The event—entitled “Are Housing Prices Destroying the California Dream?”—brought together a scholar, a politician, a leading journalist, the head of a nonprofit housing organization, and a national expert on housing to examine a crisis that the panelists said touches every person in every region of the state.

This problem “affects all ends of the economic distribution, and all ends of the age distribution,” said Gary Segura, dean of the UCLA Luskin School of Public Affairs, adding: “I am one of millions of Californians who cannot afford my house the day I retire.”

Moderator David Lesher, CEO and editor of the nonprofit media organization CALMatters, framed the conversation around three questions: “How big of a problem is housing? What’s the cause of the problem? And what are we going to do about it?”

The panelists said the housing crisis involves the intersection of many different problems: zoning, planning, taxation, environment, infrastructure, transportation, mental health, homelessness, demands on developers, financing, and Californians’ high expectations for the places where they live.

This complicated intersection makes the housing situation difficult to understand. One panelist, Kevin de León, president pro tem of the California State Senate, recalled a day he spent in downtown L.A. with a wide variety of people—from housing advocates to police and local officials—to learn more about housing and homelessness. “My conclusion was the following: The left hand didn’t know what the right hand was doing,” he said.

But that can’t be an excuse, given how high the stakes are. “We have a housing crisis, and it’s a big driver without a doubt when it comes to poverty,” de León said. He cited the statistic that a Californian who makes minimum wage would need to work three full-time jobs to afford the average two-bedroom apartment.

Another panelist, AARP housing policy expert Rodney Harrell, said that affordable housing is a national crisis, but it’s even worse in California. An AARP survey, he noted, found that almost two-thirds of Californians have thought about leaving the state because of high housing costs.

He said the heart of the matter is a lack of supply, but fixing it is not just a matter of building more places to live. “There are not enough housing units of the types that people need”—affordable, near jobs or transit, and with designs for people who may have special needs because of their age or health. And high costs leave people very vulnerable. “The folks I worry about most are the people who have not planned for an emergency—something happens to your spouse, you have a health crisis, you lose a job” and then you can no longer afford your housing.

Segura, of UCLA, spoke of the need to reduce the costs that local governments put on developers, by demanding they widen streets, provide parking, or take on wage issues as a condition of building housing. Such demands add to the cost of housing and make “pulling a building permit the most expensive thing you can do in California.”

He also argued that linkage fees, which make developers pay for affordable housing, reflect attempts by local governments to make up for some of the control and revenue they lost under Proposition 13, the 1978 ballot initiative that limited property taxes. While noting that it’s unpopular to free up developers, he warned, “We cannot use developers and development to solve all issues.”

Lisa Hershey, executive director of the nonprofit Housing California, said that too much public money goes into tax subsidies for our homes—she mentioned the mortgage interest rate deduction—and not enough into infrastructure, transit, access to schools, and livable community policies that stabilize neighborhoods, and keep people in their homes. “The stability of home makes everything else possible” in terms of improving people’s lives, she said.

She also lamented how efforts to address the housing crisis—by building more transit and housing—can end up pushing out longstanding residents of certain neighborhoods, as land values, rents, and home prices rise. Many Californians are being pushed out of established neighborhoods to places far from jobs, creating longer commutes.

De León noted that a development in Boyle Heights, which is part of his Senate district, was blocked because of concerns about such displacement. “People are thinking, ‘If I’m going to be displaced, where am I going to live? My cultural identity, my linguistic identity—everything is in this neighborhood, this block,’” he said.

Hershey and de León both touted a package of 15 bills that the legislature passed in the just concluded session, and that Governor Jerry Brown signed into law. It includes a dedicated funding source for affordable housing, a housing bond that will go to voters, and legislation that should speed up permitting in localities. De León said that the push on housing would be enhanced by other new laws that promote road and infrastructure repair, boost transit, add parks, and reduce pollution.

“This package we’ve moved forward—I’m hoping it will be the first step of many steps,” he said.

De León also noted that the housing package—in combination with previously allocated state money for the homeless and mentally ill and local measures for funding housing and homeless programs—meant that an unprecedented amount of money is flowing to address housing issues. But that doesn’t guarantee that local leaders will find ways to turn money into housing that meets people’s needs.

“At a macro level we can move all the capital that is necessary to catalyze and attract money,” de León said. “But if at the local level, the leadership is lacking, it just takes a really bad problem and makes it even worse.”

During a question-and-answer session with the audience, one person asked why, if California is producing so little housing, she sees so much development as she drives around.

Harrell, of AARP, responded that “not all supply is created equal—just because a building is going up, it doesn’t mean it has enough units that folks can afford.” And UCLA’s Segura noted that the housing being built is simply not enough for a state that’s reaching a population of 40 million.

Hershey, of Housing California, called this “a historic moment,” with opportunities to address the housing crisis given the resources, the focus on the problem, and “a gubernatorial campaign with several candidates who are interested in housing.”

But she cautioned that such a complex problem won’t be solved quickly. “This is the long game,” she said.

At that, Harrell added, “We all need to take part.”

The post California’s Housing Crisis Is a Nasty Intersection of the State’s Worst Problems appeared first on Zócalo Public Square.

In advance of an April 26 Zócalo/ASU event on the future of our health care system—”Will the Aging of America Bankrupt the Healthcare System?“—we posed that very question to people who think a lot about how the Baby Boom will impact us overall.

The post A Silver Tsunami Is About to Hit U.S. Health Care appeared first on Zócalo Public Square.

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Petruno said that in the 1970s, his college tuition cost $115 per quarter. The costs of higher education have skyrocketed since then, leading to heavy student loan debt—which is just one of the many obstacles millennials face as they try, or even think about, saving for retirement.

Another obstacle, said personal finance columnist Liz Weston, is that incomes have been shrinking. Today, the median American income is about $51,000. In 1999, it was $56,000. Before we even start talking about retirement, said Weston, we must acknowledge that “we’re not in a situation of stagnant incomes but shrinking incomes.”

City of Los Angeles financial empowerment initiative director Olivia Calderon added that 46 percent of California households live “in a perpetual state of income insecurity.” They don’t have enough assets to tide them over for three months if they were to lose their jobs. These people don’t have pensions or savings plans; they are taking on a lot of risk for expenditures like college tuition, and they have no easy way to save for the future.

What can young people who are lucky enough to be employed at a business with a 401(k) savings plan do to spare themselves this fate?

SagePoint financial advisor Alexander Cruz said that the first thing he asks clients is, “‘Do you have a match?’” If your company matches your 401(k) contribution, they will give you what essentially amounts to free money. Let’s say you make $50,000, and put 5 percent of your salary— $2,500—in a 401(k). If your company does a 50 percent match, you’ll earn an extra $1,250 each year. Forty years later, that $1,250 will be worth “thousands and thousands of dollars,” said Cruz.

Every dollar you save in a retirement account grows 20 times, said Weston. Even after inflation, that’s a lot of money. If you start saving about 10 percent of your income in your 20s, you can have a comfortable retirement. If you wait until your 30s, you have to save about 15 percent. If you wait until your 40s, you have to save a third of your income to match what you’d have if you’d started in your 20s—and that’s difficult. “We have to get people started early so they have a decent retirement,” she said.

But young people—feeling the sting of the financial collapse—don’t necessarily trust the market, said Calderon. They also lack financial education: “Our K-12 education system really needs to be revamped,” she said. We need to grow “a new generation of very savvy investors who feel confident to ask questions and to make better decisions.”

Many of us don’t understand the different retirement options that are available or how they are supposed to work.

Gerri Madrid-Davis, AARP’s director of financial security and consumer affairs, said that 401(k) plans were originally designed to be supplemental savings accounts. Retirees were supposed to have a “three-legged stool” model. Social Security would be your base retirement income; your pension would be a steady stream of income; and your 401(k) would be an additional savings vehicle. But today, only 17 percent of Americans who go to work every day have access to a pension. And many people aren’t aware of the fees that eat into their 401(k) plans.

Weston said that another problem with 401(k) plans is the lack of clear disclosure about fees. In addition, most people aren’t required to sign up or increase their contributions steadily over time. Many people also end up cashing out their plans, and paying a significant amount of money—between one-half and one-third of the amount withdrawn—in taxes and penalties. It might not seem like a lot of money, but a $5,000 withdrawal can end up costing $50,000 in lost retirement savings.

What state and local government initiatives are getting people in the habit of saving?

Calderon pointed to a retirement savings bill authored by California State Senator Kevin de León, which was introduced in 2007 and passed in 2012. The bill creates a publicly administered retirement savings program for private-sector workers without access to an employer-sponsored plan. The plan has not yet been implemented—the legislature has created an advisory committee to design it—but the goal, said Calderon, is “to make it very, very easy for Californians to save.” Saving for retirement should be automatic—where “you have to opt out as opposed to having to opt in,” she said. “We need to make the savings options really simple, because sometimes, less is more.”

Seventeen states are currently looking into adopting similar plans, said Madrid-Davis. Anyone in the workforce can walk into a bank or brokerage house and open an individual retirement account. “But you’re 15 times more likely to participate if you have that account at work,” she said. “A lot of it is getting inertia to work for us instead of against us.”

“Education is incredibly important,” said Madrid-Davis. And there are many resources available to people today online. (The AARP website, for instance, offers free tools like a calculator that helps you figure out when you should start taking Social Security.)

Ultimately, said Petruno, “time is the most powerful tool.” The earlier you start saving, the better off you are.

In the question-and-answer session, the panel was asked what young people who can’t get into the housing market should do about the absence of such a traditional asset.

Petruno said this was a non-issue: Houses aren’t the best investments and can, in fact, be “money pits” with a lot of unseen costs.

However, said Madrid-Davis, owning a home “is still part of the American Dream,” particularly for people who want more than what their parents had. There’s value in that kind of aspiration—and buying a house can be a good investment, as long as buyers do their homework and are honest about what they can afford.

The post You Should Have Started Saving for Retirement Yesterday appeared first on Zócalo Public Square.

Will short (or nonexistent) retirements simply be the “new normal” for an entire generation? Or can young people who are carrying college debt, struggling to find full-time jobs with health insurance, and putting off marriage and home-buying be convinced of the importance of financial planning? In advance of the Zócalo/AARP event “Will Young Californians Ever Be Able to Retire?”, we asked experts on retirement the following question: What can either the private or the public sector do to get young Californians to save for retirement?

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