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This study is very poorly interpreted. It specifically excludes government and corporate pensions (including social security) from its calculation. Consider:

This study is very poorly interpreted. It specifically excludes government and corporate pensions (including social security) from its calculation. Consider: 1. Avg income (all ages) in the US is ~50k/yr 2. Avg social security is ~25k/yr (mostly untaxed) So including social security in the calculation HALVES the annual burn rate, more than doubling your runway because of greater interest compounding on savings. Additionally, many baby boomers retiring today have some kind of additional corporate pension from their early careers in the 70s and 80s and these are all government guaranteed, even if the issuing firm goes bankrupt. That probably adds another 5-10k/yr per person on avg. And finally, most retirees today own houses that have massively appreciated since purchase. Given very favorable laws on cap gains from primary residence sales + low interest rates on borrowing against a home, most retirees probably have a nice additional cushion to draw from. Overall, this article is FUD. Unless there's a massive economic recession/depression in the near future, most retirees will be absolutely fine. The poorest will struggle, but probably no more than they have since Reaganomics kicked in 40years ago.

xur17 7y ago
> these are all government guaranteed, even if the issuing firm goes bankrupt. That probably adds another 5-10k/yr per person on avg. I didn't realize the government guaranteed pensions, so I did some research. [0] indicates that companies can optionally participate in PBGC, which guarantees at least a portion of a worker's pension. [0] https://www.thebalance.com/is-my-pension-safe-2388790 https://www.thebalance.com/is-my-pension-safe-2388790
BeetleB 7y ago
>This study is very poorly interpreted. It specifically excludes government and corporate pensions (including social security) from its calculation. It excludes corporate defined benefits pensions. I suspect the people on corporate defined benefits is fairly low at this point. Source of the social security number? I have a salary above average, and the SS web site estimates a $24K/year for me (today's dollars). Lower income folks should get less.
- b_tterc_p 7y ago
  There’s still going to be quite a few people with them now. The accrued benefits don’t go away just because the company switches it’s policy.
- Retric 7y ago
  Social security benefits are extremely non-linear using from 90% down to 15% of income in each range. It also only considers a limited set of your highest years earnings, which can mess with early estimates. The minimum benefit for someone who worked 30 years making minimum wage is $872.50 per month, 10.5k/year The maximum benefit is $2,861 per month or 35k/year, for someone who made 140+k for 35 years.
  - mbbutler 7y ago
    The benefit is linear but the distribution of people getting it is not evenly distributed around the middle of the benefit range. Therefore the average benefit is not just the mean of the min and max SS benefits.
    - Retric 7y ago
      The existence of bend points in the formula means it’s non linear. https://www.ssa.gov/oact/cola/bendpoints.html https://www.ssa.gov/oact/cola/bendpoints.html PIA formula For an individual who first becomes eligible for old-age insurance benefits or disability insurance benefits in 2019, or who dies in 2019 before becoming eligible for benefits, his/her PIA will be the sum of: (a) 90 percent of the first $926 of his/her average indexed monthly earnings, plus (b) 32 percent of his/her average indexed monthly earnings over $926 and through $5,583, plus (c) 15 percent of his/her average indexed monthly earnings over $5,583. Note the c is capped 11,075 US$ per month as income above that is not taxed.
      - mbbutler 7y ago
        Oh, I'm sorry. I misread your first claim. I thought you said the benefit WAS linear.
mbbutler 7y ago
> 2. Avg social security is ~25k/yr (mostly untaxed) Where are you getting that number? One source I found said that the average SS benefit in January 2019 was $1461/month which works out to $17.5k/year. [0] This seems to agree with the SSA's snapshot from May. [1] [0] https://money.usnews.com/money/retirement/social-security/articles/2018-08-20/how-much-you-will-get-from-social-security https://money.usnews.com/money/retirement/social-security/ar... [1] https://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/ https://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/

xur17 7y ago

> these are all government guaranteed, even if the issuing firm goes bankrupt. That probably adds another 5-10k/yr per person on avg. I didn't realize the government guaranteed pensions, so I did some research. [0] indicates that companies can optionally participate in PBGC, which guarantees at least a portion of a worker's pension. [0] https://www.thebalance.com/is-my-pension-safe-2388790 https://www.thebalance.com/is-my-pension-safe-2388790

BeetleB 7y ago

>This study is very poorly interpreted. It specifically excludes government and corporate pensions (including social security) from its calculation. It excludes corporate defined benefits pensions. I suspect the people on corporate defined benefits is fairly low at this point. Source of the social security number? I have a salary above average, and the SS web site estimates a $24K/year for me (today's dollars). Lower income folks should get less.

b_tterc_p 7y ago
There’s still going to be quite a few people with them now. The accrued benefits don’t go away just because the company switches it’s policy.
Retric 7y ago
Social security benefits are extremely non-linear using from 90% down to 15% of income in each range. It also only considers a limited set of your highest years earnings, which can mess with early estimates. The minimum benefit for someone who worked 30 years making minimum wage is $872.50 per month, 10.5k/year The maximum benefit is $2,861 per month or 35k/year, for someone who made 140+k for 35 years.
- mbbutler 7y ago
  The benefit is linear but the distribution of people getting it is not evenly distributed around the middle of the benefit range. Therefore the average benefit is not just the mean of the min and max SS benefits.
  - Retric 7y ago
    The existence of bend points in the formula means it’s non linear. https://www.ssa.gov/oact/cola/bendpoints.html https://www.ssa.gov/oact/cola/bendpoints.html PIA formula For an individual who first becomes eligible for old-age insurance benefits or disability insurance benefits in 2019, or who dies in 2019 before becoming eligible for benefits, his/her PIA will be the sum of: (a) 90 percent of the first $926 of his/her average indexed monthly earnings, plus (b) 32 percent of his/her average indexed monthly earnings over $926 and through $5,583, plus (c) 15 percent of his/her average indexed monthly earnings over $5,583. Note the c is capped 11,075 US$ per month as income above that is not taxed.
    - mbbutler 7y ago
      Oh, I'm sorry. I misread your first claim. I thought you said the benefit WAS linear.

mbbutler 7y ago

> 2. Avg social security is ~25k/yr (mostly untaxed) Where are you getting that number? One source I found said that the average SS benefit in January 2019 was $1461/month which works out to $17.5k/year. [0] This seems to agree with the SSA's snapshot from May. [1] [0] https://money.usnews.com/money/retirement/social-security/articles/2018-08-20/how-much-you-will-get-from-social-security https://money.usnews.com/money/retirement/social-security/ar... [1] https://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/ https://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/