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Income Disparity and Retirement Savings Say Trouble Ahead for the U.S. Economy Lombardi Letter 2019-05-03 14:11:48 U.S. economy retirement income disparity savings economy Income disparity and retirement savings are major problems in the U.S. economy that continue to get ignored. The longer these issues prevail, the bigger the trouble in the coming years. Here’s the full story. Analysis and Predictions,U.S. Economy https://www.lombardiletter.com/wp-content/uploads/2019/05/Income-Disparity-And-Retirement-Savings-Say-U.S.-Economy-Could-Be-in-Trouble-150x150.jpg

Income Disparity and Retirement Savings Say Trouble Ahead for the U.S. Economy

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Income Disparity And Retirement Savings Say U.S. Economy Could Be in Trouble

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Want to Know What’s Really Happening in the U.S. Economy? Look at Income Disparity and Retirement Savings

There are a lot of problems in the U.S. economy, and they continue to get bigger. Two of the biggest issues that get ignored in the noise are income disparity and retirement savings.

Since the financial crisis, we have been told that there’s been a lot of economic growth. As proof of growth in the U.S. economy, we are often presented with stock market charts or details on how companies in the U.S. are making a lot of money.

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Here’s the thing: the average person in America continues to struggle. Those who are rich are making lots of money while the middle class is struggling to earn higher wages or save for retirement. There’s a lot of data suggesting this is true.

CEOs Are Making Tons More Than the Average American Worker

First, look at the income disparity in the U.S. economy.

A worker in the private sector made about $41,000 in 1965 (keep in mind, this value is based on 2017 dollars). In 2019, annual compensation amounted to $54,600. That means that over a 52-year period, average workers saw their income grow by 33%. (Source: “CEO compensation surged in 2017,” Economic Policy Institute, August 16, 2018.)

In the same period, CEOs’ salaries increased from $902,000 to $18.9 million for an increase of 1,989%.

That means that over the last 52 years, for every one-percent increase in the average worker’s salary, CEO salaries have increased by 60%.

Pension Coverage Dissipating

Now look at retirement savings.

Pension is one way Americans save for retirement. Sadly, over the past few years, pension coverage for Americans has fallen off a cliff. Think of pension coverage as a group of workers that have a pension plan where their employer pitches in a little.

In 2013, pension coverage in the U.S. was 39.2%; in other words, 39.2% of workers in the U.S. had a pension set up in a way where the employer paid something. (Source: “Pension Coverage,” Economic Policy Institute, last accessed May 2, 2019.)

However, in 2016, this figure was 32.4%. Looking at the percentage change, pension coverage in the U.S. has collapsed over 17% in just three years—meaning 17% of workers in the U.S. no longer have it.

An Economic Collapse Ahead for the U.S. Economy?

I don’t mean to scare you and I don’t want to be the bearer of bad news, but things are not as rosy as you would think in the U.S. economy. Don’t just look at the performance of the stock market and get complacent.

The above are just a few of the many data sets that suggest income disparity and retirement savings are a big issue in the U.S. economy.

What will happen as this problem gets bigger? Sadly, there’s nothing being done to fix this issue.

I will end with some food for thought: will the scenario of a partial or full economic collapse play out in the years ahead?

The problems at hand are definitely not sustainable over the long term. It doesn’t end well when a major portion of the population is struggling and only a few are flourishing. When something like this happens, businesses don’t sell, factories stop producing, massive job losses follow, and it’s just nothing good beyond that.

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