Last week, reviewed a book called America, Welcome to the Poorhouse: What YOU must do to protect your financial future and the reform we need by Jane White. I asked a few more questions about White’s book, and asked her to weigh in on the current health care debate — even though it isn’t covered in her book.
Your 401k isn’t enough
One of the things that White points out is that your 401k probably isn’t enough to retire on:
“Unless they are the tiny percentage of the workforce that has long job tenure at a company that still offers an old-fashioned pension, most of those 38 million Boomers born between 1946 and 1956 who are scheduled to retire between 2011 and 2020–nearly one-quarter of the workforce–will have to stay on the job another eight to 10 years to achieve a 401(k) balance equal to at least 10 times their salaries near retirement.”
Americans aren’t saving enough, and employers aren’t required to put in that much. In fact, according to White, U.S. employers contribute less to retirement than just about every other developed nation — and even some developing nations (Mexico has us beat, as does Poland and Slovak Republic). White advocates a mandatory retirement contribution from employers. When I pointed out in my review that this idea (plus the idea of having the government cover more education expenses for higher education) was radical, White took exception:
“I’m not sure why you think my reform is radical, given that we are the richest nation on earth. Australia is one of eight countries that has a mandatory 401(k) style system and seven of them are more generous than ours; the average employer contribution rate is 7.25% of pay, Denmark’s is 11.8 percent, Hungary’s is 8%, Mexico’s is 6.5%, Poland’s is 7.3% and the Slovak Republic’s is 9%. In the United Kingdom, 55% of the population is covered by a regular pension compared to only 17% in the U.S.”
While I, personally, don’t think the idea is so radical, I know that many here in the U.S. would think that such reform is radical. The fact that we are the richest nation on earth does little to impress upon us as a society what we could do with that to make life better for everyone. Instead, our mind set is so incredibly individualistic that we continue to pursue policies that have been resulting in a widening gap between rich and poor, and the extinction of the middle class, for nearly three decades.
Health care reform
Another necessity, in addition to meaningful mortgage reform, retirement reform and changes to how we pay for higher education, is health care reform. Costs are getting out of control. But that won’t change, White says, until lobbyists no longer have the power they do over legislators. Citing data from the Center for Responsive Politics, White points this out about the guy in charge of health care reform:
“Nothing will change in Congress until we shut down K Street, the center of lobbying activity in Washington, D.C. The man who killed the “public option”, Sen. Max Baucus, raised a whopping $11 million since 2005 and doled out $9 million to his colleagues so that they would vote his way. Only Sen. Orrin Hatch collected more than Baucus from Big Pharma.”
What do you think? Are we going to be stymied in a quest for meaningful reform due to lobbying interests?
Image source: Daylife