How do people retire if they live paycheck to paycheck?

[rob in cal]

    According to some reports a huge amount of working age Americans live paycheck to paycheck, one layoff or huge car repair bill away from a financial disaster.  And yet there are also huge amounts of Americans who are able to retire comfortably.  So, the question is didn't a fair amount of them also live paycheck to paycheck during their working lives? This is hardly a new phenomena after all.  I wonder if a big chunk of people allegedly living paycheck to paycheck actually have a big retirement nest egg that's not being considered, or have a good work pension that's also not being considered.  I have some relatives who would probably be considered paycheck to paycheck but in about 5 or 7 years one of them will be able to retire pretty well due to working for the same government entity for over 30 years and being old enough by that time.

[TheAnonOne]

They don't, other than luck (inheritance, pension) or SS.

It's that simple.

Sent from my SM-G935T using Tapatalk

[Chris22]

1.  Sell house, move to low COLA
2.  Drastically downgrade life and/or subsist on pension/SS/401k
3.  Don't

[ketchup]

If there's truly been no retirement savings (or pension), then it's all up to Social Security checks, maybe with a reverse mortgage thrown in there.

And plenty of retirees live "paycheck" to "paycheck" too in that sort of scenario.  I've definitely seen it.  Simply being retired doesn't always mean comfortably retired.

[prognastat]

Saving too little, then downsizing from a family home to a small house or apartment in a LCOL area, collecting social security and help from family members.

Some simply don't and keep working until they aren't physically able to anymore.

[redbird]

Some also either rely on family members to support them or they go into debt to afford it. The latter especially is for the people who involuntarily retire - either they can no longer work due to health issues or they get fired or laid off and can't find another job.

[stoaX]

If you are among those who end up with a pension you can live paycheck to paycheck and still retire...just not early.  And those living paycheck to paycheck don't necessarily live that way their entire working lives.  They may save some at some points in their careers and live paycheck to paycheck at other times - the number of people living paycheck to paycheck must be a rather fluid number. 

[VolcanicArts]

Buy lottery tickets and pray

[DTaggart]

This is my father in law. He managed to spend every cent he and (now deceased) mother in law ever earned while working, so he subsists on SS and MIL's pension, with lots of high-interest debt whenever "emergencies" crop up (because who could possibly foresee a 10+ year old vehicle might someday need new brakes or tires??) When the debt payments get too high, he consolidates, and when that is no longer sustainable, he declares bankruptcy.

Once he's re-indebted himself enough too quickly to declare bankruptcy again, he starts trying to bum money off of family. Once family figures out that he's not willing to alter his lifestyle to correct his situation (ie move to a place he can afford or maybe stop buying stupid collectible coins or ceramic figurines), they stop giving him money. Only then does he finally decide to start selling off some of the immense quantities of collectible shit he's bought over his lifetime (for far less than he paid for it). Once he finally gets caught up on his late payments and still has a little leftover from the selling of stupid shit, does he finally, at 83 years old, learn his lesson and maybe set aside some of that extra money for the next inevitable emergency? Or does he buy himself a new flat screen TV with surround sound, because his current flat-screen doesn't have built-in surround, just an external sound bar....?

I'm sorry, what was the question again? Oh, Social security and credit cards/loans, that's how they do it.

[caracarn]

I think several alluded to what my response is.  You can always retire, it just may be a very uncomfortable retirement.  I know several people who only collect their meager social security and if not for the food stamps they qualify for might not have enough to eat.  They live in terribly run down housing with leaky roofs and never do nay home repair hoping that they die before the house collapses.  It's not a life I'd want and so I make different decisions than living pay check to pay check. 

[okobrien]

My parents had about two weeks of savings for the majority of my childhood.  As the five of us kids moved out and went to college, they had fewer mouths to feed, the house got paid off, and they were able to slowly build up reserves.  Between my Dad's union pension and SS, he was able to retire.  The ironic thing, is now both parents have build up some side gigs which they really enjoy, and bring in more money than they need.  So in summary, they lived paycheck to paycheck until they retired.  Now they bring in more than they ever have before, and are finally done stressing about money.

[cj25]

My 80 something grandma is married to someone 18 years younger and neither work or have savings, so he went back to school for his phd and they live off student loans.

My dad has a small pension until SS kicks in, then he will have more money and a bump in his pension since he basically retired after a layoff in his late forties.  He has a weird adjustable rate balloon payment mortgage that he assumes he won't live long enough to have to deal with (even though he bought the house in 1985 for $81k... currently owes like 200k).  He barely has any food.  We buy all his clothes for birthday/Christmas gifts.  He currently doesn't have hot water after his water heater broke a year ago.  Luckily he has insane mechanic skills and is basically a hoarder (of cars/car parts/random shit) so he can usually fix or unload something if in a major pinch.  He has no health insurance and is in very bad shape.

Guess that's how people do it.

[Giro]

A lot of people work until they are eligible for social security.  By that time, even the paycheck-to-paycheck folks have paid off their homes.  Yes, there are people who borrow from mortgages but I think that ends when they are in their 40's/early 50's.  They still have a good bit of time before retirement to get the home paid off.  Then, no mortgage and living on the SS check is pretty doable.  not fabulous and not early but doable.

[Just Joe]

They might borrow from their mortgages until late into life and they might work well past the typical retirement dates. Then they might have a house payment into their retirement years. Basically paying interest for a lifetime. And it worries me alot to be honest. I want them to be comfortable and active and happy.

DW and I are emulating other parts of the family. Modest lifestyle, good income, savings/investment, DIY skills, general long term happiness with life.

[MrsPete]

My best guesses:

- Work 'til 65 (or later) and collect Social Security. 
- Disability. 

Coupled with a paid-for house (which, in recent years, have probably allowed reverse mortgages) either of the above could lead to a modest, if not comfortable, retirement. 
Also, we all know that appearances aren't necessarily reality ... some of these people who appear quite comfortable probably dread receiving the credit card bill every month. 

[WhiteTrashCash]

Move in with adult children. Serve as free babysitters. Watch Judge Judy all day.

[I'm a red panda]

A lot of people work until they are eligible for social security.  By that time, even the paycheck-to-paycheck folks have paid off their homes.  Yes, there are people who borrow from mortgages but I think that ends when they are in their 40's/early 50's.  They still have a good bit of time before retirement to get the home paid off.  Then, no mortgage and living on the SS check is pretty doable.  not fabulous and not early but doable.

This is an awfully optimistic view of how people are living.   MANY of the people who live paycheck to paycheck their whole life do not own property. They rent.


I think your notion that people stop borrowing off their mortgages when they are early 50s is also really generous to their financial smarts...  My in-laws (late 60s) have been in their house for 40 years, and have like 10% equity in it; because they borrowed against it to get a new BMW and go to Disney world, and some other stuff we can't account for- because the money is all gone now. This is at least the second time they've done this, as they did it once when DH was a kid too, again for vacations and consumer goods.  The house is falling apart, and they can't afford to fix it.  The new mortgage was another 30 years.

His Dad has a fire fighters pension, but it isn't enough to pay the mortgage, the $250 cable bill, and groceries- so he is still working.  DH's mother has never held a job more than a year, and refuses to even look for one.

[ringer707]

To echo others- social security and reverse mortgages. DH's grandparents have been retired for as long as I've known them (10 years, and they were 68 back then). They were the type who turned 65/66 and said "I'm all done, it's time to retire" despite having nothing saved. Within no time, they were way in over their heads to the point that my MIL had to take over their finances. Then grandpa had some serious mental health issues (think standing in the backyard in your underwear-type stuff) and gained access to some of the accounts and went nuts buying everything. Very similar to a manic state. They were really in a bad situation. I don't know how many of their bills my MIL was paying for them, I know at least phones. Grandpa has since died and Grandma quickly remarried a rich man (that's a wild story for another day).

[Much Fishing to Do]

Everyone says you can't live off of social security, yet most do.  I think its like saying to a mustachian you can't live off of half your income or less.  Its difficult, but can be done, it just requires certain sacrifices.

Seems like there are only really 2  types of people.  The first are the few that work long and hard and save a lot of money and spend quite a bit and retire and can continue this spending. The rest are those who drastically cut expenses to the bones and learn to live off of half or less of what they were making at some point.  If you do it at 65 and live off of your social security you're normal.  If you do it at 35 and live off of investment income you're a mustachian.  I think its often the same resulting quality of life between those two, the difference being one worked an extra 30 years (and of course "same quality of life" I say tongue in cheek...)

[wenchsenior]

A lot of people work until they are eligible for social security.  By that time, even the paycheck-to-paycheck folks have paid off their homes.  Yes, there are people who borrow from mortgages but I think that ends when they are in their 40's/early 50's.  They still have a good bit of time before retirement to get the home paid off.  Then, no mortgage and living on the SS check is pretty doable.  not fabulous and not early but doable.

This is an awfully optimistic view of how people are living.   MANY of the people who live paycheck to paycheck their whole life do not own property. They rent.


I think your notion that people stop borrowing off their mortgages when they are early 50s is also really generous to their financial smarts...  My in-laws (late 60s) have been in their house for 40 years, and have like 10% equity in it; because they borrowed against it to get a new BMW and go to Disney world, and some other stuff we can't account for- because the money is all gone now. This is at least the second time they've done this, as they did it once when DH was a kid too, again for vacations and consumer goods.  The house is falling apart, and they can't afford to fix it.  The new mortgage was another 30 years.

His Dad has a fire fighters pension, but it isn't enough to pay the mortgage, the $250 cable bill, and groceries- so he is still working.  DH's mother has never held a job more than a year, and refuses to even look for one.

Yeah...about 20% of 65+ crowd do not own homes.  And I suspect a significant portion of them have already tapped the equity on their home and continue to do so because they have no cash to pay for upkeep or repairs. Or they own the property but start to fall behind on property taxes a few years in.  A significant portion of the elderly in my family and my husband's family fall into one of these categories.

[mm1970]

Social Security, part time jobs (under the table), help from family

[BAMxi]

My grandmother fits into this category. Though she has a very small emergency fund saved up, i believe it to be in the several thousand dollars range and is not invested in anything other than a savings account. She worked at a department store for the majority of her working years and in retail for pretty much her entire career. She lives modestly with a paid off older Scion xA with only about 45k miles on it. She rents a 2 bed 1.5 bath apartment in a community with income restrictions for about $360 per month and lives alone. She receives a SS check and EBT (food stamps) which she gets by on, and is covered by Medicare. She is able to maintain this lifestyle comfortably, however she does not have much room in her budget to allow for traveling or other costs beyond daily living. She does pay for cable and high speed internet. I have tossed around the idea of helping her cut the cable part of her bill, however she is very change averse and likes to be able to just turn on the TV and flip channels. Whatever helps her fill her time, i guess. Seems her biggest struggle is feeling lonely and bored, as she just is at home with her cat most of the time. I'm not sure how  much of that is because of her limited budget and how much is just because she's getting older now.

[little_brown_dog]

They use govt programs like social security to pay for the bulk of their expenses. Family members, such as adult kids, often fill in the gaps by helping to cover utility costs, transport costs, or groceries. When they spend down their savings and need nursing care in a facility, medicare covers it. My grandmother ended up in this exact situation. She had literally no money of her own left when she died. It was SS/medicare and her kids covering her living and medical expenses. My grandfather retired in his early 50s and they just spent down their savings and collected SS in their 60s. In hindsight it was clear he probably retired way too early and mismanaged that situation entirely. She lived until her late 80s and had almost nothing left for the last 5-10 years of her life.

[DarthKitten]

Both of my parents do this (separately). They get SS and split the proceeds from the house when they divorced. They were living a mustachian lifestyle out of necessity my whole life due to low income (minus the saving part, obv.), so neither are borrowing from family or living in low income housing. There are also a lot of assistance programs out there if you know where to look. My mom uses a senior bus service that's available to anyone over 55 regardless of income, yet few people use it.

[Jrr85]

    According to some reports a huge amount of working age Americans live paycheck to paycheck, one layoff or huge car repair bill away from a financial disaster.  And yet there are also huge amounts of Americans who are able to retire comfortably.  So, the question is didn't a fair amount of them also live paycheck to paycheck during their working lives? This is hardly a new phenomena after all.  I wonder if a big chunk of people allegedly living paycheck to paycheck actually have a big retirement nest egg that's not being considered, or have a good work pension that's also not being considered.  I have some relatives who would probably be considered paycheck to paycheck but in about 5 or 7 years one of them will be able to retire pretty well due to working for the same government entity for over 30 years and being old enough by that time.

There are plenty of people scrounging by on social security and other public or private assistance, but I don't think we've hit the big wave of retirees who lived well during their working life but didn't save.  I think a lot of these people will keep working, and then we will have an interesting political situation where a large political block is complaining about SS not being high enough at the same time SS taxes are only bringing in enough money to pay for 80% +/- of benefits.   

[Dicey]

I think there's a big difference between retiring and just stopping your job or having it stopped via outside forces. Can't undervalue the power of FU money.

[Livingthedream55]

I see quite a few senior citizen baggers at the supermarket. I don't think they are there for kicks. Also, I do taxes for the working poor through the VITA program and see a lot of folks in the 60's with W-2s from Walmart, Dollar Store, Christmas Tree Shops, etc.

[Rosy]

OK - so this is a board with primarily a young to middle age membership, a nice percentage even well to do. But, really, in what universe do you live? I ask that in all sincerity, wondering in which gated community or sheltered environment you might live.

Rant:
Government Program makes Social Security sound like a hand out, it is not a hand out! That is nothing but current political rhetoric and clueless Millenial spin. 

SS was originally touted as a retirement program for all citizens. There was no 401K and only the big companies had pension plans. It was and is forced participation.
So how is this a hand out???

Millions of people including myself have paid into SS during their long working lives - often 30-40 even 50 working years and you would deny us or make it sound like a hand out? The hell!
If I could I would take it in one lump sum, with interest if you please. Instead I've loaned my money to the government for years, so they could fund other programs with no personal access to my own money, not even in an emergency. I feel cheated and I am, when I see that the monthly payments remained at zero percent living increase or at a paltry 0.03% - which by the way is the exact amount my Medicare insurance premium went up by. Result - zero increase for me.

Letting the program languish at zero percent increase is an effective political measure to throttle the program. According to my fiendishly clever uber Republican nephew, the program will be phased out altogether in seven to eight years. I noticed on CNN this morning that they were actually sawing on Medicare in one of their concessions to the Conservative hold outs while debating the Health Care Bill .....
So perhaps he is right on.

SS is a good and much needed program as evidenced by just about every response given here - only a fool would deny that. Entitlement? Hell yes - I am entitled to the money I paid in and if it were you and your own money, you'd see it the same way.
You want a new system or nothing at all? Then give me back the money I paid into SS, but you can't, can you?, because you already pulled it out of SS and funded God knows what. This is no different than a private pension plan going bust due to mismanagement.
End of rant .....

@Jrr85 - I don't think we have to worry about 80% SS payments too much, people will be glad to get anything at all. The ultimate goal is to get rid of SS altogether and maybe they will. They have in essence begun looking for ways to defund it and the current political regime will not hesitate to gut it, if they get a chance. It will create another ever widening chasm between the have and the have nots. Interesting times we live in, in every sense of the word.

@Dicey - I agree - FU money is essential, but so is rock solid medical coverage and living healthy with plenty of pro-active preventative care - not to mention enjoying your life and living a little, 'cause you never know what tomorrow will bring. 

[prognastat]

OK - so this is a board with primarily a young to middle age membership, a nice percentage even well to do. But, really, in what universe do you live? I ask that in all sincerity, wondering in which gated community or sheltered environment you might live.

Rant:
Government Program makes Social Security sound like a hand out, it is not a hand out! That is nothing but current political rhetoric and clueless Millenial spin. 

SS was originally touted as a retirement program for all citizens. There was no 401K and only the big companies had pension plans. It was and is forced participation.
So how is this a hand out???

Millions of people including myself have paid into SS during their long working lives - often 30-40 even 50 working years and you would deny us or make it sound like a hand out? The hell!
If I could I would take it in one lump sum, with interest if you please. Instead I've loaned my money to the government for years, so they could fund other programs with no personal access to my own money, not even in an emergency. I feel cheated and I am, when I see that the monthly payments remained at zero percent living increase or at a paltry 0.03% - which by the way is the exact amount my Medicare insurance premium went up by. Result - zero increase for me.

Letting the program languish at zero percent increase is an effective political measure to throttle the program. According to my fiendishly clever uber Republican nephew, the program will be phased out altogether in seven to eight years. I noticed on CNN this morning that they were actually sawing on Medicare in one of their concessions to the Conservative hold outs while debating the Health Care Bill .....
So perhaps he is right on.

SS is a good and much needed program as evidenced by just about every response given here - only a fool would deny that. Entitlement? Hell yes - I am entitled to the money I paid in and if it were you and your own money, you'd see it the same way.
You want a new system or nothing at all? Then give me back the money I paid into SS, but you can't, can you?, because you already pulled it out of SS and funded God knows what. This is no different than a private pension plan going bust due to mismanagement.
End of rant .....

@Jrr85 - I don't think we have to worry about 80% SS payments too much, people will be glad to get anything at all. The ultimate goal is to get rid of SS altogether and maybe they will. They have in essence begun looking for ways to defund it and the current political regime will not hesitate to gut it, if they get a chance. It will create another ever widening chasm between the have and the have nots. Interesting times we live in, in every sense of the word.

@Dicey - I agree - FU money is essential, but so is rock solid medical coverage and living healthy with plenty of pro-active preventative care - not to mention enjoying your life and living a little, 'cause you never know what tomorrow will bring.

Though I agree some may think of it as a handout I don't think anyone in this thread has so far said anything of the sort. Quite the opposite I get the feeling that at least a solid majority of the people here on MMM would be considered left on the political spectrum and for supporting things like SS/Medicare/Medicaid etc.

It seems like a rant aimed at other people instead of any actual response that furthers the current course of the thread.

[wenchsenior]

They use govt programs like social security to pay for the bulk of their expenses. Family members, such as adult kids, often fill in the gaps by helping to cover utility costs, transport costs, or groceries. When they spend down their savings and need nursing care in a facility, medicare covers it. My grandmother ended up in this exact situation. She had literally no money of her own left when she died. It was SS/medicare and her kids covering her living and medical expenses. My grandfather retired in his early 50s and they just spent down their savings and collected SS in their 60s. In hindsight it was clear he probably retired way too early and mismanaged that situation entirely. She lived until her late 80s and had almost nothing left for the last 5-10 years of her life.

Just a point of clarity. Medicare does not cover nursing home or long term care.  Medicaid currently covers it if you spend down your assets to essentially nothing.

[Rosy]

@prognastad - Rants can easily go off topic:) - it was just the way SS was referred to as a government program that hit me wrong - maybe I read a tone into it which did not exist. So there ya go - and as far as the people here on MMM, I love MMM and the wide spectrum of people and opinions one runs into on this board.

[prognastat]

@prognastad - Rants can easily go off topic:) - it was just the way SS was referred to as a government program that hit me wrong - maybe I read a tone into it which did not exist. So there ya go - and as far as the people here on MMM, I love MMM and the wide spectrum of people and opinions one runs into on this board.

I mean it is a government program, the government withholds a portion of your income to ensure you have some form of money when you can retire.

[wenchsenior]

OK - so this is a board with primarily a young to middle age membership, a nice percentage even well to do. But, really, in what universe do you live? I ask that in all sincerity, wondering in which gated community or sheltered environment you might live.

Rant:
Government Program makes Social Security sound like a hand out, it is not a hand out! That is nothing but current political rhetoric and clueless Millenial spin. 

SS was originally touted as a retirement program for all citizens. There was no 401K and only the big companies had pension plans. It was and is forced participation.
So how is this a hand out???

Millions of people including myself have paid into SS during their long working lives - often 30-40 even 50 working years and you would deny us or make it sound like a hand out? The hell!
If I could I would take it in one lump sum, with interest if you please. Instead I've loaned my money to the government for years, so they could fund other programs with no personal access to my own money, not even in an emergency. I feel cheated and I am, when I see that the monthly payments remained at zero percent living increase or at a paltry 0.03% - which by the way is the exact amount my Medicare insurance premium went up by. Result - zero increase for me.

Letting the program languish at zero percent increase is an effective political measure to throttle the program. According to my fiendishly clever uber Republican nephew, the program will be phased out altogether in seven to eight years. I noticed on CNN this morning that they were actually sawing on Medicare in one of their concessions to the Conservative hold outs while debating the Health Care Bill .....
So perhaps he is right on.

SS is a good and much needed program as evidenced by just about every response given here - only a fool would deny that. Entitlement? Hell yes - I am entitled to the money I paid in and if it were you and your own money, you'd see it the same way.
You want a new system or nothing at all? Then give me back the money I paid into SS, but you can't, can you?, because you already pulled it out of SS and funded God knows what. This is no different than a private pension plan going bust due to mismanagement.
End of rant .....

@Jrr85 - I don't think we have to worry about 80% SS payments too much, people will be glad to get anything at all. The ultimate goal is to get rid of SS altogether and maybe they will. They have in essence begun looking for ways to defund it and the current political regime will not hesitate to gut it, if they get a chance. It will create another ever widening chasm between the have and the have nots. Interesting times we live in, in every sense of the word.

@Dicey - I agree - FU money is essential, but so is rock solid medical coverage and living healthy with plenty of pro-active preventative care - not to mention enjoying your life and living a little, 'cause you never know what tomorrow will bring.

I too didn't see anyone scorning SS in this thread, but you said a couple interesting things here.   First of all, unless Paul Ryan and Co. are very much more politically savvy than this health care debacle makes them look, your 'clever' nephew is just verbalizing a hard core conservative wish list item. Social Security is not going to be phased out precisely because most old people in the country rely on it as a primary source of income, and also vote in high numbers.   Even W's attempt to partially privatize the program ended in abysmal failure in his own party last time the GOP controlled all branches of  government. 

SS is becoming less solvent over time, but that is fixable if Congress would just get off their asses, boost taxes a bit, boost the retirement age a bit, lift the cap on contributions and rejigger the formula for payout a little, etc.  In 15 years or so when the payout has to be cut by 15-25% because of the current funding crunch, govt will have to make changes. Hopefully they wont wait that long.

SS is currently underfunded mainly because of demographic shifts and no adjustments in SS taxes in 30+ years.  Your money is not being invested to give back to you when you retire, and it never was. Your money is immediately transferred to current SS recipients.  Your kids' and grandkids' SS payments will then be used to pay for YOUR SS benefits.  Right now, we have a shit ton of aging collectors, a tiny generation of Gen X workers paying in, and we're just getting the big Millennial generation into their prime earning years to help partly close the gap. 

I find it frustrating that SS is always talked about as a 'retirement program'. It does function as that, of course, but that implies that each individuals contributions are invested at a poor rate of return, 'raided' for non-related gov't programs, and eventually given back to them with no investment gain.  But SS was never designed to be a traditional retirement account. It's an obligatory retirement insurance annuity that also helps protect contributors' non earning spouses and kids, and helps those who become disabled.

The downside of annuities is, of course, that you might not ever collect your money, if you die young. Or, you might collect more than you ever paid in (which is true of many low-income SS recipients).  It's the nature of the beast.  I feel like this causes confusion to some people when we discuss how to fix it; such conversations might be simpler if everyone was approaching it on the same terms.

 

[Hargrove]

I can't think of anything more politically suicidal than not saving Social Security at the moment the ruling party is forced to make a call on it.

They're not "not saving Social Security" because it's too hard to figure out or they don't plan eventually to save it. Social Security is a two-part political hand grenade. The first part is getting rid of it - either party that allows that to happen would blow up. They won't get rid of it. But, nobody wants to hold the second, smaller political hand grenade - raising the age. They're trying to lay groundwork for us all to accept the age has to go up by pissing and moaning about it dissolving SOON SO SOON OH NOOOO so that someone can finally tackle the "tough reality" that we all knew was necessary a decade ago.

And uh... yeah, Social Security is a government program.

Tons of Americans do in fact live paycheck to paycheck. 401k enrollment has to be forced to be automatic, forced to offer lower fees, and there has to be a high school civics class about crap like that so people understand how they're supposed to engage with the system. Pensions worked because they were almost automatic. 401ks don't work because people think it's just a weird loan basket they can raid but which is set up to hit them with stiff penalties, instead of using it to retire.

[MrsPete]

There are plenty of people scrounging by on social security and other public or private assistance, but I don't think we've hit the big wave of retirees who lived well during their working life but didn't save.  I think a lot of these people will keep working, and then we will have an interesting political situation where a large political block is complaining about SS not being high enough at the same time SS taxes are only bringing in enough money to pay for 80% +/- of benefits.

Let's add a bit to that:  With these people continuing to work (assuming they're able to do so, what with ageism in the work place being a very real thing and ravages of physical aging kicking in), jobs will not open up for younger people.  That's a related problem.

[KungfuRabbit]

The big problem is comparing generations.  A large chunk of people retiring today that had been living paycheck to paycheck, but a large chunk of them also have good pensions from work.

Pensions are a thing of the past.  My company stopped doing them in 2007, 1 year after I was hired (so yes, I still have a pension, I'm waiting for the day I get a letter saying they are cancelling it and buying it out, which will really suck because it's heavily back-weighted).

Anyhow, people that retire 20 years from now are the ones that are in trouble.  Pensions are toast, Social Security is not going to keep up with cost of living increases (and it could even go down especially if Trump cuts taxes....), and you can't rely on buying a house and having it's value go up at 10% a year so you're sitting on a $300,000 nest egg to sell and move into an apartment.  So if you don't save you'll be stuck living off SS alone...which would not be fun.

I have a few friends in this boat.  They don't even have retirement accounts, they live paycheck to paycheck with no buffer, they have consumer debt, they rent, and they have no pension.  Literally in their mid 30s with negative net worth and no real assets.  If you ask them about it they say something like "I can't afford to figure that out now, I'm sure I'll be fine"...It's possible they will get a windfall inheritance, but that depends on how their parents die (none of them are even remotely rich, so if they drop dead of a heart attack or car accident they'd have money, but if they move into a nursing home they'd probably get down to $0 net worth and have medicaid pay for the rest of their life). 

So yea, long story short, I think people can get away with it now if they were even remotely successful, but I think 20 years from now we are in a LOT of trouble.  A lot of trouble. 

[Dicey]

@Dicey - I agree - FU money is essential, but so is rock solid medical coverage and living healthy with plenty of pro-active preventative care - not to mention enjoying your life and living a little, 'cause you never know what tomorrow will bring.

Oh Rosy, I quite enjoyed your rant, and totally get where you're coming from. Maybe reframing it to "government administered program" might help it seem like something closer to the truth. Nobody expects anything that's government run to be efficient, right?

And as to the Carpe Diem stuff, yeah, I'm living the dream every day of my life. Cancer in my early 20's taught me some valuable lessons. Yours is always good advice.

[Ramblin' Ma'am]

The big problem is comparing generations.  A large chunk of people retiring today that had been living paycheck to paycheck, but a large chunk of them also have good pensions from work.

Pensions are a thing of the past.  My company stopped doing them in 2007, 1 year after I was hired (so yes, I still have a pension, I'm waiting for the day I get a letter saying they are cancelling it and buying it out, which will really suck because it's heavily back-weighted).

Anyhow, people that retire 20 years from now are the ones that are in trouble.  Pensions are toast, Social Security is not going to keep up with cost of living increases (and it could even go down especially if Trump cuts taxes....), and you can't rely on buying a house and having it's value go up at 10% a year so you're sitting on a $300,000 nest egg to sell and move into an apartment.  So if you don't save you'll be stuck living off SS alone...which would not be fun.

I have a few friends in this boat.  They don't even have retirement accounts, they live paycheck to paycheck with no buffer, they have consumer debt, they rent, and they have no pension.  Literally in their mid 30s with negative net worth and no real assets.  If you ask them about it they say something like "I can't afford to figure that out now, I'm sure I'll be fine"...It's possible they will get a windfall inheritance, but that depends on how their parents die (none of them are even remotely rich, so if they drop dead of a heart attack or car accident they'd have money, but if they move into a nursing home they'd probably get down to $0 net worth and have medicaid pay for the rest of their life). 

So yea, long story short, I think people can get away with it now if they were even remotely successful, but I think 20 years from now we are in a LOT of trouble.  A lot of trouble.

Not as many workers had pensions in the past as is commonly believed. The high point was 1980, and it was only about 40% of the workforce. Obviously it's a lot lower now, though.

[prognastat]

It was a lot more common for an employee to have a full career at one company. It is far less common these days for an employee to remain at one company their full working career.

[Cooper62]

My father does it and seems to be enjoying his retirement.  He gets social security and a pension and tells me he easily lives on the social security alone so the pension is just extra.  He lives in the paid off house we grew up in so that helps alot.  It is in a low cola midwest city with low property tax.  My parents always took good care of the house and neighbors did as well so nice area to live.  His living expenses are low.  He eats healthfully but does not spend a lot on food.  For instnace, his breakfast is often a bowl of steel cut oats he makes and a piece of fruit.  His daily splurge is five dollars lunch all you can eat at the very nice senior center in town.  He spends little on clothing as he syas he odes not need much.  He also works out at the senior center and takes advantage of low cost activities there.  He is involved in church and meets up with church friends for Bible study.  He is also in a walking group and other than cost of shoes free.  It is helpful he is happy to do low cost activities.  We do a few long weekend trips with extended family and while I'd be happy to pay his way he is always able to afford it out of his social security. 

I think it also helps my parents received a modest inheritance from my mom's parents including small paid off house they were able to sell and invest.  Dad enjoys investing so he has managed that money well and over 20 years has grown it so it throws off extra dividend income for him.  Although he says he does not need it to live day to day.  In summary, I see possible to live comfortably in retirement in a low cola area if the house and car paid off and you are content to live modestly. 

[Jrr85]

OK - so this is a board with primarily a young to middle age membership, a nice percentage even well to do. But, really, in what universe do you live? I ask that in all sincerity, wondering in which gated community or sheltered environment you might live.

Rant:
Government Program makes Social Security sound like a hand out, it is not a hand out! That is nothing but current political rhetoric and clueless Millenial spin. 

  I'm not sure if hand out is the right word, but it's a government transfer program.  It takes money from workers, and gives it to retirees (with I guess some overlap for people that are working and receiving SS), disabled people, and certain survivors of beneficiaries.  It's different from other government welfare programs in that's it's not means tested, and unlike other welfare programs pretty much every recipient has to pay in first as opposed to means tested programs where a recipient might have never paid net taxes. 

SS was originally touted as a retirement program for all citizens. There was no 401K and only the big companies had pension plans. It was and is forced participation.
So how is this a hand out???

Millions of people including myself have paid into SS during their long working lives - often 30-40 even 50 working years and you would deny us or make it sound like a hand out? The hell!

  To be fair, boomers who have paid in are asking (or presumably will be asking) that younger (and generally poorer) workers have to pay more taxes than boomers were willing to pay when they were working to support boomers in retirement (and in many cases, to help fund nicer lifestyles than the workers paying more taxes can afford).  Again, handout may not be the right description, but the program still looks a little distasteful when you look at what young people are actually being asked to do. 

If I could I would take it in one lump sum, with interest if you please. Instead I've loaned my money to the government for years, so they could fund other programs with no personal access to my own money, not even in an emergency. I feel cheated and I am,

  I would say you didn't loan the government money.  It was taken from you and given to retirees (or sent to the general fund to be spent).  What you got in return was a "promise" that money would in turn be taken from people younger than you and given to you if you lived long enough.  I'm not sure if you should feel cheated.  Probably a little bit as had Congress taken the "excess" social security taxes and put them into any reasonable investment, you probably wouldn't be reliant on politics to get what has been "promised".  There would be sufficient fund to avoid any difficult political problems. 

But absolutely almost anyone that works would be better off if they had the option to invest their social security taxes (less the purchase of disability insurance) rather than pay into social security.

when I see that the monthly payments remained at zero percent living increase or at a paltry 0.03% - which by the way is the exact amount my Medicare insurance premium went up by. Result - zero increase for me.

Letting the program languish at zero percent increase is an effective political measure to throttle the program. According to my fiendishly clever uber Republican nephew, the program will be phased out altogether in seven to eight years. I noticed on CNN this morning that they were actually sawing on Medicare in one of their concessions to the Conservative hold outs while debating the Health Care Bill .....
So perhaps he is right on.

SS is a good and much needed program as evidenced by just about every response given here - only a fool would deny that. Entitlement? Hell yes - I am entitled to the money I paid in and if it were you and your own money, you'd see it the same way.

  Maybe, but you're not asking for money from the politicians who spent SS revenue of the voters who put them into office.  You're asking for the people who indisputably were not responsible for the mismanagement of social security to pay you money. 

You want a new system or nothing at all? Then give me back the money I paid into SS, but you can't, can you?, because you already pulled it out of SS and funded God knows what.

  I'm not sure who "you" is supposed to be.  Again, the people to blame are the politicians and voters who put them in office from pretty much the late 70's to now. 

This is no different than a private pension plan going bust due to mismanagement.

  It's unfortunately a lot worse because it involves so many people.  It's also worse because even though people have been on notice about the problem for a long time, I suspect they have done less to prepare because of a belief (in fairness probably an accurate one) that when it comes down to it they'll probably just raise taxes a lot to cover the difference. 

[GetItRight]

As best I can figure from talking to people near traditional retirement age who are paycheck to paycheck or close to it, they have some savings but it's in retirement accounts that are inaccessible, they plan to sell their house and move somewhere sane and affordable (socialist high tax and cost of living state here), or they plan to work until they drop dead or simply can't anymore (medical) and live off welfare (SS and other welfare programs). The retired people I meet here are generally "poor" and on welfare (living an extravagant lifestyle by mustachian standards) or quite rich in that they were very high earners, presumably saved a lot and thus can afford to stay in this area.

Regarding the discussion of social security above, SS is just another tax/welfare scheme, essentially a make-work program as if the government didn't steal that money from me I could RE with 3x-4x the monthly amount they will likely never pay back to me, assuming 7% average return and 4% SWR. It's welfare, and the massive waste creates jobs that benefit society as much as paying people to dig ditches and fill them back in.

[wenchsenior]

As best I can figure from talking to people near traditional retirement age who are paycheck to paycheck or close to it, they have some savings but it's in retirement accounts that are inaccessible, they plan to sell their house and move somewhere sane and affordable (socialist high tax and cost of living state here), or they plan to work until they drop dead or simply can't anymore (medical) and live off welfare (SS and other welfare programs). The retired people I meet here are generally "poor" and on welfare (living an extravagant lifestyle by mustachian standards) or quite rich in that they were very high earners, presumably saved a lot and thus can afford to stay in this area.

Regarding the discussion of social security above, SS is just another tax/welfare scheme, essentially a make-work program as if the government didn't steal that money from me I could RE with 3x-4x the monthly amount they will likely never pay back to me, assuming 7% average return and 4% SWR. It's welfare, and the massive waste creates jobs that benefit society as much as paying people to dig ditches and fill them back in.

I'm very curious what accounts would be inaccessible if you were at or near retirement age, which typically is 65-67, or perhaps 62 if you are bugging out early? 

[BGordon]

I'm curious as to whether I will ever receive any benefits from Social Security.  If I remember correctly, when I was in college they were predicting that it would be bankrupt by 2020.  They have obviously pushed that prediction out a few more years now.  Something tells me it will get pushed out again.  I'm not counting on it, but it would be nice if I at least recovered what I put in. 

However, using me as an example it is easy to see why the system is in trouble.  I haven't been the most successful person career wise and therefore haven't paid that much in.  Ignoring a return on the money, if I wait until age 70 to start receiving payments it will take me less than 3 years to recover what I paid in and approximately 5 years to recover both my and my employers contributions.  Now granted, if they had invested the money, it would have covered my withdrawals for many more years, but they didn't.

[GetItRight]

As best I can figure from talking to people near traditional retirement age who are paycheck to paycheck or close to it, they have some savings but it's in retirement accounts that are inaccessible,

I'm very curious what accounts would be inaccessible if you were at or near retirement age, which typically is 65-67, or perhaps 62 if you are bugging out early?

I'd guesstimate the folks I'm getting that particular anecdote from are in the 55-60 range... Which of course with any semblance of decent planning or saving shouldn't be an issue. I've also talked to people in the 30-40 range who don't even contribute enough to get their 401k match and seem to think $50k or less in a 401k as their only savings is a lot of money. Maybe these same people at 55-60 are getting nervous when they realize they should have saved more?

[VolcanicArts]

I can say this, the exact second I turn 62 I will be requesting SS and hitting a table in Vegas every day on the first after that.

[Abe]

There are certain scenarios where people will get more in benefits from SS & Medicare than they paid in. This is especially true with Medicare expenditures rising dramatically these last several decades.

http://www.politifact.com/truth-o-meter/article/2013/feb/01/medicare-and-social-security-what-you-paid-what-yo/

[aceyou]

Well written article about the growing presence of disability in american society, particularly in poor rural areas.  Probably very relevant to this thread, and an insightful read. 

http://www.washingtonpost.com/sf/local/2017/03/30/disabled-or-just-desperate/?utm_term=.c7c15b922e47

[Aggie1999]

There are certain scenarios where people will get more in benefits from SS & Medicare than they paid in. This is especially true with Medicare expenditures rising dramatically these last several decades.

http://www.politifact.com/truth-o-meter/article/2013/feb/01/medicare-and-social-security-what-you-paid-what-yo/

An article showing how SS is mainly just another form of forced wealth distribution (i.e. welfare). Very little attention paid to how SS is a losing proposition to the above average pay worker. Heck, the SS portion is even a negative return on most of the average earner statistics they provide. The government needs to can SS. Continue to pay the benefits to those getting SS and those X years from SS. For everyone else refund the contributed money plus inflation. Never happen but at some point you gotta cut losses on a losing investment...

[Tabaxus]

There are certain scenarios where people will get more in benefits from SS & Medicare than they paid in. This is especially true with Medicare expenditures rising dramatically these last several decades.

http://www.politifact.com/truth-o-meter/article/2013/feb/01/medicare-and-social-security-what-you-paid-what-yo/

An article showing how SS is mainly just another form of forced wealth distribution (i.e. welfare). Very little attention paid to how SS is a losing proposition to the above average pay worker. Heck, the SS portion is even a negative return on most of the average earner statistics they provide. The government needs to can SS. Continue to pay the benefits to those getting SS and those X years from SS. For everyone else refund the contributed money plus inflation. Never happen but at some point you gotta cut losses on a losing investment...

Your conclusion does not remotely follow from your premise.