Housing Rental Expense killing DC contributions?

Despite the fact that inflation, as measured by the CPI, seems to be contained, rental expense for housing has jumped significantly in the US during the last decade.  As a country we are moving away from being a home ownership society to one that rents housing, as home ownership is now at its lowest since 1967! Furthermore, the only reason the home ownership rate is as “high” as it is, is due to homeowners in the 65 and over age group. For everyone else, home ownership rates are now the lowest recorded.

Compounding this problem is the fact that US household incomes are 7.2% less than they were in 1999. The lower incomes are being crushed by rising housing costs, medical expenses / insurance and education. Is it no wonder that folks don’t have any additional resources to fund their DC plans? What percentage of the US population really has discretionary income at this time?

According to the “State of the Nation’s Housing” report released by the Center for Housing Studies at Harvard, which showed that while inflation among most products and services may indeed be roughly as the Fed and BLS represent it, when it comes to rent things have never been worse.

According to the report, 2013 marked another year with a record-high number of cost burdened households – those paying more than 30 percent of income for housing. In the United States, 20.7 million renter households (49.0 percent) were cost burdened in 2013.  Alarmingly, 11.2 million (25%) all renter households, had “severe cost burdens, paying more than half of income for housing.” The median US renter household earned $32,700 in 2013 and spent $900 per month on housing costs.

So, do you still believe that the failure to fund defined contribution plans is because we have a population hellbent on consumption? The demise of the DB plan means that a significant percentage of our population will never be able to make adequate contributions (if any) into their retirement plan. The social and economic consequences for our country will be grave.

Single and Broke In Retirement?

We recently came across a news report that highlighted the fact that “singles” in the U.S. are more likely NOT to have a retirement account. In fact, only 51 percent of unattached people have a retirement savings account, according to a study released Wednesday by Mintel. (Mario Petitti / Chicago Tribune)

The population of single people is rising with almost half of adults today not living with a spouse, according to the U.S. Census. That’s up from about 30 percent in 1967.

“More Americans are staying single longer, and our data shows this trend will hold out for the foreseeable future,” Robyn Kaiserman, Mintel financial services analyst, said in the report.

Regrettably, the percentage of singles that have a retirement account is far less than people who are living with a partner or who are married, the research firm said.

Retirement savings accounts have been set up, in contrast, by 68% of people living with a partner and 84% of married adults.

We, at KCS, suggest that Americans overall need to take retirement more seriously, especially those not in a traditional DB plan.

For participants in defined contribution plans, just 27% contribute the maximum allowed to their plan, and 22% say they contribute only enough to get the employer match.

Whether you are single or not the key to funding a successful retirement is to start saving / investing early in life and be consistent (save with every paycheck). Taking advantage of a matching 401k plan should be a no brainer. Unfortunately, the power of compounding is lost on many people. But, why should that be a surprise? We provide so little financial literacy in our schools!

KCS September 2015 Fireside Chat – “Happy 80th Birthday”

We are pleased to share with you the latest KCS Fireside Chat article. Social Security has just turned 80, and in this article we explore its origins, operating practices, and importantly, its future. We hope that you find this subject interesting.


As a nation we cannot afford to have our seniors living on the precipice of financial ruin. A return to the poor houses of the 20’s and 30’s is absolutely unacceptable. Ideally, we would once again provide a strong pension system that would strengthen the three-legged stool, but until we can resurrect defined benefit pensions for the masses, we better figure out a way to continue to provide, and even enhance, the current Social Security system.

Please don’t hesitate to reach out to us if we can be of any assistance to you. Have a great Labor Day weekend!