Look, the title of this Slate piece alone sent me into a rage. I'm surprised I didn't turn green, tear out of my clothes and go rampaging through Pennsylvania screaming "Faith MAD!" (Good thing, too, I don't have the insurance to cover that.)
Is there a way to get the poor to save for retirement?
Um, no, really. Here's why:
THE POOR ARE POOR BECAUSE THEY DON'T HAVE MONEY!
I know I'm not with the Heritage Foundation or the Tax Policy Center, nor am I an economist, but I do have one qualification the asshat who wrote this piece doesn't: I'm poor! See, I can tell you why poor people do what we do, because I'm just telling you what I do.
What do I have saved for retirement? Zilch. My retirement plan is dying before I get too disabled or old to work. Seriously. I'm not being snarky, that's the plan.
Why haven't I saved for retirement? Well, I wrote this yesterday, Wednesday, and on Wednesday, I had $5 until payday on Friday. The bus costs $1.25 per trip. So, I have exactly enough money to get to and from work. That's it.
Why? Because I'm fucking poor, that's why. That's what being poor means. I got paid Friday, cashed my check at the pawn shop ($8 fee), paid bills (what I could anyway, paid $1 per money order), bought food and then I need a prescription. That was $15. The next day I went to feed the dog breakfast and realized I only had enough to feed him half of breakfast (he eats 2 cups of food twice a day), so I needed to buy dog food. Then my husband says to me that he needs CDs to burn his mixes to so he can check them on various sound systems*, so I bought CDs.
Then I had no money left.
Seriously, I hope I don't get my period before Friday. I hope I don't need any food or medicine or anything at all, because if so, it'll suck to be me. I had to steal toothpaste samples from my boss' office** to get to Friday.
Does anyone think that there is a way of getting me to save for retirement without giving me more money?
Apparently, economists do. Apparently, if they just convince me of the benefits of a 401(k) I'll rush right out and fill one up!
Through automatic savings . . . By simply switching the default—requiring people to opt out of a savings program, rather than asking them to opt in—the savings rate could shift significantly.
Seriously, that's the answer. Just take money I need to buy toothpaste out of my check automatically, and everything will be fine. Because it's not like I need every penny of my check or anything. And I love explaining things like that to the woman in charge of payroll. It was awesome explaining to her why direct deposit is not for me. (There are so many judgments against me, if I ever deposit any money into a bank account, I'll never see it again.)
Some have advocated making a retirement-savings tax credit refundable, which means that if the value of the credit exceeds the worker's tax bill, the government would actually deliver a check for the difference. In effect, the working poor could pay a negative tax.
That's not so bad, but keep in mind, I don't need toothpaste next March, I need it yesterday. That's what being poor is about. A person with money notices that their stove is acting funny and shops the sales to replace it. A poor person notices that their stove is acting up and does nothing, because they don't have the money to do anything, and then when the stove completely stops working, they stop cooking or they ask around to see if a friend has one. If you give this person the option of $200 now or $200 six months from now, what do you think they'll do? In fact, they'll take the $200 now even if the figure six months from now is $1,000, because they need a stove now. Which brings me to the last suggested solution:
A few think the only way to really pump up savings among the poor is to offer a matching program, similar to the way some companies match employee contributions to 401(k) accounts. Uncle Sam would pitch in $2 for every $1 a low-wage earner contributes, and he would match middle-class contributions dollar-for-dollar. The rich would be on their own.
Again, if you have money to pay bills and buy food and deal with broken appliances, then that probably seems like a great deal. But if you really, really need $200 today, $600 30 years from now is not much of an incentive to wait, now is it?
*Please say you'll participate in the release of The Cheat Code's first album! The songs are so good they may actually cure cancer!
**Once I borrowed on from him before a dentist appointment and he told me to take one any time I wanted, so it's not technically stealing. Poverty turns one into quite the ethicist.