Seniors can't afford Soylent Green, must eat Old Roy instead....

[thebaldguy]

This is just the tip of the iceberg.

There are millions of Americans who have saved nothing for retirement like the person in the article. They never put a penny aside for a rainy day or retirement. Everybody thinks that the government will have to provide for all needs and wants. In the next few decades, we will see millions of people who will have no retirement income other than Social Security.

[Gewehr98]

There are some who wisely put money aside, and watched their 401(k) turn into a 201(k), also. 

[Balog]

This is just the tip of the iceberg.

There are millions of Americans who have saved nothing for retirement like the person in the article. They never put a penny aside for a rainy day or retirement. Everybody thinks that the government will have to provide for all needs and wants. In the next few decades, we will see millions of people who will have no retirement income other than Social Security.

This. Right or wrong, most people dislike starving. Smart or stupid, many many boomers put their trust in fed.gov and squandered their money on toys and living beyond their means. To quote my favorite Pinocchio line, "You've had your fun, now you pay."

Sadly, even the smart and responsible people had so much of their income siphoned off at gun point that what they saved may not be enough.

In the end, many millions of people are going to call in debts fed.gov can't pay. When that happens, I am not optimistic about the stability of our political and economic system.

[Lee]

While SS is a problem, the costs pale in comparison to health care.  I'd hazard to guess that one visit to the hospital by most Senior Citizens costs taxpayers more than a year of SS. if anyone thinks we don't already have socialized medicine, I've got a bridge I'd like to sell.  Maybe I could retire then.

[Balog]

While SS is a problem, the costs pale in comparison to health care.  I'd hazard to guess that one visit to the hospital by most Senior Citizens costs taxpayers more than a year of SS. if anyone thinks we don't already have socialized medicine, I've got a bridge I'd like to sell.  Maybe I could retire then.

This too.

[HankB]

Inflation is supposed to be nonexistent, so there's no COLA this year for social security, right?

If that's the case, then why did Congress just find it necessary to vote itself an 8% increase in their office operating budget allowance?

[Headless Thompson Gunner]

I doubt necessity played any part in the recent congressional raise.

[MillCreek]

There are some who wisely put money aside, and watched their 401(k) turn into a 201(k), also. 

Amen to that.  Plus I was out of work for five months this year and my new job pays 48% less than my old job.  Fortunately I have always lived well within my means so I am doing OK. 

[DustinD]

Who is this fictitious "they" you speak of?  Because as far as I know, when I started watching my SS deductions going into Uncle Sam's coffers at the tender age of 18, I was of the opinion that SS was going to be safe, secure, and happy come age 65 when I could start using it.  I had no real desire to change it, because it wasn't broken at the time. I'd wager the majority of us thought it was secure and solvent as we plodded along with our McLives.  Fast-forward another 30 years, and it's a different story, but just like everybody else, I've already committed a big chunk of change, and I kinda doubt Uncle Sam will give it back to me because I'm pissed at how they managed the fund.  Am I one of those "they" who failed to see the oncoming train wreck?

It is a pyramid scheme that does not take advantage of compound interest over time, it was bound to fail from the beginning. I am 27, and I have been campaigning against it since I was about 18 years old. To be fair I have had the internet since before then and thus a bit more easy access to information that is important to my future. I have also had people tell me in junior high and high school that it would probably not be there for me when I retire.

There is nothing that has happened in the last x number of decades that could not have been seen in the beginning. Of course more and more people would get on SS as they got older, and thus benefits would have to be adjusted downward. It is not like we just recently discovered that 18 year olds eventually morph into 65 year olds, mortality and birth rates are easily predicted and calculated as well.

The lady in the story got what she asked for with SS, at the expense of people like myself who will get nothing. She has no right to complain, she could have figured out at any point in her life what SS was going to give her without much trouble at all. It is no one's fault but hers (and maybe Fistful's) that she neglected to even once in her life do the math for something that is so important to her and then plan accordingly.  

[HankB]

Another thing about your SS "contributions" . . . above a certain, fairly low base level, the additional taxes you and your employer pay add very little to your expected benefit when you retire . . . e.g., someone who pays 2x the tax today as the next guy, will not get anything near 2x the benefit when he retires.

And the taxation of benefits that Reagan started and Clinton expanded? Guess what - that doesn't go back into the SS trust fund - it's just general revenue. That's a way of .gov pilfering SS funds without even having to leave an IOU behind. 

[Viking]

Another thing about your SS "contributions" . . . above a certain, fairly low base level, the additional taxes you and your employer pay add very little to your expected benefit when you retire . . . e.g., someone who pays 2x the tax today as the next guy, will not get anything near 2x the benefit when he retires.

And the taxation of benefits that Reagan started and Clinton expanded? Guess what - that doesn't go back into the SS trust fund - it's just general revenue. That's a way of .gov pilfering SS funds without even having to leave an IOU behind. 

Well, they have the most guns and manpower, so they are obviously in their right to do so!

[RevDisk]

Well, they have the most guns and manpower, so they are obviously in their right to do so!

Unfortunately, in 99% of human history, might does make right. 


Interestingly, in this case, it is not not merely the police and army that provides might.  Legally speaking, the US government has formed the opinion that it enjoys sovereign immunity.  In other words, it cannot be sued unless it consents to said lawsuit.  Generously, the Federal Tort Claims Act and the Tucker Act waive some specific instances.  Having read the 11th amendment, I'm not sure how it grants sovereign immunity or how that notion is squared with "petition the Government for a redress of grievances".   I suppose one could consider the ability to file a lawsuit as an act of petitioning, even if you will automatically lose that petition in any area where sovereign immunity is not waved. 

[thebaldguy]

This. Right or wrong, most people dislike starving. Smart or stupid, many many boomers put their trust in fed.gov and squandered their money on toys and living beyond their means. To quote my favorite Pinocchio line, "You've had your fun, now you pay."

Sadly, even the smart and responsible people had so much of their income siphoned off at gun point that what they saved may not be enough.

In the end, many millions of people are going to call in debts fed.gov can't pay. When that happens, I am not optimistic about the stability of our political and economic system.

I tragically know many folks about to retire who have nothing saved. I'm serious. Many of these folks worked good jobs earning good money. They spent everything they earned and lived beyond their means for decades. Many are retiring soon and are not even close to paying off their house or their debt. These folks will be coming out of the woodwork demanding that the government fund their retirement lifestyle.

[Balog]

I tragically know many folks about to retire who have nothing saved. I'm serious. Many of these folks worked good jobs earning good money. They spent everything they earned and lived beyond their means for decades. Many are retiring soon and are not even close to paying off their house or their debt. These folks will be coming out of the woodwork demanding that the government fund their retirement lifestyle.

Debt can be a good thing. But it's generally not, and when it becomes a lifestyle you're pretty much hosed.

[Gowen]

Debt can be a good thing. But it's generally not, and when it becomes a lifestyle you're pretty much hosed.

To quote Dave Ramsey, "I can find nowhere in the Bible where God has used debt to bless someone."  To the contrary, the Bible goes on to say, "the borrower is servant (aka slave) to the lender."  The only thing I am in debt on is my house and I have come to realize that I spent all those years and money on something that I don't like anymore.  Don't spend your life chasing things.  You spend all that time away from the people who love you, doing something that nine times out of ten you hate doing.  It's never worth it.

[Gewehr98]

I have come to realize that I spent all those years and money on something that I don't like anymore.

You have an ex-wife, too?   

[Sawdust]

You have an ex-wife, too?   

Bwahahahahahaha 

Unfortunately...I can relate...

Sawdust

[MillCreek]

From an article in today's (10/21/09) USAToday:

http://www.usatoday.com/money/perfi/retirement/2009-10-19-401k-savings-retirement_N.htm


Others — nearly one-third of American households — don't have any retirement savings, according to a McKinsey & Co. report. And only 4% of middle-income married couples who don't have a pension and are nearing retirement are likely to have enough money to last their lifetime, according to a new report by Ernst & Young.

I am surprised that only 4% of middle-income married couples have enough retirement savings to last their lifetimes.  I am surprised it is that low.

[Balog]

From an article in today's (10/21/09) USAToday:

http://www.usatoday.com/money/perfi/retirement/2009-10-19-401k-savings-retirement_N.htm


Others — nearly one-third of American households — don't have any retirement savings, according to a McKinsey & Co. report. And only 4% of middle-income married couples who don't have a pension and are nearing retirement are likely to have enough money to last their lifetime, according to a new report by Ernst & Young.

I am surprised that only 4% of middle-income married couples have enough retirement savings to last their lifetimes.  I am surprised it is that low.

I'm not. Our culture demands perpetual car payments, credit card payments etc. Being in debt is an accepted lifestyle these days. :(

To quote Dave Ramsey, "I can find nowhere in the Bible where God has used debt to bless someone."  To the contrary, the Bible goes on to say, "the borrower is servant (aka slave) to the lender."  The only thing I am in debt on is my house and I have come to realize that I spent all those years and money on something that I don't like anymore.  Don't spend your life chasing things.  You spend all that time away from the people who love you, doing something that nine times out of ten you hate doing.  It's never worth it.

Which is still being in debt. But it's a good thing, because if no one went into debt for a house the market would crash way way harder than our current lil "bubble." Debt for depreciating assets is a bad idea, and most non-depreciating one as well, to be honest.

[mtnbkr]

Which is still being in debt.

Technically, yes, but you have to live somewhere. You either pay rent forever, or a mortgage payment for some period of time.  If you never pay off the mortgage (keep refinancing, etc), are you any worse off than if you rent for your entire life?

Granted, my goal is to pay my mortgage off before I retire, but I'm not bothered by the mere fact I have a mortgage.  If I didn't have one at this point in my life, I'd probably be renting, which means a monthly payment to someone else.

Chris

[Gowen]

I'm not. Our culture demands perpetual car payments, credit card payments etc. Being in debt is an accepted lifestyle these days. :(

Which is still being in debt. But it's a good thing, because if no one went into debt for a house the market would crash way way harder than our current lil "bubble." Debt for depreciating assets is a bad idea, and most non-depreciating one as well, to be honest.

Looking back, I don't necessarily agree.  18 years ago, before my wife and I got house hungry, we lived in a mobile home, $95/mo space rent with only electricity and propane for expenses.  If we had been smart, we would have socked ton of money away for a few years and paid cash for a home.  As it stands right now, if we had put the money away that we paid into our mortgage, we would have saved as much or more money than our house is currently worth.  The only benefit to having my house I can see is that we know what we both want and living in the city isn't part of it. Our next house is going to be purchased without debt.

You have an ex-wife, too?   

LOL, nope.  Just celebrated 20th anniversary with my wife.

[Balog]

I think you missed my point mtnbkr. Scanr started by saying all debt is always bad, then saying he had a mortgage. I merely used that to point out that not all debt is always bad.

Looking back, I don't necessarily agree.  18 years ago, before my wife and I got house hungry, we lived in a mobile home, $95/mo space rent with only electricity and propane for expenses.  If we had been smart, we would have socked ton of money away for a few years and paid cash for a home.  As it stands right now, if we had put the money away that we paid into our mortgage, we would have saved as much or more money than our house is currently worth.  The only benefit to having my house I can see is that we know what we both want and living in the city isn't part of it. Our next house is going to be purchased without debt.

It's hard to find a non-tiny/scary/seedy place where I live for <$1k a month. And in the places with super low rents, the average salaries are generally too low to be able to accumulate a house payment in a few years. If you can live with family or get a sweetheart deal while both people work, and you live in a place with crappy real estate values then sure save up and pay cash. But even if I put every dollar of my salary into saving for a house and had zero expenses, it'd take me over 4 years to afford a small place. And that's not factoring in the increasing house prices.

[Headless Thompson Gunner]

It'd be tough to save up to buy a house in 5 years, but it'd be entirely doable if you're willing to save for a decade or more.  It's a matter of letting compound interest work its magic for you.  If you do that, interest pays a big chunk of your house for you, instead of you having to pay for the house plus an even bigger pile of interest.  You'd come out way ahead.

Not saying it's for everyone, or that it's right or wrong.  Just saying it has some serious advantages for those willing to make the sacrifice.

[Balog]

It'd be tough to save up to buy a house in 5 years, but it'd be entirely doable if you're willing to save for a decade or more.  It's a matter of letting compound interest work its magic for you.  If you do that, interest pays a big chunk of your house for you, instead of you having to pay for the house plus an even bigger pile of interest.  You'd come out way ahead.

Not saying it's for everyone, or that it's right or wrong.  Just saying it has some serious advantages for those willing to make the sacrifice.

I thought about that. Still tough for average income ($50kish) when houses are ~$220-250k, but yeah it's doable. I also considered that having kids would throw a major monkey wrench into those austere plans. I might be willing to rent for a decade, but there is no way in hell I'm putting off kids that long. No comments on others who make their own choices, but it's not worth it to me.

Also, one needs to factor in the rent one pays and subtract that from the compounding interest.

[MillCreek]

It'd be tough to save up to buy a house in 5 years, but it'd be entirely doable if you're willing to save for a decade or more.  It's a matter of letting compound interest work its magic for you.  If you do that, interest pays a big chunk of your house for you, instead of you having to pay for the house plus an even bigger pile of interest.  You'd come out way ahead.

At this time, it is appropriate to say what compound interest?  With the current rates being paid on savings accounts, CDs or money markets by banks that are not at risk of imminent failure, I almost think it would be better to put it under the mattress.