SS was never meant to cover all of your retirement

[The Captain]

On several other threads people keep saying the government promised to take care of them in their old age and is now trying to "reneg" on the promise. Please read below:

www.ssa.gov/pubs/10024.html#a0=0

"But Social Security was never meant to be the only source of income for people when they retire. Social Security replaces about 40 percent of an average wage earner’s income after retiring, and most financial advisors say retirees will need 70 percent or more of pre-retirement earnings to live comfortably. To have a comfortable retirement, Americans need much more than just Social Security. They also need private pensions, savings and investments. "

SS is meant to be one of a three legged stool:

1. SS
2. Private Savings
3. Pension (if you don't have one you need to save more personally).

This has been communicated since the start of social security, who's main goal was to keep seniors out of abject poverty (which has been accomplished very successfully, seniors have the lowest rate of poverty in the nation). SS's goal was never to be the only source of retirement income.

So yes, I understand there are some cases where people do save and outlive their personal savings. However I will never back down from my position on people who don't have any personal savings when they retire and then try to play the "age card" when they can’t afford to support themselves in the lifestyle they expect.
Why do we find it acceptable to tell young people to get a roommate to share expenses if housing is expensive but that is not a consideration for seniors?
Why is it ok to tell younger people they should downsize if they can’t afford the house they are in, but if you are a senior it’s considered mean?

I am not generation bashing here (and I know some of you will say I am, just try to look at it objectively). One poster even said they would parade their elderly parent “as pathetically” as possible to win sympathy even though the law is against the elderly person. How is that right?
Consider that a significantly greater portion of the “greatest generation” and boomers after them had pensions and healthcare provided 100% by their employers then the generations after them. This was done with one working spouse while the mother stayed home to “raise the kids” even after they were in school full time.
Now, in many regions, you do need two working parents to support a family, pay health premiums/costs, and try to do a decent job of saving for retirement. The younger generations are supposed to cover their own expenses in addition to higher tax rates on a higher wage base than the previous generations ever paid? Let’s say we have one person who works for 42 years (20 to 62). They then retire and live to 75 while their spouse lives to 82. The man will receive SS for 13 years while the wife will get it for 20 years for a combined total of 33 years. Is it reasonable to believe working for 42 years and paying in less than an average of 15% (both employee and employer) of the total wages during that period will be enough to cover 33 years of retirement income AND medical expenses. Does anyone here really believe that?

We need to acknowledge that SS is a giant Ponzi scheme. You did NOT pay for your SS, you paid for your parents and grandparents. If you demand more in medical, prescription, or COLA benefits then you are demanding your children and grandchildren pay more because you did not plan or save enough.
It really is that simple.

[midjd]

I don't think anyone here has argued that SS was ever meant to be the SOLE support in your old age.

The concerns, from what I'm reading, are that in many cases pensions (often government pensions) were decreased or outright eliminated, and certain expenses (especially healthcare) rose much more quickly than could be anticipated.

When many of the Greatest Generation were born, there were no MRIs, no CT scans, no real cancer treatment, no organ transplants, and you usually keeled over from something semi-preventable in your 50s or 60s (if you didn't die in childbirth or from stepping on a rusty nail). I can see how it would be hard for people who grew up then to ever anticipate the advances that would be made, or what they'd cost.

Not giving them a free pass, by any means, but it's not always as simple as "they were too stupid/lazy to save."

Why do we find it acceptable to tell young people to get a roommate to share expenses if housing is expensive but that is not a consideration for seniors?
Why is it ok to tell younger people they should downsize if they can’t afford the house they are in, but if you are a senior it’s considered mean?

I've seen plenty of threads on here that recommended seniors downsize or move in with a relative or roommate to help cut costs.

[hannah27]

You've made some sweeping generalizations and you're not as objective as you claim to be. Quite a few Boomers are not even 55 yet and you can bet that many of them absolutely do NOT have pensions or health care that are 100% provided by their employers. Only a minority of Boomers ever had that sweet deal - and many of them have lost it in recent years anyway, thanks to the economic downturn.

Many Boomers are caught right now between caring for parents, children and grandchildren. I am one of them. It is very, very expensive and as a result, there is very little left to put away for retirement. That is my own personal reality and I know I'm not alone. I am fortunate that I do have an employer-sponsored pension plan but I pay into it and it's going to be a very small leg of my 3-legged stool.

I think that many young people today are confusing Boomers with the parents of Boomers. My parents were probably the last generation to enjoy nice pensions, full health care benefits and affordable health care, and overall retirement security - but only because my father had a very good career. For every one like him, there were many who scraped by their entire lives and there was no pension. There is no shortage of poor people right now in their 70's and older... not Boomers.

Tax rates right now are far lower than the ones I paid when I worked in my teens, 20's and 30's. I have been paying Social Security taxes since 1974. Had I had the option of investing that money privately, I would have absolutely no need today for monthly SS income. I would be very comfortable financially. Instead, I was forced to pay for other people's retirement. Why do you think that YOU shouldn't have to do the same, even if it costs you more in taxes?

Do I expect my children and grandchildren to pay more to fund SS for me and my generation? Yes, I absolutely do. It's a social contract that my generation honored and I expect younger generations to follow suit. Taxes will be higher. They may even get as high as the taxes that *we* had to pay for decades. Imagine that.

[Gardening Grandma]

On several other threads people keep saying the government promised to take care of them in their old age and is now trying to "reneg" on the promise.

Hmm. I must have missed those threads. I don't recall anyone saying the gov't promised to take care of them in their old age. Can you point me?


And I do know several seniors who do have roommates or live with their kids. They aren't looking for the gov't to take care of them. They ARE expecting the gov't to live up to its promises.

[midjd]

Consider that a significantly greater portion of the “greatest generation” and boomers after them had pensions and healthcare provided 100% by their employers then the generations after them. This was done with one working spouse while the mother stayed home to “raise the kids” even after they were in school full time.
Now, in many regions, you do need two working parents to support a family, pay health premiums/costs, and try to do a decent job of saving for retirement.

And let me beat Phil to it and point out that the standard of living during the time when one working spouse could support an entire family was much, much lower than it is today. The average home size during those times was about equal to the average garage size today. And families rarely had more than one vehicle, didn't send their kids to private school, didn't go on out-of-state vacations, etc.

You're not really comparing apples to oranges here. An average wage earner can easily support a family in much of the country if they're willing to live like the families of the 40s - 50s did... problem is, most people these days aren't.

And for what it's worth, I'm 28, and my one living grandparent does a fine job of supporting himself on his savings, so I don't really have a horse in this race. But I think your claims of objectivity are a little overstated. You obviously have some strong opinions on the issue.

[Opti]

Consider that a significantly greater portion of the “greatest generation” and boomers after them had pensions and healthcare provided 100% by their employers then the generations after them. This was done with one working spouse while the mother stayed home to “raise the kids” even after they were in school full time.

You need to do more research. The Boomers include those born from 1946 to 1964. Pensions were mostly non-existent for the latter half of the Boomers and if they existed at all, were phased our within the first few years of employment. (My actual experience) You might also want to research the rise of two income families as well. My Mom, pre-Boomer, went back to work when the youngest was in grade school or kindergarten.

I suppose us late Boomers did have more access to pensions than those after us, but for most of us it was just a few years of not qualifying into the pension with no other options initially. Nice job of taking a quote from the fence thread and implying it has anything to do with an SS discussion.

[Gardening Grandma]

And let me beat Phil to it and point out that the standard of living during the time when one working spouse could support an entire family was much, much lower than it is today. The average home size during those times was about equal to the average garage size today. And families rarely had more than one vehicle, didn't send their kids to private school, didn't go on out-of-state vacations, etc.

How many times do new posters come on here asking for help getting out of debt and/or making ends meet.

They don't want to live in a 2 or 3 bedroom house with only one bath, they MUST have their cell phones, they MUST have 2 (or more) vehicles, they NEED to keep their high speed internet and their cable package, their kids NEED to go to private schools, they DESERVE a nice vacation because they work so hard.....

[zibazinski]

My grandmother worked in the fields along with my mom and aunts in order for them to eat and have a roof over their heads. My grandfather worked for Salem Electric but it wasn't enough for them to live on. They lived in a 4 bedroom, 1 bath home with a 1 car detached garage. TINY house. When I see it now it makes me laugh because, to me, it was HUGE. Tiny bedrooms downstairs. Enough for a twin bed and a desk. Upper bedrooms had a full bed in each for all four of the girls to share, 2 to a room and 2 to a bed. Grandpa and grandma did not share a bedroom downstairs anymore because that's how more mouths to feed would happen! So they used the two tiny bedrooms. If there were any social safety nets, my grandparents would have been too proud to take them. You breed me, you feed me. They did.

[Deleted]

Aug 19, 2012 11:15:51 GMT -5 Gardening Grandma said:

And let me beat Phil to it and point out that the standard of living during the time when one working spouse could support an entire family was much, much lower than it is today. The average home size during those times was about equal to the average garage size today. And families rarely had more than one vehicle, didn't send their kids to private school, didn't go on out-of-state vacations, etc.

How many times do new posters come on here asking for help getting out of debt and/or making ends meet.

They don't want to live in a 2 or 3 bedroom house with only one bath, they MUST have their cell phones, they MUST have 2 (or more) vehicles, they NEED to keep their high speed internet and their cable package, their kids NEED to go to private schools, they DESERVE a nice vacation because they work so hard.....

I will point out that if you don't have a home phone, you very well may need a cell phone and if both adults are working in different direction, they may need two vehicles.

[Gardening Grandma]

I will point out that if you don't have a home phone, you very well may need a cell phone and if both adults are working in different direction, they may need two vehicles.

Except that the point is that it is possible for many working couples to have only one spouse working if they were willing to accept the standard of living that was common then. One working spouse only really needs one vehicle. And, generally, one landline (with no whistles & bells) is cheaper than a cell phone. Or they could use one cheap cell phone and not have a landline. How many families now insist that they need both?

[phil5185]

Now, in many regions, you do need two working parents to support a family, pay health premiums/costs, and try to do a decent job of saving for retirement.
And let me beat Phil to it and point out that the standard of living during the time when one working spouse could support an entire family

lol - yes, that comment caught my eye too. The main reason that "in many regions, you do need two working parents to support a family" is because the parents have re-defined "need" in the last 70 years. During the War, we (family of 5) had a rented 500 ft one-rm cottage, an out house, and we carried our water in a pail from a well across the driveway at the LL's house. We lived there for 7 yrs, moved in 1946.

That generation (the first to get SS) definitely followed the 3-legged stool theory, did without, and put-back savings all of their lives. The Boomer Gen was the first to lose sight of 'savings' and spent a larger % of earnings. And later generations built on that - 3 cars, mcmanions, etc, which locked in the requirement for ever larger earnings per person as well as two steady careers.

BTW, Ponzi took new client's investments and fraudulently mis-used it to pay high interest to older client's. It's based on exponential growth of new clients at each layer - in about 7 layers you run out of clients and the scam fails. In the case of SS, it was planned 'pass thru' system that the 'new' pay the 'old', not based on an exponential expansion of population.

An advantage of the 'pass thru' system is that you do not need a 40-year reserve savings account sitting idle (~$30 trillion) to draw SS pensions from. (I don't really want to pay the taxes to set up that $30 tril reserve savings account, do you?)

[midjd]

Aug 19, 2012 12:13:16 GMT -5 Gardening Grandma said:

I will point out that if you don't have a home phone, you very well may need a cell phone and if both adults are working in different direction, they may need two vehicles.

Except that the point is that it is possible for many working couples to have only one spouse working if they were willing to accept the standard of living that was common then. One working spouse only really needs one vehicle. And, generally, one landline (with no whistles & bells) is cheaper than a cell phone. Or they could use one cheap cell phone and not have a landline. How many families now insist that they need both?

Exactly.

My 87yo grandpa lives in a 600sf house on a half-acre lot. He has a landline, no cable. He has a decade-old car that he drives maybe 20 miles a week. He never uses the a/c during the summer and keeps the house at 65 in the winter. His only "splurges" are a monthly gym membership and his annual Marine reunion trip (and of course he stays in a Motel 6 and brings his own food ).

Compared to how he grew up, he feels he's living the dream. But compared to his kids'/grandkids' lifestyles, he's living in relative poverty. (Never mind that his NW is much higher than ours).

How many people aged 50 and younger are willing to live that type of lifestyle? Or do we feel we "deserve" more than that?

[midjd]

We do need to live into the time we were born into, you know. All this waxing poetic about the past is very fun (for some of you apparently), but not nearly as illuminating as you all seem to think it is.

You're right. And Captain is right. It is now impossible for anyone in the US to support a family on a single income while paying health costs and saving for retirement. The days when that was possible are over.

Wait...

[NastyWoman]

Aug 19, 2012 12:58:30 GMT -5 midjd said:

We do need to live into the time we were born into, you know. All this waxing poetic about the past is very fun (for some of you apparently), but not nearly as illuminating as you all seem to think it is.

You're right. And Captain is right. It is now impossible for anyone in the US to support a family on a single income while paying health costs and saving for retirement. The days when that was possible are over.

Wait...

I know quite a few couples who are still making this work in a VHCOLA. To be honest they are HI as well.

[Phoenix84]

"Why do we find it acceptable to tell young people to get a roommate to share expenses if housing is expensive but that is not a consideration for seniors?
Why is it ok to tell younger people they should downsize if they can’t afford the house they are in, but if you are a senior it’s considered mean?"

*shrugs* I don't know, you're preeching to the choir. I have no problem with seniors who don't save taking a massive lifestyle hit.

I also don't really feel sorry for the old people who I see working in low paying jobs. I figure either they have to in order to survive, or they want to do it to get out of the house.

I learned long ago age doesn't necessarily bring wisdom. I've meet 16 year olds who are wiser than some 60 year olds.

And I never understood all the bitching seniors do either. Even if they are under a fixed income, their poverty rate is waaaaay lower than any other age group. There's more assistance out there for seniors than any other age group. Sometimes seniors seem like the most spoiled, entitled group there is. Some seem to feel like because they managed to iive to a certain age, they "deserve" things, like retirement, and expect others to take care of them.

Fact, the younger you are the more likely you are to be in poverty, only when you're young it "builds character."

And yes, I realize there are plenty of responsible seniors out there, but as with every age group, there are a few bad apples.

[Deleted]

Mid said; "How many people aged 50 and younger are willing to live that type of lifestyle? Or do we feel we "deserve" more than that? "

Raises my hand. This is the thing, while I am "poor" and "lower income" I actually have a pretty nice quality of life. I don't need an expensive car, I only drive about 100-200 miles a month so my old gas-hog is actually cheaper in this case. My housing costs, minus maintenance, costs less than $2K a year. I have a $30 a month WalMart no contract cell.

I intentionally bought this property. It is paid-off. We have Prop 13 in CA and my property taxes for my $100+K property are only $700 a year, because I have a mobile home on land and they depreciate them each year for taxes. (Note, 90% of the people who live in my county live in mobiles, because building here is expensive and problematic due to the rural area. So, it does not have the stigma you might find in other places.) My fire insurance is high at about $1K a year, but we are in a very bad area for fire and have been evacuated twice for local fires in the last 10 years!

I honestly don't covet the idea of working for 40 years to save for retirement. Most people in my family die in their 60s or early 70s of cancer, Parkinsons, or suicide, so I am not really convinced I will live to be 100 or even 80. (I also smoked for 20 years of my life, so cancer wouldn't be a total surprise and I am not ever going to do a lot of treatments for any ailment.)

We bought a smaller 3 bedroom because it accommodates the teenagers for now but will be small enough to save on energy and all that going forward in life.

It's kinda funny to me. Many people in my county don't have internet or cell phones because they are not accessible in many of the more rural areas. We have only had cell service at my house for about 3 or 4 years. My internet is a radio antenna on my roof that hits an antenna on a local mountain via point-to-point connection. If we didn't have access to see the mountain from my roof, internet would be very costly and problematic here as well.

The only caveat I see to living the 1950s lifestyle is health care. The last statistic I saw said less than 20% of the people in my county have coverage other than Medicare or Medicaid. Many have nothing.

[TD2K]

Do I expect my children and grandchildren to pay more to fund SS for me and my generation? Yes, I absolutely do. It's a social contract that my generation honored and I expect younger generations to follow suit. Taxes will be higher. They may even get as high as the taxes that *we* had to pay for decades. Imagine that.

You may have been willing to do this because it appeared social security would be there for you since the amount of money it was taking in from payroll deductions way exceeded what it was paying out. That stopped being the case, I don't think workers today are willing to pay whatever it takes to keep your payout coming. To do that I think is incredibly selfish with the changing demographics of how many workers there are to every retiree.

The social security trust fund is there but to fund that money, the government has to take money out from other sources. That is what is finally doing to drive a discussion on what changes have to be made to social security. I think the 'pain' should be shared.

I've been working for 30 years and I remember hearing discussions how social security and the Canadian pension system were fundamentally flawed back then. Taxpayers didn't want to listen to what had to be changed and the politicians were willing to kick the problem down the road rather than facing the voters' wrath.

You can say 'but I held up my end of the agreement, the government now needs to do the same'. You might as well use the same argument with a real Ponzi scheme, it won't work in that case either.

[Deleted]

What few talk about is SS is eventually self correcting. You have to look on a long enough time line, but population trends will eventually right the ship. The problem is more the near future, say 20-30 years out, when we are extremely upside down.

As long as the government makes everyone continue to pay, it isn't a ponzi scheme.

[phil5185]

What few talk about is SS is eventually self correcting. You have to look on a long enough time line, but population trends will eventually right the ship. The problem is more the near future, say 20-30 years out, when we are extremely upside down.

Isn't it peculiar that we never hear that. Either it doesn't ring with sensationalism for the Talking Heads - or journalists don't do math? Actually, SS isn't hard to modulate - require Congress to adjust the 'age 66' number every 5 or 10 years to account for the shift of balance between payers & payees. Currently about $850B comes in, $875B goes out each yr. If the '66' was shifted to '68' it would balance. Maybe in 20 or 40 yrs it will be to 66 or 64.

Just today, in an Op Ed, a kid wrote in - 'all of us in HS & college know that we'll never get SS so why do we have to pay?" IMO it's a disservice to our kids for our politicians to fear-monger & the media to hype it. But, so goes the circle.

[Deleted]

Aug 19, 2012 16:33:45 GMT -5 @wxyz said:

The problem with SS is:

1. The government stole all the trust fund money. If that money was siting there with earnings it would cover the great majority of the baby boomer SS.

2. For political reasons the government keeps expanding the program with various benefits and programs.

3. People bitch about SS, yet right now they are paying into SS at a reduced rate due to the "payroll tax cuts" put into place by Obama. Talk about idiotic, a failing program where the government can not keep up with the benefits because they stole all the trust fund is now falling further behind due to the government lowering the tax rate to buy votes. (I would bet that most people when they hear the phrase "payroll tax cut" have no idea it is the SS contribution rate that was cut)

You are repeating a myth that the SS balance sheet was impacted by the payroll tax cut. What actually happened is the federal government paid the difference through issuing more debt.

[Deleted]

IMO it's a disservice to our kids for our politicians to fear-monger & the media to hype it. But, so goes the circle.

Truer words have never been spoken.

[Deleted]

Aug 19, 2012 16:52:07 GMT -5 @wxyz said:

MMC

Yeah, right. They just put more of the "special" treasuries into SS like they did to steal all the trust funds. It is a total scam, as usual. Accounting gimmicks do not equal real money down the road.

I hear you. It is a subtle difference, but an important one.

[mmhmm]

Aug 19, 2012 10:55:01 GMT -5 Gardening Grandma said:

On several other threads people keep saying the government promised to take care of them in their old age and is now trying to "reneg" on the promise.

Hmm. I must have missed those threads. I don't recall anyone saying the gov't promised to take care of them in their old age. Can you point me?


And I do know several seniors who do have roommates or live with their kids. They aren't looking for the gov't to take care of them. They ARE expecting the gov't to live up to its promises.

I missed those threads, as well, and I at least glance through just about every thread. I have a feeling everybody missed those threads.

[resolution]

Aug 19, 2012 17:42:45 GMT -5 mmhmm said:

Aug 19, 2012 10:55:01 GMT -5 Gardening Grandma said:

On several other threads people keep saying the government promised to take care of them in their old age and is now trying to "reneg" on the promise.

Hmm. I must have missed those threads. I don't recall anyone saying the gov't promised to take care of them in their old age. Can you point me?


And I do know several seniors who do have roommates or live with their kids. They aren't looking for the gov't to take care of them. They ARE expecting the gov't to live up to its promises.

I missed those threads, as well, and I at least glance through just about every thread. I have a feeling everybody missed those threads.

I saw those comments in another thread. I am not sure if they were on the fence thread or one of the spin-offs, but they were there and not made up by the OP. However it is misleading to say that this thread isn't generational bashing.

The elderly that are retiring today have paid into the system for their lifetime. If the money had been handled properly it would be there for them. I don't understand why some feel it is selfish to expect to receive the promised benefits from the system that they paid into. I sometimes wonder how the people that want to cut social security for the elderly would feel if the next generation behind them decided to dip into their 401k plans and IRAs.

[Deleted]

Aug 19, 2012 18:28:13 GMT -5 @hootieman said:

The things that will help are as follows:
1. The government must stop stealing it.
2. People will be paid lower benefit amounts.
3. The age to draw Social Security will have to be raised.
4. You gonna die.

The government didn't steal it. Another myth. It would be stealing if the government ever defaulted on the bonds that SS holds.

Raising the age is stupid to me. People aren't working longer, they are living longer. Cover it with increased premiums.

[morrisr2d2]

Default is very likely, explicitly or implicitly.

[Deleted]

Aug 19, 2012 19:17:15 GMT -5 morrisr2d2 said:

Default is very likely, explicitly or implicitly.

Funny, I don't see it likely at all.

[Deleted]

Aug 19, 2012 18:16:20 GMT -5 resolution said:

The elderly that are retiring today have paid into the system for their lifetime. If the money had been handled properly it would be there for them. I don't understand why some feel it is selfish to expect to receive the promised benefits from the system that they paid into. I sometimes wonder how the people that want to cut social security for the elderly would feel if the next generation behind them decided to dip into their 401k plans and IRAs.

Uh, I am paying into social security right now, I have been for the past 27 years and will be paying into it for the next two decades. Based on current predictions by a myriad of finance experts, SS will be gone and defaulted by the time I am ready to collect on it, so your comment is inherently false.

Thanks to my wife's financial advice we are making sure we have plenty of money put aside to retire on and if, by some miracle, SS is still solvent it will be a nice 'bonus', but if it's not, we will be able to live comfortably.

[busymom]

Plenty of folks from my parent's generation ("the greatest generation") worked for companies that had pension plans. My Dad had one, and now that my Mom is a widow, I thank God all the time that she's got that pension money, in addition to social security.


Neither DH nor I have ever worked at a company that offerred a pension plan. Sure, we've got IRA's & annuities, but I feel we are at a big disadvantage compared to my parent's generation. (And yes, DH & I are at the tail end of the baby boom generation.) I only am aware of one friend who has the traditional pension, so you can bet that any Social Security is going to be important. I've been paying, at least part-time, since I was age 15, so yes, I do expect to get something out of all of these years of paying in. It's not a "gift" from the government. It's a contract the government made with me. If I had thought after all of these years of paying in that they weren't going to give something back, I would've invested that money elsewhere.

[mrsdutt]

I wonder who pays the people who work for the SS administration? Payroll has to account for - at least - millions. Do the funds come out of our contributions or does another entity pay for them? Would anybody know the answer to this?