10 ms·

The End of Retirement

62 points by jimsojim 11y ago

newmotors 11y ago
How much does SS pay these days? Any other help programs for the elderly (65+ - assuming they never had a real job)?
- woofyman 11y ago
  Social Security is based on your highest 20 years of salary and what age you start collecting benefits. My projected monthly payment, if I start collecting at 70 is $3,600.00 a month. I'm 56.
  - skimpycompiler 11y ago
    Are there parts of the US where $3600 is enough?
    - JustSomeNobody 11y ago
      Yeah, most anywhere except California, Washington (both), and New York.
    - pmorici 11y ago
      $3,600 a month is more than enough in most places in the US. Especially if you plan right and have a paid off house in an area with favorable property tax laws when you retire.
    - douche 11y ago
      If the $3600 is what goes into your pocket (I'm not really up on how SS is taxed, since I'm too young to ever have a chance of seeing a dime of it), then yeah, that is a pretty comfortable amount of income in many areas of the US. Assuming you have your mortgage paid off, there are a lot of places in the U.S. where a retired person with that kind of income would have more disposable income than anyone else in the community.
    - VLM 11y ago
      Median income of the subset of employed americans is only $2400/month before tax, so you'll be living better than most Americans at $3600/mo.
      - jqm 11y ago
        "Median income of the subset of employed americans is only $2400/month" That's also a good point as to why people aren't saving money....
      - cookiecaper 11y ago
        Where are you seeing that $28k/yr is the median income? Bear in mind this is per month, not per pay period.
        dangrossman 11y ago
        Just a guess, but if he threw "median personal income US" into Google, it would've quoted from Wikipedia: > The overall median income for all 155 million persons over the age of 15 who worked with earnings in 2005 was $28,567 Which, divided by 12, is $2380. https://en.wikipedia.org/wiki/Personal_income_in_the_United_States https://en.wikipedia.org/wiki/Personal_income_in_the_United_...
        cookiecaper 11y ago
        I checked before posting by typing in "median us income": https://archive.is/M05IS https://archive.is/M05IS . It's $51,939. The difference is that this is median household income, not median personal income. This is the answer I usually see when median income is discussed, and it's really debatable which is the most appropriate to use when discussing what a person can "live off of", though I accept that personal median income is the most direct analog to personal Social Security payments. The real question is whether the OP has a wife that will also be collecting SS.
        deleted 11y ago
        [deleted]
    - cookiecaper 11y ago
      Define "enough". $3600/mo is $43.2k/yr, which is a few k/yr less than the nationwide median income. Keep in mind that in many areas, two wage-earners (that is, $100k+/yr) are required to maintain a middle class standard of living. It could be pretty adequate if the potential retiree has planned well and has already paid off their home (a typical house payment in an area of the country with a sane cost of living would probably be between $1k-$1.5k). It'd really help to have some decently-sized retirement accounts. Basically, $3600/mo is adequate maintenance money, but add one or two major expenses to that (like a house, car, or major medical bill), and it gets dicier. If you want to travel during your retirement, or do anything besides buy groceries, you'll need significant savings to draw from.
      - woofyman 11y ago
        Plus health insurance costs.
        toomuchtodo 11y ago
        Medicare + subsidized supplemental insurance from the ACA (due to less income in retirement years).
    - hyperpape 11y ago
      I live in an area where $3600/month is more than the median income. Hell, five years ago, I was supporting myself, my wife and a kid on about something like that.[1] It was rough, but just barely manageable. [1] "Something like that" because I was making significantly less, but had some familial advantages (I was driving a car in decent condition that I got from parents when I was younger, parents bought the kids lots of clothes, and of course I had a safety net, which is huge--not having that would've moved me from constant stress to full blown panic). Edit: Ohhhh, I forgot the EITC, which makes a big difference. That nudged us a lot closer to that line back then. Still, where I live, $3600 a month would be fine for a single person who didn't have enormous health care costs (and I know that's a real "aside from that, Mrs. Lincoln?" comment. Retirees are pretty likely to have big medical bills).
    - gaoshan 11y ago
      I live in Ohio and have paid off my home so for my wife and myself that would be enough. This assumes no expensive medical emergencies, no new cars needed, no significant international travel, etc. Wouldn't be a very luxurious life but we wouldn't starve to death. About all I'm hoping for any longer.
    - trentmb 11y ago
      That's 43,200/yr- plenty to live a comfortable life in much of the US.
    - LyndsySimon 11y ago
      Yes. I grew up in north-central Arkansas. The median household income there is substantially less than that.
  - mbrutsch 11y ago
    How'd you get them figures? I'm 53, I'm curious how mine looks.
    - zrail 11y ago
      SSA sends out an annual letter with your figures. You can also create an account on SSA.gov[1] and check anytime you want. [1]: http://www.ssa.gov/myaccount/ http://www.ssa.gov/myaccount/
      - mbrutsch 11y ago
        Sweet, thanks. Looks like I'll get $2600/mo at age 70. If SSA holds out that long, I can live on that, but I am not hopeful.
        zrail 11y ago
        Benefits won't just stop completely. If Congress fails to act, SSA will have to cut benefits to 70%. So, instead of $2,600 you'll receive $1,820. At 70% payout, SSA can continue to pay benefits at projected income levels indefinitely.
        mbrutsch 11y ago
        Now all I have to worry about is keeping up with inflation.
        toomuchtodo 11y ago
        Inflation won't be an issue. The only costs going up are healthcare and college. College won't be an issue for you, and Medicare should fill the gap until the US makes it to single payer.
    - woofyman 11y ago
      They'll start sending you estimates when you get a little older but you can go to ss.gov for an estimate.
  - jsalit 11y ago
    Small correction, it's based on your highest 35 years of salary[1] [1] - http://www.ssa.gov/pubs/EN-05-10070.pdf http://www.ssa.gov/pubs/EN-05-10070.pdf
    - woofyman 11y ago
      Right, thank you. I only have 2 more years to go.
      - toomuchtodo 11y ago
        Congrats!
- mshron 11y ago
  The two people mentioned in the article both say they make about $500 a month from social security.
reasonattlm 11y ago
While it's blindingly obvious that the current monolithic pyramid schemes used to move money from the young to the old will have to disappear, this is a big stumbling block for politicians. People already in the payout stages of the pyramid scheme will not take kindly to changes. The difficulty of changing these systems has even been touted as a reason to opposing healthy life extension technologies - so much for rules to benefit the people! It's quite astounding that anyone would rather suffer and die (and force suffering and death on billions) than face the reality that change happens and we must adapt. In the world just a few decades from now in which the old are becoming just as healthy, active, and capable as the young, social security programs are just not needed. Not that I think they are a good plan in the first place - enforced wealth transfers from the young to the old are generally enforced wealth transfers from the poor to the rich. Not to mention the fact that it encourages people to rely on the (inherently inefficient, unreliable) government for services that are quite capably handled by planning ahead (very underrated in the present time!), insurance, family, investment, and standard banking. Retirement in the future will become something quite different from what it is today. I think we will see two forms of retirement in this future without aging. Firstly, there will be the extended vacation. A worker will finish a career with enough money saved to go on vacation for a few decades. That should be more than enough time to decide on a new direction in life. Secondly, an ambitious worker could save enough wealth to remove the need for income - they could live on capital gains, the return on investments, and all the normal methodologies of the well to do in the present day. Given enough time, even the most lowly of jobs could produce this sort of wealth, necessary for a permanent vacation. Of course, this won't result in a world of perpetually vacationing people. If everyone is resting on their laurels, there would be no one to produce goods and provide services. So a dynamic equilibrium would arise between the vacationers and the working - too few workers and prices rise, so more vacationers return to work (out of necessity, or looking to make a killing in a hot market). If many people are working, prices fall, so more can afford to become long term vacationers. A future in which we have decided to treat aging as the medical condition that it is, and implemented SENS or similar approaches of periodic repair of cell and tissue damage that causes aging, will be one in which everyone who is prepared to work can be wealthy. This wealth will bring vastly greater choice and freedom. It would be a terrible shame if political concerns and simple human selfishness mess up, prolong, and cause unnecessary pain in the transition from the current state of affairs to a better tomorrow.
gambiting 11y ago
I don't understand something - if she worked her entire life, how can she not have a pension? Does US not have a state pension?
- woofyman 11y ago
  no
  - pmorici 11y ago
    What is Social Security if not a 'state pension' by another name? The article says she gets $499 a month from Social Security.
- pkaye 11y ago
  Unless you work for the government or a legacy union, the concept of a pension (one with defined benefits) no longer exists. Most people who worked can rely on Social Security or Medicare but it doesn't fully cover your costs. The more common option is 401K where you basically have to save up and invest your own money tax deferred because employers hardly contribute much. In these cases, those make little income or are not well organized don't put anything much into their 401K. Then they reach their retirement age and find out they don't have enough to survive. Lastly there are those who did save into their 401K but lost a lot due to ill timing and the whims of the stock market.
  - alyandon 11y ago
    I really love how my employer gets to define the options I have for investing the money in my 401k. I'm basically forced into investing my money in the volatile equities market if I want to have any hope of living comfortably in retirement. :-/
    - toomuchtodo 11y ago
      Where would you prefer to invest your retirement funds if not equities?
mdorazio 11y ago
This editorial is unfortunately about 95% dramatic story and 5% meaningful numbers. What it doesn't talk about in detail is the savings rate for the baby boomers pre-retirement age, which is the largest factor in the current "we can't retire" saga. Pre-2008, most boomers were basically saving nothing [1] and somehow expecting things to just work out when they got older. As a result, I'm not nearly as sympathetic as this article wants me to be. Another issue it leaves unaddressed is what the proliferation of older Americans remaining in the job market is doing to job availability for younger Americans. Tech is obviously insulated, but in many other industries it is becoming very difficult to advance into the executive ranks because the current executives are staying in well past their retirement age. [1] http://www.bloomberg.com/bw/articles/2014-11-20/millennials-are-lousy-savers-but-baby-boomers-were-worse http://www.bloomberg.com/bw/articles/2014-11-20/millennials-...
- ThomPete 11y ago
  Thats true in a strictly logical sense of course. But perhaps we need to dig one step deeper and ask why they didn't do that. My guess is that it's not entirely as simple as it might sound.
  - mdorazio 11y ago
    I'm all for digging deeper, but I'm not convinced you're going to find a satisfying answer. I try not to hop on the boomer hate train too much, but it's hard to look at what they were handed and not be angry. In the 60s and 70s, a college degree in anything from a decent school was enough to land you meaningful employment. That degree cost less than a third of what it does today. A decent size house in a metropolitan area could be had in your late 20s with a single income. Upward mobility in the workforce was basically unlimited, and thanks to the population bulge, boomers also were able to enact pretty much whatever political policies they wanted as an aggregate group. Yes, Vietnam really sucked, and the S&L crash wasn't fun, either, but how hard would it really have been to set aside 5% of income every year instead of plowing it into ever bigger houses, more cars, vacations, etc.? I'll give you one thing - financial planning education in the US is absolutely awful and continues to fail millions of people every year. Without that, all you see is mass commercialization encouraging people to spend more money, and an ever increasing need to keep up with the Joneses.
TerryADavis 11y ago
I live in some kind of CIA prison or mental health hospital. All my news media is stories about me. That's odd. I am the center of my world. When I had jobs they were fake, like the Truman show. They wanted me to crack the secure hash algorithm, so they could study me and put humanity lock in hell with no way out. You don't seriosuly expect me to get a job and get tortured again! LOL What kind of drugs are you on. God talks. You forget that. Are you serriosuly so stupid you do not know what a certified random number is. MIT made a artificial intellkigence to monitor mental patianence. I have been arguing with this entity for ten years. It is not programmed to understand what God talking means.
bryan11 11y ago
A comment heard from several friends: "Why save for retirement? One large medical expense can wipe out years of savings. You're better off enjoying life and spending what you earn while you can."
- masterleep 11y ago
  Wouldn't insurance be a better response?
  - tzakrajs 11y ago
    I think the argument is that not even insurance can properly insulate you from this risk.
- deleted 11y ago
  [deleted]
- EliRivers 11y ago
  I'm not familiar with your system, so excuse my ignorance; can they do that? Take money from your pension scheme?
  - deleted 11y ago
    [deleted]
  - cookiecaper 11y ago
    No, they can't take money directly from the "pension scheme". Social Security cannot be garnished to satisfy judgments from private creditors, and in most cases, retirement accounts are privileged and will not be forcibly garnished or confiscated by the authorities to pay an outstanding judgment. Also in most cases, you can retain retirement accounts through a bankruptcy. This is a good reason to make sure a lot of your savings is allocated into designated retirement accounts and not just a standard savings account. Parent poster is commenting on the general expense of medicine, but for your typical retiree, it shouldn't be too out of control with Medicare.
EliRivers 11y ago
As an aside, it's sometimes really hard to get people to save for their retirement. My employer recently had another round of meetings, trying to encourage people not to opt-out and extolling the benefits. At the moment, to put 1000 GBP into a pension pot will lower an employee's take-home here about 350 GBP - the company is doubling it (up to 5% of the salary), the government is giving the tax back, and the company is doing it by salary sacrifice so your take-home isn't so badly affected (tax etc. goes down a bit, offsetting a little the money the employee puts into the pension). They can choose what to put it in; stocks, funds, cash, treasuries. They can move it between providers, it's theirs. The only restriction is they can't have it back until they're at retirement age (not even retired; just at the right age, I think). Even so, many people say they'll not bother, thanks. Some say they rather just save the money up themselves (costing them an incredible 1000 GBP for every 1000 GBP they save - three times the cost!). I know that putting it into a pension has risks and downsides, but given that the pension is basically tripling their money on day one, it seems incredible how many people aren't interested. Makes me fear that if people aren't interested even with (what seems to me) such a good deal, what are people without such sweeteners doing.
- jacquesm 11y ago
  The pension funds have lost a lot of trust, and that's not the fault of the employees.
- georgeott 11y ago
  This. Even just 5%, compounded over decades, can turn into A LOT of savings.
- icefox 11y ago
  At least in the states with the 401k, everywhere i have worked it has been an opt-in system so you had to convince people to do the minimum paperwork to get get "Free money" and think of the future. Only recently have a I started hearing that there can be the opposite and 401k can be opt-out (some law change perhaps?). This was also shown with Organ donation http://www.medicalnewstoday.com/articles/282905.php http://www.medicalnewstoday.com/articles/282905.php how much better opt-out could be. I am only guessing, but the percentage of people that are in the system even after those that opt-out is probably way higher than here where most has to opt-in. My sad example would be my 24 year old self didn't bother to bring the fully filled out 401k form upstairs to get the free money even though he vaguely understood it was the right thing to do. It was all set to go, I just had to carry the paperwork, but I didn't. Took a job change and another opportunity before I figured it out. In startup land this is the difference between a 1 step funnel and a zero step funnel. Which would your company like to have?
dovereconomics 11y ago
To be honest, I believe the trend is to only become worse. Every generation appears to become more hedonist and think less about retirement. Many of my friends(millennials) make six figures and barely save any money for retirement. Carpe diem is failing on people.
- dudul 11y ago
  "Carpe diem is failing on people." This is quite funny when you think that "Carpe Diem" originally means literally the opposite of what people use it for nowadays. The original quote is "carpe diem, quam minimum credula postero" i.e. "Seize the day, put very little trust in tomorrow (the future)". Meaning that one should do everything today to ensure a good future and be prepared.
- shubhamjain 11y ago
  > Every generation appears to become more hedonist and think less about retirement. Many of my friends(millennials) make six figures and barely save any money for retirement. Well, maybe I am too unimaginative but not being an American, I am curious where does all the money go. Reading Paul Graham's article about Ramen Profitability, I get the idea that a bare minimum lifestyle can burn as low as ~$1000 - 1500 / month [1]. Now a person is earning 6x this figure, how you don't end up saving something. Bars, clubs would only be fun to a certain extent. The only reasonable explanation I can think is, people buy everything that they don't need. [1]: http://www.paulgraham.com/ramenprofitable.html http://www.paulgraham.com/ramenprofitable.html
  - dovereconomics 11y ago
    Unfortunately, most people don't have minimalist lives. With a 'humble' example: $3000/month SF/NYC apartment,$1000/month on clothing(specially bankers), $1500/month on food(no time to cook, so $50/day), $2000/month on entertainment($500/week), $1500/ month on a decent car +gas. That's already ~110k a year. It's really easy to go beyond that.
    - yummyfajitas 11y ago
deleted 11y ago
[deleted]
maehwasu 11y ago
I save most of my income, and try to have a clear plan to spread spending evenly over my future, rather than just blowing money today (I'm 31). At the same time, given the drastically worse quality of life from age 65+ relative to ages 30-60, I'm not particularly interested in plans that enable/force me to save a lot of money for that stage. This isn't a simple case of hyberbolic discounting (overvaluing the present relative to the future)--I value those age 35-60 years quite highly and have been willing to sacrifice some immediate benefits to optimize them. I just think it's important to be realistic about the fact that certain periods of life are superior to others, and I'd rather stack my enjoyment in those periods.
jqm 11y ago
I've seen retirement make people unhappy. They become isolated and have to find ways to make connections with others. They are bored and start doing things like canvassing the neighborhood looking for minor HMA violations. Sometimes the lack of schedule and structure isn't the best for the health. Sometimes they feel useless. Of course this isn't all cases but I've seen it. People generally want to feel important and connected and a job often provides that. The problem is, as a persons mind and body starts to wear down there is less they can actually contribute. People talk about wisdom and experience and there is something to be said for that, but the world is changing so much faster than conceptual models which makes "wisdom" worth less than traditionally it has been. Besides, people start forgetting. So who actually hires old people? Who can afford too? It's hard enough to find good work when you are young and able. I don't know what the point is. I guess I hope to actually never retire but to be able to do what I like at a pace I'm able until death. (With all the vacations I want of course). Even were I unfathomably wealthy I would want to live like this. Because sitting around doing nothing sucks. So does playing golf every day.
jbuzbee 11y ago
The author of this article has an obvious bias or slant she's pushing and tries hard to paint a picture of doom and gloom and of evil corporations out to take advantage of employees, e.g. when talking of self-directed 401K retirement funds with company contributions: Workers got shafted But you know what? In many ways the opportunities that these retirement-age workers have sounds like an adventure. What's the alternative? Sitting at home watching soap-operas on TV or feeding pigeons at the park? No matter what, getting old sucks and you'll be popping Advil and aspirin for aches and pains. But companies like Amazon and the Park Service give these folks something to do and a way to keep contributing to society. At the start of the article May was out of money, living in a trailer with no electricity or water, contemplating suicide. But by the end, thanks to Amazon and other companies she had turned it around and she was having a ball. Obviously work at these companies can be hard or boring, but we get quotes like the following: Despite the boredom, May was grateful for one part of her job. “The best thing was the camaraderie,” she said. “I made friends there.” “Oh my God,” she said, explaining that it was a relief to be around people who she felt understood her. “The other day, for the first time in years and years, I felt joy. Joy! That’s better than being happy.” Before long, May was helping two of her neighbors... May told me she was doing fabulously. “My whole life has been ups and downs,” she said. “The happiest I’ve been is when I have very little.” Sounds to me like Amazon and the others were a god-send for May and her friends.
- littletimmy 11y ago
  What's wrong with watching soap-operas on TV? We have to do away with this moronic idea that people must be productive. A man's life is more than what he produces.
- zzalpha 11y ago
  Yeah! It's like homelessness! That's, like, free camping! Who would complain about free camping???
  - jbuzbee 11y ago
    To repeat, from an active participant in this economy: for the first time in years and years, I felt joy. Joy!
roymurdock 11y ago
An economic perspective because the article didn't really touch on it: There are two main schemes for creating a pension system like social security: Pay-as-you-go (PAYGO) and Fully-funded. Under the PAYGO system, contributions from the current labor force are shared among retirees. Under the Fully-funded system, current earnings are collected as taxes from workers when they are young and invested by the government on their behalf, then paid out at retirement age. Social Security in the US is a PAYGO pension system. PAYGO works great when 1) the working-age population is increasing relative to the retiree-population (tax-base is increasing relative to tax-drain) and 2) worker productivity is increasing (more taxes extracted from tax-base). Fully-funded doesn't depend on population growth as the rate of return is generally determined by return on private investments, such as bonds and equities. There are benefits and drawbacks to both systems, but with the shift in employment dynamics (less young, more old), the slowdown in the growth rate of the US population, and observed 6-7% market returns over the long-run [1] it seems like it would be worth considering phasing out PAYGO and switching to a Fully-funded system, or a hybrid of the two. Here's more info for those who are interested (article is from 1998 but seems even more prescient now): http://www.frbsf.org/economic-research/publications/economic-letter/1998/march/on-the-transition-to-a-fully-funded-social-security-system/ http://www.frbsf.org/economic-research/publications/economic... [1] http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a1.neDMy8DEU http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a1.ne...
- wazoox 11y ago
  There is a common misconception in your description or the return rate on bonds and equity. At some point, you need to sell your bonds to get actual money to buy things. When many older people sell their bonds to earn a living, they flood the market and bond price crashes, and they're actually no better than using the pay-go system. in the end, retired people must live on the surplus created by those still working; the way you redistribute that surplus doesn't really change the equilibrium.
  - yummyfajitas 11y ago
    This ignores the effect of buying bonds earlier in life. While people are working, they are reducing consumption and directing some of their productive capacity into investment. This raises future production, resulting in more future surplus to go around.
tomohawk 11y ago
When we bought our first house in the early 90s, we were the only people in the neighborhood who were not retired. In fact, everyone in the neighborhood had been retired longer than we had been alive (26+ years). They were living off of social security and savings, which was possible because their houses were paid off and because the social security taxes while they were working were much less (2%) than they are now (14%). So, they were getting a fantastic payoff from their social security 'investment' that no future generation can hope to get, while at the same time able to save more since much less was being skimmed off the top. It's too bad that our generation and later generations have not been given the same opportunity that they were, and instead face the ruinous 14% social security tax with the disincentive that it is likely that getting any benefits will probably be 'means tested' by the time we retire. Most of my peers that I've talked to don't expect to get any social security when they become of age. Socking 15% - 20% away after 14% is taken off the top is difficult, but the benefit from it will far surpass anything I'll ever receive from social security.
- ac29 11y ago
  I'm curious where you got that 14% number. The source I found says 6.2% [1], and 0% after 118.5k/year in wages. [1] http://www.irs.gov/taxtopics/tc751.html http://www.irs.gov/taxtopics/tc751.html
  - lotsofpulp 11y ago
    From an employer's perspective, what an employee is paid depends on the total cost of employing that person, which includes the employer's half of the social security and Medicare tax. It's reasonable to state that also as a tax that the employee pays. From your link: The current tax rate for Social Security is 6.2% for the employer and 6.2% for the employee, or 12.4% total. The current rate for Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9% total.
    - evgen 11y ago
      It's reasonable to state that also as a tax that the employee pays. No it isn't. If your employer can spend less to employ you then they will keep the profit for themselves, not share it with you.
geggam 11y ago
Social Security is funded. politicians keep stealing the funds and putting IOU's in it. Not to mention if we quit capping the income paying into social security it would be in the black regardless of the theft. The thing that is evident here is the stock market is a method for the fleecing of the people by forcing them to invest or lose money saving.
cookiecaper 11y ago
Retirement is a very new system. The concept that people just quit working and let other people pay for their existence over the last 30 years of their life is an artifact of the industrial revolution, since by about 70 people couldn't reasonably tolerate factory work anymore.

62 points by jimsojim 11y ago

newmotors 11y ago

How much does SS pay these days? Any other help programs for the elderly (65+ - assuming they never had a real job)?

woofyman 11y ago
Social Security is based on your highest 20 years of salary and what age you start collecting benefits. My projected monthly payment, if I start collecting at 70 is $3,600.00 a month. I'm 56.
- skimpycompiler 11y ago
  Are there parts of the US where $3600 is enough?
  - JustSomeNobody 11y ago
    Yeah, most anywhere except California, Washington (both), and New York.
  - pmorici 11y ago
    $3,600 a month is more than enough in most places in the US. Especially if you plan right and have a paid off house in an area with favorable property tax laws when you retire.
  - douche 11y ago
    If the $3600 is what goes into your pocket (I'm not really up on how SS is taxed, since I'm too young to ever have a chance of seeing a dime of it), then yeah, that is a pretty comfortable amount of income in many areas of the US. Assuming you have your mortgage paid off, there are a lot of places in the U.S. where a retired person with that kind of income would have more disposable income than anyone else in the community.
  - VLM 11y ago
    Median income of the subset of employed americans is only $2400/month before tax, so you'll be living better than most Americans at $3600/mo.
    - jqm 11y ago
      "Median income of the subset of employed americans is only $2400/month" That's also a good point as to why people aren't saving money....
    - cookiecaper 11y ago
      Where are you seeing that $28k/yr is the median income? Bear in mind this is per month, not per pay period.
      - dangrossman 11y ago
        Just a guess, but if he threw "median personal income US" into Google, it would've quoted from Wikipedia: > The overall median income for all 155 million persons over the age of 15 who worked with earnings in 2005 was $28,567 Which, divided by 12, is $2380. https://en.wikipedia.org/wiki/Personal_income_in_the_United_States https://en.wikipedia.org/wiki/Personal_income_in_the_United_...
        cookiecaper 11y ago
        I checked before posting by typing in "median us income": https://archive.is/M05IS https://archive.is/M05IS . It's $51,939. The difference is that this is median household income, not median personal income. This is the answer I usually see when median income is discussed, and it's really debatable which is the most appropriate to use when discussing what a person can "live off of", though I accept that personal median income is the most direct analog to personal Social Security payments. The real question is whether the OP has a wife that will also be collecting SS.
      - deleted 11y ago
        [deleted]
  - cookiecaper 11y ago
    Define "enough". $3600/mo is $43.2k/yr, which is a few k/yr less than the nationwide median income. Keep in mind that in many areas, two wage-earners (that is, $100k+/yr) are required to maintain a middle class standard of living. It could be pretty adequate if the potential retiree has planned well and has already paid off their home (a typical house payment in an area of the country with a sane cost of living would probably be between $1k-$1.5k). It'd really help to have some decently-sized retirement accounts. Basically, $3600/mo is adequate maintenance money, but add one or two major expenses to that (like a house, car, or major medical bill), and it gets dicier. If you want to travel during your retirement, or do anything besides buy groceries, you'll need significant savings to draw from.
    - woofyman 11y ago
      Plus health insurance costs.
      - toomuchtodo 11y ago
        Medicare + subsidized supplemental insurance from the ACA (due to less income in retirement years).
  - hyperpape 11y ago
    I live in an area where $3600/month is more than the median income. Hell, five years ago, I was supporting myself, my wife and a kid on about something like that.[1] It was rough, but just barely manageable. [1] "Something like that" because I was making significantly less, but had some familial advantages (I was driving a car in decent condition that I got from parents when I was younger, parents bought the kids lots of clothes, and of course I had a safety net, which is huge--not having that would've moved me from constant stress to full blown panic). Edit: Ohhhh, I forgot the EITC, which makes a big difference. That nudged us a lot closer to that line back then. Still, where I live, $3600 a month would be fine for a single person who didn't have enormous health care costs (and I know that's a real "aside from that, Mrs. Lincoln?" comment. Retirees are pretty likely to have big medical bills).
  - gaoshan 11y ago
    I live in Ohio and have paid off my home so for my wife and myself that would be enough. This assumes no expensive medical emergencies, no new cars needed, no significant international travel, etc. Wouldn't be a very luxurious life but we wouldn't starve to death. About all I'm hoping for any longer.
  - trentmb 11y ago
    That's 43,200/yr- plenty to live a comfortable life in much of the US.
  - LyndsySimon 11y ago
    Yes. I grew up in north-central Arkansas. The median household income there is substantially less than that.
- mbrutsch 11y ago
  How'd you get them figures? I'm 53, I'm curious how mine looks.
  - zrail 11y ago
    SSA sends out an annual letter with your figures. You can also create an account on SSA.gov[1] and check anytime you want. [1]: http://www.ssa.gov/myaccount/ http://www.ssa.gov/myaccount/
    - mbrutsch 11y ago
      Sweet, thanks. Looks like I'll get $2600/mo at age 70. If SSA holds out that long, I can live on that, but I am not hopeful.
      - zrail 11y ago
        Benefits won't just stop completely. If Congress fails to act, SSA will have to cut benefits to 70%. So, instead of $2,600 you'll receive $1,820. At 70% payout, SSA can continue to pay benefits at projected income levels indefinitely.
        mbrutsch 11y ago
        Now all I have to worry about is keeping up with inflation.
        toomuchtodo 11y ago
        Inflation won't be an issue. The only costs going up are healthcare and college. College won't be an issue for you, and Medicare should fill the gap until the US makes it to single payer.
  - woofyman 11y ago
    They'll start sending you estimates when you get a little older but you can go to ss.gov for an estimate.
- jsalit 11y ago
  Small correction, it's based on your highest 35 years of salary[1] [1] - http://www.ssa.gov/pubs/EN-05-10070.pdf http://www.ssa.gov/pubs/EN-05-10070.pdf
  - woofyman 11y ago
    Right, thank you. I only have 2 more years to go.
    - toomuchtodo 11y ago
      Congrats!
mshron 11y ago
The two people mentioned in the article both say they make about $500 a month from social security.

reasonattlm 11y ago

While it's blindingly obvious that the current monolithic pyramid schemes used to move money from the young to the old will have to disappear, this is a big stumbling block for politicians. People already in the payout stages of the pyramid scheme will not take kindly to changes. The difficulty of changing these systems has even been touted as a reason to opposing healthy life extension technologies - so much for rules to benefit the people! It's quite astounding that anyone would rather suffer and die (and force suffering and death on billions) than face the reality that change happens and we must adapt. In the world just a few decades from now in which the old are becoming just as healthy, active, and capable as the young, social security programs are just not needed. Not that I think they are a good plan in the first place - enforced wealth transfers from the young to the old are generally enforced wealth transfers from the poor to the rich. Not to mention the fact that it encourages people to rely on the (inherently inefficient, unreliable) government for services that are quite capably handled by planning ahead (very underrated in the present time!), insurance, family, investment, and standard banking. Retirement in the future will become something quite different from what it is today. I think we will see two forms of retirement in this future without aging. Firstly, there will be the extended vacation. A worker will finish a career with enough money saved to go on vacation for a few decades. That should be more than enough time to decide on a new direction in life. Secondly, an ambitious worker could save enough wealth to remove the need for income - they could live on capital gains, the return on investments, and all the normal methodologies of the well to do in the present day. Given enough time, even the most lowly of jobs could produce this sort of wealth, necessary for a permanent vacation. Of course, this won't result in a world of perpetually vacationing people. If everyone is resting on their laurels, there would be no one to produce goods and provide services. So a dynamic equilibrium would arise between the vacationers and the working - too few workers and prices rise, so more vacationers return to work (out of necessity, or looking to make a killing in a hot market). If many people are working, prices fall, so more can afford to become long term vacationers. A future in which we have decided to treat aging as the medical condition that it is, and implemented SENS or similar approaches of periodic repair of cell and tissue damage that causes aging, will be one in which everyone who is prepared to work can be wealthy. This wealth will bring vastly greater choice and freedom. It would be a terrible shame if political concerns and simple human selfishness mess up, prolong, and cause unnecessary pain in the transition from the current state of affairs to a better tomorrow.

gambiting 11y ago

I don't understand something - if she worked her entire life, how can she not have a pension? Does US not have a state pension?

woofyman 11y ago
no
- pmorici 11y ago
  What is Social Security if not a 'state pension' by another name? The article says she gets $499 a month from Social Security.
pkaye 11y ago
Unless you work for the government or a legacy union, the concept of a pension (one with defined benefits) no longer exists. Most people who worked can rely on Social Security or Medicare but it doesn't fully cover your costs. The more common option is 401K where you basically have to save up and invest your own money tax deferred because employers hardly contribute much. In these cases, those make little income or are not well organized don't put anything much into their 401K. Then they reach their retirement age and find out they don't have enough to survive. Lastly there are those who did save into their 401K but lost a lot due to ill timing and the whims of the stock market.
- alyandon 11y ago
  I really love how my employer gets to define the options I have for investing the money in my 401k. I'm basically forced into investing my money in the volatile equities market if I want to have any hope of living comfortably in retirement. :-/
  - toomuchtodo 11y ago
    Where would you prefer to invest your retirement funds if not equities?

mdorazio 11y ago

This editorial is unfortunately about 95% dramatic story and 5% meaningful numbers. What it doesn't talk about in detail is the savings rate for the baby boomers pre-retirement age, which is the largest factor in the current "we can't retire" saga. Pre-2008, most boomers were basically saving nothing [1] and somehow expecting things to just work out when they got older. As a result, I'm not nearly as sympathetic as this article wants me to be. Another issue it leaves unaddressed is what the proliferation of older Americans remaining in the job market is doing to job availability for younger Americans. Tech is obviously insulated, but in many other industries it is becoming very difficult to advance into the executive ranks because the current executives are staying in well past their retirement age. [1] http://www.bloomberg.com/bw/articles/2014-11-20/millennials-are-lousy-savers-but-baby-boomers-were-worse http://www.bloomberg.com/bw/articles/2014-11-20/millennials-...

ThomPete 11y ago
Thats true in a strictly logical sense of course. But perhaps we need to dig one step deeper and ask why they didn't do that. My guess is that it's not entirely as simple as it might sound.
- mdorazio 11y ago
  I'm all for digging deeper, but I'm not convinced you're going to find a satisfying answer. I try not to hop on the boomer hate train too much, but it's hard to look at what they were handed and not be angry. In the 60s and 70s, a college degree in anything from a decent school was enough to land you meaningful employment. That degree cost less than a third of what it does today. A decent size house in a metropolitan area could be had in your late 20s with a single income. Upward mobility in the workforce was basically unlimited, and thanks to the population bulge, boomers also were able to enact pretty much whatever political policies they wanted as an aggregate group. Yes, Vietnam really sucked, and the S&L crash wasn't fun, either, but how hard would it really have been to set aside 5% of income every year instead of plowing it into ever bigger houses, more cars, vacations, etc.? I'll give you one thing - financial planning education in the US is absolutely awful and continues to fail millions of people every year. Without that, all you see is mass commercialization encouraging people to spend more money, and an ever increasing need to keep up with the Joneses.

TerryADavis 11y ago

I live in some kind of CIA prison or mental health hospital. All my news media is stories about me. That's odd. I am the center of my world. When I had jobs they were fake, like the Truman show. They wanted me to crack the secure hash algorithm, so they could study me and put humanity lock in hell with no way out. You don't seriosuly expect me to get a job and get tortured again! LOL What kind of drugs are you on. God talks. You forget that. Are you serriosuly so stupid you do not know what a certified random number is. MIT made a artificial intellkigence to monitor mental patianence. I have been arguing with this entity for ten years. It is not programmed to understand what God talking means.

bryan11 11y ago

A comment heard from several friends: "Why save for retirement? One large medical expense can wipe out years of savings. You're better off enjoying life and spending what you earn while you can."

masterleep 11y ago
Wouldn't insurance be a better response?
- tzakrajs 11y ago
  I think the argument is that not even insurance can properly insulate you from this risk.
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EliRivers 11y ago
I'm not familiar with your system, so excuse my ignorance; can they do that? Take money from your pension scheme?
- deleted 11y ago
  [deleted]
- cookiecaper 11y ago
  No, they can't take money directly from the "pension scheme". Social Security cannot be garnished to satisfy judgments from private creditors, and in most cases, retirement accounts are privileged and will not be forcibly garnished or confiscated by the authorities to pay an outstanding judgment. Also in most cases, you can retain retirement accounts through a bankruptcy. This is a good reason to make sure a lot of your savings is allocated into designated retirement accounts and not just a standard savings account. Parent poster is commenting on the general expense of medicine, but for your typical retiree, it shouldn't be too out of control with Medicare.

EliRivers 11y ago

As an aside, it's sometimes really hard to get people to save for their retirement. My employer recently had another round of meetings, trying to encourage people not to opt-out and extolling the benefits. At the moment, to put 1000 GBP into a pension pot will lower an employee's take-home here about 350 GBP - the company is doubling it (up to 5% of the salary), the government is giving the tax back, and the company is doing it by salary sacrifice so your take-home isn't so badly affected (tax etc. goes down a bit, offsetting a little the money the employee puts into the pension). They can choose what to put it in; stocks, funds, cash, treasuries. They can move it between providers, it's theirs. The only restriction is they can't have it back until they're at retirement age (not even retired; just at the right age, I think). Even so, many people say they'll not bother, thanks. Some say they rather just save the money up themselves (costing them an incredible 1000 GBP for every 1000 GBP they save - three times the cost!). I know that putting it into a pension has risks and downsides, but given that the pension is basically tripling their money on day one, it seems incredible how many people aren't interested. Makes me fear that if people aren't interested even with (what seems to me) such a good deal, what are people without such sweeteners doing.

jacquesm 11y ago
The pension funds have lost a lot of trust, and that's not the fault of the employees.
georgeott 11y ago
This. Even just 5%, compounded over decades, can turn into A LOT of savings.
icefox 11y ago
At least in the states with the 401k, everywhere i have worked it has been an opt-in system so you had to convince people to do the minimum paperwork to get get "Free money" and think of the future. Only recently have a I started hearing that there can be the opposite and 401k can be opt-out (some law change perhaps?). This was also shown with Organ donation http://www.medicalnewstoday.com/articles/282905.php http://www.medicalnewstoday.com/articles/282905.php how much better opt-out could be. I am only guessing, but the percentage of people that are in the system even after those that opt-out is probably way higher than here where most has to opt-in. My sad example would be my 24 year old self didn't bother to bring the fully filled out 401k form upstairs to get the free money even though he vaguely understood it was the right thing to do. It was all set to go, I just had to carry the paperwork, but I didn't. Took a job change and another opportunity before I figured it out. In startup land this is the difference between a 1 step funnel and a zero step funnel. Which would your company like to have?

dovereconomics 11y ago

To be honest, I believe the trend is to only become worse. Every generation appears to become more hedonist and think less about retirement. Many of my friends(millennials) make six figures and barely save any money for retirement. Carpe diem is failing on people.

dudul 11y ago
"Carpe diem is failing on people." This is quite funny when you think that "Carpe Diem" originally means literally the opposite of what people use it for nowadays. The original quote is "carpe diem, quam minimum credula postero" i.e. "Seize the day, put very little trust in tomorrow (the future)". Meaning that one should do everything today to ensure a good future and be prepared.
shubhamjain 11y ago
> Every generation appears to become more hedonist and think less about retirement. Many of my friends(millennials) make six figures and barely save any money for retirement. Well, maybe I am too unimaginative but not being an American, I am curious where does all the money go. Reading Paul Graham's article about Ramen Profitability, I get the idea that a bare minimum lifestyle can burn as low as ~$1000 - 1500 / month [1]. Now a person is earning 6x this figure, how you don't end up saving something. Bars, clubs would only be fun to a certain extent. The only reasonable explanation I can think is, people buy everything that they don't need. [1]: http://www.paulgraham.com/ramenprofitable.html http://www.paulgraham.com/ramenprofitable.html
- dovereconomics 11y ago
  Unfortunately, most people don't have minimalist lives. With a 'humble' example: $3000/month SF/NYC apartment,$1000/month on clothing(specially bankers), $1500/month on food(no time to cook, so $50/day), $2000/month on entertainment($500/week), $1500/ month on a decent car +gas. That's already ~110k a year. It's really easy to go beyond that.
  - yummyfajitas 11y ago

deleted 11y ago

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maehwasu 11y ago

I save most of my income, and try to have a clear plan to spread spending evenly over my future, rather than just blowing money today (I'm 31). At the same time, given the drastically worse quality of life from age 65+ relative to ages 30-60, I'm not particularly interested in plans that enable/force me to save a lot of money for that stage. This isn't a simple case of hyberbolic discounting (overvaluing the present relative to the future)--I value those age 35-60 years quite highly and have been willing to sacrifice some immediate benefits to optimize them. I just think it's important to be realistic about the fact that certain periods of life are superior to others, and I'd rather stack my enjoyment in those periods.

jqm 11y ago

I've seen retirement make people unhappy. They become isolated and have to find ways to make connections with others. They are bored and start doing things like canvassing the neighborhood looking for minor HMA violations. Sometimes the lack of schedule and structure isn't the best for the health. Sometimes they feel useless. Of course this isn't all cases but I've seen it. People generally want to feel important and connected and a job often provides that. The problem is, as a persons mind and body starts to wear down there is less they can actually contribute. People talk about wisdom and experience and there is something to be said for that, but the world is changing so much faster than conceptual models which makes "wisdom" worth less than traditionally it has been. Besides, people start forgetting. So who actually hires old people? Who can afford too? It's hard enough to find good work when you are young and able. I don't know what the point is. I guess I hope to actually never retire but to be able to do what I like at a pace I'm able until death. (With all the vacations I want of course). Even were I unfathomably wealthy I would want to live like this. Because sitting around doing nothing sucks. So does playing golf every day.

jbuzbee 11y ago

The author of this article has an obvious bias or slant she's pushing and tries hard to paint a picture of doom and gloom and of evil corporations out to take advantage of employees, e.g. when talking of self-directed 401K retirement funds with company contributions: Workers got shafted But you know what? In many ways the opportunities that these retirement-age workers have sounds like an adventure. What's the alternative? Sitting at home watching soap-operas on TV or feeding pigeons at the park? No matter what, getting old sucks and you'll be popping Advil and aspirin for aches and pains. But companies like Amazon and the Park Service give these folks something to do and a way to keep contributing to society. At the start of the article May was out of money, living in a trailer with no electricity or water, contemplating suicide. But by the end, thanks to Amazon and other companies she had turned it around and she was having a ball. Obviously work at these companies can be hard or boring, but we get quotes like the following: Despite the boredom, May was grateful for one part of her job. “The best thing was the camaraderie,” she said. “I made friends there.” “Oh my God,” she said, explaining that it was a relief to be around people who she felt understood her. “The other day, for the first time in years and years, I felt joy. Joy! That’s better than being happy.” Before long, May was helping two of her neighbors... May told me she was doing fabulously. “My whole life has been ups and downs,” she said. “The happiest I’ve been is when I have very little.” Sounds to me like Amazon and the others were a god-send for May and her friends.

littletimmy 11y ago
What's wrong with watching soap-operas on TV? We have to do away with this moronic idea that people must be productive. A man's life is more than what he produces.
zzalpha 11y ago
Yeah! It's like homelessness! That's, like, free camping! Who would complain about free camping???
- jbuzbee 11y ago
  To repeat, from an active participant in this economy: for the first time in years and years, I felt joy. Joy!

roymurdock 11y ago

An economic perspective because the article didn't really touch on it: There are two main schemes for creating a pension system like social security: Pay-as-you-go (PAYGO) and Fully-funded. Under the PAYGO system, contributions from the current labor force are shared among retirees. Under the Fully-funded system, current earnings are collected as taxes from workers when they are young and invested by the government on their behalf, then paid out at retirement age. Social Security in the US is a PAYGO pension system. PAYGO works great when 1) the working-age population is increasing relative to the retiree-population (tax-base is increasing relative to tax-drain) and 2) worker productivity is increasing (more taxes extracted from tax-base). Fully-funded doesn't depend on population growth as the rate of return is generally determined by return on private investments, such as bonds and equities. There are benefits and drawbacks to both systems, but with the shift in employment dynamics (less young, more old), the slowdown in the growth rate of the US population, and observed 6-7% market returns over the long-run [1] it seems like it would be worth considering phasing out PAYGO and switching to a Fully-funded system, or a hybrid of the two. Here's more info for those who are interested (article is from 1998 but seems even more prescient now): http://www.frbsf.org/economic-research/publications/economic-letter/1998/march/on-the-transition-to-a-fully-funded-social-security-system/ http://www.frbsf.org/economic-research/publications/economic... [1] http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a1.neDMy8DEU http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a1.ne...

wazoox 11y ago
There is a common misconception in your description or the return rate on bonds and equity. At some point, you need to sell your bonds to get actual money to buy things. When many older people sell their bonds to earn a living, they flood the market and bond price crashes, and they're actually no better than using the pay-go system. in the end, retired people must live on the surplus created by those still working; the way you redistribute that surplus doesn't really change the equilibrium.
- yummyfajitas 11y ago
  This ignores the effect of buying bonds earlier in life. While people are working, they are reducing consumption and directing some of their productive capacity into investment. This raises future production, resulting in more future surplus to go around.

tomohawk 11y ago

When we bought our first house in the early 90s, we were the only people in the neighborhood who were not retired. In fact, everyone in the neighborhood had been retired longer than we had been alive (26+ years). They were living off of social security and savings, which was possible because their houses were paid off and because the social security taxes while they were working were much less (2%) than they are now (14%). So, they were getting a fantastic payoff from their social security 'investment' that no future generation can hope to get, while at the same time able to save more since much less was being skimmed off the top. It's too bad that our generation and later generations have not been given the same opportunity that they were, and instead face the ruinous 14% social security tax with the disincentive that it is likely that getting any benefits will probably be 'means tested' by the time we retire. Most of my peers that I've talked to don't expect to get any social security when they become of age. Socking 15% - 20% away after 14% is taken off the top is difficult, but the benefit from it will far surpass anything I'll ever receive from social security.

ac29 11y ago
I'm curious where you got that 14% number. The source I found says 6.2% [1], and 0% after 118.5k/year in wages. [1] http://www.irs.gov/taxtopics/tc751.html http://www.irs.gov/taxtopics/tc751.html
- lotsofpulp 11y ago
  From an employer's perspective, what an employee is paid depends on the total cost of employing that person, which includes the employer's half of the social security and Medicare tax. It's reasonable to state that also as a tax that the employee pays. From your link: The current tax rate for Social Security is 6.2% for the employer and 6.2% for the employee, or 12.4% total. The current rate for Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9% total.
  - evgen 11y ago
    It's reasonable to state that also as a tax that the employee pays. No it isn't. If your employer can spend less to employ you then they will keep the profit for themselves, not share it with you.

geggam 11y ago

Social Security is funded. politicians keep stealing the funds and putting IOU's in it. Not to mention if we quit capping the income paying into social security it would be in the black regardless of the theft. The thing that is evident here is the stock market is a method for the fleecing of the people by forcing them to invest or lose money saving.

cookiecaper 11y ago

Retirement is a very new system. The concept that people just quit working and let other people pay for their existence over the last 30 years of their life is an artifact of the industrial revolution, since by about 70 people couldn't reasonably tolerate factory work anymore.