Saturday, February 28, 2015
FAIRFIELD-SUISUN, CALIFORNIA
99 CENTS

Not so golden: Wealth gap lasting into retirement

William Kistler

This July 8, 2014 photo shows William Kistler at work in his office in Denver. Sixty-three-year-old William Kistler views retirement like someone tied to the tracks watching a train coming: It’s looming, it’s threatening and there’s little he can do.“There is not enough to retire with,” said Kistler, a Golden, Colorado, resident who said he is unable to build up a nest egg for his wife with his modest salary helping seniors navigate benefits. “It’s completely frightening to tell you the truth. And I, like a lot of people, try not to think about it too much, which is actually a problem.”(AP Photo/Ed Andrieski)

By
From page C6 | August 10, 2014 |

William Kistler views retirement like someone tied to the tracks and watching a train coming. It’s looming and threatening, but there’s little he can do.

Kistler, a 63-year-old resident of Golden, Colorado, has been unable to build up a nest egg for himself and his wife with his modest salary at a nonprofit. He has saved little in a 401(k) over the past decade, after spending most of his working life self-employed. That puts him far behind many wealthier Americans approaching retirement.

“There is not enough to retire with,” he said. “It’s completely frightening, to tell you the truth. And I, like a lot of people, try not to think about it too much, which is actually a problem.”

With traditional pensions becoming rarer in the private sector, and lower-paid workers less likely to have access to an employer-provided retirement plan, there is a growing gulf in the retirement savings of the wealthy and people with lower incomes. That, experts say, could exacerbate an already widening wealth gap across America, as more than 70 million baby boomers head into retirement — many of them with skimpy reserves.

Because retirement savings are ever more closely tied to income, the widening gulf between the rich and those with less promises to continue — and perhaps worsen — after workers reach retirement age. That is likely to put pressure on government services and lead even more Americans to work well into what is supposed to be their golden years.

Increasingly, financial security for retirees reflects how much they have accumulated during their working career — things like 401(k) accounts, other savings and home equity.

Highly educated, dual income couples tend to do better under this system. The future looks bleaker for people with less education, lower incomes or health issues, as well as for single parents, said Karen Smith, a senior fellow at the Urban Institute, a Washington think tank.

“We do find rising inequality,” said Smith, who added that it’s a problem if those at the top are seeing disproportionate gains from economic growth.

Incomes for the highest-earning 1 percent of Americans soared 31 percent from 2009 through 2012, after adjusting for inflation, according to data compiled by Emmanuel Saez, an economist at University of California, Berkeley. For everyone else, it inched up an average of 0.4 percent.

Researchers at the liberal Economic Policy Institute say households in the top fifth of income saw median retirement savings increase from $45,539 in 1989 to $160,000 in 2010 in inflation-adjusted dollars. For households in the bottom fifth, median retirement savings were down from $8,433 in 1989 to $8,000 in 2010, adjusted for inflation. The calculations did not include households without retirement savings.

Employment Benefit Research Institute research director Jack VanDerhei found that in households where annual income is less than $25,000, nine in 10 saved less than $10,000, up slightly from 2009. For households with six-figure incomes, 42 percent saved at least $250,000, up from 34 percent five years earlier.

The days of retirees being able to count on set monthly payments from pensions continue to fade among non-government workers. Only 13 percent of private-sector workers now participate in “defined benefit” plans, compared with a third of such workers in 1985. They’ve been eclipsed by “defined contribution” plans, often 401(k)s, in which employers match a portion of employee contributions.

Americans know they need to save for retirement. The trick for many is actually doing it. It’s estimated that about half of private-sector workers don’t take part in a retirement plan at their current job.

“Over the years, all I’ve been able to do, especially as a single parent, is just pay your bills every month,” said Susan McNamara, a 62-year-old adjunct professor from the Boston area. “Anything that’s left over is used up when your car breaks down or when the furnace breaks down. … There’s never anything left over, ever.”

McNamara is divorced and her son is now grown. But she has had heart issues linked to cancer in 2004 and related financial worries. She sold her home to meet expenses. McNamara has a defined contribution plan from past stints as a full-time professor, but its balance is under $50,000.

Or consider Kistler, who makes $41,000 a year working as a benefits counselor for a nonprofit health care provider. He has no substantial savings beyond the 401(k) worth roughly $19,000, and he has debt. He plans to keep working.

Kistler is philosophical about being on the short end of a retirement gap, though he wonders what will happen when boomers in his financial situation begin retiring by the millions.

“This next 10 to 15 years is going to be quite interesting,” he said.

EBRI, a Washington-based nonpartisan research group, projects that more than 55 percent of baby boomers and the generation that follows them, Generation X, will have enough money to last through retirement.

But EBRI also found the least wealthy boomer and Gen X households are far more likely to run short of money in retirement. Under some models, 43 percent of those in the lowest quarter run short of money in the first year of retirement.

VanDerhei, EBRI’s research director, said members of that group are relying mostly on Social Security and lacked consistent access to retirement plans over their careers.

Many of those retirees will find that it won’t be enough, David John of AARP’s Public Policy Institute said, noting the average monthly Social Security retiree benefit last year was about $1,300.

“In the long run, if we have significant numbers of people retiring on Social Security and very little else, there’s going to be a tremendous pressure on state and local governments for additional services, ranging from health to housing to libraries,” John said. “There’s going to be significant pressure on the national government to provide additional support.”

John said a good first step would be to ensure more workers have the ability to save through employer-sponsored retirement plans.

For many, it will mean working to a later age and cutting back.

In Brooklyn, 60-year-old Madeline Smith is already thinking about a modest future. While she has no illusions about living the “little fairy tale” of a cushy retirement, she also is confident she can get by, maybe working part-time, living simply or even renting out her house.

“Sometimes you have to learn to be a little bit more conservative,” she said. “I think a lot of people are learning that now as they get older.”

 

The Associated Press

The Associated Press

LEAVE A COMMENT

Discussion | No comments

The Daily Republic does not necessarily condone the comments here, nor does it review every post. Read our full policy

  • Recent Articles

  • Enter your email address to subscribe and receive notifications of new posts by email.

  • .

    Solano News

     
    Hop to it: Vacaville ready for rabbit invasion

    By Amy Maginnis-Honey | From Page: A1 | Gallery

     
    True grit: Travis Teacher of the Year refuses to accept failure

    By Bill Hicks | From Page: A1 | Gallery

    Firefighters garner praise, Scout earns Eagle rank

    By Susan Hiland | From Page: A2

     
    Exercise machine toppled on him, man says

    By Ryan McCarthy | From Page: A3

     
     
    Officials discuss regional program to adapt to rising tides

    By Kevin W. Green | From Page: A3 | Gallery

    Vasculitis is inflammation of blood vessels

    By Scott Anderson | From Page: B8

     
    Fairfield police log: Feb. 26, 2015

    By Susan Hiland | From Page: A12

     
    Suisun City police log: Feb. 26, 2015

    By Susan Hiland | From Page: A12

    .

    US / World

    Man shoots wife, himself at Northern Calif. retirement home

    By The Associated Press | From Page: A3

     
    Commuter with measles also dined at Bay Area restaurant

    By The Associated Press | From Page: A3

    Hundreds of illicit oil wastewater pits found in Kern County

    By The Associated Press | From Page: A4

     
    Thieves crash car through electronics store in San Francisco

    By The Associated Press | From Page: A4

    Some California farmers to go without federal water

    By The Associated Press | From Page: A4 | Gallery

     
    Orange County case challenges legality of tiered water rates

    By The Associated Press | From Page: A4

    US appeals court: Marathon bombing trial can stay in Boston

    By The Associated Press | From Page: A5

     
    Congress OKs 1-week bill to keep Homeland Security open

    By The Associated Press | From Page: A5 | Gallery

    US rescinds rule requiring judges to move to Guantanamo

    By The Associated Press | From Page: A5

     
    US, Liberia start 1st formal test of ZMapp Ebola virus drug

    By The Associated Press | From Page: A5

    Gunman kills 7, commits suicide, in house-to-house rampage

    By The Associated Press | From Page: A5

     
    Woman knocked out by eggs

    By The Associated Press | From Page: A9

    Mexico official: Police capture top capo ‘La Tuta’ Gomez

    By The Associated Press | From Page: A10 | Gallery

     
    Well-educated ‘Jihadi John’ no surprise to experts

    By The Associated Press | From Page: A10

    Unmasking of ‘Jihadi John’ as a London lad shocks Britain

    By The Associated Press | From Page: A10

     
    .

    Opinion

    How GOP can resolve immigration mess

    By Ramesh Ponnuru | From Page: A8

     
    Unlikely winners of Greece’s surrender on euro

    By Mark Gilbert | From Page: A8

    A remedy for veterans’ care

    By Bill Frist And Jim Marshall | From Page: A8

     
    Editorial Cartoon: Feb. 28, 2015

    By Daily Republic Syndicated Content | From Page: A8

    .

    Living

    Today in History: Feb. 28, 2015

    By The Associated Press | From Page: A2

     
    Community Calendar: Feb. 28, 2015

    By Susan Hiland | From Page: A2

    Horoscopes: Feb. 28, 2015

    By Holiday Mathis | From Page: A7

     
    Poem about heaven helps dog owners when beloved pet dies

    By Kathy Mitchell and Marcy Sugar | From Page: A7

    Coca-Cola bottle as art? Atlanta’s High Museum takes a look

    By The Associated Press | From Page: B8

     
    .

    Entertainment

    Leonard Nimoy, famous as Mr. Spock on ‘Star Trek,’ dies

    By The Associated Press | From Page: B9

     
    TVGrid

    By Daily Republic Syndicated Content | From Page: B9

    .

    Sports

    SCC women’s basketball out of playoffs after 74-47 loss

    By Daily Republic staff | From Page: B1

     
    Vaca advances three wrestlers into semis at Masters

    By Daily Republic staff | From Page: B1

     
    Spurs snap 4-game skid, beat short-handed Kings 107-96

    By The Associated Press | From Page: B1

    Thompson scores 25 points, Warriors rout Raptors 113-89

    By The Associated Press | From Page: B1

     
    Casey McGehee’s move to Giants a homecoming of sorts

    By The Associated Press | From Page: B1

    Bulls expect Derrick Rose back this season from knee surgery

    By The Associated Press | From Page: B2

     
    Testimony: Several Hernandez texts are missing from phone

    By The Associated Press | From Page: B2

    Approaching ‘last call’ for NHL GMs to tweak rosters

    By The Associated Press | From Page: B2

     
    PGA Tour to move Match Play to Texas

    By The Associated Press | From Page: B2

    Notre Dame president credited for transforming school dies

    By The Associated Press | From Page: B2

     
    MLS Commissioner Garber: Hopeful season will start on time

    By The Associated Press | From Page: B2

    Travis Kvapil’s NASCAR car stolen from hotel before race

    By The Associated Press | From Page: B2

     
    McIlroy to miss cut at Honda Classic; Reed leads

    By The Associated Press | From Page: B2

    NHL fines Sharks’ Couture $5,000 for tripping from behind

    By The Associated Press | From Page: B2

     
    Browns agree to terms with quarterback Josh McCown

    By The Associated Press | From Page: B2

    Kyle Busch released from hospital following foot surgery

    By The Associated Press | From Page: B2

     
     
    This date in sports history for Saturday, Feb. 28, 2015

    By The Associated Press | From Page: B4

    .

    Business

    Gas prices soar in California as supply shrinks

    By The Associated Press | From Page: A1 | Gallery

     
    Uber says database containing driver info was breached

    By The Associated Press | From Page: B5

    Signed contracts to buy US homes rise to 18-month high

    By The Associated Press | From Page: B5

     
    Fiat Chrysler recalls 467K SUVs for possible stalling

    By The Associated Press | From Page: B5

    US consumer sentiment slips in February on icy weather

    By The Associated Press | From Page: B5

     
    Southwest nearly done inspecting planes that were grounded

    By The Associated Press | From Page: B5

    5 reasons US economy is stronger than Q4 GDP suggests

    By The Associated Press | From Page: B5 | Gallery

     
    Tribes from around US gather to discuss legal marijuana

    By The Associated Press | From Page: B5

    .

    Obituaries

    Gabriel T. Traub

    By Nancy Green | From Page: A4, 1 Comment

     
    Maria Kraszewski

    By Nancy Green | From Page: A4

    .

    Comics

    Baldo

    By Daily Republic Syndicated Content | From Page: A6

     
    Sally Forth

    By Daily Republic Syndicated Content | From Page: A6

    Garfield

    By Daily Republic Syndicated Content | From Page: A6

     
    Blondie

    By Daily Republic Syndicated Content | From Page: A6

    For Better or Worse

    By Daily Republic Syndicated Content | From Page: A6

     
    Get Fuzzy

    By Daily Republic Syndicated Content | From Page: A6

    Beetle Bailey

    By Daily Republic Syndicated Content | From Page: A6

     
    Dilbert

    By Daily Republic Syndicated Content | From Page: A6

    Wizard of Id

    By Daily Republic Syndicated Content | From Page: A6

     
    Baby Blues

    By Daily Republic Syndicated Content | From Page: A6

    Frank and Ernest

    By Daily Republic Syndicated Content | From Page: A6

     
    B.C.

    By Daily Republic Syndicated Content | From Page: A6

    Peanuts

    By Daily Republic Syndicated Content | From Page: A6

     
    Rose is Rose

    By Daily Republic Syndicated Content | From Page: A6

    Zits

    By Daily Republic Syndicated Content | From Page: A6

     
    Pickles

    By Daily Republic Syndicated Content | From Page: A6

    Bridge

    By Daily Republic Syndicated Content | From Page: A7

     
    Crossword

    By Daily Republic Syndicated Content | From Page: A7

    Word Sleuth

    By Daily Republic Syndicated Content | From Page: A7

     
    Cryptoquote

    By Daily Republic Syndicated Content | From Page: A7

    Sudoku

    By Daily Republic Syndicated Content | From Page: A7

     
    .

    Home Seller 2/28/2015

    Right at Home: Decor made of bicycle parts

    By The Associated Press | From Page: HSR2Comments are off for this post | Gallery

    Real estate transactions for Feb. 28, 2015

    By Daily Republic | From Page: HSR3

    Average US rate on 30-year mortgage rises to 3.80 percent

    By The Associated Press | From Page: HSR3