$1.2M throws off $48,000/year at a 4% withdrawal rate (assuming no interest/divs and no inflation). It’s not bad for retirement when you add in Social Security (depending on where you live), but it’s not the high life. And if you’re at/below the 9.9% salary level, that kind of net worth takes a LOT of long-term planning and saving.
Or you inherited it from your parents. Living off 1.2 million in your retirement years is definitely the high life if your neighbors are tenant farmers who don’t have social security, much less an IRA.
I anticipate an increasing homeless population among the elderly of my generation who weren’t fortunate enough to be born into middle class families.
I thought the point of the article was that only the 9.9 % have the ability to fix the problem and they better get busy doing so for the sake of their children.
Because historically societies that get themselves into this sort of pickle don’t survive. We need to quit concentrating on the tiny picture: «I’m not all that privileged» and look at the big picture and address the problems asap.
Or at least that was my take away from the article
Mine also. it’s not enough to say “it’s not me, it’s them” and sit back and watch the inequality increase.
I think the points made about that widespread feeling of never having “enough” because of looking upward at the next guy who has more are always worth repeating, too.
The privilege is not simply about the precise amount of savings. There is so much more to it, especially with regards to educational opportunities. For example, the science research program at our school is fairly selective. Once a student is accepted to the program, however, it is his responsibility to find a mentor to supervise his research. Kids are told this is accomplished by reading articles and sending out hundreds of emails to potential mentors hoping someone will respond. In reality, out of the class of about 17 students, only ONE student found a mentor through this method. Every other student had some kind of contact. My daughter finally found a mentor through a friend of a friend of a friend from our congregation. We are privileged to live an the kind of community where many of the congregants are professionals, doctors, lawyers, scientists, people with connections in many different fields.
There is also the privilege of living in a community where it is expected that the kids will attend college, where all the other families are going through or have gone through the process and can share information. In fact, there are so many privileges that I could go on for pages. None of that has anything to do with the exact amount of savings we have. The lifestyle that all of us in this community live, places us in the 9.9% for all practical purposes.
I have no answers to this problem. But it is one of the reasons I get so angry when I hear people complain about the crumbs that are thrown to lower income families, like some financial aid.
^this, this, this.
It was an interesting read (referring to section 4 - the one about college) , but none of the info would be new to CC folks. Except maybe the idea that the “top 50” colleges were defined for this class, and are as selective as P’ton was in the 80s.
Excellent post #25 @gallentjill.
That being said, the slate article made some very good points. The 9.9% is not a monolithic group. Many of those in that group are people who are retired to close to it. They saved to take care of themselves in their old age, as they have been told to do. There is a big difference in lifestyle among those who hit that net worth at age 65 and those who hit it at age 30.
They top 10% certainly need to take a hard look at way in which they contribute to disparity in income and educational opportunity. Living in nice communities with good schools is much more common than sending kids to prep school at the lower end of that range. The children of privilege may not be going to super elites in most cases, but they are going to private colleges or flagship level State Us. Allowing kids the opportunity to participate in a sport or EC at a high level or paying for music/voice/acting lessons are ways that top 10% kids have a leg up on others. That likely is true for those at the top 20% as well.
I am not sure of the answer to inequality. Most people with the means to do so want to live in areas with “good schools”. It is difficult for people, regardless of their ideals, to want to put their children in a situation that is not the best educationally. Many districts do not have the ability to absorb kids from other communities or if they do end up with a two tiered system that often does not really benefit those it is designed to assist.
If there were greater mobility and opportunity, inequality would not be much of a problem, since people would see that they earn their economic status, rather than inherit it from their parents. Unfortunately, the trend seems to be toward both greater inequality and lesser mobility and opportunity. That combination of circumstances leads to greater resentment, which tends to lead people to look to ideologies like communism or racism out of desperation based on seeing center-left or center-right capitalist systems failing them.
Right. But, how do we accomplish the goal of greater mobility and opportunity? Thats the question that needs to be answered. According to the article, affirmative action and other outreach programs only make the problem worse. I’m not sure I agree with that. But, in any case, the only solutions I can imagine are greater increase in financial aid, so that students can actually afford to go to college and graduate without crushing debt. But that doesn’t begin to scratch the surface of all the privilege that takes affect while children are growing up. How do you equalize the enrichment opportunities? The good schools? The job contacts? The nurture you get in a household of other educated people?
That is the hard problem. Indeed, some claim that societies historically have become more unequal and less mobile over time, until violent levelings (war, revolution, epidemics, etc.) occurred (e.g. https://www.theatlantic.com/business/archive/2017/02/scheidel-great-leveler-inequality-violence/517164/ ). However, the violent levelings commonly resulted in mass deaths and made society overall poorer as well.
A lot of the income inequality is engendered by bad choices. As the article says, one parent households are very bad for moving upward income wise, the biggest predictor of poverty. The upper 10% get married before having children and stay married. Anecdotally, I know many in my parents generation who now have saved and saved, including my own parents until now they are over the line into comfortable retirements. It wasn’t easy. My dad went from going to school barefoot in a one room school house, then served in WWII, went to college on the GI Bill (free college tuition for veterans), and worked and saved his money.
Both of my grandfathers served in WWII as well, but returned home to Jim Crow laws, which limited their options severely, especially in terms of buying homes in areas of their own choosing, colleges mostly limited to HBCUs, job opportunities (“No N— need apply”) and the general ability to translate military experience into life opportunities. These factors greatly impacted their abilities to save or pass anything on to future generations.
My dad went to his local directional college, not anything elite. He was asked in a job interview if he was one of those ‘g-d’ Catholics. And this by a public school board. Not as bad as Jim Crow but he got a job, spent very little, grew a garden for food. My Mom clipped coupons. We wore hand me downs and things from the lost and found that were not claimed. He invested conservatively. My parents didn’t gamble, smoke or drink. They had only two children. That’s my life experience so that’s how I see how to have a comfortable retirement.
WWII and its after effects were one of the violent leveling events suggested in the linked page from #31.
@TatinG father happened to benefit from it.
The fallacy is the belief that, “if I made it out, anyone can do it and anything else is the result of bad choices.” Of course, some kids claw their way out of poverty, survive a troubled home life, a complete lack of enrichment and a failing school system. However, the existence of a few especially gifted and resilient kids doesn’t change the equation for the vast majority of lower income people in the United States. Lack of mobility is a dangerous thing for any society. Its also a huge moral failing.
We don’t have a massive working-to-middle class entitlement program like the 40s GI Bill anymore. Some college tuition benefit but that’s about it. Nothing on that scale with housing and college and business and farm loans and all that.
I’ve met a lot of people who love a good pull-yourself-up-by-the-bootstraps story. As a culture, we seem to value Social Darwinism. I’m not saying everyone feels that way, but it seems particularly “American”. To me, at least.
It’s also hard to “get ahead” when you are paying the “Family Tax”. Helping close relatives who are even worse off than you.
H & I would argue about that. His mom, his family of origin versus our kids & our little family.
Sorry! I’m rambling now. Interesting thread!
I think I dozed-off a couple of times reading it.