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America, Welcome to the Poorhouse (Why Retirement Planning Is Important)

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America, Welcome to the Poorhouse (Why Retirement Planning Is Important)

The Bottom Line

America, Welcome to the Poorhouse by Jane White. 235 pages.

A great book. Easy to read and comprehensive. Explains how the recession has hurt retirement planning. More important, it gives easy-to-follow, useful tips to help you plan for your retirement.

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Pros

  • Easy to read.
  • Comprehensive.
  • Useful tips on how to plan for retirement.

Cons

  • Political discussion may turn off readers who need the info but disagree.

Description

  • Part 1. 80% of Americans Can't Afford to Retire
  • Part 2. How the American Dream Turned into a Nightmare
  • Part 3. College is Unaffordable When the Majority of Americans Need Degrees
  • Part 4. 35 Million Americans Are Drowning in Credit Card Debt.
  • Part 5. Real Campaign Reform That Puts Citizens, Not the Business Lobby, First

Guide Review - America, Welcome to the Poorhouse (Why Retirement Planning Is Important)

The author, Jane White, explains why 80% of Americans cannot afford to retire...at all. One reason is the CEO pay is now 208 times that of the average worker. This has increased since 1980, when CEO pay was "only" 42 times the average worker. In other words, income inequality has gotten worse.

A second reason is, during the housing boom, Americans used their home as an ATM, using home equity to purchase cars and furniture. Now that the boom is over, half of all Americans are under some kind of mortgage stress. In addition, the real estate "boom and bust" also destroyed many jobs - half of the jobs created between 2000 and 2005 were real estate related.

A third reason is that most workers are now reliant on 401(k)'s instead of pensions for their retirements. In 1974, 44% of workers had a pension plan. By 2004, only 17% had one. Most workers don't put enough into their 401(k). Businesses spend a lot of time explaining the different types of funds, but don't actually help workers determine how much they need to contribute to reach their retirement goal. Furthermore, businesses don't contribute as much as those in other countries do.

Fortunately, Jane gives you many great ideas to restart your retirement planning. First, how much should net worth do you need to retire? Plan on 10x your final working year's annual salary. Second, don't take money out of your plan, even in a downturn. Third, contribute more than the 3% minimum...and save outside the plan as well. Fourth, use a Roth IRA instead of a regular IRA.

She also has great tips on how to get out of credit card debtor's prison. It sounds so simple -- don't buy things unless you really need them, don't replace items until they need it, go to community college instead of higher priced ones. But, 35 million Americans only pay the minimum every month on their bill, which means they pay the maximum on their interest. Jane also shares lots of resources to help those in debt get out.

A final point is how Americans have been urged in the past to get out and spend to spur economic growth. Even after 9/11, President Bush suggested it was a patriotic duty to spend. Over 70% of GDP is based on consumer spending. However, economic health should be measured by the net worth of families. It is Americans' wealth, not spending, that will best contribute to a healthy economy in the long run. And that wealth is what is necessary to allow plans for retirement to be successful.

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