How is the Economy Working for You?
This economy is humming along at full speed. It is working for everyone…right? Is this economy working for you?
The opening paragraph of Repurpose Your Career: A Practical Guide for the 2nd Half of Life Third Edition is as follows:
Finally, we’re at full employment! As of the writing of this book, unemployment rates are below four percent. Everybody who wants a job has one, right? Well, no, not exactly. I mean, that’s what most of the data says. But it doesn’t feel true. The data seems to be leaving something out.
Over the last six months, I have discovered some shocking data on how unequal this recovery has been. I want to take a moment to discuss this, which explains why I see so many economic refugees here in Ajijic Mexico.
We will discuss how is this economy working for you.
The Roaring Stock Market Has Benefited Everyone…Right?
I have had a conversation many times about how the rise in the stock market has NOT solved our retirement plans. I will admit that I personally have benefited from the stock market’s rise. However, only about half of the households in the U.S. have any exposure to the stock market.
In fact, since the great recession, many of us baby boomers have reduced our exposure to the stock market. This is largely due to the fact that we have been jolted by 2 horrific recessions when we expected to be accumulating much of our retirement savings.
Are many shell shocked? Yes.
On top of that news, we see the following, according to Financial Samurai:
As of 2019, the top 10 percent of Americans owned an average of $969,000 in stocks. The next 40 percent owned $132,000 on average. For the bottom half of families, it was just under $54,000.
Listen to the most recent episode
The top 10% of families measured by net worth owned 80% of the stock market by value.
Is this great economy working for you?
How Does Your Wealth Compare? Is this Economy Working for You?
I am a big fan of the Center for Retirement Research at Boston College’s Squared Away blog. In March, they published the post How Does Your Wealth Compare?
The post starts out saying:
Depressing or eye-opening?
An online tool tells you where you stand financially by stacking up your net worth against other Americans.
The calculator compares a family’s net worth – financial and other assets minus debts – with all other U.S. families. Homeowners can choose to include the value of their home equity in their total net worth – or not.
I clicked on the link and was taken to the Don’t Quit Your Day Job (DQYDJ) website and the article Net Worth by Age Calculator for the United States.
I ran the calculator for the 60-64-year-old age group and discovered that I was in pretty good shape, but I already knew that.
Average and Median Household Wealth
What I found disturbing was the following chart which verified my past research.
What I want you to notice is the huge gap between average wealth and median wealth. For the 60-64 age group, the median amount is $224,775. For those of you who are not versed on median versus average:
The median of a set of numbers is that number where half the numbers are lower and half the numbers are higher. In the case of real estate, that means that the median is the price where half the homes sold in any given area that month were cheaper, and half were more expensive than the median.
The average of a set of numbers is the total of those numbers divided by the number of items in that set. The median and the average might be close, but they could also significantly different. It all depends on the numbers.
Half of the families in the 60-64 age group have less than $224,775 net worth. Notice that the median and average values drop off precipitously in the younger age groups. Those younger age groups 50-54 and 55-59 make up a large portion of the readership of this blog.
The huge gap between the mean and the average is best explained in the following chart.
The top 10% have most of the wealth.
Is this great economy working for you?
Planning to Work into Your 70’s
Many of you have calculated that the only way out of this is to work into your 70’s. If this is your plan I want you to check out an article on https://www.propublica.org called If You’re Over 50, Chances Are the Decision to Leave a Job Won’t be Yours
The subtitle to the article says it all:
A new data analysis by ProPublica and the Urban Institute shows more than half of older U.S. workers are pushed out of longtime jobs before they choose to retire, suffering financial damage that is often irreversible.
The article goes on to say:
Through 2016, our analysis found that between the time older workers enter the study and when they leave paid employment, 56 percent are laid off at least once or leave jobs under such financially damaging circumstances that it’s likely they were pushed out rather than choosing to go voluntarily.
Only one in 10 of these workers ever again earns as much as they did before their employment setbacks, our analysis showed. Even years afterward, the household incomes of over half of those who experience such work disruptions remain substantially below those of workers who don’t.
Another article was written for the New York Time by my namesake Mark Miller.
Mark wrote an article called Why Working Till Whenever Is a Risky Retirement Strategy and chronicled the journey of a number of people. This included a member of the Career Pivot Membership Community, Cleo Parker.
Is this economy working for you?
Why am I Telling You This?
One of the biggest issues I see when people work on tackling these problems is they think they are alone. No one else has these problems…right?
One of the things I have learned from running the Career Pivot Membership Community is people need support in solving these problems. When we think we are only one with these problems it can be completely overwhelming.
One solution I see is becoming an expat. There was a very good article in the Washington Post called The little-noticed surge across the U.S.-Mexico border: It’s Americans, heading south. By some estimates, there are 2 million US citizens living in Mexico. It is an estimate because many are living in Mexico illegally. Yes, you heard that right – they are living illegally in Mexico because they do not qualify for a resident visa. They are too poor to qualify.
If you would like to learn more about my wife’s and my experience in becoming an expat you can read all about it here.
Another solution is to start planning now. Check out my post Want to Work in Your 70s at Something You Love? Plan Now.
Lastly, become politically active. This wealth inequality has been building since the dot com bust and many will tell you it started long before that. I will not tell you which issues or candidates to support, but I do encourage you to get involved.
Does any of this surprise you? What are you going to do?
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