9 ms·

When I hear senior citizens on fixed incomes, I assume we're talking about people who have left the workforce, permanently. Unlike almost everyone else currentl

by brbsix 10y ago

When I hear senior citizens on fixed incomes, I assume we're talking about people who have left the workforce, permanently. Unlike almost everyone else currently in the workforce, there is absolutely no expectation of any future change in income. In this regard, it does not seem silly at all.

sedachv 10y ago
> Unlike almost everyone else currently in the workforce, there is absolutely no expectation of any future change in income. Social Security is adjusted for inflation: https://www.ssa.gov/news/cola/ https://www.ssa.gov/news/cola/ Likewise bond yields and stock prices will change with inflation/deflation. Any retirement scheme not adjusted for inflation is a rip-off at best and a scam at worst.
- paulsutter 10y ago
  Matching inflation would be no change in income, which is exactly why they do it.
- KKKKkkkk1 10y ago
  If bond yields adjust to rising inflation, that means their prices go down and their coupons stay fixed. For stocks, prices follow the prices of bonds, and earnings take a hit, so you also a get hit on the dividends side. So it's not a good story for retirees.
- loeg 10y ago
  National inflation doesn't cover local cost-of-living variation.
  - ghaff 10y ago
    No, but if you take out housing that's a big part of the variation. And, historically, it was assumed that many on a "fixed income" would own their houses and/or move to a lower COLA area (e.g. the stereotypical retire to Florida or, more recently, the Southwest). Property taxes are a potential wildcard which is one reason why increases are often capped--which isn't popular with the "they should just move out" crowd.
    - loeg 10y ago
      How do you just ignore housing, though? Housing is probably the single most important expense and the most likely not to track national inflation. That's most of what people "on a fixed income" are at risk from.
- dragonwriter 10y ago
  > Social Security is adjusted for inflation: Which makes it fixed in real terms. > Any retirement scheme not adjusted for inflation is a rip-off at best and a scam at worst. Fixed (in nominal terms) annuities are not-infrequently used as retirement vehicles (and many pensions are either fixed or have less-than-full COLAs.)
  - sedachv 10y ago
    > Which makes it fixed in real terms. So where is the problem? Inflation adjusted income has barely increased at all for anyone but the top 20% of earners since the mid-1960s: http://www.advisorperspectives.com/dshort/updates/Household-Income-Distribution.php http://www.advisorperspectives.com/dshort/updates/Household-... > Fixed (in nominal terms) annuities are not-infrequently used as retirement vehicles Which is why annuities are almost always a rip-off.
    - dragonwriter 10y ago
      > So where is the problem? Whether or not its a "problem", that is an explanation of why it is an accurate description of the scenario faced by the group in question, and a useful label. > Inflation adjusted income has barely increased at all for anyone but the top 20% of earners since the mid-1960s Its barely increased for the averages of segments of the income distribution. That doesn't mean individuals don't see income growth over time (and even move between, e.g., income quintiles), it just means that (except in the top ranges) the overall distribution isn't moving up. That's an important issue, to be sure, but its a different issue that individuals on fixed incomes and the impacts specific policies, etc., may have on the, distinct from the rest of the population which makes it useful to identify and discuss them as a group with a label.

by brbsix 10y ago

sedachv 10y ago

> Unlike almost everyone else currently in the workforce, there is absolutely no expectation of any future change in income. Social Security is adjusted for inflation: https://www.ssa.gov/news/cola/ https://www.ssa.gov/news/cola/ Likewise bond yields and stock prices will change with inflation/deflation. Any retirement scheme not adjusted for inflation is a rip-off at best and a scam at worst.

paulsutter 10y ago
Matching inflation would be no change in income, which is exactly why they do it.
KKKKkkkk1 10y ago
If bond yields adjust to rising inflation, that means their prices go down and their coupons stay fixed. For stocks, prices follow the prices of bonds, and earnings take a hit, so you also a get hit on the dividends side. So it's not a good story for retirees.
loeg 10y ago
National inflation doesn't cover local cost-of-living variation.
- ghaff 10y ago
  No, but if you take out housing that's a big part of the variation. And, historically, it was assumed that many on a "fixed income" would own their houses and/or move to a lower COLA area (e.g. the stereotypical retire to Florida or, more recently, the Southwest). Property taxes are a potential wildcard which is one reason why increases are often capped--which isn't popular with the "they should just move out" crowd.
  - loeg 10y ago
    How do you just ignore housing, though? Housing is probably the single most important expense and the most likely not to track national inflation. That's most of what people "on a fixed income" are at risk from.
dragonwriter 10y ago
> Social Security is adjusted for inflation: Which makes it fixed in real terms. > Any retirement scheme not adjusted for inflation is a rip-off at best and a scam at worst. Fixed (in nominal terms) annuities are not-infrequently used as retirement vehicles (and many pensions are either fixed or have less-than-full COLAs.)
- sedachv 10y ago
  > Which makes it fixed in real terms. So where is the problem? Inflation adjusted income has barely increased at all for anyone but the top 20% of earners since the mid-1960s: http://www.advisorperspectives.com/dshort/updates/Household-Income-Distribution.php http://www.advisorperspectives.com/dshort/updates/Household-... > Fixed (in nominal terms) annuities are not-infrequently used as retirement vehicles Which is why annuities are almost always a rip-off.
  - dragonwriter 10y ago
    > So where is the problem? Whether or not its a "problem", that is an explanation of why it is an accurate description of the scenario faced by the group in question, and a useful label. > Inflation adjusted income has barely increased at all for anyone but the top 20% of earners since the mid-1960s Its barely increased for the averages of segments of the income distribution. That doesn't mean individuals don't see income growth over time (and even move between, e.g., income quintiles), it just means that (except in the top ranges) the overall distribution isn't moving up. That's an important issue, to be sure, but its a different issue that individuals on fixed incomes and the impacts specific policies, etc., may have on the, distinct from the rest of the population which makes it useful to identify and discuss them as a group with a label.