Peak Retirement ???

[cx3]

http://www.zerohedge.com/news/2013-10-15/guest-post-are-we-approaching-peak-retirement

I'm aware of peak housing,peak oil,etc. Have to admit, never heard of peak retirement. If I had to sum up the article,future traditional expecting retirees are pretty much going to be out of luck.

[try2bfrugal]

http://www.zerohedge.com/news/2013-10-15/guest-post-are-we-approaching-peak-retirement

I'm aware of peak housing,peak oil,etc. Have to admit, never heard of peak retirement. If I had to sum up the article,future traditional expecting retirees are pretty much going to be out of luck.

The article brings up good points, but living in a global economy with people all over the world buying stocks in U.S. based global companies, and foreign investors buying houses in the U.S., I am not sure how much of it will come true.

But the answer on the SS front is obvious - people are living longer and the SS age needs to be pushed back before too long to still make the numbers work.

[SteveinMN]

people are living longer and the SS age needs to be pushed back before too long to still make the numbers work.
Or means-tested. But I don't think even the Tea Party Republicans want to touch that third rail.

[try2bfrugal]

Or means-tested. But I don't think even the Tea Party Republicans want to touch that third rail.

Only 2% of SS recipients have income greater than 100K, so if they did income testing it isn't going to do much to save the program unless they start to implement deep cuts into the middle class. Plus a lot of people would just stop saving, stop working part time or give money to their kids rather than work or save extra and not come out ahead financially.

I think the age change is what they will end up doing because that saves money on every recipient, not just the top percent income-wise.

[iris lilies]

Only 2% of SS recipients have income greater than 100K, so if they did income testing it isn't going to do much to save the program unless they start to implement deep cuts into the middle class. Plus a lot of people would just stop saving, stop working part time or give money to their kids rather than work or save extra and not come out ahead financially.

I think the age change is what they will end up doing because that saves money on every recipient, not just the top percent income-wise.

I've always said means testing needs to be implemented as well, but I don't know how much that would save the SS system and if it is as you say, then there's not much to mine there.

[SteveinMN]

Only 2% of SS recipients have income greater than 100K, so if they did income testing it isn't going to do much to save the program unless they start to implement deep cuts into the middle class. Plus a lot of people would just stop saving, stop working part time or give money to their kids rather than work or save extra and not come out ahead financially.
100K is a nice high bar. If they set it lower, I'm sure the percentage changes. But I'm also sure that your second sentence would prove true, too. One of the great problems SS has is that people have come to think of it as their own personal government bank account (now there's a government program people like!) rather than the tax it really is.

[Alan]

.... One of the great problems SS has is that people have come to think of it as their own personal government bank account (now there's a government program people like!) rather than the tax it really is.
Or perhaps they remember it as the Old-Age, Survivors, and Disability Insurance program (emphasis mine) that they've paid premiums on for their entire working life.

[try2bfrugal]

100K is a nice high bar. If they set it lower, I'm sure the percentage changes. But I'm also sure that your second sentence would prove true, too. One of the great problems SS has is that people have come to think of it as their own personal government bank account (now there's a government program people like!) rather than the tax it really is.

Realistically, if you had a job at 66 making $24K a year and that disqualified you from $24K in SS benefits, are you really going to keep working if you are basically getting taxed 100% on your job income? Or even if you made $48K, but that disqualified you from $24K in SS benefits, plus you had to pay SS and income taxes, are you really going to keep working in retirement if you are going to get taxed over 50% on what you make?

[cx3]

I think we are nearing the end of the American Dream as we know it.
Keep your eye on the geopolitical actions concerning the US dollar.I think the time frame for the end can be tied to the US dollar. When the dollar loses its world reserve currency status it will be game over.China,looking after it's own interests, is leading the charge to do just that.It will happen sooner rather than later.
I think any retirement planning must take into consideration that the not so future America may be totally different from the one we know. All of this is just my opinion,please don't construe as advice.
I recently read an article by a guy who lived through the Soviet collapse in early 90's. He was comparing how well prepared Russia was for such an event to how the US would fare during a similar event.In a nutshell,the US not at all prepared for such a collapse. There would be much pain and suffering.Here is the link if anyone wants to read.
http://madconomist.com/what-if-us-collapses-soviet-collapse-lessons-every-american-needs-to-know

[catherine]

I recently read an article by a guy who lived through the Soviet collapse in early 90's. He was comparing how well prepared Russia was for such an event to how the US would fare during a similar event.In a nutshell,the US not at all prepared for such a collapse. There would be much pain and suffering.Here is the link if anyone wants to read.
http://madconomist.com/what-if-us-collapses-soviet-collapse-lessons-every-american-needs-to-know

Interesting observations--and as he points out, not scientific, nor based on any expertise as an economist or sociologist or politician or activist, but interesting nonetheless.

I liked Slide 27 the best. As someone extremely interested in new economic models, I enjoyed reading this.

[SteveinMN]

Or perhaps they remember it as the Old-Age, Survivors, and Disability Insurance program (emphasis mine) that they've paid premiums on for their entire working life.
Insurance should not be anyone's bank account. Sounds like it's time to (re)define "old-age". They've been chipping away at "survivors" and "disability" for years....

[creaker]

I think we are nearing the end of the American Dream as we know it.
Keep your eye on the geopolitical actions concerning the US dollar.I think the time frame for the end can be tied to the US dollar. When the dollar loses its world reserve currency status it will be game over.China,looking after it's own interests, is leading the charge to do just that.It will happen sooner rather than later.
I think any retirement planning must take into consideration that the not so future America may be totally different from the one we know. All of this is just my opinion,please don't construe as advice.
I recently read an article by a guy who lived through the Soviet collapse in early 90's. He was comparing how well prepared Russia was for such an event to how the US would fare during a similar event.In a nutshell,the US not at all prepared for such a collapse. There would be much pain and suffering.Here is the link if anyone wants to read.
http://madconomist.com/what-if-us-collapses-soviet-collapse-lessons-every-american-needs-to-know

It really wasn't that long - post WWII until recently? If you include Medicare in that dream, only since the mid-60's. It will likely have a shorter run than the Soviets did.

[ApatheticNoMore]

Talk about politics one shouldn't think about because they only make one angry. The baby boomers will make sure all raising the age etc. only (or at least mostly) applies to generations after them.

[Yossarian]

100K is a nice high bar. If they set it lower, I'm sure the percentage changes. But I'm also sure that your second sentence would prove true, too. One of the great problems SS has is that people have come to think of it as their own personal government bank account (now there's a government program people like!) rather than the tax it really is.

I think it's the other way. It's recently that people have tried to shift the thinking about the program to being as a tax.


The Design of the Original Social Security Act

The new social insurance program the Committee on Economic Security (CES) was designing in 1934 was different than welfare in that it was a contributory program in which workers and their employers paid for the cost of the benefits--with the government's role being that of the fund's administrator, rather than its payer.

http://www.ssa.gov/history/genrev.html

[SteveinMN]

Because people live so much longer than they used to and that has never been addressed by the SSA. Then there's the cap on one's contribution above a certain salary level. I'm not saying SS is the perfect system. But it's been unattended for so long because there's no way to change it enough without goring a lot of voting oxen. And, as confrontational as politics is these days, that's nothing politicians want to touch.

[dmc]

I still have a few years, but I'm seriously thinking about taking SS at 62. I don't need it, but I paid in the max for a lot of years and I'd like to get something back. I'll just take it early and invest it. My understanding is you need to make around 7% to come out even. Thats assuming those of us that saved and planned are not penalized by the spendthrifts.

[ApatheticNoMore]

Because people live so much longer than they used to and that has never been addressed by the SSA.

they live longer statisically but a surprising number still decide to take SS at 62, and it's not mostly rich people, it tends actually to be those on the lower end of the income scale - the better off people wait until full retirement age (which is, of course, wise financially). They physically can't work anymore or noone will hire. The noone will hire of course is something I believe in, most companies I've worked at skew young. Few foggies allowed. So yea I figure that's pretty much the way it is, I'll get older and less hirable in time. Has anyone looked at say 50-62 year old unemployment? (and then tell me they should all be working even past that age) How many people at 60 are just hoping to survive until 62, maybe via unemployment, until they can collect because noone will hire them? When unemployed in the heart of the Great Recession everyone truly long term unemployed (like 2 years and stuff!) in the unemployment suport group was older, the younger people mostly found work eventually (even if it took 6 months). You'd need a major movement to abolish age discrimination with harsh penalties before having all the foggies work even begins to make sense (which of course is the right thing to do (preventing discrimination), but of course then there's a young person that doesn't get a job).

[Spartana]

I won't get SS even though I paid into it for about 12 plus years - most while in the armed forces. After that I worked as a public employee for the State of Calif and quit paying into SS and paid into a public pension plan instead. While technically I can get a small SS benefit based on my contributions, they will be reduced by 2/3rds of my public pension amount so will be basicly zero anyways. I did pay into medicare all the years I worked though so will get that once I'm 65.

[Spartana]

Also, didn't they already do some age changes to SS? My statement says I couldn't collect full benefits until I was 66 or 67. Calif made changes to it's public employee pension system recently and changed retirerment age from 55 to 67 (or from age 50 to age 63 for public safety employees like me who gets a pension at 50 - at reduced pension) . This is for new hires only though so didn't effect my pension.

[jp1]

Yes, they made a modest adjustment to the SS age. I can't collect my full benefit until age 67. Hopefully I will be financially able to retire sooner, but thankfully I have a desk job so I will hopefully at least be physically able to work that long if necessary. Whether or not I can find/keep a job to that age is, I suppose, another story. But I still have a while to go before I have to start worrying about that since I'm only 45.

One of my coworkers, age 55, just surprised everyone last month by retiring with 2 weeks notice and moving to Costa Rica. He and his husband were able to do so because the home they owned in San Francisco had gone up in value quite a lot and they walked away with a 7 figure profit. I think the article is basically right that as time goes by the real estate market is going to suffer. Not mentioned, in addition to the problems it suggested, is that plenty of people are hoping to do just what my coworker did. Sell and move to a smaller home in a cheaper location. As the over-sized baby boom generation does this en masse who exactly is going to buy the homes? Surely not young families today. They simply don't have the financial ability to do so as incomes are falling and more and more young adults are saddled with large amounts of student loan debt. Millions of mcmansions will end up with no buyers.

[try2bfrugal]

Yes, they made a modest adjustment to the SS age. I can't collect my full benefit until age 67. Hopefully I will be financially able to retire sooner, but thankfully I have a desk job so I will hopefully at least be physically able to work that long if necessary. Whether or not I can find/keep a job to that age is, I suppose, another story. But I still have a while to go before I have to start worrying about that since I'm only 45.

One of my coworkers, age 55, just surprised everyone last month by retiring with 2 weeks notice and moving to Costa Rica. He and his husband were able to do so because the home they owned in San Francisco had gone up in value quite a lot and they walked away with a 7 figure profit. I think the article is basically right that as time goes by the real estate market is going to suffer. Not mentioned, in addition to the problems it suggested, is that plenty of people are hoping to do just what my coworker did. Sell and move to a smaller home in a cheaper location. As the over-sized baby boom generation does this en masse who exactly is going to buy the homes? Surely not young families today. They simply don't have the financial ability to do so as incomes are falling and more and more young adults are saddled with large amounts of student loan debt. Millions of mcmansions will end up with no buyers.

I think you have a lot of good points and that is also what I see as a likely scenario for the future in most many locations in the U.S. In the San Francisco and other parts of coastal California, there have been many foreign buyers, especially from Asia, plus the dot.com industry seems to be in the boom part of the perpetual boom and bust cycle so it is hard to know what will happen with housing prices. They seem crazy high, but London home prices seem to stay crazy high because it is a desirable locations for many international real estate buyers, so maybe the same factors will keep real estate prices high in the metro areas in states like California and New York.

[SteveinMN]

they live longer statisically but a surprising number still decide to take SS at 62, and it's not mostly rich people, it tends actually to be those on the lower end of the income scale - the better off people wait until full retirement age (which is, of course, wise financially). They physically can't work anymore or noone will hire.
I believe we're seeing (and will see much more) of the results of kicking cans down the road. Though it's starting to get fixed now, the inability of many people to pay for proper medical care and the entrenchment of agribusiness in American medical practices (subsidizing specific crops, SAD, etc.) mean people are not as healthy as they could be, making it less likely that they can work at a high level later in life. And age discrimination is a real issue in the U.S. (a culture which reveres youth [that has money] in the first place). Couple the perceptions of an older worker with a couple of years away from some rapidly-changing lines of work and hireability goes out the window. Be unemployed long enough and the people who do the official count stop counting you as unemployed, masking the problem. I don't know as raising the lower limit for SS eligibility is palatable politically, but for many people it is the life preserver in the water. It certainly does lengthen the amount of time the typical "senior" collects, which makes it more likely that person will collect more than the person paid and maybe more than the actuaries expected in establishing the SS tax rate.

I believe JP1 also makes a very valid point about the future of an economy built around baby boomers. I can see far-flung areas of some really nice homes bulldozed because upcoming buyers have little interest or financial ability to buy a McMansion 40 miles away from where they work (for as long as they work in that particular location; businesses are far more mobile than they used to be, as well). Will we need the number of school buildings we have now? Can they be converted readily for businesses or as places to live? Attrition (or, maybe more correctly, lack of consideration of it) is going to hurt an economy built on more More MORE.

[cx3]

I believe we're seeing (and will see much more) of the results of kicking cans down the road. Though it's starting to get fixed now,

Steve would you provide some evidence that "it's starting to get fixed now". I really would like to believe that,but I haven't seen anything that supports your statement.

[SteveinMN]

Steve would you provide some evidence that "it's starting to get fixed now".
The italics in my original statement are important. IMHO Obamacare is a step toward what we should have (universal health care). At least that finally is starting to roll. It's a lot harder now for insurance companies to cherry-pick their customers to avoid the ones who are already sick (for whatever reason).

We also have an opportunity (note the use of italics again) with a new farm bill to recast agricultural welfare subsidies so they're not so tilted to the large-scale processing of lower-quality foods (yes, I know agriculture is pwned by big money but this is the best chance we've had in years and likely will have for several more). I think there's growing awareness of "food deserts" in urban areas and the epidemic of Type 2 diabetes partially as a result of the cheap and widespread availability of highly-processed low-nutrient foods at the expense of whole, less-processed foods.

There's not a lot of evidence. But it takes a long time to turn around the ship of state and I am hopeful that we are taking the first steps in being more conscious about a problem that will only get bigger as the Baby Boomer cohort ages.

[softweave]

You'd need a major movement to abolish age discrimination with harsh penalties before having all the foggies work even begins to make sense (which of course is the right thing to do (preventing discrimination), but of course then there's a young person that doesn't get a job).

What the heck are foggies? Did you mean fogies as in old fogies? I am 60+ and not foggy -- at least most days.

[ApatheticNoMore]

What the heck are foggies? Did you mean fogies as in old fogies? I am 60+ and not foggy -- at least most days.

Yea old fogies - a bit offensive :). But I was trying to parallel that the view corporate America seems to have of older poeple is kinda offensive, that they're old fogies, lets hire someone younger. At any rate no workplace I have worked has given me great confidence in my prospects for employment when I'm older (unless one is talking self-employment which is a different matter I suppose).

[softweave]

Yea old fogies - a bit offensive :). But I was trying to parallel that the view corporate America seems to have of older poeple is kinda offensive, that they're old fogies, lets hire someone younger. At any rate no workplace I have worked has given me great confidence in my prospects for employment when I'm older (unless one is talking self-employment which is a different matter I suppose).

It's more than a bit offensive. Paralleling common disparaging views of "others" does nothing to counteract or dispel them.

[cx3]

Softweave,I noticed your rather new here with 22 posts.If your offended by the use of the word fogies,then I highly suggest you avoid the public policy forum.Just saying.:)

[softweave]

Softweave,I noticed your rather new here with 22 posts.If your offended by the use of the word fogies,then I highly suggest you avoid the public policy forum.Just saying.:)

cx3 I'm not new here. I've been a member of the simple living forum for 8 years. I am not interested in debating public policy. I do disagree with any assumption that casual agist remarks are okay. My survival may depend on overcoming such views here and in the work place.

[Zoebird]

I would agree with Steve in part. I think we are progressing toward a concept of not kicking the can down the road, but I also agree that the US is going to change, and that it's going to be OK. I really believe that. Perhaps I'm just an optimist. Perhaps I have to be.

In the end, one does the best one can with what one knows and can control. For me, a lot of the public policy stuff is so far beyond my actual control, that it has very little impact on my daily life. Does that mean I'm disengaged? No. It just means that I dno't let myself get all flapped about that over which I have very little control.

I do have control over some things -- my family life, my work life, how I conduct myself. I am learning to grow veg, to forage, to fish. I'm investing in a high-end water filter (berkey) because the watershed where we will be living has run off from fracking in it, according to news reports. I'm making connections in my community. I'm saving up for a live-income property so that we can have some stability. I'm building my business and saving as much as I can. I'm doing the very best that I can.

But beyond that, I vote, I read, I write letters to local to national leaders toward what I think is important. I hope that they vote the way I want; they usually don't. I don't have much power over it, so I try not to let it get to me.

And I know the US will change. In buddhism, they say the one thing that you can count on is change. So, you know, you ahve to get comfortable with that.

[ApatheticNoMore]

but I also agree that the US is going to change, and that it's going to be OK.

I could see good parts in the entire collapse of the U.S. economy (the U.S. rules the world very badly in most ways), I just worry we're going to continue to get only the bad part of changes without even the parts that may be redeeming, because that seems to have been what's happening (the banks were saved, ordinary people were not).


I do have control over some things -- my family life, my work life, how I conduct myself. I am learning to grow veg, to forage, to fish. I'm investing in a high-end water filter (berkey) because the watershed where we will be living has run off from fracking in it, according to news reports. I'm making connections in my community.

I've done all those that were applicable (well I could focus more on work stuff), well applicable considering I live in an apartment without real gardening space, not 100 acres somewhere and I'm not going to live on 100 acres somewhere. I'm bored with it! :) It can't even save me, and I'm not sure it can save anyone else in that case. Bored might be too strong a word, I'll always be a believer in planting seeds (of change blah blah) in the hope of making things better, part of me is deeply utopian (utopian to the nth degree), but much more of me knows you can aim for utopia but you can't expect it, so at turns skeptical and cynical, in fact it's a very high order to expect it indeed, and what is more realistic to expect is more of the same (which is things getting worse). Because despite all that the economy seems to be getting worse for most people. I guess I really do see most of that stuff as a UTOPIAN project that may or may not bear fruit (yes maybe the next stage of economic development - steady state? will be better if we get there), rather than exactly being a practical one.


I'm building my business and saving as much as I can. I'm doing the very best that I can.

I throw a whole lot in financial markets I don't trust whatsoever (stocks, bonds, currencies, whatever), but it quite literally is the best option I see, just keep throwing money in.


But beyond that, I vote, I read, I write letters to local to national leaders toward what I think is important. I hope that they vote the way I want; they usually don't. I don't have much power over it, so I try not to let it get to me.

I do when I care enough, that we were preparing for the mass indiscriminate slaughter we call war in yet another country, Syria, I protested.


And I know the US will change. In buddhism, they say the one thing that you can count on is change. So, you know, you ahve to get comfortable with that.

I'll never be ok with the baby boomers enjoying their retirement and making sure future generations have none if that's what they do. The thought of me working these depressing jobs forever and not even being able to retire despite having paid into dozens of so called things that were supposed to help me retire my whole life (including SS) is the most depressing thing I can imagine. I hope those boomers can't sleep at night if they do that and cut our SS! :) (by saying raise the age until we're nearly dead or something, I'm quite sure I won't be collecting SS when moldering in the grave) Then again I know also that I probably won't even be hireable for those jobs when I'm old so well it wouldn't surprise me at all to live out my older years in complete poverty. And I doubt poverty will have gotten any more pleasant than it ever was.