A 37-year-old single father of two boys, Eric Payne knows how difficult it can be to make ends meet from week-to-week, especially if you’re also trying to find a way to put back some money for a retirement nest egg for later on down the road. He refers to the process of making his money last and cover his expenses as “clicking.” I know what you’re probably thinking. If he’s having a hard time getting it all together, he must not be making a good salary.
You’d be dead wrong.
Payne earns about $80,000 a year, but after all of his necessities have been paid, he doesn’t have a whole lot left to work with. And that, my friends, is the result of living in Bidenomics. With astronomical inflation, free printing funny money by the Fed, and insane interest rates, the dollar’s purchasing power has taken a pretty severe hit. This then leads to an increase in the cost of living, which is why Payne doesn’t have much disposable income left after paying the bills.
“The clicking is for day-to-day operations,” Payne, who is employed as the director of quality assurance for a seafood wholesaler located near Portland, Maine, went on to say to CNN. “Groceries, car payment, mortgage, kids’ clothes, childcare, or figuring out how to cover an unexpected bill.”
“My financial focus has to be on the present, as every dollar counts,” he said during his interview with CNN. “However, I am fully aware that I’m creating another problem for myself down the road.”
Discussing what it’s like to save for the future, he stated that it feels nearly impossible. “It’s a constant battle, I guess I would say I always kind of feel like I’m getting kicked. I think I’ve got a handle on it and then something else comes up that I have to deal with.”
Between a 401(k) from a previous job and an employee stock ownership plan at his current company, he has less than $10,000 saved for retirement. But he doesn’t expect to stop working at 65 and says he’ll likely have to keep earning money as long as his health allows him to.
Payne is far from alone in his struggles.
The number of US workers in the labor market over the age of 75 is expected to nearly double over the next decade according to the Bureau of Labor Statistics, creating a looming retirement crisis. Retirement savings in the United States were long thought of as a three-legged stool. Americans had pension plans, Social Security benefits, and defined contribution plans like the 401(k). Not anymore.
The pension plan is currently headed the way of the dinosaur, which isn’t helping matters much. Half of the workers in the private sector were covered by those back in the mid 80s, however, by the time 2022 rolled around, only 15 percent of workers had them.
For almost a quarter of older adults, payments from the extremely strained Social Security program provide almost 90 percent of their income, a survey produced by the Social Security Administration said. The program is currently facing a 75-year deficit and if the government doesn’t do something soon, it could be totally depleted of funds in a decade’s time.
So what do folks have left to help them with their retirement? The 401(k), which 68 percent of industry workers are given access to, though only 50 percent of them make use of the investment.
BlackRock CEO Larry Fink warned in his annual investor letter last week that unless corporate leaders and politicians undertake “an organized, high-level effort” to rethink retirement in the US, they risk alienating younger generations from capitalism and politics.
“It’s no wonder younger generations, Millennials and Gen Z, are so economically anxious,” he went on to state. “They believe my generation – the baby boomers – have focused on their own financial well-being to the detriment of who comes next. And in the case of retirement, they’re right.”
Fink suggested pushing the age of expected retirement past 65 and said that more access to investing and 401(k) plans can help solve the problem. That would also help Fink, as more than half of the $10 trillion in assets that BlackRock manages are marked for retirement.
But saving for retirement is a far off thought for many Americans – just 44% of US adults could afford to pay an emergency expense of $1,000 or more from their savings, according to Bankrate data.
Due to the economy swirling around the toilet bowl these days, people are feeling pressured to prematurely tap into their 401(k) accounts in order to avoid defaulting on loans or to prevent steep penalties from accruing.
A 54-year-old single mom working as a legal administrative assistant in Central Texas, Jamie has had to rely on the cash savings in her 401(k) in order to support her and her son on more than one occasion. The first time being right after she gave birth to him, as she was working for an employer that did not provide maternity leave for new mothers. And what’s worse, the employer sent her a letter the same day she came home from the hospital, telling her they would not be holding her position while she was recovering.
“I was out of work, his father wasn’t around and wasn’t able to help. That’s when I first stepped into my 401(k) to support us while I looked for another job,” she remarked.
She dipped in again a few years later while she was between jobs. She needed the money to cover expenses, fund a move and pay off credit card debt, she said. Jamie, who spoke to CNN on condition we not use her last name, still lives paycheck-to-paycheck and has about $15,000 remaining in her 401(k).
“That’s all I have,” she explained. “I mean, it’s just not enough. But there’s nothing I can do about it right now.”
Lots of folks are worried about the status of their retirement investments due to this being an election year. Former President Donald Trump has stated that there are a lot of areas within entitlement programs to make cuts and reductions, including Social Security, which alarmed some people, but he’s clearly referring to waste, not the entitlements, as his campaign spokeswoman, Karoline Leavitt told CNN later in a clarification of his comments.
One thing’s for sure. Matters will be even worse if Biden is given four more years in the White House. Action needs to be taken in order to reduce inflation, cut waste spending, and reduce the interest rates if we want to see the purchasing power of the dollar increase so that we can have more money to save for retirement.