What would happen if one ran out of $ later in life?

[GenXguy]

Ok, so I just went to the SS calculator at https://www.ssa.gov/cgi-bin/benefit6.cgi

I did the quick calculator and for someone born in 1956 I had them start working at Wal-mart in 1993 at a starting wage of $20,000 a year. They got a raise after 10 years and were making $25,000 a year in 2003. They got another raise after 10 more years and were making $30,000 in 2013. They finally retired in 2023 at age 67 still making $30,000 a year (they were not really good at getting raises).

The calculator says they get a payment of $1695 a month from SS at age 67.

I don't know about you, but working 30 years, starting at $20,000 a year and only having 2 raises and ending at $30,000 a year doesn't sound like a really high earner to me

People I know that worked at Walmart in the early 90's were not making $20K/yr. It was closer to minimum wage and not full time hours. And the raises were low. And not everyone can work until age 67, and many want to retire and collect SS at age 62. I expect those people got real SS checks much lower than you calculated.

 

[ivinsfan]

What does that have to do with the price of tea in China?

Our discussion is about running out of money and (maybe sidetracked), is there a safety net.

If you worked at Wal-Mart for 30 years then retired at 67, I get that you probably don't have $1 mil in a 401K, but I thought we were talking about running out of money, whether it be going from $20k in the bank to $0, or $2mil to $0.

I am saying you can live on $1695 a month in several (not crack death zones) parts of the USA.

It has to do with having some breathing room cause you know, sh&* happens....also one must remember when you are a couple living on SS and one dies things can change quickly...

 

[Fermion]

People I know that worked at Walmart in the early 90's were not making $20K/yr. It was closer to minimum wage and not full time hours. And the raises were low. And not everyone can work until age 67, and many want to retire and collect SS at age 62. I expect those people got real SS checks much lower than you calculated.

I used $30,000 as a final ending salary but our local Wal-mart is paying $18/hr now for starting. That is around $36,000 a year, so my numbers were low.

Minimum wage in 1993 in WA state was $4.90 an hour so that would be $10,000 a year.

 

[GenXguy]

I used $30,000 as a final ending salary but our local Wal-mart is paying $18/hr now for starting. That is around $36,000 a year, so my numbers were low.

Minimum wage in 1993 in WA state was $4.90 an hour so that would be $10,000 a year.

But less than $10K/yr if not working 40 hours per week. Our local Walmart pays closer to minimum wage, which is pretty high here now.

 

[Fermion]

Here is the original question by the OP:

"You did you part and the fire calculator gives you 100% chance of success. But something unexpected happened. In some cultures, the kids are obligated to take care of their elderly. That is not the case in US.

Assume you are in very good health but old and could not work. But only have the SS as the source of income which is not enough to cover the basics."

1) "You did your part and firecalc gave you 100%"

I made the assumption that if you got to a point where firecalc gave you 100% for a 30 year retirement, that you had paid a decent sum into SS.

2) "Assume you are in very good health but old and could not work"

I assume here that you are past full retirement age since you are in good health but too old to work. There are tons of people in the 55 to 70 range still working. The guy at the UPS store where we are getting a lot of building materials sent is at least 70.


People are taking the OP's question and applying it to any random person they know who is barely getting by on SS, but were those people ever at 100% Firecalc score in their life? Are they in good health?

 

[jollystomper]

^^^Yeah, I also need some clarity on the OP's question...

If the question is "if FireCalc gave you 100% and you are in good health but old and could not work, and only have SS as the source of income which is not enough to cover the basics, what then?", that does not make sense to me. You are likely not 100% in FireCalc with only SS, and the goal of retirement is being 100% in FireCalc without having to work.

Perhaps what the OP was actually asking in the wording was "what happens to those who only have SS as a source of income?"

I'm so confused... .

 

[GenXguy]

People are taking the OP's question and applying it to any random person they know who is barely getting by on SS, but were those people ever at 100% Firecalc score in their life? Are they in good health?

I believe the thread branched out a little, as threads often do, after your early comment about social security alone being enough to live on.

Perhaps what the OP was actually asking in the wording was "what happens to those who only have SS as a source of income?"

I'm so confused... .

If so, at least we covered that to some degree.

He did also say:

Also, we read so many articles on line about the "crisis" of Americans do not have enough to retire. Where are all those people who do not have $1000 to their name?

 

[Fermion]

A lot of my comments were made under the assumption that it was at least an average retiree who encountered really bad luck (and a health scare can do that to you) or made really poor investing decisions (bank wires to Nigeria for taxes on supposed inheritances). I quickly pulled up an average SS figure of around $1700 based on those assumptions. I figured anyone who had gotten to a 30 year retirement calculation of 100% probably was above the average but I used average.

We retired at age 45 and the higher earner will get a payment of over $2700 a month in today's dollars if they wait until age 65. That is shocking to me...having all those zeros from 45 to 65 and yet getting that much. The combined SS payment will be over $4000/month in today's dollars. I guess we hit the juicy part of the contribution bends.

 

[Fermion]

Its a total joke. I just checked and if I put in our last year's earnings (we were hitting the max every year at 117,000) for the years 2016 to 2034, it only increases the benefit to $3066 a month.

Definitely hit the sweet spot retiring at 45.

 

[GenXguy]

I think this is the same friend who had an addiction of Ambien that you had a thread on.

I was very interested because the husband of my sister-in-law also had an addiction of Ambien that drove him to literal insanity. If it were not for his wife and kids who stepped in, he would have died of starvation because he refused to eat.

Interesting. I've been taking Ambien for 1 1/2 years, but a small dose (partial tablet) at some point overnight, and not every night. I haven't had any problems with it, and haven't increased my dose. It works, just not that well because I still wake up too early. I think I elaborated more on it in one of the past sleeping related threads.

 

[Mark2024]

OP here. Thanks for all who take your time to write.

After reading all these posts, I myself finally understand what I was asking. Is there a safety net provided by government and/or society for people who outlives their money.

It sounds like there are.

 

[COcheesehead]

Its a total joke. I just checked and if I put in our last year's earnings (we were hitting the max every year at 117,000) for the years 2016 to 2034, it only increases the benefit to $3066 a month.

Definitely hit the sweet spot retiring at 45.

Yep, zeros hurt. We worked into our 50’s and will hit closer to $5400/month combined. IF, IF….

 

[Teacher Terry]

As a former social worker I can tell you all that the social safety net really varies between states. In Reno waiting lists for low income housing is years long. Our taxes are low and so are our services.

Some people are broke due to their own mistakes but many are in that situation through no fault of their own. The things that I have seen and heard are heartbreaking. Medical bills from a serious illness often wipe people out financially even with insurance.

It’s easy to say that people should move to a LCOL but often their support system is where they live now. Plus people need to move before they are broke and some people just put their heads in the sand because they can’t face reality.

 

[Fermion]

Yep, zeros hurt. We worked into our 50’s and will hit closer to $5400/month combined. IF, IF….

Oh, I was more thinking the zeros really didn't hurt that much. Not working for from age 45 to 65 and your benefit is only reduced by $360 a month. We are talking about hundreds of thousands of dollars in contributions you and your employer didn't have to pay and you only lose $4000/yr or so.

Essentially it is $117,000 x 12.4% x 20 = $290,000 in contributions and they are paying you $4,000 a year....that is a return of 1.38%

 

[NW-Bound]

Interesting. I've been taking Ambien for 1 1/2 years, but a small dose (partial tablet) at some point overnight, and not every night. I haven't had any problems with it, and haven't increased my dose. It works, just not that well because I still wake up too early. I think I elaborated more on it in one of the past sleeping related threads.

The thread by ivinsfan is here: https://www.early-retirement.org/fo...-time-friend-with-spending-issues-110220.html

Ambien effects aside, it is a very interesting real-life story on how a person descends into a financial abyss, which is the subject of this thread.

 

[Delawaredave5]

The combination of some common sense along with modest social safety nets (albeit spotty and complicated) means we'll be fine.....

 

[Gumby]

Here is the original question by the OP:

"You did you part and the fire calculator gives you 100% chance of success. But something unexpected happened. In some cultures, the kids are obligated to take care of their elderly. That is not the case in US.

Assume you are in very good health but old and could not work. But only have the SS as the source of income which is not enough to cover the basics."

1) "You did your part and firecalc gave you 100%"

I made the assumption that if you got to a point where firecalc gave you 100% for a 30 year retirement, that you had paid a decent sum into SS.

2) "Assume you are in very good health but old and could not work"

I assume here that you are past full retirement age since you are in good health but too old to work. There are tons of people in the 55 to 70 range still working. The guy at the UPS store where we are getting a lot of building materials sent is at least 70.


People are taking the OP's question and applying it to any random person they know who is barely getting by on SS, but were those people ever at 100% Firecalc score in their life? Are they in good health?

Some here just wanted to rant about the fact some elderly people live in poverty. No denying that, but that wasn't the OPs' question.

What the OP's actual question points out to me is that even if I FIRECalc gives me 100%, that is not the end of my analysis or planning. I really should consider what will happen if our portfolio goes to zero.

In our case, the young wife and I took the 100% survivor option for both of our pensions. It cut our current income by about 10%, but it ensures continued cash flow to the survivor at the same rate. Moreover, as I have mentioned before, the young wife is not eligible for Social Security on her own and, due to the Government Pension Offset (GPO), she does not currently receive a spousal benefit and will not receive a survivor benefit should I predecease her (which is the more likely scenario). For that eventuality, I have a fully paid up whole life insurance policy. I have told her that she should take the annuity payout of the death benefit, as it will replace my social security income and remove the market risk for her.

Finally, we were willing to wait to retire until the reduced pensions plus social security income covered our regular, non-BTD, spending. I feel that we have done all we can do to anticipate and deal with the OP's scenario. (PS - no kids to take us in anyway).

 

[old medic]

Thats one of the benefits of living a poor life, paycheck to paycheck for so many years.... we learned to manage. Having played with so many different scenarios in FC that I'm not too worried about it.

 

[rothlev]

I don't think that's realistic in many cases. I know low income seniors making less than $15,000/yr that don't qualify for free health care or various other government assistance in this state (and that would be the same in most states.)

There may be income limits, the people I knew did qualify. My MIL had a survivor pension from the government ( no SSI) , it was modest. She got all of the listed benefits. Most of the folks in those buildings, own cars, eat out ( maybe senior specials and carefully ) The buildings always sponsor parties and activities. Food banks also are an option. She usually had extra food from the boxes that were delivered, that she was giving it away to her children. She wound up saving money and the building told my SIL to move the extra money out of her checking account.

Other low income folks rent a room instead of an apartment, live with their children, etc... Mobile home parks are also very reasonable.

 

[athena53]

I can't see going a scenario where we go from $$$$$ to 0 fast enough that I can't do anything, except a collapse of society and some form of hyper inflation (Argentina style)

I agree. When I read stories of people who "lost all their retirement savings in the last crash", it's usually because they consistently withdrew $X per year when $X was an unsustainable % of their portfolio. Maybe the needed it it make expenses or maybe they were being unrealistic. Like you, I have plenty of places I can make adjustments if needed, barring the scenario where I wire it all to the soul mate I met on-line.

 

[wrigley]

You did you part and the fire calculator gives you 100% chance of success. But something unexpected happened. In some cultures, the kids are obligated to take care of their elderly. That is not the case in US.

Assume you are in very good health but old and could not work. But only have the SS as the source of income which is not enough to cover the basics.

What happens then?

Also, we read so many articles on line about the "crisis" of Americans do not have enough to retire. Where are all those people who do not have $1000 to their name?

I know a bunch of people that couldn't scrape together $500 if their life depended on it. Sad but so true!

Mike

 

[rothlev]

In the states that didn't expand Medicaid (ACA fiasco) that is especially true. The only option to them is to buy a health insurance policy direct from an insurer which is very costly or they would not be given coverage due to an underlying condition.

medicare and medicaid combine when your income is low, and medicaid picks up what Medicare doesn't cover. ( this applies obviously to folks over 65 ) there are asset limitations on this help. You have to spend down your assets before you qualify.

 

[HawkeyeNFO]

"Assume you are in very good health but...could not work."

I call BS

 

[Gumby]

I call BS

It's a hypothetical, not a statement of fact. Maybe it's not a good hypothetical, because in real life you probably could work at something. But that doesn't make it "BS".

 

[rk911]

we are currently living well beneath our means. if SS and our pensions disappeared our savings and investments would carry us for decades. if they suddenly disappeared I guess we’d have to find jobs or hunker down in our paid for home.