True, and most of them rollover as much as is allowed from their 401k's to their TRS accounts when they get close to retirement.
IMO, these advice assume you have a solid margin of money to work with. Keeping some credit lines open will make it easier in the long run to secure loans and mortgages. College education is a huge investment and will land most people into debt. That graduates degree will take 2-4 more years when that time could be spent on work. Depending on your successes in the meantime, your job could actually help finance your graduate studies or you might discover it's not worth the extra 2 years of study with how much you currently earn. With real estate, it takes money to make money. It takes a solid amount of income to pay off the property taxes (in addition to the rent or mortgage you're paying on your home). A novice investor can't assume that rental payments will cover that. Finally, if you're on your way to an advanced degree, you might be tempted to splurge a little extra on daily amenities like a faster laptop. I think its easy to underestimate the human element in hindsight. The best amendment to your advice would be to plan everything (really need a car?) and research into loans and credit should there be a time when you're forced to get one like it was originally intended.
The median has risen less than 1% in six years while the people at the top have seen an 8% increase. It is class warfare alright, but not the way you mean it. That is especially true considering that energy costs are not included in inflation numbers, skewing the median far lower than the numbers you cite given the massive increases in energy costs since 2000. The median American is not better off, they are worse or at best the same as they were in 2000. The rich are getting VERY rich. Great for the rich, but for the rest of us, not so much.
That's not entirely true. All you need are buyers, not necessarily middle class buyers or buyers in the U.S. People will buy certain products no matter what economic class they're in...i.e. legal drugs, Coca Cola, gas, etc... China's a perfectly good example of the this where the wealth distribution gap is huge. We can't survive on an international level with just mom and pop stores. However, I do think many corporation's interest are shifting more from the whole organizition (it's lowest workers up to the CEO), to more of the interest of people who's running it and majority share holders, hence the huge (and growing) disparity in wages between a janitor and a CEO. I don't see the modern corporations as organic anymore. The parts are alot more individualistic.
China's Gini coefficient, which is sort of the general index number for income inequality, is not much different than the US's, though it has been rising. Brazil and Mexico are examples of industrialized nations with extremely high Gini numbers, and very unequal distributions of income. http://en.wikipedia.org/wiki/Image:Gini_since_WWII.gif
That's an interesting point. there seems to be no more upward mobility, no more interaction. I remember when I worked at circuit city in college I had no idea about what went on at the corporate level. I didn't even know who the ceo was.
i saw this when i was working for fair issac. it started out fine until they switched CEOs. the main branch was in San Raphael, CA but he lived in michigian and decided he didn't want to move here, so he switched the main branch. He then started to cut down services and clamped down on raises in order to raise the bottom line and make his stock (which he gets free a certain amount yearly and sells as soon as possible) look even better. everyone just assumed his intentions are to resign with a golden parachute.
Heard on Air America Radio during the lunch hour today talking about minimum wage -- at $5.15/hr for a decade in the US. 1) Britain has lifted almost 2 million Brits out of poverty since it increased the minimum wage to more than $9/hr. 2) Similarly, Ireland has lifted hundreds of thousands of Irish out of poverty by increasing the minimum wage over $9/hr. Before you conservatives want to use excuses of jobless rates and GDP, here are the facts: The unemployment rates stood at 4.2% for Ireland, 4.7% for UK, and 5.1% for US (all 2005 estimates). The 2005 GDP per capita for Ireland ($41,000) is comparable to that of US ($41,800). For UK, it's about 25% lower at $30,300. So, increasing minimum wage didn't cause the economy to collapse in either UK or Ireland, nor it resulted in any more job losses in these two countries for crying out loud. Now spin.
some of you guys are so conditioned by the rich to protect their interests its not even funny. a thread starts about income disparity and you start talking about how most americans don't save. I gonna bet that if a thread started about how much money athletes make compared to avg americans that the conversation would go in an entirely different direction.
I think that's the idea of income disparities. A rise in just 1% DOES NOT keep up with inflation. Inflation has grown by more than a single percentage point. Inflation adjusted median incomes show a decline in real value of wages for Middle America. Also, the fact that wages are growing so much more rapidly at the top also demonstrates a rising income inequality in America.
Guess again. Stating *richness* in terms of only income is an incomplete analysis and self-serving. You setting the terms of the debate (the determinate Republican skill) to direct the discussion towards your pre-determined conclusion. By including the saving side of the *rich* equation, I was not getting Ayn Rand on your *ss But I was getting the facts right like there are a lot of rich people who got there by saving. IIRC there are very few people relatively that got to be millionaires without saving 15-20% of their income. And btw I would be very interested in hearing your ideas of how to fix income disparity problem (or was it the falling real wage problem of middle income earners).
But the issue isn't about how to get rich, it isn't even about rich people really, its about income disparity between the top income earners and the middle class. edit: I don't have a solution, but people saving money isn't going to close the gap in income disparity.
I doubt that savings is what made people millionaires, rather it was investing. After that point I'm sure their savings went up. Anyway income savings & investment is factored in in any measurment of income & income disparity, so it really is a separate issue.
Is this a bad thing or just a stupid thing? The old company that I worked for (and that laid my *ss off) has a CEO that make $15 million a year or so. During his tenure, they have average a lay off every six months with every other one being > 5+% workforce reduction. I don't see how this guy has lasted. Not only has he lasted, but he gets stock bonuses every year. One could make the argument that some companies are so screwed up that there is no other course than frequent layoffs. But you gotta expect that the board of directors does not have in their multi year plan frequent layoffs. In my mind, the board pay someone less than a million dollars a year with no bonuses and get the same "performance". But there is probably some pissing contest going on between competing companies on who pays their CEO and Exec VPs the most. Stupid is as stupid does.
Any solution to this issue will be extremely complex and will involve multiple actions from both the government and individual consumers. Critiquing the savings rate on the other hand is probably not the biggest issue at hand. The poor and middle class spend disproportionate amounts of their income on needs and necessary goods and services. As a result, the amount of money left over is usually never enough to make real headway in the financial markets. The upper class can make money because 1) They have enough capital to make any sort of gains in the stock market and 2) Investing takes advantage of lower capital gains taxes, as well as financial loopholes that avoid taxation alltogether as opposed to middle and lower class individuals who are taxed at a higher rate because unless they are investing, they get hit with the standard income tax rate for whatever they save. Saving money in banks and CDs is still a bad option today. Besides paying higher taxes, interest rates are still relatively low by historical standards. (I think the federal funds rate is only one percentage point over the neutral rate of the federal funds rate) So unless, you can invest, you're not going to be making signficant money by saving. Hell for a while interest rates were so low that inflation was outpacing it. However, that's not to say savings is entirely irrelevant. America has a serious savings problem in the sense that all we do is either invest or spend. I think everyone has heard plenty about the fact that all our debt is held by foreigners and much of that can be attributed to the fact that we just don't save money (via bonds) anymore.
I never said its a good or bad thing. I said it's a fact and that it is something we have to acknowledge. Corporate payoffs are an entirely different issue and contribute very little to the actual situation. That is just one extreme example.
How you read _The Millionaire Next Door_? That book profiled millionaires and what they are like. There is a strong colloration between saving 15-20% of your income (and properly investing it) and becoming a millionaire aka *rich*. Why is income disparity such a liberal issue? I don't care what the top 1% earn in income, since it effect so small of a percentage. I do care about falling real wages for middle income earners, especially since there may not be any non-extreme way to fix it.
I can agree with that to some degree. but I think the issue goes beyond the top 1% and I don't know about there being only extreme ways to fix the problem becuase I think, and I'm just guessing, that the real problem as far as the middle class is concerned is corporate profits. an analysis about the fall purchasing power of the middle class should be linked to corporate profits. company's are doing more and more to increase their earnings including finding cuts to employee benefits. and they do this to increase value of stock which intern increases investor value which usually increases rich people's earnings so I guess actually its all related.
