The Great Retirement Con

November 20, 2017

Peak Prosperity

The Origins Of The Retirement Plan

Back during the Revolutionary War, the Continental Congress promised a monthly lifetime income to soldiers who fought and survived the conflict. This guaranteed income stream, called a "pension", was again offered to soldiers in the Civil War and every American war since.

Since then, similar pension promises funded from public coffers expanded to cover retirees from other branches of government. States and cities followed suit -- extending pensions to all sorts of municipal workers ranging from policemen to politicians, teachers to trash collectors.

A pension is what's referred to as a defined benefit plan. The payout promised a worker upon retirement is guaranteed up front according to a formula, typically dependent on salary size and years of employment.

Understandably, workers appreciated the security and dependability offered by pensions. So, as a means to attract skilled talent, the private sector started offering them, too.

The first corporate pension was offered by the American Express Company in 1875. By the 1960s, half of all employees in the private sector were covered by a pension plan.

Off-loading Of Retirement Risk By Corporations

Once pensions had become commonplace, they were much less effective as an incentive to lure top talent. They started to feel like burdensome cost centers to companies.

As America's corporations grew and their veteran employees started hitting retirement age, the amount of funding required to meet current and future pension funding obligations became huge. And it kept growing. Remember, the Baby Boomer generation, the largest ever by far in US history, was just entering the workforce by the 1960s.

Companies were eager to get this expanding liability off of their backs. And the more poorly-capitalized firms started defaulting on their pensions, stiffing those who had loyally worked for them.

So, it's little surprise that the 1970s and '80s saw the introduction of personal retirement savings plans. The Individual Retirement Arrangement (IRA) was formed by the Employee Retirement Income Security Act (ERISA) in 1974. And the first 401k plan was created in 1980.

These savings vehicles are defined contribution plans. The future payout of the plan is variable (i.e., unknown today), and will be largely a function of how much of their income the worker directs into the fund over their career, as well as the market return on the fund's investments.

Touted as a revolutionary improvement for the worker, these plans promised to give the individual power over his/her own financial destiny. No longer would it be dictated by their employer.

Your company doesn't offer a pension? No worries: open an IRA and create your own personal pension fund.

Afraid your employer might mismanage your pension fund? A 401k removes that risk. You decide how your retirement money is invested.

Want to retire sooner? Just increase the percent of your annual income contributions.

All this sounded pretty good to workers. But it sounded GREAT to their employers.

Why? Because it transferred the burden of retirement funding away from the company and onto its employees. It allowed for the removal of a massive and fast-growing liability off of the corporate balance sheet, and materially improved the outlook for future earnings and cash flow.

As you would expect given this, corporate America moved swiftly over the next several decades to cap pension participation and transition to defined contribution plans.

The table below shows how vigorously pensions (green) have disappeared since the introduction of IRAs and 401ks (red):

(Source)

So, to recap: 40 years ago, a grand experiment was embarked upon. One that promised US workers: Using these new defined contribution vehicles, you'll be better off when you reach retirement age.

Which raises a simple but very important question: How have things worked out?

The Ugly Aftermath

America The Broke

Well, things haven't worked out too well.

Three decades later, what we're realizing is that this shift from dedicated-contribution pension plans to voluntary private savings was a grand experiment with no assurances. Corporations definitely benefited, as they could redeploy capital to expansion or bottom line profits. But employees? The data certainly seems to show that the experiment did not take human nature into account enough – specifically, the fact that just because people have the option to save money for later use doesn't mean that they actually will.

First off, not every American worker (by far) is offered a 401k or similar retirement plan through work. But of those that are, 21% choose not to participate (source).

As a result, 1 in 4 of those aged 45-64 and 22% of those 65+ have $0 in retirement savings (source). Forty-nine percent of American adults of all ages aren't saving anything for retirement.

In 2016, the Economic Policy Institute published an excellent chartbook titled The State Of American Retirement (for those inclined to review the full set of charts on their website, it's well worth the time). The EPI's main conclusion from their analysis is that the switchover of the US workforce from defined-benefit pension plans to self-directed retirement savings vehicles (e..g, 401Ks and IRAs) has resulted in a sizeable drop in retirement preparedness. Retirement wealth has not grown fast enough to keep pace with our aging population.

The stats illustrated by the EPI's charts are frightening on a mean, or average, level. For instance, for all workers 32-61, the average amount saved for retirement is less than $100,000. That's not much to live on in the last decades of your twilight years. And that average savings is actually lower than it was back in 2007, showing that households have still yet to fully recover the wealth lost during the Great Recession.

But mean numbers are skewed by the outliers. In this case, the multi-$million households are bringing up the average pretty dramatically, making things look better than they really are. It's when we look at the median figures that things get truly scary:

Nearly half of families have no retirement account savings at all. That makes median (50th percentile) values low for all age groups, ranging from $480 for families in their mid-30s to $17,000 for families approaching retirement in 2013. For most age groups, median account balances in 2013 were less than half their pre-recession peak and lower than at the start of the new millennium.
(Source)

The 50th percentile household aged 56-61 has only $17,000 to retire on. That's dangerously close to the Federal poverty level income for a family of two for just a single year.

Most planners advise saving enough before retirement to maintain annual living expenses at about 70-80% of what they were during one's income-earning years. Medicare out-of-pocket costs alone are expected to be between $240,000 and $430,000 over retirement for a 65-year-old couple retiring today.

The gap between retirement savings and living costs in one's later years is pretty staggering:

Nearly 83% of retired households have less saved than Medicare costs alone will consume.

One-third of retired households are entirely dependent on Social Security. On average, that's only $1,230 per month – a hard income to live on. (source)

34 percent of older Americans depend on credit cards to pay for basic living expenses such as mortgage payments, groceries, and utilities. (source)

As for Medicare, the out-of-pocket costs could easily soar over retirement. The Wall Street Journal reports that the current estimate of Medicare's unfunded liability now tops $42 Trillion. Such a mind-boggling gap makes it highly likely that current retirees will not receive all of the entitlements they are being promised.

And the denial being shown by baby boomers entering retirement is frightening. Many simply plan to work longer before retiring, with a growing percentage saying they plan to work "forever".

But the data shows that declining health gives older Americans no choice but to leave the work force eventually, whether they want to or not. Years of surveys by the Employment Benefit Research Institute show that fully half of current retirees had to leave the work force sooner than desired due to health problems, disability, or layoffs.

Add to this the nefarious impact of the Federal Reserve's prolonged 0% interest rate policy, which has made it extremely hard for retirees with fixed-income investments to generate a meaningful income from them.

The number of Americans aged 65 years and older is projected to more than double in the next 40 years:

Will the remaining body of active workers be able to support this tsunami of underfunded seniors? Don't bet on it.

Especially since their retirement savings prospects are even more dim. With long-stagnant real wages and punishing price inflation in the cost of living, Generation X and Millennials are hard-pressed to put money away for their twilight years:

(Source)

Public Pensions: Broken Promises

And for those "lucky" folks expecting to enjoy a public pension, there's a lot of uncertainty as to whether they're going to receive all they've been promised.

Due to underfunded contributions, years of portfolio under-performance due to the Federal Reserve's 0% interest rate policy, poor fund management, and other reasons, many of the federal and state pensions are woefully under-captialized. The below chart from former Dallas Fed advisor Danielle DiMartino-Booth shows how the total sum of unfunded public pension obligations exploded from $292 billion in 2007 to $1.9 trillion by the end of 2016:

(Source)

And the daily headlines of failing state and local pension funds (Illinois, Kentucky, New Jersey, Dallas, Providence -- to name but a few) show that the problem is metastasizing across the nation at an accelerating rate.

Affording Your Future

The bottom line when it comes to retirement is that you're on your own. The vehicles and the promises you've been given are proving woefully insufficient to fund the "retirement" dream you've been sold your whole life.

That's the bad news.

But the good news is that the dream is still attainable. There are strategies and behaviors that, if adopted now, will make it much more likely for you to be able to afford to retire -- and in a way you can enjoy.

In Part 2: Success Strategies For Retirement, we detail out these best practices for a solvent retirement, including providing 14 specific action steps you can start taking right now in your life that will materially improve your odds of enjoying your later years with grace.

For far too many Americans, "retirement" will remain a perpetual myth. Don't let that happen to you.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access)

POLL: Was Malaysia Flight 370 taken by a WORMHOLE?

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It's hard to know what's real and what's fake anymore.

With the insanity that seems to grow every day, it is becoming more and more difficult to tell what's true and what's not, what to believe, and what to reject. Anything seems possible.

That's why Glenn had Ashton Forbes on his show, to explore the fringe what most people would consider impossible. Forbes brought Glenn a fascinating but far-out theory that explains the decade-old disappearance of Malaysia Airlines Flight 370 along with riveting footage that supposedly corroborates his story. Like something out of a sci-fi novel, Forbes made the startling claim that Flight 370 was TELEPORTED via a U.S. military-made wormhole! As crazy as that sounds, the video footage along with Forbes' scientific research made an interesting, if not compelling case.

But what do you think? Do you believe that the U.S. Government can create wormholes? Did they use one to abduct Flight 370? Is the government hiding futuristic tech from the rest of the world? Let us know in the poll below:

Does the military have the capability to create wormholes?

Is the U.S. military somehow responsible for what happened to Malaysia Flight 370?

Is the military in possession of technology beyond what we believe to be possible?

Do you think American military tech is ahead of the other superpowers?

Do you think there would be negative consequences if secret government technology was leaked?

5 videos that reveal the WOKE GARBAGE being taught to our kids

School today is not like it used to be...

Glenn recently covered how our medical schools have been taken over by gender-affirming, anti-racist, woke garbage, and unfortunately, it doesn't stop there. Education at all levels has been compromised by progressive ideology. From high-level university academics to grade school, American children are constantly being bombarded by the latest backward propaganda from the left. Luckily, in the age of Zoom classes and smartphones, it's harder for teachers to get away their agenda in secret. Here are five videos that show just how corrupt schools really are:

Woke teacher vandalizes pro-life display

Professor Shellyne Rodriguez, an art professor at Hunter College in New York, was caught on camera having a violent argument with a group of pro-life students who were tabling on campus. Rodriguez was later fired from her position after threatening a reporter from the New York Post, who was looking into this incident, with a machete.

Woke professor argues with student after he called police heroes

An unnamed professor from Cypress College was captured having a heated discussion with a student over Zoom. The professor verbally attacked the student, who had given a presentation on "cancel culture" and his support of law enforcement. The university later confirmed that the professor was put on leave after the incident.

Professor goes on Anti-Trump rant

Professor Olga Perez Stable Cox was filmed by a student going on an anti-Trump rant during her human-sexuality class at Orange Coast College. This rant included Professor Cox describing Trump's election as "an act of terrorism”. The student who filmed this outburst was suspended for an entire semester along with several other punishments, including a three-page apology essay to Professor Cox explaining his actions. Orange Coast College continues to defend Professor Cox, citing the student code of conduct.

Unhinged teacher caught on video going on left-wing political rant

Lehi High School teacher Leah Kinyon was filmed amid a wild, left-wing rant during a chemistry class. Kinyon made several politically charged remarks, which included encouraging students to get vaccinated and calling President Trump a "literal moron." Despite her claims that the school admins "don't give a crap" about her delusional ramblings, a statement from Lehi High School reveals that she "is no longer an employee of Alpine School District."

Far-left Berkeley law professor melts down when a Senator asks her if men can get pregnant

During a Senate Judiciary Committee hearing, Berkeley Law Professor Khiara M. Bridges was asked by Missouri Senator Josh Hawley to clarify earlier statements involving "people with a capacity for pregnancy." The senator's line of questioning is met with a long-winded, frantic rant accusing the senator of being transphobic. When Sen. Hawley tries to clarify further, Professor Bridges makes the outrageous claim that such a line of questioning somehow leads to trans suicides.

Woke ideology trumps medicine in America's top 5 medical schools

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Progressive ideology has infected our most prestigious medical schools and is seeping into our medical system.

As Glenn covered in his latest TV special, "diversity, equity and inclusion" (DEI), and leftist rhetoric have overtaken science and medicine as the focus of medical schools across the nation. The next generation of doctors and nurses is being force-fed DEI and "anti-racist" nonsense at the expense of slipping standards. This has led to a decline in people's trust in the medical industry and for good reason. Woke ideology has already been the driving force behind at least one medical malpractice case, and more are undoubtedly on the way.

All of this is being spearheaded by universities, which have integrated DEI practices into the fabric of their programs. Our top medical schools now require students and staff to participate in mandatory DEI and "anti-racist" classes and training and are adjusting the standards to reflect this new shift in focus. Here are 5 statements from the top American medical schools that show that medicine is no longer their primary focus:

Harvard Medical School

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Taken from the Harvard University "Unconscious bias" resource page:

“As members of HMS, we each have a responsibility to create an inclusive community that values all individuals. Barriers to inclusion may include assumptions we make about others that guide our interactions. Recognizing our Unconscious Bias is a critical step in developing a culture of equity and inclusion within HMS and in our partnerships with other communities.”

The Johns Hopkins University School of Medicine

Rob Carr / Staff | Getty Images

Pulled from the JHM Office of Diversity, Inclusion and Health Equity blog:

“One-hour live, virtual unconscious bias training ... [w]ill be required at all Johns Hopkins Health System (JHHS) entities for managers and above; hospital nurse leaders; credentialed providers (such as physician assistants and nurse practitioners); and for school of medicine faculty and trainees (including residents, fellows, medical and graduate students, and research postdocs), as well as those at a manager level or above.”

Stanford University School of Medicine

Philip Pacheco / Stringer | Getty Images

Found on the Stanford Medicine Commission on Justice and Equity page:

“The Commission on Justice and Equity—composed of external and internal leaders, experts, and advocates—represents an institution-wide, collaborative effort to dismantle systemic racism and discrimination within our own community and beyond.”

Perelman School of Medicine at the University of Pennsylvania

Education Images / Contributor | Getty Images

Taken from the Penn Medicine Commitment to Inclusion, Equity, and Antiracism site:

“We openly acknowledge the role of structural forces of oppression as primary drivers of the disparate health outcomes. We believe that working to reverse the underrepresentation of historically excluded groups is critical in achieving equitable health outcomes. While this is an ongoing journey for our program, here are some of the tangible steps we have taken to achieve an inclusive culture”

Columbia University Vagelos College of Physicians and Surgeons

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Pulled from the Vagelos College of Physicians and Surgeons Diversity, Equity, Inclusivity, Justice, and Anti-Racism page:

"Courses are being revised to be more inclusive and informed by the key principle of race as a social construct and a social determinant of health. We are training faculty that Anti-Racism is not an add-on to a course. Anti-Racism is a pedagogy - a manner of teaching, designing courses, and measuring learning outcomes. We make sure that the classroom environment is inclusive by holding space for respectful conversation and ensuring that we address any “classroom ruptures”– a disorienting dilemma or situation when a bias or microaggression that may occur, providing real time opportunities for professional development, learning, and growth. Racist actions and remarks are never tolerated at Columbia University and will be dealt with following established protocols."

Critical theory destroys truth and justice

Editor's note: This article was originally published on TheBlaze.com.

Critical theory once stood out as the absurd progressive notion that it is. Now, its maxims are becoming an integral part of ordinary political discourse. The more you repeat a lie, the more you will believe it, and this is the very dangerous place in which we find ourselves today.

Take this critical theory maxim as an example: If we desire justice, we must sometimes champion what may appear superficially as injustice. It's a necessary evil, if you will, the necessity of “controlled injustice.”

By using truth through fabrication and controlled injustice for justice, we’ll save the republic. We’ll be acting in a noble way.

This definition of justice is defined by the “oppressed,” not the “oppressor.” It is the greatest happiness for the greatest number. To achieve this justice, however, we need to endorse acts on occasion that, while seemingly unjust, serve a higher purpose. It will ensure the stability and the unity of our republic, and this may manifest in ways that seem contradictory to our values. But these are the necessary shadows to cast light on “true justice.”

And isn’t that what we are all after, anyway?

Here’s another critical theory maxim: Sometimes we find the truth through fabrication. Our pursuit of truth sometimes requires a strategic use of falsehoods. The truth is a construct that has been shaped and tailored to promote the well-being of the collective.

We sometimes need to accept and propagate lies designed by "the system” — not the old system, but the system that we’re now using to replace the old to get more justice through injustice and more truth through fabrication.

We’re engaging in a higher form of honesty. When we fabricate, it’s for the right reason. We are reaching up to the heavens fighting for a higher sort of honesty. To fortify the truth, we occasionally must weave a tapestry of lies. Each thread, essential for the greater picture, will ultimately define our understanding and ensure our unity under this infallible wisdom.

The election is coming up. Does this maxim sound familiar? Many think it is imperative that we secure our republic through election control to maintain our republic. Sometimes, we might need to take actions that by traditional standards might be questionable.

The act of securing elections requires cheating. It's not mere deception. It is a noble act of safeguarding our way of life. We're on the verge of losing this democracy, and without deception, we will lose it.

To ensure it doesn't fall into the hands of those we know will destroy it, we may have to make a few fabrications. We're fabricating stories to be able to control or secure the republic through our elections. By using truth through fabrication and controlled injustice for justice, we'll save the republic. Therefore, we'll be acting in a noble way. Stealing an election from those who wish to harm our society is truly an act of valor and an essential measure to protect our values and ensure the continuation of our just society.

If we desire justice, we must sometimes champion what may appear superficially as injustice.

I know it's a paradox of honor through dishonor. But in this context, by embracing the dishonor, we achieve the highest form of honor, ensuring the stability and the continuation of our great republic.

Let this be heard, far and wide, as a great call to patriotic action. As we advance, let each of us, citizens of this great and honorable republic, consider these principles. Not as abstract or paradoxical but as practical guides to daily life. Embrace the necessity of controlled injustice, the utility of lies, the duty to secure our electoral process, and the honor and apparent dishonor. These are not merely strategies for survival. They are prerequisites for our prosperity.

We all have to remember that justice is what our leaders define, that truth is what our party tells us. Our republic stands strong on the values of injustice for justice, honor through dishonor, and the fabrication of truths. To deviate from this path is to jeopardize the very fabric of our society. Strength through unity; unity through strength.

We've heard this nonsense for so long. But now, this nonsense is becoming an instituted reality, and we are entering perilous times. Don't be fooled by the narratives you will hear during the march to November. Never let someone convince you that the ends justify the means, that a little bit of injustice is needed to achieve a broader, collective vision of justice, that truth sometimes requires fabricated lies and narratives. If we do, justice will cease to be justice, truth will cease to be truth, and our republic will be lost.