two retirements

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A report from the Institute for Policy Studies prompted Mother Jones to declare that saving for retirement is a struggle--unless you're a CEO:

The study, titled "A Tale of Two Retirements," found that in 2015 just 100 CEOs had retirement funds worth $4.7 billion--equivalent to the entire retirement savings of the least wealthy 41 percent of American families, or 116 million people. [...]

Those 100 CEOs have nest eggs large enough to generate a retirement check of more than $250,000 per month for the rest of their lives. Meanwhile, the average American fortunate enough to have a 401(k) plan has socked away only enough to receive a monthly check of just $101. And those are the lucky ones: 37 percent of all US households have no retirement savings at all.

"So how has this happened?"

Simply, the tax rules are structured in favor of massive executive retirement packages. Ordinary workers face strict limits on how much pre-tax income they invested in tax-deferred plans like 401(k)s. (The current limit is $18,000.) CEOs may participate in regular employee plans, but they also get Supplemental Executive Retirement Plans, which Fortune 500 companies set up with unlimited tax-deferred compensation. Since more than half of executive compensation is tied to stock price, CEOs have direct incentives to cut back on worker retirement benefits to pad their balance sheets. The money saved by those cost-cutting measures goes straight back into executives' pockets, often tax-free: Corporations may deduct unlimited amounts of executive compensation from their federal taxes so long as it's "performance based."

The IPS report asks, "Why has the CEO-worker retirement benefit gap become such a chasm?" and answers:

This is not the result of executives working harder or investing more wisely. Instead, this gap is one more example of rule-rigging in favor of the 1%.

After getting screwed by trickle-down economics our entire working lives, retirement is salt in the wound.

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This page contains a single entry by cognitivedissident published on December 16, 2016 7:29 AM.

indivisible was the previous entry in this blog.

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