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Personal Finance: Rich man, poor man

Michelle Singletary
Thursday, September 30, 2010; 10:53 AM

"I've been rich and I've been poor. Believe me, rich is better."

The bawdy 1930s actress Mae West may have been joking when she said that, but her words aren't so funny given new figures just released by the Census Bureau that show the gulf between the rich and the rest of America is growing alarmingly large.

The top-earning 20 percent of Americans - those making more than $100,000 each year - received 49.4 percent of all income generated in the U.S., compared with the 3.4 percent earned by the bottom 20 percent of wage-earners.

Three states - New York, Connecticut and Texas - and the District of Columbia had the largest gaps between rich and poor, reports Hope Yen of the Associated Press. At the city level, huge income gaps were found in New York, Miami, Los Angeles, Boston and Atlanta.

The income gap may also be impacting marriage. Sociologists say younger people are increasingly choosing to delay marriage as they struggle to find work and, as a result, put off making long-term commitments.

Here's the thing. We all have to be concerned about this widening gap, even you're doing well. The rich do live better. Compared with the millions living below the poverty line, they have the means to buy healthier food. They have access to better health care. They can pay for their kids to go to college without sinking their household into debt for decades. They can afford housing without plunging their household into debt until they're old and gray.

And while many of us have achieved middle class status, that position, for many, is just a paycheck away from poverty. As many people have learned, they have income wealth but not enough net worth to sustain a long stretch of unemployment or major illness.

"Beyond what Congress can do immediately, it's clear that America needs a broader movement to create a more just and higher-wage economy," writes the Post's Katrina vanden Heuvel. "This devastating economic reality has the potential to create new political alliances -- and shape a 21st-century anti-poverty movement. Such a movement is urgently needed because the voices of the poor, of workers and of those struggling to get by are barely heard in the halls of power these days."

What do you think? The Color of Money Question of the Week: How concerned are you about the growing gap between the rich and poor? Send your comments to colorofmoney@washpost.com. In the subject line put "Rich Man, Poor Man."

Retiring the Retirement Goal

In 1998, 11.9 percent of workers 65 and older remained in the labor force. In 2008, 16.8 percent of seniors kept working past 65.

This year, 18 percent of older workers say they will keep working. By 2018, the Bureau of Labor Statistics projects 22 percent of older workers will still be working, reports CNNMoney.com writer Jessica Dickler in 'I'll work till I die': Older workers say no to retirement.

"The whole idea of working longer, even for a handful of years, can be tremendously beneficial to your mental well being," says Mark Miller, author of "The Hard Times Guide to Retirement Security."

And of course, the recession has made a traditional retirement nonexistent for many seniors. They can't afford to retire.

Short Sale Surge

As the grim economy persists, many Americans continue to find themselves on the short end of the housing stick.

In Walking away with less, Post writers Dina ElBoghdady and Dan Keating report that the increase in short sales is plaguing many neighborhoods across the country.

A short sale occurs when a property is sold and the lender agrees to accept less than what's owed on the mortgage.

A recent survey by CoreLogic, a mortgage research firm, found completed short sales have more than tripled since 2008. This spring, the Obama administration launched a program, the Home Affordable Foreclosure Alternatives Program, to encourage lenders to go the short-sale route for borrowers whose loans can't be modified through the federal government's foreclosure prevention effort. Lenders receive $1,500 and borrowers another $3,000 for moving expenses.

Here's more information about the program.

Your Thoughts on Obama's Town Hall

Last week's Color of Money Question: What do you think of President Obama's defense of his efforts to fix the economy?

In a recent town hall meeting, President Obama spoke about the many issues affecting middle class America. During the discussion, which was broadcast on CNBC, some participants seemed frustrated with the President's responses. But I wanted to hear what you thought. So here's what some of you had to say:

"President Obama has performed extremely well, considering the horrific situation he inherited from the Bush administration," says Jerry Mebane of Huntsville, Al. "The Republicans failed to regulate financial institutions that caused the recession. If we want continuing improvement, we had better vote for Democrats."

Jeff Bond Of Dunn Loring, Va. believes President Obama is out of touch with the struggles of many Americans, especially small business.

"He does not seem to understand business or how business works or understand that the backbone of any diverse economy is the ability to make things," Bond wrote. "Moreover, he does not understand how to empathize with the middle class. Instead he has increased the size of the federal government beyond what is effective."

Robin Larson of Cambridge, Mass. wrote: "The President, for all his efforts and good intentions, has been much too light and lean in levying blame where it belongs. And he has been way too lame and broad, almost to the point of being disingenuous and patronizing, in his explanation of what's happening and what he's really doing about it. There are too many empty 'sound bites,' very few specifics, no real timetable and real reluctance to take Congress and those at fault to the woodshed."

Several of you agreed with me that Obama was far too kind to Anthony Scaramucci, a managing partner of hedge fund SkyBridge Capital, who had the nerve to say he and his Wall Street buddies felt like they were being hit like a piƱata. Oh, the poor rich men.

"I agree with you 100 percent," said Mark Olson of Hurst, Tex. "He should have taken advantage of that golden opportunity and really read the Wall Street dude a riot act he would never forget. At least make him regret he had the audacity to even bring it up."

"Personally, rather than whacking these Wall Street whiners with a stick, I would prefer to sharpen the point of the stick and give them several good pokes with the pointed end," wrote Russell Settle of Elkton, Md.

Online chats

Join me today at 11:45 am for my live online video chat.

I will answer your finance questions and read responses to last week's Color for Money Question.

The financial conversation continues in my online text chat at noon ET. My guest will be Willie Jolley, author of "Turn Setbacks into Greenbacks: 7 Secrets for Going Up in Down Times."

Be sure to submit your questions early or if you are unable to log in, read the archives later.

Upcoming Events

--Saturday, October 2, 5:30 p.m. to 6:30 p.m.: Come see me at the Boulevard at Capital Centre, located at 900 Capital Centre Blvd., Largo, Md., 20774. For more information, go to www.capitalbookfest.org.

--Thursday, October 21 at 9 p.m.: Watch CNN's "Almighty Debt: A Black in America Special," hosted by Soledad O'Brien. Following the documentary, I'll be participating in a panel discussion at 10:30 p.m. Here's a trailer of the program.

--Thursday, November 4: I will be facilitating the Money Madness session at the Essence Women's Conference located in New York City at the Marriott Marquis. For registration and ticket information, go to www.essence.com/ewc.

Tia Lewis contributed to this e-letter.

You are welcome to e-mail comments and questions to singletarym@washpost.com. Please include your name and hometown; your comments may be used in a future column or newsletter unless otherwise requested.

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