Friday, January 1, 2016

Reality is hard, deal with it or don't

Link:



The American pension offered once by many companies was a benefit once afforded to most workers. 


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38 percent of the workforce had access to a pension in 1980 and now it is down to 13 percent as of 2008.  But this has trended even lower over the last seven years as the crisis has given more pretext to companies to chop benefits.  This trend has come in multiple forms.  One way for employers to save money is on cutting pensions and shifting the retirement burden to employees.  This was ushered under the guise of helping out workers.  Well here we are 35 years later and the plan has been an abject failure.  This has ushered in the new retirement model of working until you die.



Most retirees are now fully reliant on Social Security.  This has become the default “pension” option.  Keep in mind that the plan was to have three major sources of income for retirement: pensions, Social Security, and your own retirement savings.  What ended up happening is that most Americans now fully rely on Social Security alone since pensions are becoming extinct and with a low wage employment revolution, many have a tough time saving for retirement.

This article is pretty good on laying out a problem which is that defined benefit plans are in decline. It then drifts off into rhetoric about the CEO pay gap between workers and management. This is not a problem related to pensions. Companies are cutting costs and they do not want the long term liability of a defined pension plan. They can become burdens that suck up a company's money and time. For an example see the airline, steel, and auto industries. General Motors pension and retiree health obligations are so large that it has been jokingly described as a pension plan that happens to own a car making enterprise. 

This particular statement aggravated me, "This brings up an odd calculus: wages are stagnant and living costs are rising yet somehow, workers are to save more for retirement.  Yet they were already having a tough time when wages were rising let alone in a climate were wages are stagnant."

I have said this before and it is not popular I know. For many people an illusion exists: A perfect world where one would graduate high school and get a factory job or go to college and get a degree and become a cubicle rat. Work at the same company for thirty years with a full benefit package whereupon one retires to Florida or Arizona playing golf and living happily ever after in worry free bliss. 

That world does not exist if it ever did. The world is open for business and everyone in the world is competing with everyone else. That means you need an edge or a special skill or talent that you can market because guaranteed employment does not exist. You have to provide value and utility to others so that they will pay you. You have to live frugally and save the difference. That means putting time and effort into education about investing and managing money. 

Lets be clear about one thing; if companies could conduct their business without any employees they would. They are not hiring people because they like you and want to be your friend. They need your skills to accomplish a task. They pay and offer benefits that will draw the talent they need to fulfill the task. That is it really. Benefits like health insurance and pensions are going away slowly but surely so deal with it.

You need to take care of your health. The bottom line is healthcare is not a right and it is/will be rationed. 

If you want to have a retirement income than you need to save and invest. Otherwise you will be working until the day you die. 

Here is the really really bad news. You are not a special snowflake and no one really cares about you and your personal problems. No corporation that you work for is going to play daddy and reward your hard work with loyalty it does not work that way. If the business falters you can and will be laid off or terminated.

If you think the government is going to fix this well all I can say is read my article on how Social Security and Medicare will bankrupt the US. Simple answer is the government can't do squat about it.

One thing you cannot do is fall into the trap of blaming someone else. Yes it is maddening that we have all these problems and that the things we were taught in the establishment schools is all horseshit. It is depressing to realize the "social compact" does not exist. However it will not help to dwell on these issues because time is wasted and time is our biggest asset.

You cannot fix the political problems in the country.

You cannot fix the SS and Medicare disaster.

You cannot make your company give you a pension plan.

You cannot make other people do what you think is right to fix these problems.

However, you can take charge of your life and get out of debt.

You can cut expenses and live frugally

You can develop new skills and sources of income

You can invest and let compounding work for you.

You can take charge of your life and be responsible for yourself regardless of what the government, corporations, and everyone else does.

The other choice is wallow in self pity and woe is me but that means eating cat food and wiping tables at McDonald's when you are 84 years old. 

Go here to see my self help articles on these issues.

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