Monday, May 07, 2012


A Familiar American Story, with a Moral, Even

Once upon a time a woman decided that with 25 or so years to go till retirement, she'd better get her affairs in order, as they say.  She did what her fellow educators did and set up a tax shelter annuity plan with a company known for working with people in her field.

Time clipped along, as time so often does. When she moved to another state, she took her account with her and kicked up her contributions to the maximum allowed by law.

Along the way her company changed its name from VALIC, for Variable Annuity Life Insurance Company, to AIG Retirement, which stands for Awful Insurance Group.

Then one day the stock market tanked, and with it, her AIG Retirement account. She watched her lovely figures be lopped by half. 

Not to worry, said people much more in tune with the acquisition of wealth than she. The market will go up and down. You'll see. She continued to salt money away and hope for the best. She had to have faith in The System!

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When at last she decided that she couldn't read another student composition or stay awake through another faculty meeting, she retired. She landed a part-time job with less stress, delightful colleagues, and much less pay to see her through to the acceptable retirement age.

In the meantime, the entire economy, envious of all the attention the stock market was receiving, decided to tank as well. Our graying lass watched the government bail out AIG, which had gotten into some bad debt of its own.

Magically, the company changed her retirement account  back into a VALIC account, the better to draw new and naive educators into its lair. Her account wobbled back into the range it had been eight years ago, but certainly no higher. She watched the numbers go up and down, like a disturbing pinball game.

When she finally met with an adviser (who wasn't happy that she'd retired and therefore was investing no more in her VALIC/AIG/VALIC account, she told her that her account would "supplement Social Security."

Supplement Social Security!

It turns out that the Social Security, which Wall Street wants to use for its video game fodder (pinball games having become passe), has proved the sure thing. The retirement account, not so much. For more on how this came to be, I recommend Michael Lewis' book, The Big Short. Don't expect it to have a happy ending.

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The advisers at VALIC/AIG/VALIC actually get sort of twitchy whenever you want to take out any money. It's like my old high school librarian, who took it as a personal affront whenever you wanted to check any of Her Books out of Her Library.

It's hard to listen to people who want to privatize Social Security when you have a certain level of knowledge and experience. I know that the same people who crashed the economy want to lay their grubby hands on people's retirement money, the better to bet against market transactions and obtain zillion-dollar bonuses for themselves.

People who worship at the altar of the free market economy have been led to one of the falsest idols of all.  

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