"Entitled Selfishness": Great article on the dismal future of Social Security

[meandtheguys2]

At this point, my biggest concern is medical care. If the government told me that they were going to cover the majority of my health needs in retirement, but not give me a dime of SS, I'd actually be okay with that. I can afford to save for my retirement, what I can't afford is to save for my health care needs. SS can go away as far as I'm concerned, as long as it's replaced by decent health coverage. DH and I will be fine w/out SS, but if Medicare goes bye-bye we are screwed with a capitol "S". DH has diabeties, what the hell are we supposed to do? Neither of us will have company sponsered health plans in retirement, so if Medicare isn't there, I don't how we'll keep DH alive and still eat. No one would insure him. His medicine costs a fortune NOW, I don't want to think about what it will cost in 30-40 years....

Medical costs are ridiculous! Yesterday I had to buy a CPAP machine. I swear you could make one with some tubing, a blow dryer and a humidifier... They were billing the insurance company $1500. Yikes. Everything is so inflated in the medical field.

 

[Taylors6]

In our state they do have to take classes for WIC...our store is testing Aldi's accepting WIC so we just had to do training on that. Also...with WIC they told us that because we have the voucher in hand we are encouraged to report problems to our manager and he sends them on. Things like people flipping out and yelling because we won't let them get an unapproved item or possible abuse of the system. They have a ID card that we can ask for to make sure its there voucher even. Its more time consuming for us...but after having someone tell you off because they can't buy energy drinks with EBT (thats Electronic Benefits Transfer..yeah food stamps is not what they call it anymore- now its EBT and they have a debit card) or watching them pull out 3 different cards to pay for their $400 in groceries...or (our personal favorite pet peeve) watching them buy their $100 cart and then say "I'm getting there's too" and point to the people behind them! It made us all happy to know they encourage some sort of watching...because the abuse is sickening.

One lady even told me that she got off the card like a year ago and when she called to tell them she had a job and didn't need it they told her just put the card up some place safe and call them back if she needed it again! She was just delighted that when she got fired all she had to do was call them and they have reactivated her benefits and her same card works!

I thought....HOW NICE....as I went to clean the bathrooms for my $11 an hour!

 

[ducklite]

Medical costs are ridiculous! Yesterday I had to buy a CPAP machine. I swear you could make one with some tubing, a blow dryer and a humidifier... They were billing the insurance company $1500. Yikes. Everything is so inflated in the medical field.

The problem is that they spend a fortune marketing new drugs. Frankly half the new drugs on the market do nothing that existing drugs already do. They just have fancier names and are maybe more convenient. A one a month birth control patch instead of a daily pill for example. It does the same thing, and the only benefit is convenience. I'd be happy to pay a lot less for a little less convenience.

I wish that the drug companies would focus on efforts to cure cancer or other hugely expensive to treat life threatening diseases rather than make a pill for restless leg syndrome and then spend millions advertising it.

I'll bet if they could cure diabetes (and they are SO close) it would save a billion dollars a year, if not more, in drug costs, mostly born by insurance companies and the government. And I'll put money on it that with a quarter of the annual cost to maintain the diabetics in the US and Canada, they would have enough to find a cure. Same thing with asthma.

Anne

 

[meandtheguys2]

Nothing to add to that Anne, except...you are so right.

They actually said on the Today show the other day that Americans should go out and get flu shots...not due to severe flu concerns, but because the vaccine companies might not make them next year, if they don't sell this year.

 

[Chicago526]

I'll bet if they could cure diabetes (and they are SO close)
Anne

From your mouth to God's ear!

 

[tedhowe]

I expect to retire from my teaching job at 57, and I could easily collect my pension for 35-40 years.

MrsPete,

I'm not trying to take a swipe at you, but this quote provided a convenient place to put in a comment I've been thinking since I started reading this thread.

The main problem with Social Security (and retirement in the US in general) is the length of time people are living in the US in the 21st century.

I don't have all the exact numbers in my head, but when Social Security was set up, the retirement age of 65 was set to just a few years below the live average life expectancy (I think it was about 68-70 at that time).

What that meant was that there were far more working people supporting each retired person than there are today.

If people are able to retire early and live for a long time off of their savings, I think that is great, but as an early GenX'er (born in 1969, 38 years old next month) I don't expect to ever receive a dime of Social Security... if it's still there, I'll take it and sock it away to help support my kids later in their lives, but none of my retirement planning has anything to do with SS.

My wife and I already have nearly $200K in retirement savings and are on track to be comfortable in retirement, but barring a windfall, I don't expect to be able to retire until at least 70. It sounds like forever, but with modern life expectancies that should still leave me 10-20 years of retirement with reasonable health if I'm lucky.

My father, and my father in law, were both fortunate enough in their careers to be able to retire before the age of 60. It was an expectation that I've realized I can't have because they had extraordinary circumstances to be able to raise multiple children and put them through college (6 kids in myfamily, 4 in my wife's) and still be in a place to retire early.

To me, the uproar regarding the raising of the retirement age for social security is similar to many of the discussions that show up in threads about debt and debt reduction here. People don't want to recognize that the "instant gratification" of retiring at 65 is mortgaging our future and our kids' futures with debt that will eventually come due.

Yes, more people will "lose out" by dying before they can take advantage of the benefits if the retirement age is raised, but that is how the system works - some people live very long lives and get far more than they paid into the system back over their retirement years. Some people pay hundreds of thousands of dollars in, never get married, and die on their 65th birthday before collecting one red cent.

Them's the breaks. Is it "fair" no, but with two small children, I am confronted with trying to teach them the concept that life is NOT fair... but if we try to make the system "fair" then it will break down all the sooner.

 

[macfamily]

*sigh* I have a little over $1k saved right now. And it's not because I'm undisciplined, or irresponsible, or don't care, or that I'm not thinking of the future and my retirement. Believe it or not, I can't afford to save very much at all! *GASP* Who'd'a thunk it? I really get resentful when I get crap for not having a big ol' nest egg building in my bank account, when these people are not me and don't know what my life is like. I know this is sort of off-topic, but I started reading this thread and heard several people talking about how they were responsible or disciplined enough to save money for retirement. Believe me, if I was able to I'd be ECSTATIC to be able to save for retirement! More than ecstatic, I'd be crowing about it too! But the cold, hard facts are, I can't. We spent almost a thousand dollars yesterday on car repairs, just so that we could get it to last a bit longer and not have another car payment or higher insurance rates... and until my husband graduates, I don't see it improving, which will be several years yet. (I suppose someone's going to mention that I have internet service I don't need and could save that, welp, sorry, I'm at work; don't think they'd appreciate that! )

Okay, I'm done ranting. Sorry, I'm not meaning to offend anyone, just giving my own personal frustrations a vent. *stepping off soapbox*

 

[ducklite]

*sigh* I have a little over $1k saved right now. And it's not because I'm undisciplined, or irresponsible, or don't care, or that I'm not thinking of the future and my retirement. Believe it or not, I can't afford to save very much at all! *GASP* Who'd'a thunk it? I really get resentful when I get crap for not having a big ol' nest egg building in my bank account, when these people are not me and don't know what my life is like. I know this is sort of off-topic, but I started reading this thread and heard several people talking about how they were responsible or disciplined enough to save money for retirement. Believe me, if I was able to I'd be ECSTATIC to be able to save for retirement! More than ecstatic, I'd be crowing about it too! But the cold, hard facts are, I can't. We spent almost a thousand dollars yesterday on car repairs, just so that we could get it to last a bit longer and not have another car payment or higher insurance rates... and until my husband graduates, I don't see it improving, which will be several years yet. (I suppose someone's going to mention that I have internet service I don't need and could save that, welp, sorry, I'm at work; don't think they'd appreciate that! )

Okay, I'm done ranting. Sorry, I'm not meaning to offend anyone, just giving my own personal frustrations a vent. *stepping off soapbox*

We were in a similar situation in our early 30's. I had a small 401K (under $1K) and DH had nothing. He left his job to go back to school. After he graduated we had to make up for lost time, and we did. We lived in a home that was WELL below our means while our friends built McMansions. We funded 401K's and saved. Paid off all our debt exept that mortgage and a car loan with 0% interest--does that even count as a loan?

Then we decided to build our retirement home NOW, while we were able to afford it. We figured if we struggled for a few years carrying two mortgages, we could buy a home that would quadruple or more in value over the years, and eventually sell the other for a windfall. Plans changed and I moved into that "retirement home" and we sold the other home. We were originally going to rent it, but I woke up one morning with my gut screaming SELL IT NOW!!! We did, and I'm glad we did, as we got top dollar and the market went flat and values dropped not six months later.

We took much of the proceeds and invested them into our retirement accounts. And that allowed us to not only catch up, but have probably more than triple what the average couple our age has saved for retirement.

Bottom line, the consequences of his education will allow your income to grow substantially But rather than spending as much as you're making, continue to live like you do now and allow the savings to catch up for a few years. It's doable! IN the long run you'll be able to have nice nest eggs. IMHO usually an education is as much of an investment as cash in the bank. YOu've got plenty of time to catch up once he's finished. It's those that never bother to catch up--or even try to save that are the ones I've got no respect for. The "lets buy a widescreen instead of putting the money away for our retirement" gang.

Anne

 

[tedhowe]

*sigh* I have a little over $1k saved right now. And it's not because I'm undisciplined, or irresponsible, or don't care, or that I'm not thinking of the future and my retirement. Believe it or not, I can't afford to save very much at all! *GASP* Who'd'a thunk it? I really get resentful when I get crap for not having a big ol' nest egg building in my bank account, when these people are not me and don't know what my life is like. I know this is sort of off-topic, but I started reading this thread and heard several people talking about how they were responsible or disciplined enough to save money for retirement. Believe me, if I was able to I'd be ECSTATIC to be able to save for retirement! More than ecstatic, I'd be crowing about it too! But the cold, hard facts are, I can't. We spent almost a thousand dollars yesterday on car repairs, just so that we could get it to last a bit longer and not have another car payment or higher insurance rates... and until my husband graduates, I don't see it improving, which will be several years yet. (I suppose someone's going to mention that I have internet service I don't need and could save that, welp, sorry, I'm at work; don't think they'd appreciate that! )

Okay, I'm done ranting. Sorry, I'm not meaning to offend anyone, just giving my own personal frustrations a vent. *stepping off soapbox*

Macfamily,

I, for one, don't begrudge anyone spending the money (or forgoing income) in order to further education or otherwise better themselves. I would agree with Ducklite's post just after yours.

My problem when it comes to retirement savings, are the people who are my peers, both in education and professional experience, who saved NOTHING during the mid- to late-nineties. I'm talking about young, professional couples who were married, and both working with no children and who were spending EVERY CENT of good professional salaries without putting anything in 401K plans that were offered by our company (my wife and I both worked for a small IT consulting company when the tech boom was, well, booming and we did very well at the time).

Meanwhile, we were spending plenty of money, but at the same time we started out with a few percent going into the 401K, and each year when it was time for a review and raise, another 1 or 2 % would go to the 401K. In fact, we just did it again twice this year, when my wife received her first significant raises in the last few years.

We lived in far smaller houses than the mortgage formulas said we could afford - staying in townhouses until 3 years ago when we had a second child on the way and wanted the room for her and for the girls to play in the yard. Other friends of ours were buying single family, 4 and 5 bedroom homes for the two of them and driving new BMWs and Geep Grand Cherokees every 2 or 3 years.

I don't begrudge anyone spending their money in any way they see fit (heaven knows I still spend too much on tech gadgets, movies and music), but take care of the future first.

To bring this rant back around to the topic of Social Security...
I have always seen Social Security as a social contract that was supposed to be helping keep society together. In short it was as if we were saying "I'll support the retirees today with money from my paycheck and in return, I expect to be supported tomorrow in my retirement by the workers then."

I don't know which is the chicken and which is the egg, but far too many GenXers (and baby boomers before them) seem to have the attitude that "If Social Security isn't going to be there in the future, then the hell with it, I'm not going to be concerned about it either."

To me that makes no sense. I'd like to say that part of the problem was how much later many professional GenXers were in starting their families, but I don't fit that mold either. I didn't have my first child until I was 32, but I started savings seriously for retirement at the age of 23.

Okay, my rant is done (for now).

Ted

 

[mrp4352]

I agree. It's kind of like going to the grocery store checkout with a full cart of groceries. You pay for your groceries, and it's NOT SELFISH to expect to put those bags into your car and take them home for your family.

Agreed.

However, there's a whole generation that's looking at paying for the groceries and not getting to keep them. At the current rate of funding, social security funds will not be available at some point. And those of us that are facing it are worried!

To me, the ideal would be to select two cut off ages:
1) age one and older - keep the plan as is
2) age two and older - allowed the option of keeping the current plan as is or selecting a retirement fund for their contributions to be moved to (and for future payments to be placed in)
3) age two and younger - contributions to a goverment selected, but publicly held retirement savings account required.

Yes, it would raise costs for the government while the SS groups are still collecting, but eventually the retirement ship would right itself and people my age will know that we have funds to look forward to.

 

[C.Ann]

MrsPete,


My wife and I already have nearly $200K in retirement savings and are on track to be comfortable in retirement, but barring a windfall, I don't expect to be able to retire until at least 70..

----------------------------

Every time I see this number - "70" - I have to wonder.. Unless you are able to keep your current position, who do you think will hire you and pay you more than pennies - once you are in that age group where health issues play a major part in your life and employers don't want to hire you due to rising healthcare costs? ("You" meaning in the general context..)

Many, many people have lost their jobs due to downsizing; outsourcing; and what-have-you right around the 55-year old mark and have had a devil of a time finding new jobs due to their age (even though it's "supposed" to be illegal to discriminate based on age).. My former SIL is 64 years old now - has had many, many years of valuable work experience - but lost her job almost 2 years ago when the company she worked for closed down.. She has been on hundreds of interviews - impeccable references - but still, no job.. As soon as they "see" her, the curtain closes.. For now she's working in a convenience store just to survive - and even that job was only offered as part-time - so she wouldn't qualify for health benefits..

 

[tedhowe]

----------------------------

Every time I see this number - "70" - I have to wonder.. Unless you are able to keep your current position, who do you think will hire you and pay you more than pennies - once you are in that age group where health issues play a major part in your life and employers don't want to hire you due to rising healthcare costs? ("You" meaning in the general context..)

Many, many people have lost their jobs due to downsizing; outsourcing; and what-have-you right around the 55-year old mark and have had a devil of a time finding new jobs due to their age (even though it's "supposed" to be illegal to discriminate based on age).. My former SIL is 64 years old now - has had many, many years of valuable work experience - but lost her job almost 2 years ago when the company she worked for closed down.. She has been on hundreds of interviews - impeccable references - but still, no job.. As soon as they "see" her, the curtain closes.. For now she's working in a convenience store just to survive - and even that job was only offered as part-time - so she wouldn't qualify for health benefits..

I agree with you that it is a problem, and one that will have to be dealt with.

Fortunately as a GenXer, I think this will be less of a problem for me and my generation because as the demographics continue to change, there will not be as many younger workers available to take jobs.

I think this is going to be a big problem for boomers and for those like your SIL who are slightly older than the boomers. Actually, I think the boomers might be part of the problem for her, since the boomers provide such a large pool of people who are 10 years younger than her - those that have a wealth of experience as well, but who will be part of the work force for a longer time and are therefore more attractive to employers.

"70" itself is just a number meant to symbolize a shift from the "60"s as the decade of retirement.

No doubt this is an issue to be concerned with, but it is probably 20 to 25 years down the road for me to grapple with. In the mean time, I have the next 2 decades to make hay while my professional sun shines.

It's all the more reason to plan for retirement and save as much as I can now.

 

[speedyf]

I totally agree with everyone's concern for Social Security...but, I also have another concern to throw out there.

I'm a Gen-Xer that will probably not see a dime of SS or will have to wait until I'm 75 to start collecting. What gets me PO'd is that I will pay for 40+ years at least 7.5% plus my employer paying 7.5% and I will probably not live long enough to see any money back.

I totally agreed with a plan awhile back to take part of my 7.65% (really 15.3% with the employer match) and contribute to a private fund. I think the numbers being floated at the time were 4% to a private fund and the other 11% to "traditional SS".

The other thing that PO's me is that I will pay all this money and my kids won't get to "inherit" it if I die before age 70. With my 401k, at least if I die before I can start collecting, the money will go to my kids which will still make me happy that someone I love is benefiting from my years of savings.

If we take 4% now and contribute to an investment instead of SS....even if it's very conservative....I would at least feel better that my children would get some of my hard earned / hard saved money if I happen to pass away before I get to spend it.

For Example:

Take a person/family that averages a low $30,000 per year over 40 years of work. That person/family will pay $4590 per year including the match required by employer (7.65% x 2 = 15.3% total). Over 40 years, that family pays $183,600. What if both members die shortly after they are eligible to receive benefits. They paid over $180,000 into the system and received nothing. Their kids are grown and they receive nothing. This doesn't even include any interest that would have accrued over the 40 years.

Instead...let say you take out 4% of the 15.3% and invest it at a very conservative 5% interest over that 40 years. I mean....a savings account or a CD at a bank makes 5% interest these days. The other 11.3% continues to go toward traditional SS and medicare.

On a family / individual that averages a low $30k per year for 40 years....that 4% is $1200 per year or $100 per month. At 5% after 40 years, that total is about $150,000. If you die the next day at 40 years and 1 day, your kids get $150,000. If not, you have $150k to help you in retirement.

Of course...that's all based on 40 years of work...where most of us are looking at working from age 18 (at least part time) to around age 65....which is more like 47 years of work.

Instead...based on the current system....I get to work from age 18 (really 16 for me) until age 70 (probably higher than that by the time I get there).....pay in 15.3% of my salary.....and get to probably collect about $1500 a month if I live past 70 with no benefits going to my kids if I die.

Woohoo!

Speed

 

[smiller]

Well, 7.65% of our income (up to $97,500) goes to SS and medicare. Invested properly over a lifetime of work....yep, it would be a nice chunk of change.

Try working as an independent contractor - paying 15.3% really makes you think twice about SS - and ouch! when it comes to tax time. It is not fun.

I'm definitely trying to plan my own retirement savings/financial future: I own my own home (reasonable mortgage right now), I deposit regularly into savings (no fancy plans yet, though), and I'm in grad school to hopefully get myself a higher salary!

 

[Amii]

I take it you are younger. Those who paid into for 50 years and then will get nothing out of it will most definitely be screwed worse than those who paid into it for fifteen years. If it ends in 30 years as is predicted, I will have paid probably $300,000 into it over my 50 working years, and will get about six years out of collecting it. Those who have only paid into it for five years--particularly their lowest earning five years as young adults will be far less impacted by the loss.

The way to fix it is easy. Choose a date in the next 20-30 years that it will no longer exist, give those who have paid into it thus far who won't be retired yet (and pro-rate for those who will) all the money they've put into it back in the form of one lump sum which must be invested in an IRA immediately (not at retirement). The require all employees to fund 401ks with the money that would have been contributed to SS, with an emplyer match of the same amount.

Put the money back into the private sector to better stimulate the economy.

Take the Medicare portion of the contribution and treat it the same way, only it will go into a long-term health care spending account that can be tapped into at retirement to buy health insurance through the private sector.

Pay the equivelent of SSDI benefits out of the general fund. I do believe that the government does somehow need to provide for the disabled.

Now sure why it's so difficult.

BTW--I vote and I write my politicians, so I AM proactive in trying to shape the future of our country.

Anne

I am 37. If Social Security ends in 30 years I will be 67. I will have paid into the system for 52 years and yet I will not see a dime of that money. I really don't think I will see the worst of it. I think people younger than me will have it worse than me. I just think the focus needs to be on fixing the system and not who is more entitled or who is going to have it worse.


I vote and write to my politicians. It hasn't helped much but I'll keep trying.

 

[MrsPete]

I was working in the private sector. Do you really for one minute think that taking the cash wasn't the right choice with that info? Have you spoken to anyone who retired from Enron, IBM, or a host of other companies who ahve changed their pension plans mid-stream?

Anne

Anne

As I said, it's not ALWAYS the right choice to take the money. Conversely, neither is it ALWAYS right to leave it there. The private sector and government aren't the same; that's one factor in whether it's right or wrong.

You'd said in your previous post that anyone with common sense would take the money out -- I'm simply saying that's not ALWAYS true.

 

[MrsPete]

Our son contributes 10% of his income to his 401K (doing it now while he'll never miss it!)

This is the single best piece of advice I could give any young person. Put aside a good percentage IMMEDIATELY so that you never miss it.

 

[MrsPete]

I thought....HOW NICE....as I went to clean the bathrooms for my $11 an hour!

Try not to worry about it. In five or ten years you'll be doing something better, and people with those attitudes will still be using their food stamps (or whatever they're called).

 

[speedyf]

This is the single best piece of advice I could give any young person. Put aside a good percentage IMMEDIATELY so that you never miss it.

Just think...ducklite's son is contributing 10% of his salary to retirement while paying 15.3% to SS (7.65% from his check and 7.65% that his employer cannot offer to him because the employer has to pay the government).

So...he's paying 10% into something he will use as retirement in the future and 15% into something he will probably never see returned to him in his lifetime.

Of course...he's probably also paying around 10% of his salary into Federal Income Tax....at least a few % into state income tax (if his state collects)....as well as another 8 to 10% or more in sales tax every time he purchases something.

Anyone ever think we might be taxed to high?

Speed

 

[MrsPete]

The problem is that they spend a fortune marketing new drugs. Frankly half the new drugs on the market do nothing that existing drugs already do. They just have fancier names and are maybe more convenient. A one a month birth control patch instead of a daily pill for example. It does the same thing, and the only benefit is convenience. I'd be happy to pay a lot less for a little less convenience.

I don't know about all drugs, but I'm going to disagree about the patch vs. daily pill for birth control. Way back when I used to take pills, I was horrible about it -- I never took them at the same time of day, and I had cause to be "worried" a couple of times. Eventually I went to another method because a daily pill just didn't work for me. That "convenience" could make the difference between using the pill successfully and having an "oops" baby. That sounds worthwhile to me -- more than just more convenient.

Also, I remember back when I was taking prenatal vitamins with my first pregnancy. I already had horrible morning sickness, and the pills weren't helping. The doctor wrote me a 'script for a fancy new prenatal vitamin, which had a nice time-released coating -- it was so much better than the others. 90% of the time I'll agree that generic drugs are just as good as the name brand, but there are exceptions!