A new report by the Employee Benefit Research Institute suggests that many Americans will have a pretty brief retirement since they will have to work beyond the average life expectancy of a citizen before they can afford to retire. The report entitled “The Impact of Deferring Retirement Age on Retirement Income Adequacy,” says that a large percentage of Americans will have to work into their 70s and 80s to afford basis costs of living.
For those Americans earning between $11,700 and $31,200, they will need to work till age 76 to have a 50% chance of covering basic expenses in retirement. Those citizens earning between $31,200 and $72,500 will need to work to age 72. You have highest income quartile (making more than $72,500), you can still retire at 65.
The AARP Public Policy Institute report, “Family Income Sources for Older People, 2009″ notes the growing importance on earnings to support older Americans:
The share of aggregate family earnings income increased steadily, from 26.4 percent of total family income in 1990 to 35.0 percent of total family income in 2009 (an increase of
9.2 percentage points or 34.8 percent). This change indicates that the earnings are becoming a more important income source for older persons’ families.
In the meantime, despite reports that the $61 trillion U.S. debt amounts to to $534,000 per household, the Obama Administration will spend $750 million on just our latest war in Libya.
Here is the EGRI report: EBRI_IB_06-2011_No358_Defr-Ret
Here is the AARP report: fs224-economic
Source: MarketWatch
Jonathan Turley
-New York Governor Mario Cuomo, June 9, 2011
Mike S wrote “I love it when via ignorance the press, the politicians and the public like you decry the benefits achieved by civil servants, the ignorance warms the cockles of my heart. I worked in NYC civil service for 32 years, before retiring at age 55.
… I deserve my pension and I deserve the health care benefits I receive.”
Let’s read what your hometown NYTimes has to say about your pension on the editorial page today:
Mike, I do not know all of the specifics of the work you did for the city. I do respect your views here, and think your comments that touch on masculinity and gender relations are particularly thoughtful, informed, and wise, though we fundamentally disagree on many broader philosophical points.
That said, the notion of any pension – never mind a near six-figure lifetime pension – is totally unheard of in today’s non-union private sector. At the same time, we have public employees retiring with 80, 90, 110% of their peak compensation for life. That makes a retiree at 55 (as you were) a kind of lottery winner: the value of a typical $90K pension plus COLA’s and health benefits is $3M or more. How many private sector workers have $3M in their 401K? How many are retiring at 49? 55? 62? Very, very few. The job you did is not worth the compensation you are receiving.
Here’s a database of $100K+ public sector pension recipients in California, counting the big three state pension plans. The public is being robbed.
http://www.californiansforpensionreform.com/database.asp?vttable=calpers
Joeey LaRusso, the difference between the idealized, averaged stock market returns you posted and SS is that the stock market (and all of the inventive, high risk, virtually unregulated instruments available to investors) can be skewed and manipulated at virtually any step of the process to enrich some while screwing others while SS is a more secure investment. When people are paying into an investment that will allow them to survive economically after their productive life in the open market is over, security is a major factor, the major factor in consideration.
W=c,
As Marcus Aurelius was wont to say, “I seek only the truth by which no man was ever harmed.” One lives to be of service.
Buddha Is Laughing
1, June 10, 2011 at 2:14 pm
—————————–
Thank you Buddha, for saying it. Another bullseye IMHO.
“What happens when the government goes broke and doesn’t honor the paper IOU you have on file with them?”
If government made the elite and corporations pay their fair share of taxes and stopped fighting unnecesary wars it wouldn’t be in debt. This debt comes from the Bush years which saw an unneeded tax cut for the rich and the starting of two wars that ultimately had no purpose, except to benefit the rich, big oil and defense contractors. As usual faux conservatives and faux libertarians performing analingus on the upper classes, want to fund their mistakes on the backs of the rest of us, unaware as you are that your turn to get screwed will also come.
“Is $700K enough if you retire at 49? Better throw some more COLA’s in there.”
Puzzling,
I love it when via ignorance the press, the politicians and the public like you decry the benefits achieved by civil servants, the ignorance warms the cockles of my heart. I worked in NYC civil service for 32 years, before retiring at age 55. I had a salary of $52,000 a year. When I retired I was the person in charge of 300+
people, in 12 offices citywide. In my last 3 years I directed a project which literally saved NYC $150,000,000 in penalties from the FDA. I have an Ivy League Masters and five year post graduate training as a psychotherapist. The top commissioner of my Agency, with more than 20,000 employees and about a $20 billion dollar budget got paid $145,000 yearly. We were all living it up, weren’t we?
My first 10 years as a caseworker I worked alone in every high crime area of NYC, day and night. Areas where the police wouldn’t go without a partner and backup. Areas never enterred by the editorial writers, or people like yourself, but areas that needed services which I supplied. By the time I retired I had had 3 heart attacks, some of it from the stresses of the jobs I did.
I deserve my pension and I deserve the health care benefits I receive. I did work that was needed and I worked hard at it, as did most of my cohort. What I didn’t mention was that each new Mayoral Administration would bring with it political supporters, with no background in the field, who would get twice as much pay, more benefits and do a third of the work. These jobs, because of their fancy titles and prestige, were stepping stones into greater success.
Whether people like you realize or not Civil Service is an honorable profession and was instituted to try to keep cronyism out of government. However, politicians love to use it as a whipping boy and the public, represented by people with your limited knowledge and skewed mindset eat it up. At the same time I was making my $50,000 grand a year and average salesman in my wife’s company, yes she had to work full time also to support our family’s modest lifestyle, made about $200,000 without any education. I suppose from your standpoint that was deserved because it was a business enterprise. Guess what, you put the same spotlight on business and you’ll find overpaid executives, some tanking their companies, others committing crimes and yet making out like bandits. What is it you do and how hard do the people around you work?
Roco, my employer and I had a contract – or at least I was led to believe we had a contract. I work for them for X years and they pay me Y dollars a month when I retire. I made my plans and funded my retirement based on that contract. Then, when it is too late for me to alter those plans effectively the company pulled out of the contract, gave all my money & many others in 8 figure bonuses to the CEO & his friends and a 10 figure bonus to the masters of the universe.
If I were a lesser man I would wish you as much luck, I would be as insensitive and ignorant of the real lives of other people as say . . . oh . . . you are.
OS,
Medicare/Medicaid? He’d give them some leeches, of course.
OMFG! Buy her some seeds is a solution? She has seeds that people give her. She is still just barely hanging on. How you gonna feed her when the temperature gets down to about ten degrees? Or keep her warm if the price of energy keeps going up. What about when she cannot take care of the tiny garden plot. Chickens? How the hell is she going to keep chickens? And even if she had chickens, she could not afford feed for them. She lives in town and has no fence. Her old car broke and she got rid of it several years ago because she could not afford to fix it, nor buy gas for it. She depends on the charity of neighbors to take her to the store once in a while if she has a few dollars.
Her health is failing and what happens when she cannot even tend her tomato plants?
Also, that lady is multiplied by thousands of people who want to work and are able to work, but THERE ARE NO JOBS!
This started out as a discussion about investing money. What do you tell those folks about “building a retirement portfolio,” sans Social Security and Medicare/Medicaid?
That may be one of the most ridiculous things you’ve ever written.
Considering almost everything you write is ridiculous, that’s quite an accomplishment.
Joeey LaRusso:
What happens when the government goes broke and doesn’t honor the paper IOU you have on file with them?
SS is not mandatory from what I understand, the government can shut it down whenever they want on their terms.
People made it before public welfare was commonly available. I imagine they would make it if it wasn’t commonly available.
Otteray Scribe:
Well I would assume those people would need some help from federal, state and local governments and private charity.
Just for the record a bag of seeds isn’t that much money. I have left overs from my garden as do many other people. Maybe we should start a program where people can donate their left over seeds and it goes to people who cannot afford to buy their own.
If you give me the ladies address I will send her my left over seeds. She could still plant and have something in September or early October.
How come the local government doesn’t have a plan like that?
Same goes for chickens. They arent all that much to buy and keep. And wal mart offers very reduced prices for hundreds of common drugs.
A hundred dollars worth of chicken feed could probably keep 3 or 4 chickens for close to 6 months. You could raise enough on this site alone to keep that woman in chickens for a year. If you send me a local post office address I will send you 50 bucks for the woman to buy a few chickens. Maybe some other people could send a few bucks for feed.
With 3 or 4 chickens she could have eggs almost every day.
Maybe you could identify 1 person a month we could figure out how to help in some small way to make to their lives a little easier, I am all for it. Maybe someone needs a couple of goats for milk, or a sheep for wool, some pigs, etc. Young animals don’t cost that much and would provide many years of service to a family.
http://www.dailykos.com/story/2011/06/10/983933/-Republican-temper-tantrum-over-Elizabeth-Warren-and-the-CFPBcontinues?via=blog_1
Roco,
It seems to me that you are advocating for individual investing accounts over Social Security. I don’t think it is a safer way to provide security for people.
To your point about average growth in the stock market- I think there are some issues with that idea. One issue I have is that average growth is not necessarily what you get. What happens if I invest, at age thirty, into a company that goes bankrupt when I am 55? My mistake for investing in them, right? Now what if there are thirty million other people who did the same thing I did. Can we truly afford to allow millions of people to gamble their future financial safety? I think it is pretty risky. Mutual funds can lose value as well. What happens to large companies if their well-being contributes to the safety of millions of Americans? Would the government allow companies to fail if it meant a hundred million people lost a lot of money and had to work an extra decade to make ends meet? Wouldn’t that create a lot of moral hazard?
I guess we could just let people take ‘personal responsibility’ but it seems inconceivable that society wouldn’t, eventually and when enough citizens are affected, have government step in and provide a system whereby the financial security of all Americans was guaranteed (at some minimum level) by law.
Maybe they would call it Social Security.
So I think dismantling SS will not work very well. I think the added money will be taken out of the economy in the form of bonus payments to CEO’s who will promptly destroy their companies (after selling everything of value to overseas investors) and the US will have to borrow even more money to take care of the baby-boomers.
Finally I think that if the stock market was able to reliably provide for the American people it would have been tried a long time ago. Our politicians are lazy and stupid- stock market gambling would be the easiest system for them- they would get even larger bribes from companies and they wouldn’t have to administer a program.
FFLEO – That’s agreed.
That some find a simple description of reality to be “scare words” shows you how far we have to go before most will even acknowledge the situation we’re in.
We think government has the power to legitimize living beyond our means in perpetuity. Politicians create endless new ponzi schemes and entitlements with no manner or intention to pay for them, creating ever more dependency on government and exchanging tomorrow’s false promise for power today.
As Tony put it on a prior thread, the average American family has borrowed its way to prosperity. With thinking like that, it’s no wonder so few care about the cost of wars, or whether the next two generations will be debt slaves for their lifetimes.
Meant $80/day before deductions. About $300-$320/week, depending on hours worked.
Puzzling,
Your comment is exaxctly why I asked Tony C. if the read the linked article. Prof T was merely quoting–accurately so–the facts in the article..
I forgot to add the lack of education and opportunity part. Thanks. Also, some folks just are not really capable of more than menial minimum wage jobs due to learning handicaps of one kind or another. Teabaggers and the self-satisfied have no clue that the jobs they encourage to be sent overseas adds to the unemployment rate here. Not everyone can be a white collar worker, and the lower end blue collar jobs are disappearing. I talk with many people and most of the working poor definitely do not choose to be in that box.
Roco and other like-minded critics of the social support system might like to try working as a roofer’s helper. That is, if you are lucky enough to find a job with the construction industry being in the toilet. You will get maybe eight dollars an hour, tops. You get to work with hot tar on a hot black roof, when the outside temperature is pushing three digits and the humidity is over 85%. You will work about ten hours a day, thus making $80.00 a week before deductions. You have the expense of keeping your old beater Ford Ranger going and buy gas at $3.45/gallon to get to work. And it needs a new set of brakes you cannot afford even if you install them yourself. If you get sick, the employer is not providing health insurance for his employees because he says the government should stay out of his business. At any rate, he does not keep an employee longer than three months so he does not have to pay benefits. If you do get sick and miss a day of work, that is a firing offense, because you can be replaced so easily.
Let’s see you do it, Roco. Oh yeah. This was about setting aside enough each month to retire on. My bad. What could I have been thinking.
And, as the USA Today article states, the only ones who don’t have to worry about retirement are public sector workers:
Is $700K enough if you retire at 49? Better throw some more COLA’s in there.