Jan 29 2017

The standard wage for an American is $29,000: Social Security data reveals raw figures for the wealthiest country in the world.

All Americans pay Social Security taxes.  So looking at Social Security for income data is fairly reliable.  The new Social Security figures show that Americans continue to make a lot less than what the public tends to believe.  For example, you may have seen mainstream shows with talking heads saying that someone making $200,000 a year is somehow middle class.  First, if your family is making that much you are in the top five percent of all U.S. households.  Not exactly the middle.  The median figure is the best measure here.  This is the point where half of workers make less or more (the true middle).  The latest Social Security data shows that the median worker income earned by an American is much less than what most expect.

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Jan 22 2017

The 4 Horsemen of the US Debt Apocalypse: 80 percent of federal government operation costs go to four areas in Health and Human Services, Social Security Administration, Veterans Affairs, and Department of Defense.

Here is a question you probably won’t find on Jeopardy: what is the actual risk of a U.S. default on its debt?  The answer to that is none because the Federal Reserve has the magical power to create new debt to pay off old maturing debt.  Must be nice to operate beyond the normal rules of accounting.  Yet there is a problem where the debt to GDP ratio is now at a level only surpassed by that brought on by World War II where the industrial powers were literally in full scale war.  It is probably worth noting that we have mountains of debt and a large portion of this is being held by China, a nation that is being politically unsettled by words of the incoming administration.  We are essentially in a situation where our tax receipts are not keeping up with our spending.  So the debt only grows.  And four departments eat up 80 percent of all federal government spending:  The Department of Health and Human Services, the Social Security Administration, Veterans Affairs, and the Department of Defense.

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Jan 15 2017

Millennials are worse off than their parents: Millennials earn 20% less than baby boomers at same stage in life.

It is now official that Millennials are worse off than their parents.  The Federal Reserve released a study showing that Millennials are as broke as we suspected.  According to the figures released Millennials earn 20% less than baby boomers did at the same stage in life.  This is a major reason why so many Millennials are living at home but are also unable to save for retirement.  What compounds this issue even more is that the Millennial generation is the most educated ever in the United States.  What we also know is that Millennials carry the vast majority of the $1.4 trillion in student debt outstanding.  This information puts our society at a fundamental crossroads in addressing the challenges faced by the young.  Do we care if the next generation is worse off than the previous one?

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Jan 7 2017

Record 95.1 million Americans not in the labor force. The challenge of having an army of non-working adults.

The year definitely ended with a bang and the number of Americans not in the labor force is now at a record high as well.  95.1 million Americans are now floating in the “not in the labor force” category that finally got some mainstream attention in 2016.  This is a big deal because you have an enormous proportion of your adult population off the charts.  This convenient math has also allowed the unemployment rate to look lower than it probably should be.  After all, if you are simply dismissing millions from your overall calculation then things can look better.  We end the year with an enormous number of adults that have fallen off the labor force bandwagon and in many cases, you have old adults who wish to retire but realize their new retirement plan is working until they die.

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Dec 31 2016

Guns and Chipotle: Millennials are the most employed generation in two occupational areas: food services and military.

Young Americans have many financial obstacles placed in their way.  Many older Americans like to chime in and blast younger Americans as being weak and complaining too much but the facts tell a different story.  Millennials do have it economically tougher.  Quality of life is up (for all) but the standard of living is getting harder to keep up with.  To achieve that middle class lifestyle that baby boomers achieved with very little education and in many cases a blue collar job now requires a two income households and mountains of student debt just to get there.  It is also the case that young Americans are now living at home in record numbers because of economic necessity.  Millennials are the most employed generation in food services and the military.  What does that tell you?

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Dec 26 2016

The near extinct pension – US pensions aggressively invest in equities relative to other countries to make up for shortfalls.

The pension is nearly extinct.  Overly optimistic returns left many pension plans practically insolvent and not ready to adapt to a low yield environment.  The benefit of pensions however is that it forced people to save over time for retirement.  What we have learned via the 401k is that when left to their own devices, people simply are not good at planning for the future especially when it comes to retirement.  So now, a full generation into this experiment we are left with many older Americans fully relying on Social Security as their main source of income.  That was never the intended use of that program.  When we look at US pension plans we realize that they are aggressively betting on equities to make up for the larger returns needed to payout retirees.  It might seem that the stock market only goes up over the last few years but as we all know, tides do shift.

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Dec 17 2016

The 401k has been a disaster for most Americans: Only 44 percent of private sector workers participate in a defined contribution plan.

Failing to plan is planning to fail.  If this is true, most Americans are planning to live in retirement with very little money and are going to rely heavily on Social Security to get by.  That is the case today where most retirees get the bulk of their income from Social Security.  Back when the 401k plan was introduced, the thought was many people would squirrel away money each month and after 30 or 40 years of working, there would be a large nest egg thanks to a raging stock market.  Stock market growth has tempered and most people just didn’t participate.  So now as many Americans enter retirement age most are realizing they are going to work until they die.  The 401k plan was introduced in 1978 and the end result for most Americans is that it has failed.

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