The Collapse of the Retirement System in America

Alternative Visions
By Dr. Jack Rasmus
January 30, 2013

The show discusses the deteriorating condition of the 6 elements of the retirement system in the US: Private defined benefit pensions, 401k plans, personal savings, retiree health benefits, Social Security, and Medicare.  The retirement system in America set up in the late 1940s-early 1950s, originally called for a ‘3-legged stool’ of incomes, was to be composed of one-third retirement income from defined benefit pensions, one third from personal savings, and one third from Social Security. The first two of those legs have already collapsed—defined benefit and 401k pensions and personal savings. And now Congress is about to begin breaking the last leg, Social Security and Medicare, with several rounds of deficit cutting set for March, May, and again later in 2013 when big corporate tax cuts take place.

The consequences of collapsing retirement incomes affecting more than 70 million people will be significant, and will hold back any sustained economic recovery in the US in 2013-14 and beyond—even as GDP data for the fourth quarter 2012 just issued today indicate a -0.1% growth for the US economy and show the US economy is coming closer to the ‘double dip’ recession I have been predicting for more than a year. Slower consumption spending with the end of the payroll tax cut, slower business spending, declining spending on inventories and trade in 2013 all point in the direction of continued slow US economy averaging no more than 1-1.5% or about one third of normal. Cuts in government spending projected, and any additional social program cuts in Medicare, Social Security, etc., will all but ensure a continued slow to zero economic growth and may even precipitate the double dip recession in the US, similar to that already occurring in Europe, the UK, and now Japan.

The radio show provides a wealth of facts and data backing up the theme of collapsing retirement incomes and continued slow economic growth.


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