“Retirees Filling the Front Line in Market Fears,” says a New York Times report still online in the wee hours of Wednesday morning.
Damn straight! The craziness of expecting people to base their economic security in old age on the stock market is coming home in the current flirtation with worldwide depression. This country’s need for a better way to take care of elders who have spent their entire lives working with little or no chance of saving enough to support themselves into advanced old age is less widely discussed but every bit as desperate as our need for a decent healthcare system.
In the first place, you need to have stashed away a phenomenal amount of money to have it last you to the end of the life expectancy that most Americans now look forward to enjoying. If “enjoying” is the operative term when what you’re looking at is twenty or thirty years of poverty. If “enjoying” is what one feels when confronted by this circumstance:
At the same time, other parts of the economy are closing in around her. Though her home is paid off, her property taxes have risen to nearly $14,000 a year, up from $5,000 when she bought the house 10 years ago. She was counting on the annuity [through AIG, not federally insured] to pay the taxes.
Fourteen thousand dollars in property taxes? For the love of GOD! I’m faced with the possibility that I won’t be able to stay in my paid-for home with $2,100 worth of property taxes. Fourteen thousand bucks is more than my entire Social Security income would be if I retired today. It’s almost as much as the gross Social Security income I will have if I retire at age 66.
Consider: with a total life savings of around $550,000—significantly more than the average American’s nest egg—my total gross income will be about $38,730. That’s GROSS, folks: the federal, state, county, and city governments all expect their cuts from that. Imagine what my net will be. I’ll leave the imagining to you, since that picture is more than I can bear at 3:30 in the morning.
Interestingly, 38 grand is too huge an income to give a pensioner a break from county property taxes; and in any event, the “break” is no exemption from the rip. If your income is under $12,000 a year, maybe the county will freeze your taxes at the amount where it stands when you apply. So if I were too poor to afford to dine on cat food, I could get my taxes frozen at 17% of my income. How white of the county.
There’s no way I can pay $2,100 out of the post-tax remains of that income and still eat. If the housing market hasn’t turned around in a couple of years, so that I can move out of this house and into a place in Sun City where the taxes and insurance are a little lower, I am screwed.
And darlin’s, if your mom is screwed today, just imagine the screwing you’re going to get when you reach old age. If over half a million dollars and a paid-off house are not enough in 2008, what will you need to stay in the middle class come 2038?
What’s needed here is not assiduous scrimping and smart investing. It’s political action.
My annual income is around $12K but my taxes won’t be frozen because I don’t own my home and probably never will.
I won’t even be able to afford to retire. So be grateful for what you have.
Sure, I’m grateful: that MAYBE I’ll be able to retire when I’m 70, if I live that long, if my job lasts that long.
How does gratitude or lack of it change the fact that this country needs to take action to keep its elders out of dire poverty?
Face it. This will not be your father’s retirement. We don’t get to have the retirement some of our parents were/are lucky to have. Retirement — defined as the cessation of all paid work, financed by entitlements — is dead, with the possible exception of programming for those who are extremely (not mildly, or just getting older) disabled.
My husband and I realized this before we were married two years ago. We had two choices then: a) moan about how unfair it all is — especially when we are confronted on a daily basis with seeing his parents on a fabulous pension and investment income — and still wind up broke; or b) figure out something of a money-maker aside from our day jobs that we enjoy doing together so that it won’t seem too much like work. We’re in our mid-fifties, with no 401k, no pension, nada. Our most recent social security statement, if it can be believed, predicts a household income at age 70 of about half of our current obligations.
We’re working on choice b, planning on staying as active and engaged as we are able. Productivity is the recipe for a happier, better life at any age, under any circumstances.
Why anyone would accept or promote as fact that the country “needs to take action to keep its elders out of dire poverty” is beyond me. You’re the one who needs the government. Why? You’re educated, smart, and capable. Buck up!
I do feel sorry for those who bought into the idea that they work for x number of years and then get to putter with a direct deposit every month. It’s disappointing as all get out to realize you wasted all that time. But it is what it is. Get up and get moving. Your copy editing business is a great step in the right direction.
😀 Maybe before we pass judgment, we should know what we’re talking about.
I work 12 to 18 hours a day, every day, seven days a week. Effectively I have two fulltime jobs: one at the Great Desert University and one on the side. The time I find to write this blog comes at two in the morning and in short breaks between paying projects.
“My father’s retirement” was hardly sumptuous. He worked until his health made it impossible for him to continue working, about eight years past his planned retirement age. He retired on $100,000, having pinched every penny that entered his hands; the double-digit inflation of the 1970s converted the buying power of his life savings to about the equivalent of $30,000 today. The union that muscled out the union he had belonged to most of his adult life stole his pension fund and threatened the families of those members who tried to protest, and so he had no pension from the many years he went to sea. He probably would have starved were it not for Social Security.
“Buck up”? “Get up and get moving”? Are you kidding? How much moving does one have to do? I’ve been writing and editing since two o’clock this morning; I went to bed at 10:00 p.m., having copyedited five chapters of the most ludicrous drivel you can imagine.
My point is that in spite of all the getting up and getting moving, in spite of above-average earning power (some years I have to work to keep my net taxable income BELOW the AMT level), a single earner with excellent savings skills, no significant debt, and a smart investment plan still is likely to hit old age without enough resources to support her or him all the way through to the grave. This is particularly so when we rely on income from equities investments in instruments such as 401(k)’s and 403(b)’s, by their nature a risky affair, to support us through old age.
The 85-plus age group is the fastest growing demographic for the United States: where a generation or two ago Americans could expect to live into their 60s or, if lucky, their 70s, most of us now can reasonably expect to live into our 80s, 90s, or even (heaven help us) our 100s.
Even a substantial savings fund — say, a million dollars — is unlikely to keep you out of poverty as you age. And if you’re in Betsey and her husband’s position, you could indeed be in deep trouble. God help you if one member of your partnership dies or is severely disabled.
It’s all well and good to say we’ll work until we drop in the traces, which is what I plan to do. But let’s bear in mind that old age is no picnic. Many of us — possibly most of us — will not be ABLE to work for the entirety of our lives. A time comes when, physically or mentally (or both), you’re simply no longer competent to do paying work. Then what? Should those folks who can no longer pull the plow be set adrift on icebergs and left to die?
And those of us who can no longer work and then find we can’t stay in our homes because the taxes outpace our incomes? Do we take up residence under the oleanders along the Arizona Canal?
What exactly are we going to do, as a civilized people, to see that the elderly are safely housed, fed, and cared for over the next 40 years or so?
It is becoming extremely ridiculous how difficult it has become to save for your future. Funny about Money has made a great point. I am sorry to hear about the rough times his grandfather has had saving for his retirement.
Firstly Pensions are almost a non-existent term now. Very few companies give out pensions. Only larger older companies have the capacity and resources. The reason being that so few people stick with their jobs longer than a few years. That is part of how our society is now. Companies realize that a pension fund is useless if no one stays with a job. I would love to have a pension fund, and I would enjoy sticking with one company that I really enjoy. Unfortunately I just can’t find something like that anymore.
And I don’t think it is as much government intervention that is needed as it is societal change. No one wants to stick with a job anymore. As soon as they become bored with a job they move on to the next.
I am sorry about my rant, unfortunately I also feel upset about the situation. As if my future wasn’t uncertain enough, I have one more worry to add to the steeping pile.
I worked hard and saved for more than 40 years to prepare for retirement. My own dad died 4 weeks after his first social security check arrived, so I didn’t want to follow his footsteps and work myself to the bitter end. Now…my investments have dwindled nearly 20% as if by magic and real estate has decreased 9% between May of this year and today. I am retired but preparing to go back to work. There is one tiny positive upside to the credit crunch that is at the edge of the current financial crisis. I no longer get a daily pile junk mail for new credit cards from Citi, Amex, Capital One or a host of others. I no longer get offers from Countrywide to refinance my paid off home (idiots). My shredder is taking a rest and the mail gal doesn’t have such a heavy load.