Monday, February 21, 2011

The nest-egg myth

It is always nice when you read something that supports your arguments.

Today, in the Los Angeles Times there is an article by Susan Jacoby, the author of "Never Say Die: The Myth and Marketing of the New Old Age." This is a book I will be buying.

A few quotes from the article.

Nearly half of today's older Americans receive no income from assets such as stocks and savings accounts.

As the debate over the federal deficit heats up, Americans are going to hear a great deal about "greedy geezers" who are supposedly bankrupting the nation with Social Security and Medicare.

The myth underlying these attacks is that most old people don't need their entitlements — that they are affluent pickpockets fleecing younger Americans.

This image of prosperous geezers and crones is just not accurate.

No generation stands to lose more from this fantasy than baby boomers, whose oldest members turn 65 this year. Because of financial losses in what will surely be known to history as the Crash of 2008, many boomers — especially older ones with less time to recover — may enter retirement in a worse financial position than their parents.

Only half of working Americans — the wealthier half with employers that match contributions — even have tax-sheltered retirement accounts. The average value of these accounts, by the way, was only about $45,500 before the crash — hardly a lavish retirement nest egg for boomers expected to live beyond 85 in unprecedented numbers.

The frequently repeated statistic that 75% of all assets are owned by people over 65 is utterly misleading, because those assets are held in a minority of very rich hands. Nearly half of older Americans receive no income — none — from assets such as stocks and savings accounts. Of those who do, half receive less than $2,000 a year.

Ms Jacoby describes a situation that is very similar in the UK. Sorry to keep on going on about this subject but the ultra-fragmentation of older people into the haves and the have-nothings will be a defining feature of the coming decades.

I just wish the media would realize that there are two possible answers to the question: “What does the future hold for the ageing population”. For one group, the smaller of the two, life will be OK, probably very good. For the majority it will be horrid. Dick Stroud

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