Why you can’t save for retirement part one
Why you can’t save for retirement? Find out here on this episode. Then download your FREE Queer Money Kickstarter, a 9-step Guide to Kickstart Your Journey to Financial Independence.
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Why can’t you save for retirement part 1?
On this Queer Money®, we’re sharing part 1 of a 2-parter on why you can’t save for retirement. We give a few reasons you might struggle to save and invest for retirement.
Here are some systemic reasons you might struggle with saving for retirement. The first reason is that many people immediately blame capitalism. Corporations have shirked their responsibilities for workers’ retirement security. In 1978, the 401(k) became a thing, and corporations put the responsibility on individuals. Corporations have done a horrible job helping people keep up with that. Part of the problem is it allowed Wall Street to give more of a reason to focus on itself. The Father of the 401(k) regrets giving more power to Wall Street, lobbyists, etc. Everything’s about shareholder value; everyone else can suck it. Teresa Ghillarducci, who was on episode 512 of Queer Money®, says, “The 401(k)-experiment hasn’t worked, and GenX has been the 401(k) guinea pigs.”
The Second reason is the rising cost of living and inflation. The CPI report shows that since 2000, healthcare costs have risen nearly 100%, housing by over 50%, and education by around 80%, yet the median household income has only increased by 27%. It is harder to save in the long term when you struggle to live in the short term.
A wealth illusion is created because we have more access to credit.
The third reason is inflation and wages have not been in alignment. Wages have been stagnant for decades. When we think about the wealthy and the corporations back in the 70s under President Reagan, they got a lot of tax breaks. There were a lot of reasons why corporations then no longer wanted to pass the money they were giving to employees as a way to stimulate the economy. The corporations could then pass the money to themselves through either dividends or by giving employees a certain level of wages. The average CEO in the S&P 500 gets paid 268% of the average worker earns. CEOs can afford anything they want. The rest of us can not. If you go back to the 70s through 2021, the productivity employees were producing 62.7% more, but our wages have only gone up 17.3%.
The fourth reason is that historically, we have had low interest rates. When you have these artificially low interest rates, it is simply harder to save. Putting money into a savings account doesn’t make sense because you can’t keep up with the cost of living. So, your dollar becomes weaker as time goes on.
Not all the reasons you can’t save are systemic. That is why we encourage you to join us as we dive into some of the reasons found within ourselves next week for part 2 of why you can’t save for retirement.
What external forces are making it harder for you, in particular, to save or invest for retirement?
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