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"On a fixed income"?
Old 08-13-2007, 09:33 AM   #1
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"On a fixed income"?

When I was younger and living in Florida, it was impossible to read the newspaper or watch the news without an elderly person bemoaning that they were "on a fixed income." I always thought it was funny for them to say this since a fixed income doesn't necessarily equate to a low income for those people who were fortunate enough back in the day to get pensions of 90% or more of their former income. And since I was just working a j*b that paid a fixed amount and didn't offer bonuses for achievement, I felt that my income was just as fixed since I wasn't on this career trajectory where I would be promoted and earn a higher salary.

I vowed to never use this phrase---and I'm proud to say that I've been FIREd a year and haven't. And although I live exclusively on investments, it wouldn't even be accurate to say that it's fixed---my portfolio has gone up and down. And in terms of teh implied living on less in retirement, I'm actually earning more from my investments than I did from my salary. Does anyone here view their FIRE finances as "fixed income" and feel that it's limiting? Or is that just something from the previous generation?
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Old 08-13-2007, 09:43 AM   #2
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Salary here with no bonuses...isn't that a "fixed" income? Or since I could get off my duff and really push/peddle Mary Kay products for a quick buck, it does not count? Or since I have determined a certain percentage of my "fixed" salary goes into savings, the remainder is "fixed"?
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Old 08-13-2007, 10:04 AM   #3
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I too cringe when I here the "fixed income" phrase in relation to retirement, since I also never received bonuses and only got small COLA raises (like SS) if lucky. Salary bumps only tended to come when I change j*obs (though sometime that bump was downward as well). So, from a day to day budgeting perspective, my income is fixed as well.

Rather, I interprete the phrase as a poor word choice that actually refers to a reduced ability to decide to pursure higher income when faced with the effects of inflation. Once you are an older retiree, the opportunity to choose to earn more is limited/reduced. So, it is not that elder's incomes are more fixed than the rest of us, but their opportunity to do something about that is limited, even if the value of their income stream erodes too steeply.
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Old 08-13-2007, 01:05 PM   #4
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Along the same lines, how about the term "Working Family"? Aren't most families working families? Of course, this is just political code.
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Old 08-13-2007, 01:09 PM   #5
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i thought it meant that their income used to be broken.
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Old 08-13-2007, 01:35 PM   #6
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Along the same lines, how about the term "Working Family"? Aren't most families working families? Of course, this is just political code.

That is "Working Poor" for the PC...

But, it is a jibe at the 'trust babies' and all of YOU who live off a portfolio you saved (who knew you could save when you were a "Working Family" and become a non-working family)
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Old 08-13-2007, 01:36 PM   #7
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Yes... 'fixed income' was used when they were on a pension... but usually meant they were only getting SS..
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Old 08-13-2007, 02:33 PM   #8
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Along the same lines, how about the term "Working Family"? Aren't most families working families? Of course, this is just political code.
Of course it's political code.

Remember, if you pay hundreds of thousands of dollars for law school or medical school all so you can work 80+ hours weeks you don't count as a "working family" to one of our political parties.
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Old 08-13-2007, 02:56 PM   #9
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Next door neighbors use the term
"We live on a Fixed Limited Income"
There kids got worried so they stopped using the phrase. Now they just talk about it when they take the boat out.
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Old 08-13-2007, 03:24 PM   #10
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Now they just talk about it when they take the boat out.
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Old 08-13-2007, 05:59 PM   #11
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I suspect that once upon a time it meant for those poor retired folks whose pension was not adjusted for inflation. 70s and 80s just about killed their standard of living.

Nowadays, I suspect, it's just to get sympathy for all sorts of discounts and other "benefits" that seniors seem to feel entitled to these days.

There are areas where wealthy retirees happily vote themselves all sorts of "breaks" on property taxes, etc. based on their age (>=65) even though it's a predominantly older population and the <65 group is a much lower net worth group. Not sure how such a thing can hold out for very long.

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Old 08-13-2007, 07:56 PM   #12
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The poor old folks are there "fixed incomes" is such brilliant spin that you wonder if it was invented by AARP or a Florida politician.

The poor working stiff employeed in a trouble industry (e.g. Autos, Airlines) has a lot less flexibility in their earning ability, than even a senior citizen living off a small pension and social security. SS at least is inflation indexed, unlike the say wages of airline flight attendent which often fall.

For those of us forunate enough to live of our assets our income is hardly fixed. If I want more income I just change my asset allocation to emphasis riskier assets with higher return. I want more income I sell my money market funds, and buy tanker stocks, and fallen REITs.

IIRC, senior citizen have the second highest discrentionary income (i.e. whats left over after taxes, housing, food, and utlities) of any group right after 50 years olds.
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Old 08-13-2007, 08:31 PM   #13
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Man, you people are rough; have a heart!! Maybe I'm a soft touch but the plight of someone depending on a pension or annuity that doesn't keep up with inflation seems pretty bad to me.

We could say that if they had been smart, they would have a lot in the market in an optimal AA. The problem with that is that not everyone understands the ravages that runaway inflation can inflict until they get caught up in it (as many did in the early 1980's). And by then, they are too old to work and they are getting poorer and poorer by the year.

Most of us here are educated and have been exposed to some financial planning information at some point in life. But a great number of Americans haven't had that opportunity and to just write them off seems unconscionable. I had better stop writing now, because I am beginning to sound like a bleeding-heart liberal.
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Old 08-13-2007, 09:05 PM   #14
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I have a heart. But for some reason we have a lot more sympathy for a 75 year old widow living off $1,000 month SS check and $500 pension from her late husband, than 30 year old single mom making $15/hour.

The financial situation could describe my mom, if she didn't have have additional assets, and does describe some of her friends. Now 18K isn't a lot to live on but...
The single mom making $15 hour = 30K/year is making the median income for females with 2 years of college. And while it sounds better than 18K the senior citizen generally has more disposable income.

IIRC about 3/4 of senior citizen own their own house, and generally own them free and clear. The senior citizen gets lots of discounts, and virtually free public transportation. ($30/year here), they are eligible for medicare, and while they often have expensive prescription drug expenses.

Most single mom hasvesalary deductions, like FICA, medicare, and if she is lucky medical insurance and has to pay some for that. She probably has to pay rent, a $40/month bus pass, and isn't eligible for any deductions. But most of all she has to feed and cloth a kid on her salary and what every modest child care money she is fortunate enough to get from dad.

Bottom line for me is if my housing expense was paid for I could make it on $18K a year if I had to. There is no way I could live on typical single mom salary.
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Old 08-13-2007, 09:27 PM   #15
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It's pretty sobering to read that 18% of elderly retirees (almost one in five! ) have incomes of less than $10,000, from all sources.

Income of the Aged Chartbook, 2004

Personally, I could not live on that little.
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Old 08-13-2007, 10:29 PM   #16
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Bottom line for me is if my housing expense was paid for I could make it on $18K a year if I had to. There is no way I could live on typical single mom salary.
To me the key difference is that young people still have something to sell, whereas an old lady without assets is pretty well tapped out.

I was walking down the street today passing sidewalk cafes full of young people lolling about and it hit me- all this posturing is related to whatever these folks are selling. Maybe something abstract, maybe something that travels with them every day. But at least they have something to sell.

Ha
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Old 08-13-2007, 11:36 PM   #17
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The auto industry in Detroit in the 60s paid a fixed pension amount. I think it was $300 a month. My ex's grandfather worked for Packard Motorcar until he was 67 when it went belly up and he lost his pension. His wife was 65 and had saved her money for 20 years so have $9,000 earned managing an apartment building, she spend half on the down payment on a tiny 2 bedroom house and some putting in a fence, refinishing the floors and making it a home. She had never had a paid job so got half her husband's SS. She paid $62 a month for the house for 15 years so it was paid off when she hit 80. After the first couple of years Packard had opened in Canada and Etna insurance started sending them a check. When they first got it there was enough to deduct Blue Cross and buy the groceries but within 10 years it barely paid the Blue Cross. Her husband died when he was 84 so she spent the next 10 years as a widow on SS.
She had raised 4 kids in the great depression with an 8th grade education. She married the boy that delivered groceries when she was 17. Those 30 years of retirement even if she got cost of living increases doesn't mean she was living better in her 90s than when they first retired.
A fixed income young person has a choice, the kids grow up, they can work two jobs or get promoted. Fixed income elderly don't become better off.
My grandmother was retired 40 years widowed the last 25 she got $400 SS and had some CDs at the bank. She wasn't really really poor but she didn't ever learn to drive so walked everywhere and never had extra money.
To me being a low income elderly is worse than being young and poor because it doesn't get better.
Most of us won't have a fixed income in retirement since we don't generally have pension. Our investments can go up or down so the income is far from fixed.
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Old 08-14-2007, 08:52 AM   #18
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The term bothers me too.

A while back, there were some referendums brought up for vote that would increase our property tax. Skipping for a moment whether these taxes were good or bad, there were several objections and letters to the editor that went like this:

'We have Seniors living on a fixed income - they can't afford a property tax increase!'

That bugged me. Where in the Constitution does it say that when you retire you are exempted from inflation? So everyone under 65 is supposed to pay for inflation for everyone past 65? A big part of that 25x required for a SWR is to support inflation.

In addition, the county does offer a reverse-mortgage kind of plan so that Seniors could pay taxes with their house equity. They even had some sort of work plan - put in hours on service projects to work off your taxes. These offers (and that's all they were, you didn't need to accept them' were ridiculed as 'stealing people's houses and slave labor).

Gimme a break. BTW, most of the homes in the area are upper middle class (exceptions of course).

If someone retired and didn't plan for inflation, they made a mistake. If they had no choice but to retire, and have a limited means, they are going to need to adjust. That might mean a move to a place with lower costs. But don't expect the world to stop, just because you are a Senior citizen on a 'fixed income'. SS is COLA'd anyhow.

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