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Who drains more SS-- ERs or regular retirees?
Old 02-26-2004, 07:36 PM   #1
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Who drains more SS-- ERs or regular retirees?

Here's a quote from one of Ted's farewell posts that made me go "Hmmm...":
"And one of those facts, which Alan Greenspan recognized just yesterday in calling for paring back future social security benefits, is that people who retire totally represent a drain on the economy."

My records show that I've paid about $45K into SS between 1977 and 2002. I sure hope the govt invests it wisely because I can't withdraw my first dollar until the end of 2022. When I tap into that "mother lode" I'll be withdrawing $9873.60/year (2003 dollars), which I may actually be able to spend all in one place... especially after I pay taxes on 85% of that.

So even if I live to trip digits (2060) I'll withdraw less than $400K (before taxes!) from that $45K DCA investment.

Does anyone think that I'm draining the economy to get that "free" money? I'll have to play around with the spreadsheet, correct to present dollars for an assumed 3.5% inflation, and see what I could get if I invested it on my own. I'm glad I quit working before I ended up even further behind.

BTW, all those years of work generated a bunch of credits-- we'll call them "dollars"-- that I've been able to invest toward even MORE credits. People are paying me for the temporary use of those credits so I'm comforted by the thought that I'm not draining anyone of assets. Presumably the future credits will purchase about 3.5% less per year, but no matter what they purchase I'm not supposed to spend more than the credits I have in that account. I don't plan to do that before I die, so I don't see how I'm draining the economy.

My kid might even be lucky enough to get some of those credits that haven't been used. So technically, by worknig to earn credits that I didn't use, doesn't that mean that the economy drained me?!? Again, I'm glad I quit working when I did.

Does anyone wonder why they call it the dismal science?
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Re: Who drains more SS-- ERs or regular retirees?
Old 02-26-2004, 10:33 PM   #2
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Re: Who drains more SS-- ERs or regular retirees?

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My records show that I've paid about $45K into SS between 1977 and 2002.
and don't forget that your employer matched that amount!

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Re: Who drains more SS-- ERs or regular retirees?
Old 02-27-2004, 03:58 AM   #3
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Re: Who drains more SS-- ERs or regular retirees?

Here is some interesting stuff that says ERs are a MAJOR drain on SS -- because they live longer.

Here is an excerpt from a study (see http://faculty.kfupm.edu.sa/coe/gutu...sc/Retire1.htm for the full (translated?) article, which also discusses years of maximum creativity etc.).

Longevity Vs. Retirement Age

The pension funds in many large corporations (e.g., Boeing, Lockheed Martin, AT&T, Lucent Technologies, etc.) have been "Over Funded" because many "late retirees" who keep-on working into their old age and retire late after the age of 65 tend to die within two years after their retirements. In other words, many of these late retirees do not live long enough to collect all their fair shares of pension money such that they leave a lot of extra-unused money in the pension funds resulting in the over-funded pension funds.

Dr. Ephrem (Siao Chung) Cheng provided the important results in the following Table 1 and the associated chart from an actuarial study of life span vs. age at retirement. The study was based on the number of pension checks sent to retirees of Boeing Aerospace.





Table 1 and the chart indicate that for people retired at the age of 50, their average life span is 86; whereas for people retired at the age of 65, their average life span is only 66.8. An important conclusion from this study is that for every year one works beyond age 55, one loses 2 years of life span on average.

The Boeing experience is that employees retiring at age of 65 receive pension checks for only 18 months, on average, prior to death. Similarly, the Lockheed experience is that employees retiring at age of 65 receive pension checks for only 17 months, on average, prior to death. Dr. David T. Chai indicated that the Bell Labs experience is similar to those of Boeing and Lockheed based on the casual observation from the Newsletters of Bell Lab retirees. A retiree from Ford Motor told Dr. Paul Tien-Lin Ho that the experience from Ford Motor is also similar to those in Boeing and Lockheed.

The statistics shown in the Pre-Retirement Seminar in Telcordia (Bellcore) indicates that the average age that Telcordia (Bellcore) employees start retirement is 57. Therefore, people who retire at the age of 65 or older are minority as compared to the number of early retirees.

The hard-working late retirees probably put too much stress on their aging body-and-mind such that they are so stressed out to develop various serious health problems that forced them to quit and retire. With such long-term stress-induced serious health problems, they die within two years after they quit and retire.

On the other hand, people who take early retirements at the age of 55 tend to live long and well into their 80s and beyond. These earlier retirees probably are either wealthier or more able to plan and manage their various aspects of their life, health and career well such that they can afford to retire early and comfortably.

These early retirees are not really idling after their early retirements to get old. They still continue doing some work. But they do the work on the part-time basis at a more leisure pace so that they do not get too stressed out. Furthermore, they have the luxury to pick and chose the types of part-time work of real interest to them so that they can enjoy and love doing that "fun" work at a more leisure pace.

The late retirees are small in number, tend to die quickly after retirement and disappear from the population of old people beyond the age of 70. Late retirees, therefore, have very little weight on the statistical average life expectancy of the population of "old people" dominated by the early retirees.


For what it's worth (about what you paid...), when looking for other similar articles I found little, but I found several talking about the issue that public policy favors later retirement, so that increased SS contributions and decureased withdrawals will keep that system healthy.

I guess I will stay out of decisions about how many years of your life you are willing to give up to help the SS fund. That seems like a decision we must each make for ourselves.

As fo me, hmmm.. my health, or SS's health... let me think... -- let me get back to you on this.

Dory36
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Re: Who drains more SS-- ERs or regular retirees?
Old 02-27-2004, 04:19 AM   #4
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Re: Who drains more SS-- ERs or regular retirees?

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The hard-working late retirees probably put too much stress on their aging body-and-mind such that they are so stressed out to develop various serious health problems that forced them to quit and retire. With such long-term stress-induced serious health problems, they die within two years after they quit and retire.

On the other hand, people who take early retirements at the age of 55 tend to live long and well into their 80s and beyond. These earlier retirees probably are either wealthier or more able to plan and manage their various aspects of their life, health and career well such that they can afford to retire early and comfortably.
Two things:

Firstly, the stress is probably the major reason for early death. It would be interesting to see how long people who enjoy stress free work or, perhaps, who are able to cope, no, thrive on stress perform. Many notable people toil into their eighties and beyond and many also drop dead at their desks at 50.

Secondly, could it be that the people who retire early also live a healthier lifestyle in general, as mentioned in the second paragraph above, thereby extending their age. A very interesting area of research, but I don't see any large corp willing to fund a study that will probably conclude that "high stress, long hours" work environments are bad for most people.
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Re: Who drains more SS-- ERs or regular retirees?
Old 02-27-2004, 08:21 AM   #5
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Re: Who drains more SS-- ERs or regular retirees?

Geez, everything I read here today inspires a comment.

I'm going to e-mail the graph to all my former co-workers. That's the ultimate public-service contribution-- work hard, die at your desk.

On the less pleasant side of the statistics, I wonder if that study accounts for the workers trying to pay for the costs of treating chronic medical conditions. Some of the more senior employees might be trapped at work, afraid to risk retiring and losing their full-time medical insurance.

OTOH working for medical coverage to treat your work-related symptoms sounds like a vicious death spiral.

I've heard rumors that Navy pensions for the 30-year retirees are overwhelmingly collected for single-digit years instead of for decades. That's a study I'd REALLY love to see in public literature (I'm sure it's already been paid for by our tax dollars).

I don't know if I'd repeal all of those laws, but I'd consider making the violators pay for their own darn medical treatment. After they finish paying the hospital bills of their victims, of course.

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Re: Who drains more SS-- ERs or regular retirees?
Old 02-27-2004, 09:07 AM   #6
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Re: Who drains more SS-- ERs or regular retirees?

I wonder how the test was performed. What I'm thinking is that people live longer as time goes by, hence the average 40 year old today is going to live longer than the average 60 year old because they've had better medical care and probably lived a healthier life simply because we know more now about things than we did.

Then the next thing to think about is quality of life. Chances are someone who ER's has some money under them and lives life at a pretty good quality level. Someone who has to work until 65 might not do as well. I noticed that when I moved from my expensive town to the very cheap area I live in now, I see a lot more grocery carts full of hamburger helper and everyone smokes and drinks a lot more here.

I love the results, but I'm not entirely sold on the causative factors.
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MRe: Who drains more SS-- ERs or regular retirees?
Old 02-27-2004, 09:21 AM   #7
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MRe: Who drains more SS-- ERs or regular retirees?

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My kid might even be lucky enough to get some of those credits that haven't been used. So technically, by working to earn credits that I didn't use, doesn't that mean that the economy drained me?!? Again, I'm glad I quit working when I did.

Does anyone wonder why they call it the dismal science?
The original reason that economics was called the dismal science is that early economists concluded that the independent, voluntary actions of individuals acting in their own self interest, the invisible hand, is superior to dictates of an aristocracy. The aristocracy did not like what this implied about them.

That is, economists saw a great future for humanity as a whole, but not such a great future for a royalty.

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Re: Who drains more SS-- ERs or regular retirees?
Old 02-27-2004, 09:36 AM   #8
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Re: Who drains more SS-- ERs or regular retirees?

It turns out that the study is fatally flawed and that whether retiring early is healthier than working longer is unknown. The result has been this urban legend that gets echoed from time to time.

The problem is that life expectancy has increased over the last few decades. Those who died just after they left work had come from a portion of the population that died around age 65 or earlier. Those who retired in their 50s generally were born much later when much better medical treatments were available.

Stated differently, very few people retired in their 50s or earlier before the last couple of decades. Back in the 1940s and 1950s, people who were able to make it to age 65 were likely to die shortly anyway.

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Re: Who drains more SS-- ERs or regular retirees?
Old 02-27-2004, 09:45 AM   #9
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Re: Who drains more SS-- ERs or regular retirees?

Dory36 has followed up on the study in the You've Got to See This section. It goes into more and better detail that what I have written here.

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Re: Who drains more SS-- ERs or regular retirees?
Old 02-27-2004, 02:48 PM   #10
 
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Re: Who drains more SS-- ERs or regular retirees?

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on Today at 12:21pm, Nords wrote:I've heard rumors that Navy pensions for the 30-year retirees are overwhelmingly collected for single-digit years instead of for decades. That's a study I'd REALLY love to see in public literature (I'm sure it's already been paid for by our tax dollars).

Nords-- I've heard same rumors for all services. Not sure how accurate it is. Not to mention those who died while still on active duty. A number of those 'old-timers' who never saw a penny of retirement helped motivate me to hang it up.

How many people did you come across during your service, who truly retired when they retired from military service? I can't think of ANY. I was constantly asked about post-retirement employment. All were astonished, when I said I was NOT going to work after retirement. I suspect the sample size of true ERs is too small and diverse to do statistically valid studies. Many of us fly low and fast without making large radar signatures.
Too true... Seems like there are 2 kinds of Mil retirees. 98% financially desperate in spite of a pension and TriCare for medical. (BIG ticket item!)... They go scrambling for jobs

2% 'gotta BE somebody. I AM Important! types. Mostly seen among higher officers and Super-Chiefs. They get bigtime jobs with contractors or fabricate a GS-12 civil service slot for themselves. Some sell real estate and hang out at the O and NCO clubs trawling.

Everybody told me I'd HAVE to work. Nobody can live on the pension. I would get bored in 6 months or less. Crap. They just cant stand the thought of anybody NOT being dragged around by the nose.

1 April will be 8 yrs retired for me. 1 yr 364 days left maybe? At least I don't have to work
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Re: Who drains more SS-- ERs or regular retirees?
Old 02-27-2004, 05:25 PM   #11
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Re: Who drains more SS-- ERs or regular retirees?

GDER, I'm starting a new thread.

Lohengrin, I'm relieved to see that someone else was able to overcome the programming!
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Re: Who drains more SS-- ERs or regular retirees?
Old 02-28-2004, 03:52 AM   #12
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Re: Who drains more SS-- ERs or regular retirees?

I for one FULLY INTEND TO WORK after retirement:

Polishing brass
Making tea for my wife, whose made coffee for me for 30 years.
Reading the Sunday paper ON SUNDAY
Sharpening fishing hooks
Untangling lines
Washing the sand out of the nooks and crannies...
Updating the dayrunner to include power naps.
Sittin on the front porch waitin fer my gomment check

Closer all the time
BUMwannaB
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