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Old 10-03-2020, 05:35 PM   #21
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I think the point is low wage earners in their 50ís losing their jobs due to Covid are not going to be rehired and will not be able to build up savings for 10 yrs leading up to 65. I think I know many folks living on 20k that would not consider themselves impoverished. They are in LCOL areas, some have paid off homes or subsidized senior housing and decent health.
I get the "point" but if you're going to say "now it's 50%!!!!" then at least you should say, previously it was 46%, or whatever the number was. Not stating the amount of the difference is bad writing, at best.
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Old 10-03-2020, 05:47 PM   #22
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I spend at what would be considered poverty levels, but that is by choice. As long as you own your own housing it is doable. I do it because that is how things have been my whole life, so to me it is normal. When I see people who need $10,000 a month I just don't get it.
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IMO, "enough" is not a number. It is an attitude.
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Old 10-03-2020, 05:48 PM   #23
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II can think of times years ago when I took the initiative to do something smart that contributed to our current situation. But I can think of just as many times I did something dumb and, in spite of it, ended up OK.
My smart story occurred about 1998 when I was offered a huge increase in salary to return to IT and fix COBOL programs so that we all didn't die in terror when the year 2000 hit. It was so very tempting. But, I also knew that I would pay for that extra money by giving up years of service towards my pension. I kept the long haul in site along with my teaching job, and skipped an opportunity to make 6 years worth of income in 2-3 years. Ultimately, that allowed me to retire early with my pension and be eligible for cheaper medical insurance.

My dumb story was in 1978 when I let a friend talk me into putting money down on a house that was too far from work. I broke the sales agreement and had to forfeit my deposit which was about 4 months gross pay. Tuition in the school of hard knocks.
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Old 10-03-2020, 05:52 PM   #24
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One other item that relates to the inability of people to save, in addition to subsistence wages, is health care. Many people (or family members) develop terrible health problems that in the USA system knocks them out of the retirement savings race permanently.

Being able to retire early reminds me of an American football team's ability to win the Super Bowl: it often comes down to the team with the least number of injured players.
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Old 10-03-2020, 07:07 PM   #25
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It seems to me that back 20+ years ago as defined benefit plans were being phased out in favor of 401K plans and the clear message was that the three-legged stool was going to be missing a leg that very few of my peers got the message and will have less of a retirement as a result
There has never been a time in the USA where even 50% of the population received a defined benfit plan (pension). Way down now but it was never the majority.
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Old 10-03-2020, 07:53 PM   #26
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When I retired I owned my home [no mortgage], I owned multiple vehicles [a sedan for myself, a sedan for my wife, a dump truck, and a farm tractor], we live in an extremely low COL region of the East Coast.

My pension has been paying us roughly $19,000/year. From this income we support ourselves and we have saved enough on the side that we managed to buy another apartment building [again no mortgage]. So this year [during the pandemic] we filled it with tenants, and we now have an additional $50k/year Net income.

While $19,000 might be considered 'poor', I fail to see how that level of income supporting us, was 'bad'.
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Old 10-03-2020, 08:04 PM   #27
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I'm getting to the point where I just scroll through the posts looking for Oldshooter's replies.

Thanks OS... I enjoy your contributions...

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Old 10-03-2020, 08:11 PM   #28
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Interesting!
Pensions do make a difference there is no question about it. The company I worked for still offers a pension and a 401K that they contribute to also. My son has been with a company for 17 years now and they have a pension and also have a 401K that they contribute to also.
I still beleive people that don't have a pension and are savers and plan for retirement can still be wealth at retirement age. You have to be disciplined and be frugal and be a saver and you can be a millionaire and retire high on the hog.
I remember when 401Ks first came out, only upper management was interested in them. Normal workers thought they would have a pension to rely on. That changed - pensions have mostly gone away and many people had to rely on savings. The trouble with that is people my age got a late start and most didnít know enough to make good decisions on how much they needed to save or how to invest their money. Often, even if they did know how to invest, the limitations of employers 401K plans guaranteed poor returns. If you throw in the complication of having 10 years less to save and grow a portfolio, I am not surprised so many people are having financial problems. You are correct, people can retire with a modicum of wealth, but it takes a special person to know how to navigate all the pitfalls.
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Old 10-03-2020, 08:13 PM   #29
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+1

The article blaming this situation on the Covid recession is ridiculous. Probably a particular view being pushed for I canít imagine what reason.
They wanted money?
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Old 10-03-2020, 08:24 PM   #30
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Originally Posted by jazz4cash View Post
I think the point is low wage earners in their 50ís losing their jobs due to Covid are not going to be rehired and will not be able to build up savings for 10 yrs leading up to 65. I think I know many folks living on 20k that would not consider themselves impoverished. They are in LCOL areas, some have paid off homes or subsidized senior housing and decent health.


I think you just hit the nail on the head. Itís in that situation Covid has hurt a certain segment of future retirees, but not the rest that many of us are fortunate to be in.
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Retiring into Poverty
Old 10-03-2020, 08:35 PM   #31
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Retiring into Poverty

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There has never been a time in the USA where even 50% of the population received a defined benfit plan (pension). Way down now but it was never the majority.

In 1960 approximately half the American private sector workforce had a pension, or dbp. That was in fact the peak of the defined benefit plan.

https://www.thebalance.com/the-histo...n-plan-2894374

Youíre correct about the fact itís never been the majority. Another interesting note is that just a decade earlier in 1950 it was 25%. So from 1950 to 1960 it doubled, then started its decline.
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Old 10-03-2020, 09:14 PM   #32
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In 1960 approximately half the American private sector workforce had a pension, or dbp. That was in fact the peak of the defined benefit plan.

https://www.thebalance.com/the-histo...n-plan-2894374

Youíre correct about the fact itís never been the majority. Another interesting note is that just a decade earlier in 1950 it was 25%. So from 1950 to 1960 it doubled, then started its decline.
Here is more detail from the Bureau of Labor Statistics on the decline of private pensions in the US. It's from 2013 but I can guess that the trends have continued in the same direction over the last 7 years.

https://www.bls.gov/opub/mlr/2012/12/art1full.pdf
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Old 10-03-2020, 09:27 PM   #33
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Money isn't everything though. I would rather live on $36k a year with good health than be a billionaire with terminal cancer.
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Old 10-03-2020, 09:52 PM   #34
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20k a year is doable for me but I will have to put aside extra for health care related expense (insurance premium and copay) as well as the property tax.
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Old 10-03-2020, 09:58 PM   #35
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With that low of an income (18k), if a person is a homeowner, they might be eligible for a significant reduction in their property tax bill. By significant I mean over 50%.
It is the first I hear that low income enables property tax reduction. Curious why would any people lose their houses because they can't pay for the property tax from job loss.
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Old 10-03-2020, 10:16 PM   #36
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does the article spell out what changed - by numbers - pre and post covid? Is 50% that much worse than before? Couldn't see the delta in the article, which renders it drivel for me.
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I think the point is low wage earners in their 50’s losing their jobs due to Covid are not going to be rehired and will not be able to build up savings for 10 yrs leading up to 65. I think I know many folks living on 20k that would not consider themselves impoverished. They are in LCOL areas, some have paid off homes or subsidized senior housing and decent health.
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I get the "point" but if you're going to say "now it's 50%!!!!" then at least you should say, previously it was 46%, or whatever the number was. Not stating the amount of the difference is bad writing, at best.
Completely agree that the article is poorly written in this respect. Here's the inference I make from the article and from other information I found.

The article says, "A total of four million people potentially pushed into retirement before they are ready will increase old-age poverty..." So we just have to figure out what number raised by 4 million gets us to 50% of the demographic in question, in order to figure out the original percentage (before COVID).

Since the article refers to people "over 55" and is focused on people not retired yet (presumably not yet 66-67 which is the average retirement age), we can roughly say it pertains to people aged 55-64. Now, per wikipedia (https://en.wikipedia.org/wiki/Demogr..._United_States), the number of people age 55-64 is just over 42 million. So, if the article is right that 4 million aged 55+ will be laid off due to COVID, and all of them get pushed into retirement too soon due to not being able to find another job, that's a little under 10% of the 42-million demographic.

This implies that the number of people in the given age bracket will rise from roughly 17 million to roughly 21 million, or from about 40% to 50%. That probably overstates the effect, because of the 4 million pushed into retirement earlier, some of those people would have been in the poor/near-poor category even without the COVID layoff (but those people will certainly be worse off after a layoff). So the real increase is likely more like 8% instead of 10%; but this gives us a general ballpark.

I agree that, as I believe another poster in this thread said, there is some clickbait going on in the article. It's arguably more alarming that 40% to 42% of the population would have been poor in their retirement even before COVID, than it is that COVID added another 8-10% to the figure. But focusing on COVID likely got more readers for the article.
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Old 10-03-2020, 11:21 PM   #37
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Does this Covid pandemic make some people poorer by turning them jobless, and having to draw on their savings or retirement funds to survive? I think so.

How bad is it? We will not have any firm statistics for a while, but I just saw something on this subject.

Quote:
A new survey from the Pew Research Center finds that 44% of lower-income people say they have dipped into their retirement or other savings since the start of the coronavirus crisis, while only 16% of upper-income people say they have done so.

... the new Pew survey indicates that half of all US adults who lost a job in the coronavirus crisis continue to be unemployed.

As the pandemic drags on, it’s possible those who have run down their savings will not recover as quickly, because it’s not just income but also the accumulation (or destruction) of wealth that determines financial insecurity.

See: https://qz.com/1908543/33-percent-in...-to-pay-bills/

Nobody in my extended family has lost their job and faced financial hardship, but we are a fortunate bunch. My son for example is really enjoying doing his engineering job from home, compared to having to come into his workplace. However, I knew of small business owners who have lost their livelihood. It's not pretty for a lot of people.
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Old 10-03-2020, 11:48 PM   #38
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It is the first I hear that low income enables property tax reduction. Curious why would any people lose their houses because they can't pay for the property tax from job loss.
The reduction in property tax approval takes some time, to take effect. Missing the current bill puts a person at risk of losing the house.

The amount of reduction is varied, so perhaps some places get 50% off, but I'm guessing some are only 10%, 20%. All that sounds good but if you can't pay the 50% , you lose.

I also think, these reductions are based on a person having very low income, and no bank assets. Imagine the outcry if some person with $1,600,000 in the bank in IRA's and owned a $1M house, had zero income, does he qualify ?
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Old 10-03-2020, 11:50 PM   #39
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Does this Covid pandemic make some people poorer by turning them jobless, and having to draw on their savings or retirement funds to survive? I think so.

How bad is it? We will not have any firm statistics for a while, but I just saw something on this subject.


See: https://qz.com/1908543/33-percent-in...-to-pay-bills/

Nobody in my extended family has lost their job and faced financial hardship, but we are a fortunate bunch. My son for example is really enjoying doing his engineering job from home, compared to having to come into his workplace. However, I knew of small business owners who have lost their livelihood. It's not pretty for a lot of people.
I've been dipping into my savings even prior to Covid, haven't many of the folks here been doing that too
It makes the reporting more difficult to how accurate it is, by the way they state the "facts".
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Old 10-04-2020, 12:06 AM   #40
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I've been dipping into my savings even prior to Covid, haven't many of the folks here been doing that too
It makes the reporting more difficult to how accurate it is, by the way they state the "facts".
OK, I see your points. I guess I wrongly assumed that retirees would be excluded in the Pew Research poll.

Have I been dipping into my savings for my retirement expenses? I initially thought so, but then remembered to consult Quicken. It showed that I underspend my dividend and interest income. The principal went up/down like a yo-yo, but that is another matter.
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