There are two ways an unequal society can be made more equal: improve the lot of the lowest strata so they are less unequal, or redistribute what the middle classes have earned, lowering their standards of living. Never, ever, ever will the richest classes be affected, since their assets are international and they can just pull up stakes and post a financial loss any time their profits are threatened.
One of the ways in which the classes have traditionally been separated has been “the accumulation of generational wealth” – i.e., assets which can be given or bequeathed to one’s children, other family members, friends, or one’s favorite charities. This sort of wealth is often stored in real estate (land and buildings), securities (stocks and bonds), precious metals, jewelry, artwork, and antiques as well as the usual bank accounts, certificates of deposit, trust funds, and so on. Most of today’s understanding of “middle class” includes home ownership, or at least some sort of stake in a piece of real estate that can be willed to our children. It is what our lower classes, our marginalized classes, and our immigrants aspire to. The probability of this sort of wealth lasting long enough to will to our children is fading rapidly as we become better at increasing the number of years between our births and our deaths.
As we age, most of us require more — and more expensive — healthcare and personal care. Once we turn 65, Medicare makes the basics available — for a fee, with Medicare Supplement programs (which can be unaffordably expensive) covering at least some of the remainder (with copays that can also be unaffordably expensive). Medicaid is only available for the poor, and once we hit the Medicare years, our expenditures are looked upon more strictly by the state — whose aim is to spend as little of our tax dollars as possible on our medical care. Because the government caps how much money it will spend out for each medication and service covered by Medicare and Medicaid, those having to spend retail (because one can’t get independent health insurance once they hit the Medicare years, only the less-comprehensive Medicare Supplement Insurance) must lay out increasing amounts of their life savings to pay to stay alive. For many seniors who have accumulated some sort of home equity, this often leads to the need to sell or to “reverse mortgage” their homes. Reverse mortgages result in a large debt burden that must be repaid by whoever one wills to inherit those homes. The terms of repayment are almost immediate, and the mortgage-holding banks make their money on the heirs to family homes having to abandon their ownership claims.
If you live longer than all your monetary and liquidatable assets, you can qualify for Medicaid — but you must sign over your entire estate to the state to reimburse it for what it has laid out (from taxes you had already paid in during your working years). This means that even if your heirs are would be able to repay a reverse mortgage, the home you’ve willed to them will be seized by the State to cover Medicaid expenditures.
Being able to pass on anything — that is, to have generational wealth — requires more than home ownership. It requires being able to avoid requiring Medicaid (and perhaps paying back Medicare? I won’t see that paperwork for a couple of years) and having enough financial assets to more than cover the most expensive medical care you could possibly expect to require (including medications that cost multiple thousands of dollars a month, round-the-clock home health care, and/or nursing home care), for a much longer period of time than you could reasonably expect to live (i.e., until well over 100 years old). In short, a net worth (per person) in the millions of dollars. I submit that this is not within the realm of today’s middle class, and barely within the range of the lower upper-class.
In short, “generational wealth” for the middle classes has become nothing more than a pipe dream.