Big_Hitter
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
So this report shouldn't surprise anyone.
no surprise here
So this report shouldn't surprise anyone.
Well maybe I shouldn't be surprised by that, but I am not ashamed to admit that I am. Actually to me this more than surprising; to me this is shocking. I'm also shocked and disgusted at what has already happened to private pensions in the past couple of decades.
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IMHO, we're in for a lot more "surprises" (alternative media has been talking about/warning of this for years).
IMHO, we're in for a lot more "surprises" (alternative media has been talking about/warning of this for years). Won't happen overnight, more like a slow, steady drip of eroded "entitlements". There's simply been too much promised and not nearly enough $ to fulfill those promises. Applies to SS and Medicare, too. Couple that with low expected returns, and you really have a nowhere to hide type of situation. I have friends who devoted their entire lives to government--everyday workers who never received bloated salaries. Reduced pensions for them will mean a lifetime of missed opportunity to make more $ in the private sector. A no win situation.
Low wages and the cost of healthcare will make it impossible for millions of working Americans to accumulate enough savings to retire.
The math won't work.
The current public policy is that taxpayers subsidize low wage workers with food stamps.
The future public policy will have Taxpayers also subsidizing their retirement.
Actually if a low wage person retires at FRA the math isn't near as bad as you think because SS replaces a much higher percentage of income for low wage workers. This study indicates replacement rates of 72% for singles and 63% for couples for those whose income is in the lowest 20%.
Note that this replacement rate compares SS benefits with gross income, so a 72% replacement rate is actually much higher if one compares SS benefits to pre-retirement take-home pay (which presumably is all spent). After SS and federal withholding someone who is single earning $2,000 a month would take home 83% of their gross, so SS would really replace ~87% (72/83) of their pre-retirement takehome pay... and that assumes they reside in a state with no state income tax... in states with an income tax the replacement rate would be higher.
Is this a great outcome.... no, but it isn't as dire as you seem to think.
So will these broke people live in a van down by the river. or section 8. or in their kids basement.
Actually there is an entire forum dedicated to people essentially living in a van down by the river. Most of them are on some form of SS. I post there a bit with financial and engineering information to aid them. Pretty decent bunch of people.
[Mod edit] If SS replaces a significant portion of their income they'll probably live wherever they are currently living, be it an apartment, a van, section 8 or their kids basement.
Or with any luck, they can move in with you.
Remember back 20 years ago when teachers and government workers were heroes in our economy because they made such small salaries compared to the private sector.
Then the economic downward spiral started and it appears that now those once underpaid teachers are just evil government union workers with a pension and the blame for all our fiscal problems.
They certainly don't make it easy to save if your earnings have peak years. We have been working for 20+ years and maxing out 401K for 15 of those years yet have only $650,000 in our 401k. This would not buy an equivalent COLA'd annuity of a public/private pensioner with 20 years on the job. I haven't checked, but I doubt you get much at all with $650k in the annuity market at age 50 to 55.
Partly to blame as we had horrible choices in our 401K in the early years (1% to 2% ER funds)...should have done something different. Also we were not in the position to run to taxpayers if our 401K returns were not super, so we had to go with a more conservative allocation.
But whatever. Maybe there will be some SS left in 20 years.
Actually there is an entire forum dedicated to people essentially living in a van down by the river. Most of them are on some form of SS. I post there a bit with financial and engineering information to aid them. Pretty decent bunch of people.
I used to follow the van dwellers ? site. It went dormant so I don't know it the guy found another host for the website.
Most just like to pull this lever: Raise taxes.... I can only speak for mine, but if it ever got in trouble, there are so many levers that can be pulled to fix the system ; provided everyone didn't stick their head in the sand and not address it...Each of these can have profound positive effects on the system. 1)Lower retirement multiplier 2) Raise retirement age 3) eliminate COLA 4) Raise total amount of years needed to retire. 5) Raise contribution rates.
If needed, little bit of pain, could eliminate a catastrophe down the road.
I remember reading an article in Fortune Magazine around the turn of the century that basically said you were a fool if you were in a pension system instead of a 401k. Of course they were assuming the stock market explosion was going to last forever. All I remember thinking is, "well it's too late to turn back now".
There are more types of pension systems and funding ratios with all getting lumped under the same troubled umbrella. I can only speak for mine, but if it ever got in trouble, there are so many levers that can be pulled to fix the system ; provided everyone didn't stick their head in the sand and not address it...Each of these can have profound positive effects on the system. 1)Lower retirement multiplier 2) Raise retirement age 3) eliminate COLA 4) Raise total amount of years needed to retire. 5) Raise contribution rates.
If needed, little bit of pain, could eliminate a catastrophe down the road.
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Yes my megacorp offers a pension and changes have been made like you mentioned to improve the health of the fund.
So will these broke people live in a van down by the river. or section 8. or in their kids basement.
Tiny houses with solar power, solar showers and composting toilets? It takes a lot of money in global terms to live a standard middle class American lifestyle, but maybe not so much to simply have the basics like food, shelter and clothing.
Tiny Houses For Homeless People Put Roofs Over Heads In Time For The Holidays
"Occupy Madison, which resulted from the nationwide movement against Wall Street wealth in 2011, has focused its efforts on combating homelessness in the Wisconsin capital since its inception. Last December, OM Build completed its first tiny house: a 98-square-foot home with a roof, insulated walls, bathroom and kitchen for Betty Ybarra. "
This is pretty funny. I tipped an older woman I know that there was a vacancy in a subsidized age 60+ building near my home. She got it and invited me over.She pays $400/month for a studio of about 400 sq ft, with a beautiful Bay view from the 18th floor. A market rate studio with this view in this neighborhood would cost who knows what-without the view maybe $1550, with it I can't guess. Walk score 98, many bus lines very close by, and even a parking lot for those with cars. Now 400 sq ft is not very big, but neither are vans, or motorhomes for that matter. And as far as exercise goes, it is hard to get more daily exercise than people living in safe well serviced urban neighborhoods with safe sidewalks, crosswalks, police, supermarkets, etc. Just look at the typical city dweller's body.Living in a van down by the river is a lot healthier than getting cramped up in inner-city housing. You are out in the open, breathing clean air, getting to walk and hike about, having more physical activities. All the good stuff.
I already have a tiny house as dwelling of last resort. It's comfortable, of 200 sq.ft (8'x25'), and is even self-propelled (at a cost of 9mpg, towing a car).
Here, it is parked facing Bodega Bay, where Hitchcock's thriller The Birds was filmed.
Same here...I didn't even start investing in my 401k at work until the last two weeks of 1997, at the age of 27. At that point, I had only been a full time employee, and eligible to invest in the 401k, since February 1994. At the time, our company match was only 1%. So, in the grand scheme of things, maybe I didn't miss out on much.
And, like you, my pay wasn't all that high back then either, so I wouldn't have been able to max it out. I don't think I started hitting the federal limit with my 401k until 2005
I remember reading an article in Fortune Magazine around the turn of the century that basically said you were a fool if you were in a pension system instead of a 401k. Of course they were assuming the stock market explosion was going to last forever. All I remember thinking is, "well it's too late to turn back now".
There are more types of pension systems and funding ratios with all getting lumped under the same troubled umbrella. I can only speak for mine, but if it ever got in trouble, there are so many levers that can be pulled to fix the system ; provided everyone didn't stick their head in the sand and not address it...Each of these can have profound positive effects on the system. 1)Lower retirement multiplier 2) Raise retirement age 3) eliminate COLA 4) Raise total amount of years needed to retire. 5) Raise contribution rates.
If needed, little bit of pain, could eliminate a catastrophe down the road.
Sent from my iPad using Tapatalk