth during the same period.
- These profit gains, which stretch across all of the S&P sectors, from energy to health care, have sustained a stock market rally that sent major indexes to near records.
- He also states that a cut in the US corporate tax rate from 35% to 21% are driving a big piece of the profit gains.
- However, ominously, these profit gains are not going to the average Americans, but rather being enjoyed by wealthy investors, big corporations, and stock holders.
Respectfully submitted by: Attorney Peter E. Grosskopf, Grosskopf Law Office, LLC