this post was submitted on 23 Oct 2023
1026 points (97.0% liked)
Work Reform
9977 readers
121 users here now
A place to discuss positive changes that can make work more equitable, and to vent about current practices. We are NOT against work; we just want the fruits of our labor to be recognized better.
Our Philosophies:
- All workers must be paid a living wage for their labor.
- Income inequality is the main cause of lower living standards.
- Workers must join together and fight back for what is rightfully theirs.
- We must not be divided and conquered. Workers gain the most when they focus on unifying issues.
Our Goals
- Higher wages for underpaid workers.
- Better worker representation, including but not limited to unions.
- Better and fewer working hours.
- Stimulating a massive wave of worker organizing in the United States and beyond.
- Organizing and supporting political causes and campaigns that put workers first.
founded 1 year ago
MODERATORS
you are viewing a single comment's thread
view the rest of the comments
view the rest of the comments
Compound interest might get you to that goal, maybe, if you start saving now.
The "start saving now" part is the bit that fucks most people.
If inflation is as high as it currently is compared to the collected interest it does not matter how much compounding is done, the buying power of that savings will flatline. Add to this equation the need to eat and live now, the amount most put away is minimal and when something comes up even those meager savings are wiped out.
The math in most households is not working out. Debt is becoming peoples rainy day fund, people are unable to even pay their property taxes with the now insufficient government minimum pensions (and a lot of people don't think these pensions will even be there when they are eligible). This leaves people selling things (reverse mortgage, downsizing, moving to lower COL areas, etc) taking on debt to live now and generally giving up.
If you put away $50 a week for 10 years you end up with (based on a generous average 2% rate) $28,554.34. This seems like a good amount but keep in mind that you put $26,000 into this. That $2554.24 does not beat the loss of buying power over 10 years. You need much closer or better returns vs inflation for this to work in your favour. I was once told that you would be better off buying some raw metal like lead, or copper as the return on simple materials at least keeps up with costs.
You're absolutely right, but I'll just point out that superannuation (pension) funds in Australia are hitting 8 percent annual returns over a 30 year timeframe. You need a broader investment base to do that, and that's hard for individuals to do by themselves. How do you diversify your $50 a week investment to maximise return? You can't.
Here, superannuation funds do all the heavy lifting for you, it's mandatory for employers to put a nominal amount of each pay into one. There are no minimum investment amounts with them and fees are waived if the balance is below a few thousand, so even if it's $10 a week you get something back eventually.
So it's possible to have it work if your government sets things up right.
Oh I am not saying people should be the ones wholly responsible for their retirement portfolio, and congrats for having a competent government pension option. I would love to have access to something better then the market equivalent of roulette.
Hell in Canada the pension plan (that you can not get enough to live off at the moment) got a stunning 1.3% return this year. And unlike other plans you need to pay extra for 40 years to get additional funds at the end (no one I know of even thinks of doing this). And some parts of the county want to spin off there own pension plan (Alberta) even though most expect it to perform worse (due to a smaller investment base and using a bad private firm to run it).
When over half of Americans live paycheck-to-paycheck, saving is not even a possibility.
It seems that a lot of things in the US are carefully designed to keep you in servitude to your current employer, which I find a little ironic coming from the land of the free.
Where I live, Australia, employers are required to put in approx 10 percent of an employee's full time wages into a superannuation fund. This is linked via reportable wages to the tax office and companies will eventually find themselves under a lot of unpleasant attention from the Australian Tax Office if they don't make regular payments for you.
This is basically "invisible" to workers, it's essentially factored into the cost to have an employee by the business.The superannuation fund can be a "default preferred" one selected by the business, or an employee nominated one, and you can transfer/roll over your accumulated funds between any superannuation fund you like as you hop between jobs. You can draw from it in some specific dire circumstances, but usually you can only access it at retirement age.
For most Australians it ticks over in the background by itself. Most super funds easily beat inflation by a fair margin most of the time, and definitely in the long term. The tax office keeps track of balances for you and gives you an easy way to see what's where and the option to roll any scattered amounts into your current main superannuation fund.
You can also contribute extra to your super fund and there are tax benefits if you do. The government actively encourages investment in super, because that way they don't have to provide much in the way of old age pensions come 2050 or so when all workers will have some sort of decent retirement amount.
Is there any form of "mandatory" saving like that in the US? I know you guys have company pension plans of some sort, is there a government version?
That's essentially what social security is (except you can't access it until retirement), but it's constantly being attacked with death by a thousand cuts, so most people under 50 don't really expect to see much of a return.
It's pretty much the opposite in Australia with our setup. Those starting work now will end up with the required 3-ish million at retirement if they work the standard average job here for most of their life.
But I think what you refer to as "social security" is the government "aged pension" here which is about $550 a week or so. That's enough for a pensioner to live a very modest lifestyle here if their accommodation has been sorted previously.
It's also suffering the same kind of squeeze you mention and is means-tested on a sliding scale so the more you can afford not to have it, the less you get of it.
Right now most boomers are on the aged pension to some degree because superannuation schemes here only really kicked in during the last 15-20 years of their working lives so they didn't have much of a balance.
Probably in the next 30 years or so only the truly destitute will be able to get it and the rest of us will have to rely on what we've saved.
Do you get the pension if you don't put into the system? I was self-employed for years, and didn't pay into the social security system for those years because I really couldn't afford to since my business was so modest and I was the only employee. So my SS payout will be minuscule, whereas my wife, who has worked for public libraries since leaving university, will get a small but useful if not survivable check every month. So basically if you don't pay in, you don't get to have a retirement pension from the government.
I'm lucky because I stand to inherit a sizable amount of money when my mother passes away that I can save for retirement, but most people aren't that lucky and will have to live on scraps.
Yes it's paid for via general income tax here in Australia, not something you pay into yourself per se. So, just like our public health system, even if you never worked you still get it.
Which is why the government set up superannuation schemes in the '90s because they realised a pinch point was coming down the line in the 2030's or so. At that time there would have been too many people on the pension for it to be sustainable.
savings interest rate was less than 0.1% for about the last 10 years so even thats not looking too solid