The long Fourth of July holiday weekend is a good time to get away from the usual work-related stuff, and presents an opportunity to bring some light to some offbeat but interesting things that may or may not relate much to 401k plans.
So, please read on for some content you might not normally find on the web pages of 401k Specialist, and enjoy your holiday weekend!
– Brian Anderson, Managing Editor, 401k Specialist
Millennials not saving for retirement due to apocalyptic fears?
Not to put a bummer on your holiday weekend, but apparently, many Millennials aren’t saving for retirement because they think climate change will make it a moot point.
According to a June 24 article on MarketWatch, many young people today think civilization may not exist by the time they hit retirement age.
A 27-year-old quoted in the article says: “I want to hope for the best and plan for a future that is stable and secure, but, when I look at current events and at the world we are predicting, I do not see how things could not be chaotic in 50 years. The weather systems are already off, and I don’t think it’s hyperbolic to be a little apocalyptic.”
Eighty-eight percent of Millennials believe climate change is happening and 69% say it will impact them in their lifetime. Some obviously believe it will have a more devastating impact than others.
The article cites a Feb. 2018 study from the National Institute on Retirement Security that says two-thirds of Millennials have nothing saved for retirement, and 95% of Millennials are not saving adequately for retirement.
Cooper gets Vanderbilt inheritance after all
When Gloria Vanderbilt passed away in June at the age of 95, her famous son, CNN journalist Anderson Cooper made it clear he was expecting no inheritance, and that was the way he preferred it.
“My mom’s made clear to me that there’s no trust fund. There’s none of that… I’m doing fine on my own. I don’t need any,” Cooper, reportedly worth north of $100 million himself, told Howard Stern.
“I don’t believe in inheriting money. I think it’s an initiative sucker, I think it’s a curse,” Cooper continued. “Who’s inherited a lot of money that has gone on to do things in their life? From the time I was growing up, if I felt like there was some pot of gold waiting for me, I don’t know if I would have been so motivated.”
Well, looks like you got it anyway, Anderson.
It was reported in the New York Post just before the holiday weekend that the will of Vanderbilt, the heiress, fashion designer and philanthropist, stipulates that the 52-year-old Cooper inherits the vast majority of her estate while her other two sons, are to receive nothing at all and an apartment in Midtown Manhattan, respectively.
Now we get to see if he’s truly as ideologically and morally opposed to inheritance as he says he is by finding ways to do good via philanthropy with the estimated $200 million inheritance.
Vanderbilt’s estate will pay any inheritance taxes, but Cooper will be subject to taxes on any income his inheritance generates.
If Cooper donates to charity he could claim an income tax deduction, and he can also give $11.4 million worth of assets away without having to pay gift taxes.
The rich get richer
One-fifth (20%) of American wealth is controlled by the top 0.1% of taxpayers, which translates to about 170,000 families in a country of 330 million people.
Meanwhile, “The bottom half of Americans combined have a negative net worth.”
These stats, though a little dated, are culled from a May 2019 article on Bloomberg Businessweek, and are based on the work of economists Gabriel Zucman (“the world’s foremost expert on where the wealthy hide their money”) and Emmanuel Saez—work about wealth inequality in America which the article says became the heart of Bernie Sanders’ 2016 presidential campaign stump speeches.
Saez and Zucman’s 2016 research also found that the top 1% control about 39% of the country’s wealth, and the bottom 90% hold only 26%, despite years of economic growth in the U.S. overall.
“The pie has not become bigger” in the U.S., Zucman told Bloomberg. “It’s just that a bigger slice is going to the top.”
One final excerpt from the piece:
Sanders came looking for their advice on his estate tax plan, which would establish rates as high as 77% on billionaires. And when New York Representative Alexandria Ocasio-Cortez proposed on 60 Minutes to hike the top marginal tax rate to as much as 70% on income above $10 million, Zucman and Saez were fast out with a New York Times op-ed in support.
You may recall that on June 24, 18 U.S. billionaires from 11 different families (including George Soros and Abigail Disney) posted a letter to 2020 presidential candidates calling for “a moderate wealth tax on the fortunes of the richest one-tenth of the richest 1% of Americans—on us.”
Still, as Forbes points out, those 18 signees means that only 3% of the 607 billionaires in the U.S. signed the letter, and 97% did not.
The “straightforward” proposal would put in place “a tax of 2 cents on the dollar on assets after a $50 million exemption and an additional tax of 1 cent on the dollar on assets over $1 billion. If you have $49.9 million or less you are not paying the tax. It is estimated to generate nearly $3 trillion in tax revenue over ten years.”
Most, least expensive states for a “comfortable” retirement
How much do you need to retire comfortably? Depends on where you live.
In some states, you can get by on a relatively small nest egg, while in others, even $2 million won’t be enough for a 20-year retirement according to a recent survey by GOBankingRates.
Any guesses on the most expensive state? Yeah, it’s Hawaii with a “comfortable” annual retirement cost of $117,724 per year.
GOBankingRates says it would take a whopping $2,354,484 to live comfortably in retirement for 20 years in the Aloha State, thanks to by far the most expensive housing and transportation costs of any state. Hey, it’s a holiday weekend—we can dream, right?
Washington D.C. is next at $100,880 a year, followed by California ($85,893) and New York ($84,036).
As for the least expensive states? Mississippi has the lowest overall cost of living in the U.S., which is why it’s the most affordable state when it comes to enjoying a comfortable retirement at $53,072 a year, less than half that of Hawaii.
Oklahoma is the second-least-expensive at $54,558 and Arkansas third at $54,744.
- See the complete state rankings here.
Debt, that long-standing enemy of 401k savings
A few stats to digest this holiday weekend that help explain challenges facing people who would probably like to be saving more for retirement in their 401k plans:
- Millennials are saddled with more than $1 trillion of student loan debt, according to a report from Business Insider citing figures from the New York Federal Reserve Consumer Credit Panel. “About 40% of outstanding [student loan] debts will default by 2023, a staggeringly high number, considering that mortgage defaults at the height of the financial crisis reached only 11.5%,” the article says.
- More than 3 million Americans aged 60 and older are still paying off their student loans, owing more than $86 billion in unpaid student loans according to a May article on INSIDER. Many older Americans are now turning to their Social Security benefits to pay student debt.
- 41% of U.S. households carry credit card debt, and the average debt balance is $5,700, according to a recent report from ValuePenguin.
More offbeat content to enjoy this holiday weekend:
- Bobby Bonilla Day: Celebrating One of the ‘Greatest Retirement Plans in History’
- Ancient Rolling Stones Rockers Team with Annuities on Latest Tour
- Weekend Wackiness: Lottery Retirement Plans, Dave Ramsey Fanatics and More
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
