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Über dieses Buch

In the US, retirement savings are low while risk exposure is high, thus dooming many retirees to a low standard of living. This book offers straightforward solutions to build real retirement security for American families.

Inhaltsverzeichnis

Frontmatter

Chapter One. The Elusive Goal of a Secure Retirement

Abstract
Imagine you are on a sinking ship in a violent storm. Some passengers are outfitted with state-of-the-art survival suits and are directed to sturdy life rafts. But most passengers get tattered life vests and are told to sink or swim. Rather than reaching sunny shores, this latter group is treading water, fending for themselves. That is what retirement savings looks like for most households these days.
Christian E. Weller

Chapter Two. Americans’ Growing Risk Exposure

Abstract
Saving enough money to pay for one’s living expenses in retirement is daunting. But even if households save diligently, the money they put away may not be available when they need it because of a financial market crash just before retirement. Households typically want to invest their savings in something to earn a rate of return that will help pay for their retirement. Earning a rate of return generally comes with some financial risk—the possibility to lose part of the investment. People may invest their savings in stocks and hold a lot of money in housing, for instance, and stock and house prices may fall just before households need the money, leaving them with a lot less income to spend than anticipated. This is the essence of risk when it comes to savings. The question here is not whether taking risks is okay but what households can do to protect their savings from too much risk.
Christian E. Weller

Chapter Three. More Risk, Greater Wealth Inequality

Abstract
The last three decades have been characterized by both rising wealth inequality and growing retirement income inadequacy, as a rising share of household s is expected to be unable to maintain its standard of living in retirement. At the same time, labor market risks—longer spells of unemployment and less stable earnings—and financial market risks—larger boom-and-bust cycles in the stock and housing markets—have gone up, too. And, as established in chapter 2, households have become more exposed to the potential fallout from these market risks.
Christian E. Weller

Chapter Four. The Looming Retirement Shipwreck

Abstract
Some households have experienced sharp wealth gains, and many others have seen no or only small wealth increases over the past few decades as rising household risk exposure has impeded savings. But, this growing wealth gap by itself does not tell the whole story. Wealth is a store of future income that people can rely on when they no longer have income from work, for instance, when they retire. Rising wealth inequality then means that a growing share of households will likely not be able to maintain their standard of living in retirement and hence will have to make substantial spending cuts or significantly delay retirement.
Christian E. Weller

Chapter Five. Social Security: The Leaky Lifeboat

Abstract
Households have had a hard time saving enough for their future amid growing economic insecurity. Labor and financial markets have become more volatile over the past three decades, and households’ exposure to these risks has increased. This combination of rising risks and falling protections has contributed to increasing wealth inequality as especially households with high risk exposure have seen smaller savings gains than their counterparts.
Christian E. Weller

Chapter Six. Sink-or-Swim Retirement Plans

Abstract
People’s exposure to both labor and financial market risks has increased since the 1980s, while labor and financial markets have also become more unstable. The combination of growing risk exposure and rising risks has contributed to increasing wealth inequality, as households with high risk exposure have experienced lower wealth gains over time than households without high risk exposure. In this chapter, I focus on some of the mechanics of rising financial risk exposure with individualized savings, such as retirement savings accounts and housing.
Christian E. Weller

Chapter Seven. A Perfect Storm: Labor and Financial Market Risks Feed on Each Other

Abstract
Saving money for the future, especially for retirement, has gone along with an increasing financial risk exposure for Americans largely because of a growing emphasis on individual savings, especially in retirement savings accounts and home equity, than has been the case in the past.
Christian E. Weller

Chapter Eight. The Pitfalls of Employer-Sponsored Retirement

Abstract
The United States directly provides fewer public benefits such as Social Security than other countries.2 However, it foregoes a much larger share of tax revenue to incentivize private savings in addition to public benefits than is the case in other countries. The US welfare state as a result tends to be as large or larger than that in Western Europe,3 with savings incentives—tax breaks for individual savings and insurance— taking on a much larger role.
Christian E. Weller

Chapter Nine. Upside-Down Tax Incentives

Abstract
Retirement is ultimately a costly proposition since people can spend decades without earning money from work and taking care of their loved ones and themselves. They hence need to save a lot of money outside of Social Security for their own future. Policy offers some help to people wanting to save for their retirement, but it provides the least help to those who face the largest risk exposure and thus greatest obstacles to saving more. The federal government already uses the tax code to incentivize people to save, typically through tax advantages for particular savings such as retirement savings in 401(k) plans. But these savings incentives are complex and favor higher income earners over those with lower earnings. The help that the tax code offers consequently does little to combat the growing retirement crisis since it fails to adequately target those who actually need help.
Christian E. Weller

Chapter Ten. Sidelined: The Millions Who Are Left Out

Abstract
Economic risks have gone up for households over the past 30 years. Wages and salaries have become more volatile, unemployment spells have become longer, stock prices have undergone wider boom and bust cycles, and house price swings have become more dangerous as households have become mired in debt. And households increasingly have had to manage their savings on their own to avoid too much exposure to these risks as DB pensions have disappeared, Social Security’s benefit growth has slowed, and individualized savings such as 401(k) plans, IRAs, and housing have become ever more widespread.
Christian E. Weller

Chapter Eleven. Charting a New Course

Abstract
People increasingly face insecure futures in retirement because policy has contributed to households’ rising risk exposure just as labor and financial risks have grown. The result has been that savings have become less stable—households cannot be sure that their savings will be available when they need them—and that wealth inequality has grown—a few households have seen substantial gains in their savings, while most households struggle with saving for their future. This situation is akin to being on a boat in a brewing storm, where the rich get state-of-the-art survival suits and life rafts, while middle- and low-income households need to find ways to sink or swim as they tread water.
Christian E. Weller

Backmatter

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