I see that table was for a specific age range, so different caveats apply.
I think if you continuously advocate against social safety nets (including Social Security), are pro “personal freedom and financial responsibility” but then don’t take steps to secure your financial future, ignore recommendations from doctors and federal health agencies on reducing transmission and vaccinations, and then get sick and die penniless from a global pandemic, the system is working exactly how you wanted it to.
How does any of the data in your post support the premise that conservatives are particularly afflicted with the curse of dying without savings and life insurance?
Using averages as you are produces meaningless numbers.
The vast majority of people who die are old people with either no dependents or with dependents who have enough income to survive on, such that they don’t need life insurance, and in fact it’s a waste of money for them to buy it. (I suspect the fact that you used to sell life insurance may be coloring your perspective here.) So if you look at averages, then it would make sense if the percentage of people who died without life insurance was relatively low, and that the average amount was low as well, even if people were purely rational. Which is not to say that people are purely rational or anything remotely close to it, but only that your numbers have no bearing on this.
On another note, I would also observe that (in addition to Martin Hyde’s point that you’ve not offered any support to the main premise of your OP) being a conservative or liberal is more about how you think the world should work, not about how it actually does. So suppose you’re a conservative and you think the safety net should be a lot less generous than it is, for all sorts of conservative-principled reasons. But that doesn’t change the reality of what the safety net actually is. And if as a practical matter you know that in the unlikely event that you die, your family will be able to get by via all sorts of government programs and the like, then that lessens the need for you to sacrifice income now in order to head off financial catastrophe in the event of your death.
From a conservative perspective, one problem with the social safety net is the Risk compensation aspect, in that it promotes the very “irresponsbility” that you’re decrying here. But once you change the risk/rewards ratio then it is what it, regardless of whether you personally are conservative or liberal.
I just did a google search and came up with 65% of eligible workers participate in 401K plans in 2015. Not sure what eligible is. Don’t have time now to look. But back in 1980 more people were in big companies (AT&T employed more people in New Jersey than the state government) and there were fewer gig workers. Not much tech either - no tech company I’ve been in or heard of offers pensions.
The 65% 401K number shows the problem, since it implies that people eligible are not making use of it, which is not possible in traditional pension plans. Remember that the sign up procedure for 401Ks was changed to make signing up the default - this was done because of low enrollment rates.
Fact is in 1980 we probably wouldn’t be having this discussion.
I thought of that, but as people age their savings amounts should increase. If it affected only the lowest quintiles I could see it also.
As I said, I can see a few explanations, I’m just curious about the actual one.
Post-conservatives don’t seem to have the same love of free markets as classic conservatives - they seem to view large corporations with the same skepticism as they do the government - especially as these companies have become more liberal in their public positions on social issues.
Legal and insurance products are increasingly more complex and difficult to understand - not to mention expensive - and the benefits aren’t always clear and are frequently not realized.
But many of these people believe God will protect them, so they give their extra money to God - or to some prosperity church that promises a long and happy life in exchange for all their disposable income. Or maybe they just tithe to some mainstream church because that was what they were taught to do - even if that church makes no explicit promises, giving away 10% of what you make cuts into your savings potential.
Or else they are living in fear of RADICAL SOCIALIST BLM DEMOCRAT ANTIFA, so they make it a priority to send their extra income to the people that are running that particular protection scam.
Even though these post-conservatives are rejecting government, they are no longer rejecting it in favor of corporate privatization. They are rejecting both government and corporate America and turning to God, snake oil, and Trump.
I don’t know if we would be having this discussion in 1980 - I think we may have been . Take the gig workers for example- sure, some of them are performing functions that would have been done by employees in 1980. But the Uber/Lyft drivers who would have been car service or cab drivers in 1980 wouldn’t have had a defined benefit pension even then. Lots of employers didn’t have defined pension plans even in 1980 * and some of the ones that did only included certain employees. For example, at the company where my mother worked, the unionized warehouse workers and truck drivers may have had defined benefit pensions through their union but no one else did. I’m not at all sure more people were working for big companies in the 1980s than do so today - I think when CNN says that 60% of workers in the early 1980s had access to a defined benefit plan, they are just leaving out large groups of workers. Maybe they’re leaving out people who work at companies with fewer than X employees or maybe they are leaving out certain types of employees ( maybe they aren’t including food-service workers or retail workers or commissioned salespeople or …) but I just don’t find it believable that 60% of all workers in 1980 had defined benefit plans
- no place that I worked from 1980 to 1988 had a defined benefit plan and and no place my husband ever worked for ever did, even though those companies were founded well before 1980
For most people, there’s little reason to have much in the way of death insurance (misleadingly called life insurance) after that point. But for a lot of people, there’s plenty of reason to have actual life insurance after that point. It can be used for estate planning or any number of things.
(Most companies in this line of business sell both life insurance and death insurance, and, confusingly, both types are called “life” insurance.)
“From 1980 through 2008, the proportion of private wage and salary workers participating in DB pension plans fell from 38 percent to 20 percent (Bureau of Labor Statistics 2008; Department of Labor 2002).”
I was writing a post to address everything in the OP, but it got long and all over the place, so I’m just going to respond to some specific points right now:
Life Insurance - Life insurance is, as we gamblers like to say, a negative expectation bet. You are selling your risk to an insurance company for a price. These are to be avoided when possible. So I need to ask, what do you think the purpose of life insurance (or any insurance, really) is? Is it to make lots of money off a dead relative? Or to allow your family some extra compensation to ease your passing? Why do you think people should have a lot of life insurance?
The proper view, IMO, is that you should only insure something, including yourself, if you can’t afford to self-insure and you are insuring against an event that will have serious financial consequences. And if you need insurance, buy the absolute minimum required to pay for what you can’t afford to pay yourself, and not a dime more.
Also, when factoring how many people have life insurance, are you including the ones who have insurance as a benefit of the job? My wife and I don’t have private life insurance. Why? Because I have a $100,000 death benefit, and my wife has a $200,000 death benefit as part of our compensation. Also, we both have defined benefit retirement packages that continue paying the spouse if one of us dies. We have enough savings to pay funeral costs. So why would we cough up any money for extra life insurance?
In fact, many people are over-insured. I went through our various paperwork years ago and found we had death benefits attached to our credit cards, the mortgage, auto insurance, etc. I canceled them all. I also never bought ‘life insurance’ from the school for our kid, because it’s a giant rip-off. You should carry only the insurance you need to cover accidents or injury that you can’t afford. The best strategy is to save enough money that you don’t need the insurance, saving you the insurance vig.
Defined Benefit Pensions - you seem to be trying to tie the loss of these to ‘Reagan’ or some nebulous conservative failing, but we lost our defined benefit pensions in Canada too. I believe the real culprit is that central banks have maintained almost-zero interest rates for a long time now, meaning retirement investments have not kept up and companies can no longer afford to hand them out.
A lot of companies got burned offering defined-benefit pensions in the 80’s, only to find their assumptions of 5+% returns from safe investments wasn’t working out. And the cost of health care and other benefits went up more than they predicted.
And many business owners watched other businesses get wiped out by pension liabilities, and decided to shift the risk to the employees. Of course, it also means the employees get the extra gains if the market goes up more than they thought or interest rates rise.
I should add that my wife and I both were grandfathered in to our defined benefit pensions. My company stopped offering them in the early 2000’s…
Savings: The ‘conservative’ answer to the savings problem is that government retirement programs are considered by many to be their savings, and UI insurance reduces the need for short-term emergency savings.
For example, in the last year before COVID, the average Canadian had a grand total savings of $1100. They clearly aren’t saving for retirement. So how come? Well, Canada Pension pays an individual just under $1,000 based on max lifetime contributions. You can also apply for Old Age Security of about $625. And if you have an income in retirement under $18,000, you are eligible for the Guaranteed Income Supplement, which is another $1100 and change. So an individual with no savings will get around $2700/mo from the government. If you are married and you both have a retirement income below $45000 or so, You both get it. So a retired couple with no savings can get as much as $5400/mo from the government.
For people who don’t mind taking government benefits, it’s a perfectly valid strategy to aim to retire with a paid-off home and no savings. With no mortgage payment and no job-related expenses, that’s a substantially better standard of living than the average working Canadian enjoys. Furthermore, if you DO save in a registered savings account that generates income, you would have to have more than roughly $200,000 in savings before you’d see any benefit, as up to that point every time you cash in your RRSP the money will get clawed back almost 1:1 from your government retirement benefits.
We have a system that incentivizes people to not save, then we get confused as to why they aren’t saving.
It helps to think of the economy as an ecology and people as agents inside of it. When you see something like a low savings rate, instead of asking how people can be so stupid, it might be better to step back and think like an anthropologist and assume that there is a reason behind it. And I would start by assuming people are Homo Economicus and that not everything breaks down to right vs left.
I used to sell life insurance, and I don’t have the foggiest idea what “death insurance” is. I’m sure it’s a real zinger once explained.
Student Loans: The ‘conservative’ response to the rapid increase in student loans is ‘duh’. We tell kids it’s critically important to go to college, then we offer them interest free loans with no payments for years. Then we have the promise of potential loan forgiveness, or discharging the loan after 20 years if it’s not paid, or a substantial reduction if you work for the government. You’d have to be an idiot NOT to take student loans under those conditions.
Then the availability of easy money caused colleges to raise tuition and fees, which eliminated the ability to work your way through college, and required even larger student loans. The student loan problem is a textbook example of incentives driving behaviour. I also think the rise in garbage degrees and grade inflation is the result of universities doing everything they can to chase down more of that sweet government largesse. There is no need for a college to have climbing walls, spas, and expensive furnishings and art and such. They do it because they are trying to attract as many students as they can from other schools, because it’s just so lucrative.
Overly-generous student loans, IMO, have been very damaging to society. They have incentivized many young people to borrow huge sums for degrees that will never lead to jobs that can pay back the loans. It’s caused colleges to bloat and become incredibly expensive, and it’s destroying the lives of poor young people who should have taken a practical degree or a trade or something they can live on, but instead use student loans to go to college and take… whatever. Sometimes something good and useful, sometimes something that’s utter hogwash. The result is that they start life later, can’t afford a home, have a harder time finding a partner and getting married and having kids, etc.
Perhaps we should tie student loans to grades and faculty. If you’re an A student, sure, you can get a loan if you can show that the faculty you are going into has a track record of salaries that can afford the loan… If you barely made it through high school, perhaps offering $100,000 in debt for a degree in some chair-warming program is a real disservice to that person.
And those who could benefit from college but now find it out of reach absent indebtedness.
Yeah, exactly.
I may have mentioned this before, but if you max out the federally subsidized federal student loan program, you’re going to graduate with something like $30,000 in debt, not the six-figure numbers that some throw around. That’s entirely manageable, even with a liberal arts degree and a low-paying job.
I don’t see why the federal student loan program makes a major difference, debt is debt and you’re only saving a couple hundred or so on interest by using the federal loan. Plus I guess there’s a tax deduction on payments down the road.
These do not account for a difference of 60k in debt. Maybe people throwing the six-figure numbers are using a different college (higher tuition) than you.
~Max
Remember, this is an international board. In Canada you can borrow up to $75,000 for a general bachelor’s degree. For some faculties, up to $125,000.
@Sam_Stone referred to “interest free loans with no payments for years. Then we have the promise of potential loan forgiveness, or discharging the loan after 20 years if it’s not paid, or a substantial reduction if you work for the government.” That sure sounds like he’s referring to the federal subsidized student loan program, which maxes out around $20,000 no matter how expensive the school is. So I don’t think one can blame the federal programs for the six-figure debts that people talk about.
Sam_Stone lives in Canada and average tuition there is apparently nearly CA$30k/yr (US$22k/yr) before assistance.
~Max