Handful of coins (Photo: Jenn Durfey/Flickr/CC)
By Laura Clawson / Daily Kos
Remember how 401(k) accounts were going to be the key to the Ownership Society? We’d all be magically rich because our money would be in the stock market, not stuck in some boring pension. About that:
New data show that in 2014, distributions from 401(k)s and similar accounts (including Individual Retirement Accounts (IRA), which are mostly rolled over from 401(k)s) came to less than $1,000 per year per person aged 65 and older. On the other hand, seniors received nearly $6,000 annually on average from traditional pensions. Pension benefits and retirement account distributions are both concentrated among upper income seniors, but far more seniors rely on pensions as a significant source of retirement income.
Which looks like this:
Your 401(k) (or your parents’) had better be big enough to live on the account itself for as long as you (or they) plan to live, because unless you’re Mitt Romney or someone, you’re not getting much income from it.
Think about these numbers and think about how many people you know whose jobs offer pensions as compared to 401(k)s (as compared to no retirement program at all). Think about how many people you know who are going to be completely screwed at this rate. We’re not on track for an ownership society, we’re on track for an elder-poverty society.
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401(k) s were designed to transfer the risk of providing pensions from corporations to individuals and to get corporations off the hook for providing them. Secondarily, they provided for more business for Wall Street and the financialized economy, more jobs for brokers, financial planners etc.
Elder poverty is becoming increasingly more common especially due to the fact that Medicare doesn’t provide for long term care for seniors who are unable to care for themselves. Many seniors think the only way to have Medi-Cal provide long term care is to spend down their assets to zero and then go on Medi-Cal. But where does this leave the well spouse? With nothing. I saw an article in the paper about an 85 year old man who was evicted from his apartment because his wife’s nursing home had consumed all their assets. She was taken care of, but he had nothing.
Elder attorneys have strategies for protecting assets so that the well spouse isn’t left with nothing and the ill spouse can still go on Medi-Cal. Check it out.