Friday, November 21, 2014
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

.

Solano News

 
Fairfield on film celebration set Saturday

By Amy Maginnis-Honey | From Page: B1

 
Solano high school students bring robotics to Shanghai, China

By Susan Winlow | From Page: A1 | Gallery

Hanukkah Festival added to Holiday in the Park

By Amy Maginnis-Honey | From Page: B1, 1 Comment

 
Holidays present seasonal entertainment

By Amy Maginnis-Honey | From Page: B1

Memories of Thanksgiving Days gone by

By Tony Wade | From Page: A2

 
Man shot at Suisun City apartment

By Ryan McCarthy | From Page: A3, 6 Comments

 
 
Fairfield police log: Nov. 19, 2014

By Susan Hiland | From Page: A12

Suisun City police log: Nov. 19, 2014

By Susan Hiland | From Page: A12

 
.

US / World

Emotions rise as people hear immigration plan

By The Associated Press | From Page: A1

 
Obama spurns GOP with expansive immigration orders

By The Associated Press | From Page: A1, 11 Comments

Congress can’t ‘de-fund’ Obama on immigration

By The Associated Press | From Page: A1, 1 Comment

 
A look at the numbers in Obama’s immigration plan

By The Associated Press | From Page: A1, 1 Comment

California sheriff criticizes Obama on immigration

By The Associated Press | From Page: A3, 3 Comments

 
PG&E fined over alleged secret dealings

By The Associated Press | From Page: A4

Deal divides billions in closed nuke plant’s costs

By The Associated Press | From Page: A4

 
California tuition hike fight shifts to Sacramento

By The Associated Press | From Page: A4

Feinstein: Drought relief bill out for this year

By The Associated Press | From Page: A5, 1 Comment

 
GOP’s success in House races ends in California

By The Associated Press | From Page: A5, 1 Comment

Insurance sign-ups outpacing first year enrollment

By The Associated Press | From Page: A5

 
Man who killed co-worker, cut out heart released

By The Associated Press | From Page: A5, 3 Comments

St. Louis region prepares for Ferguson decision

By The Associated Press | From Page: A6

 
Union: Ferguson officer does not expect charges

By The Associated Press | From Page: A6, 2 Comments

NOAA: Globe sets 5th hottest-month record of 2014

By The Associated Press | From Page: A7

 
Roofs collapse as New York clobbered by more snow

By The Associated Press | From Page: A7

Hearing draws apology, admission in air bag mess

By The Associated Press | From Page: A7

 
Florida State shooter was well-liked but troubled

By The Associated Press | From Page: A7

Officials downplay debates over Ebola aid response

By The Associated Press | From Page: A7

 
Boko Haram said to kill about 45 people in Nigeria

By The Associated Press | From Page: A10

Israeli mayor’s ban on Arab workers ignites uproar

By The Associated Press | From Page: A10

 
Protesters, police clash in Mexico before marches

By The Associated Press | From Page: A10

Egypt acquits doctor in female genital mutilation

By The Associated Press | From Page: A10

 
Slain beauty queen, sister buried in Honduras

By The Associated Press | From Page: A10

.

Opinion

Why are we still changing clock times?

By Letter to the Editor | From Page: A11, 17 Comments

 
Editorial Cartoons: Nov. 21, 2014

By Daily Republic staff | From Page: A11

 
Thank you to businesses that support veterans

By Letter to the Editor | From Page: A11

 
 
Thank you for saving my purse

By Letter to the Editor | From Page: A11, 1 Comment

.

Living

Today in History: Nov. 21, 2014

By The Associated Press | From Page: A2

 
Community Calendar: Nov. 21, 2014

By Susan Hiland | From Page: A2

I have several part-time jobs and have no time or money for a personal life

By Kathy Mitchell and Marcy Sugar | From Page: A9

 
Horoscopes: Nov. 21, 2014

By Holiday Mathis | From Page: A9

.

Entertainment

Week in preview Nov. 21-27, 2014

By Amy Maginnis-Honey | From Page: B1

 
Mike Nichols, crafter of films, plays, dies at 83

By The Associated Press | From Page: B2

Hollywood pays tribute to Mike Nichols

By The Associated Press | From Page: B2

 
Five memorable movies from Mike Nichols

By The Associated Press | From Page: B2

Highlights from Mike Nichols’ multi-genre career

By The Associated Press | From Page: B2

 
Handler apologizes for watermelon joke at awards

By The Associated Press | From Page: B3

O’Keeffe painting sells for record $44.4M in NYC

By The Associated Press | From Page: B3

 
TV Land pulls ‘Cosby Show’ from lineup

By The Associated Press | From Page: B3, 1 Comment

Mysterious sculpture recovered from River Seine

By The Associated Press | From Page: B3

 
Review: Revolution gathering in ‘Mockingjay

By The Associated Press | From Page: B3

Entertainment calendar Nov. 21, 2014

By Susan Hiland | From Page: B4

 
How a ‘tiny hamster’ video gets made

By The Washington Post | From Page: B5

TVGrid

By Daily Republic Syndicated Content | From Page: B6

 
James Nesbitt as a father whose child disappears

By The Associated Press | From Page: B6

.

Sports

Bulldogs, Wildcats into SJS quarterfinals

By Paul Farmer | From Page: B7

 
Raiders snap 16-game skid with 24-20 win vs. KC

By The Associated Press | From Page: B7 | Gallery

 
Giants confident they’re in Pablo Sandoval chase

By The Associated Press | From Page: B7

Intense Boldin keeps making big catches for 49ers

By The Associated Press | From Page: B7

 
Lewis in range of big prize at Tour Championship

By The Associated Press | From Page: B8

Hendrick gives Kahne 3-year contract extension

By The Associated Press | From Page: B8

 
NASCAR: Johnson says Harvick was correct winner

By The Associated Press | From Page: B8

Jared Goff growing into role of Cal’s ‘Golden Boy’

By The Associated Press | From Page: B8

 
JC volleyball: Falcons have 4 players earn all-BVC honors

By Daily Republic staff | From Page: B8

Manfred given 5-year term as baseball commissioner

By The Associated Press | From Page: B8

 
Bills’ home game against Jets relocated to Detroit

By The Associated Press | From Page: B8

AP source: Bermuda to host 2017 America’s Cup

By The Associated Press | From Page: B8

 
FIFA to review World Cup corruption report

By The Associated Press | From Page: B8

Union appeals Adrian Peterson’s suspension

By The Associated Press | From Page: B8

 
This week in sports history for Friday, Nov. 21, 2014

By The Associated Press | From Page: B9

 
Bjugstad leads Panthers to 3-2 SO win over Sharks

By The Associated Press | From Page: B10

Prep football capsules: Week 12

By Paul Farmer | From Page: B10

 
Cousins, Gay lead Kings past Bulls, 103-88

By The Associated Press | From Page: B10

.

Business

LaCrosse rides Buick’s high reliability rating

By Ann M. Job | From Page: C1

 
Ford gets the aluminum F-150 ready for prime time

By The Associated Press | From Page: C2

Country of origin label for meat cuts endangered

By The Associated Press | From Page: B11

 
Polls: Employers still prioritize health coverage

By The Associated Press | From Page: B11

New Mexico lawmakers grill spaceport boss

By The Associated Press | From Page: B11

 
Family gets $6.75 million in Botox treatment case

By The Associated Press | From Page: B11

Gap names heads of namesake brand, Banana Republic

By The Associated Press | From Page: B11

 
AT&T pays $23.8 M to settle hazardous-waste case

By The Associated Press | From Page: B11

Soaring generic drug prices draw Senate scrutiny

By The Associated Press | From Page: B11

 
US home sales rise in October

By The Associated Press | From Page: B11

US unemployment aid applications fall to 291,000

By The Associated Press | From Page: B11

 
.

Obituaries

.

Comics

Sally Forth

By Daily Republic Syndicated Content | From Page: A8

 
B.C.

By Daily Republic Syndicated Content | From Page: A8

Baldo

By Daily Republic Syndicated Content | From Page: A8

 
Wizard of Id

By Daily Republic Syndicated Content | From Page: A8

Zits

By Daily Republic Syndicated Content | From Page: A8

 
Garfield

By Daily Republic Syndicated Content | From Page: A8

Frank and Ernest

By Daily Republic Syndicated Content | From Page: A8

 
Pickles

By Daily Republic Syndicated Content | From Page: A8

Beetle Bailey

By Daily Republic Syndicated Content | From Page: A8

 
Baby Blues

By Daily Republic Syndicated Content | From Page: A8

Blondie

By Daily Republic Syndicated Content | From Page: A8

 
Peanuts

By Daily Republic Syndicated Content | From Page: A8

Dilbert

By Daily Republic Syndicated Content | From Page: A8

 
Get Fuzzy

By Daily Republic Syndicated Content | From Page: A8

For Better or Worse

By Daily Republic Syndicated Content | From Page: A8

 
Rose is Rose

By Daily Republic Syndicated Content | From Page: A8

Sudoku

By Daily Republic Syndicated Content | From Page: A9

 
Cryptoquote

By Daily Republic Syndicated Content | From Page: A9

Bridge

By Daily Republic Syndicated Content | From Page: A9

 
Crossword

By Daily Republic Syndicated Content | From Page: A9