Prepared to be scared if you crack open America, Welcome to the Poorhouse by Jane White. The headlines and chapter titles gave me a fright:
- 80 percent of Americans can’t afford to retire
- the median 401 (k) balance for workers 60-65 (i.e., near retirement) was a paltry $43,000
- mortgage mess: it ain’t just subprime, it’s half of Americans in overpriced homes
- 35 million Americans are drowning in credit card debt
White makes the case that a “retirement crisis” is set to hit in 2011. “The first wave of Baby Boomers, those born in 1946, is scheduled to retire in 2011 and can’t afford to — at the same time my daughter’s generation, one of the largest in history, is scheduled to graduate from college,” she writes. “Will a big percentage of the 4 million graduates wind up jobless because my generation’s 3.4 million Boomers can’t afford to retire?”
I’m almost too scared to keep reading. But the book also offers solutions:
- require employers to contribute to employee 401 (k) programs no matter what
- save wisely until retirement reform happens
- buy an home in an affordable community, like Portland, Denver, San Antonio, Austin, Houston, or Raleigh (the book has pricing, education, and crime stats on each of these cities)
White advocates major reform via a taxpayer lobbying group that will match the power of big business. “We need a national citizens’ PAC that not only issues “report cards” on Congresspeople,” she writes, “but also encourages honest candidates to run for office and replace them…We need a new American revolution against the business lobby and those in Washington who enable it and do its bidding.” One such PAC is called the Accountability Now group and it is backed by a major union and MoveOn.org, a Democratic political group.
I’d like to believe in White’s optimism that positive reform will financially empower many Americans, but I’m not convinced it will happen in the next decade. As a country we have to get a lot poorer before people will be moved to act. What do you think?
Leave a comment on this post by Friday and you could win my review copy! If you can’t wait, buy it from amazon for $16.55 (orig. $22.99).
Welcome to Bargain Babe! I’m Mara, and I’m so glad you’re here. I am an obsessive bargain hunter and penny pincher, and I am determined to live a full life without EVER paying full price.
I hope we can all change our spending habits and look towards investing in our future. It seems like with such dark times looming with a never ending presence so many of us, myself included, are relying on retail therapy for the quick pick me up. I definitely It’s like completely altering your thinking completely; instead of what is pleasing now… to how will this really benefit me in the long run. Financial Security for Americans seems possible but I definitely agree with you about getting a lot poorer before we change our habits. Maybe we can do it sooner. You are helping us all a lot. Thanks!
It just scares this 45 yr. old when I see my 20-30 -year-old co-workers who still live with their parents, have massive credit card debt, drive new cars, have the latest cell phones and of course, have no retirement savings accounts whatsoever.
I don’t know what is going to happen, the stock market is up and unemployment is at a horrifying 10%. I know that I can’t retire when I want to, and obviously social security will not be enough to support me. I don’t know what will happen, it is very scary, but people are not poor enough to do anything yet.
I agree people will have to get a LOT poorer until they will act and then we’ll have a revolt on our hands. My former boss used to say probably in about 100 years or so. The money rules are written for the rich and the people who work for them. Also recommend reading Conspiracy of the Rich. Similiar stuff and VERY eye-opening.
From what I’ve read here and on Amazon.com which has a whole chapter you can preview, tha author is right-on. Many in America are in big trouble. However, she advocate government changes and wants employers to contribute more to the employee’s 401K. We as individuals must be responsible for ourselves. We can’t afford to wait for others to make changes that may never come. We must each take control of our destiny.
A problem we don’t often see addressed in this regard is how late in life many people are now having children (my generation included; I’m in my 40s). While many of us were in our 20s – pre-marriage & kids, we lived large. Then the kids came, along with the requisite expenses. As we near retirement, they are just going to college. When my parents were my age, their children were finished with college & graduate school and had jobs. So we have expenses now, at the end of our earning years, that our parents didn’t have (let alone college being much more expensive now). And we are still encouraged to spend more than we have on houses, cars, what have you. If we were really serious about turning the economy around, we would talk about these issues with young people very early in life, encouraging them to save for the future and choose a career that will really give them a way to earn a living. And we would demand that our govt. reps. really represented us and provided the safety net that nearly all other 1st world countries have – job security, vacation time, sick leave, health care, childcare, retirement.
Wendy, I agree that talking to children about saving money is important to do early in life. It starts with giving a child an allowance and builds from there. My Mom paid me $1 to balance her checkbook when I was in junior high school. It was one of my favorite ways to make a buck!
If “we have to get a lot poorer ” means not having a 62 inch plasma tv, or the brand new I-phone (with contract) the day it’s released, or a McMansion with Rooms To Go furniture stuffed in every room and bought on a 5 yr. payment plan, then so be it. It’s about time people stopped with the hedonistic, gluttinous buy-buy-buy EVERYTHING NOW, even when they have to put it on credit, and get back to reality. Do’t buy what you can’t afford. Save (invest) at least 10% of your paycheck for retirement. Live within your means. Maybe this economic meltdown will cause a return to individual fiscal responsibility?
Another great book, “Financial Armegeddon” by Michael Panzner. He paints a pretty dismal picture of what’s to come and how to prepare for it.
Looking back, on this subject I could wish for 2 things: That I had been taught and reminded and taught again about fiscal responsibility, including how to avoid money problems when you see them looming, and how to ‘read’ advertisements for what they’re really saying. Apply Dr. House’s credo to marketing: All advertisers are liars; all ads are lies. It has become 2nd nature for me to dismiss TV ads; I never buy what they tell me to when they tell me to. I do my research and make informed decisions. If you only subscribe to 1 magazine make it Consumer Reports — and get the online version and save some trees.
It is scary to see the statistics… and I still have two kids to send to college… then our retirement!
It sounds like White wants the government to fix the problem. I think Americans need to fix the problem. Americans overextended themselves, didn’t save and bought houses they could not afford. We don’t need more government regulation. We need the government to get off our toes so we can pull ourselves up by the bootstraps.
Surely I’m misunderstanding the last sentence in your penultimate paragraph…”moveon.org is “encouraging honest candidates to run for office” ??!! Puhleeze.
Carol Lee good post…book looks good but that moveon comment really is scary!