Growing wealth gap will lead to retirement crisis
I used to be shockedwhen I’d hear people say “I haven’t received a pay increase in five years.” It’s not shocking anymore. It’s why the wealth gap is building. Andit’smany people’s reality.
Whenworkers don’t participate in the financial victories of the organizations they serve, the debt bubble balloons and the retirement crisis worsens. This is how the wealth gap grows.
As the prices of goods and services increase over time, your wages lose buying power. For instance, if the cost of your son Johnny’s piano lessons increase but your wages don’t, then you are faced with some seemingly simple options. You can fund the increase by saving less. You can fund the increase by reallocating funds away from another monthly expense. You can go into debt. Or you can tell Johnny to learn piano via YouTube.
With the U. S. personal savings rate ( amount of disposable income set aside for retirement) hovering around 3.4%, you would like to think people wouldn’t sacrifice future stability for present wants, but it happens all the time.
The U. S. personal savings rate has been on a pretty steady decline since 2008, when it climbed to around 8% following the Great Recession. When people are scared they do exactly what they should do — save. And when they get less scared, they lose perspective — and apparently memory — and stop saving.
If you enter into a period of wage stagnation with consumer debt, you’re in big trouble. And if you enter into a period ofwage stagnation with inadequate retirement savings, you’re in big trouble.