Unstacking the deck

The Thinker by Rodin

I’ve decided life is much easier if you are rich.

This is hardly surprising. While my wife and I don’t consider ourselves rich, at age 60 plus we are out of debt. No mortgage. No car payments. Now, precisely when I don’t need credit, I’ve discovered my credit score is 832 out of 850. I know this only because we applied for a 2% cash back credit card, and the credit union thought I needed to know the good news.

Yes, if you want to pay less, get at least relatively rich. Also, it helps to be retired. You have time to shop for the discounts, and you can time things like vacations (something of an oxymoron if you’re retired) for ideal times. For example, if you want a cheap Caribbean cruise, book it for early December. When you are retired, there’s no reason not to.

It’s the poor and those who work for a living that pay handsomely for the privilege. Of course, that was me for much of my life too, until recently. There was that mortgage, to start. It’s a great deal for the mortgage companies. For thirty years you pay for the privilege of being deeply in debt. If you get too far behind on your mortgage due to circumstances you probably can’t control, like losing your job, the bank will be happy to repossess your house. Maybe you’ll get some equity back after they sell it, but you sure won’t have a house bought and paid for. At best, you get to start the whole cycle again.

So it goes with much of life’s necessities: car loans, home improvements and college education for the kids. Neglecting fixing infrastructure to save money only does the opposite in the long run. Live within your means, our betters tell us. Only it’s not at all easy to do that, particularly today, as living is so expensive and wage increases are so niggardly.

The system is stacked against the vast majority of us. Worse, “our betters” tell us it’s all our fault when we fail. We fail mostly because they set impossible goals. It’s some defect in ourselves when we do, and it’s never the fact that the rich have used the system to bar the gates for most of us from making it to their level. Not that most of these rich ever knew poverty. So many, like Donald Trump, live on inherited wealth. Trump never went hungry, or homeless, or had to live in a cheap apartment. Yet these are the people who feel they have the right to tell us what we are doing wrong. In fact, they create the conditions to keep us mostly forever on the outside.

Candidates like Bernie Sanders and Elizabeth Warren at least have acknowledged the obvious: the system is rigged against the vast majority of us. To the extent that I am rich is probably due to 20% being white and male, 20% the sort of doggedness my betters wanted out of me, and 60% being a former government employee who moved steadily through the ranks over 32 years. Because I stayed in it, I can take advantage of a system available these days only available to a vanishing few: a nice pension.

My daughter recently joined the civil service. She’s being trained to be a 911 operator for Prince William County in Virginia. She was shocked to discover when she was hired that she too could earn a pension, like dear old dad. My pension looked a bit problematic when I joined the civil service. Hers is probably more problematic, and ultimately depends on a future Virginia state government. Assuming she decides to hang around in this field that long, maybe she will climb that rung of financial security like dear old dad. But that will only be because there is a rung there for her to reach for. For most of us, that rung was pulled decades ago.

Ending pensions though was one of the biggest and earliest ways they pulled the rug from under us. You just have to do the math on 401Ks and IRAs to see how it just doesn’t work. If you can manage to save $5,000 a year for 35 years at 6% return and with a 2% inflation rate, your nest egg is about $560,000. Taking out inflation, that’s $237,000 in today’s dollars. To make that stretch over 25 years with a 4% rate of return and 2% inflation, you could take out $1255 a month. If you outlive your money, you will be reduced to social security income alone, assuming that system is solvent. “Our betters” are trying very hard to ensure it won’t be.

In most places, $1255 a month in today’s dollars won’t even pay the rent. Hopefully you will have paid of your mortgage before you retire, but how many of us can count on steady income and no major financial calamities? With a pension though, assuming it’s fully funded, it’s income for life. Any 401K or IRA supplements a pension. That’s exactly how we’re doing it.

And with such a steady income in retirement, that’s how we keep making our modest pile grow. You book vacations in off seasons. You pay cash for stuff and often get a discount. You buy in bulk. Like me, maybe, you find a 2% cash-back, no-fee credit card and try to put all expenses on it. Or you take out a CD at get 2.25% return on it, like we also did recently. It’s all nice, unearned money, free for the taking if you are savvy and have a nice pile of cash you don’t need to touch.

We save money in other ways now. We don’t need a car loan and probably won’t ever need to take out a loan again. We pay cash when we buy cars. As we discovered recently, we got a good discount from the dealership for the privilege. As we age, we can get senior rates: for hotels, for some meals, for movie tickets, and yes, for our medical bills. Socialized medicine is available at age 65. It’s called Medicare. It goes a long way to helping you keep whatever nest egg you bring into retirement.

So yeah, we’re fortunate. While corporations were giving you measly cost of living raises, their executives kept raising their salaries and your productivity was sent to shareholders, like, er, me I guess. Thanks! Meanwhile, you keep getting squeezed and more squeezed. Your costs go up but your salary doesn’t. So you scrambled. You work two jobs, maybe three. Your life is a treadmill. “Your betters” keep upping your pace and if you fall off, that’s fine with them. The problem obviously was that you weren’t trying hard enough.

No wonder we are so chronically anxious and depressed. “Your betters” have made you this way through ignorance but more likely by general sadism. When will we, like Howard Beale in Network simply acknowledge we won’t take it anymore?

The deck is stacked against us, but it doesn’t have to be. We have to stand up and demand it. Aside from a wealth tax and upping tax rates substantially for the richest, lets also make real pensions universal. Everyone should be able to enjoy retirement like we are fortunate enough to enjoy. It takes, yes, a welfare state, and our insistence that our productivity enjoys the same rewards “our betters” get.

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