Author Topic: Nobody in the middle class can retire! It's unpossible!  (Read 14509 times)

GuitarStv

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Nobody in the middle class can retire! It's unpossible!
« on: September 24, 2013, 07:32:41 AM »
http://business.financialpost.com/2013/09/23/retirement-crisis-in-america-77-year-old-flips-burgers-to-earn-in-a-week-what-he-used-to-make-in-an-hour/


Highlights:

"many affluent Baby Boomers who are approaching the end of their careers haven’t come close to saving the 10 to 20 times their annual working income that investment experts say they’ll need to maintain their standard of living in old age."

"For middle class households, with incomes ranging from the mid five to low six figures, it’s especially grim. When the 2008 financial crisis hit, what little Palome had saved — US$90,000 — took a beating and he suddenly found himself in need of cash to maintain his lifestyle."

"59% of households headed by people 65 and older currently have no retirement account assets"

arebelspy

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #1 on: September 24, 2013, 07:45:53 AM »
Quote
59% of households headed by people 65 and older currently have no retirement account assets

Yikes.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

randymarsh

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #2 on: September 24, 2013, 08:16:32 AM »
Quote
His savings, which he’d invested mostly in stocks, shrank from about US$90,000 to less than US$40,000.

People reading this are going to get the idea that they shouldn't invest in the stock market. "It's scary and you can lose everything overnight!"

Quote
To stretch his income, Palome runs his dishwasher once a week and turns off his hot water heater every morning after he showers. He buys airline tickets six months in advance, booking rental cars for as little as US$13.80 a day.

I didn't realize any of these were hardships. Why would a single person even need to run the dishwasher much more than once a week anyway?

StarswirlTheMustached

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #3 on: September 24, 2013, 08:25:04 AM »
Quote
His savings, which he’d invested mostly in stocks, shrank from about US$90,000 to less than US$40,000.

People reading this are going to get the idea that they shouldn't invest in the stock market. "It's scary and you can lose everything overnight!"

Quote
To stretch his income, Palome runs his dishwasher once a week and turns off his hot water heater every morning after he showers. He buys airline tickets six months in advance, booking rental cars for as little as US$13.80 a day.

I didn't realize any of these were hardships. Why would a single person even need to run the dishwasher much more than once a week anyway?
Now you see why he never built up any savings, the poor sap.

wing117

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #4 on: September 24, 2013, 08:39:36 AM »
Quote
It seems like another life. At the height of his corporate career, Tom Palome was pulling in a salary in the low six-figures and flying first class on business trips to Europe.

Today, the 77-year-old former vice president of marketing for Oral-B juggles two part-time jobs[...]

Well, right there all sympathy flew out the window.

Quote
When the 2008 financial crisis hit, what little Palome had saved — US$90,000 — took a beating and he suddenly found himself in need of cash to maintain his lifestyle.

Vice President of Marketing of a large company, making six figures ("low six figures") only saves 90K? If he's 77 now, that means he only saved 90,000 dollars by the time he was 72!

Quote
Because he was self-employed, Palome didn’t have a 401(k) account, and he has never had a tax-deferred IRA, or Individual Retirement Account.

How is the average middle-class person going to amass US$1,000,000 by the time they’re 65, which is what they’ll need to get US$40,000 a year in income from their retirement savings?

This whole article is a big "oh poor middle class" session. According to statistics*, self-employed folks are more likely to become millionaires than those who are salary employees! And being self employed has nothing to do with opening a traditional or roth IRA.

Good find, GuitarStv! Another reason to be Mustachian. Nothing scares me more than the possibility of being an old penniless involuntary part time worker.

*The Millionaire Next Door book/studies.

footenote

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #5 on: September 24, 2013, 08:56:49 AM »
DH and I were chatting yesterday about how few people we know in our age range (55 - 62) who are prepared for retirement:
  • Maybe half a dozen robber barons I worked with who clawed into the "top 1%"
  • DH's brother whose wife has a now-almost-extinct, old-school manufacturing pension
  • SIL who is diligent, frugal, and will probably retire at 65
  • Frat brother of DH who was successful in real estate and also built a lucrative personal speaking/consulting brand
We are college educated professionals who have worked at companies like GE, Carlson and Prudential. And those are the only people we could think of out of hundreds we know personally in our cohort likely to have a reasonable retirement. 

ToeInTheWater

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #6 on: September 24, 2013, 09:26:06 AM »
we've got a "retirement seminar" here at work tomorrow. 
topics to include:

"social security, IRAs, mutual funds, calculating retirement needs, managing retirement resources, protecting your assets and estate planning"

we've been asked to bring an "investment summary" to work from.

not sure what will be discussed "out loud" vs "on YOUR sheet of paper" but will be interesting to see if i can get a feel from the group on how many are on track vs not.

will report back this week

b

mpbaker22

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #7 on: September 24, 2013, 09:27:54 AM »
Quote
His savings, which he’d invested mostly in stocks, shrank from about US$90,000 to less than US$40,000.

People reading this are going to get the idea that they shouldn't invest in the stock market. "It's scary and you can lose everything overnight!"

Quote
To stretch his income, Palome runs his dishwasher once a week and turns off his hot water heater every morning after he showers. He buys airline tickets six months in advance, booking rental cars for as little as US$13.80 a day.

I didn't realize any of these were hardships. Why would a single person even need to run the dishwasher much more than once a week anyway?

If you have a newer dishwasher, it's supposed to be more efficient/cheaper to run than hand-washing.  I'm surprised the author put that in with airline tickets and rental cars.  What a joke.

SnackDog

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #8 on: September 24, 2013, 10:22:55 AM »
The most efficient way to operate a dishwasher is to run it completely full of dishes.  Otherwise, it is probably more efficient to hand wash.  If you are a household of three or less, I can see no reason for a dishwasher.  We have them every we live but stopped using them ages ago for a variety of reasons.

dragoncar

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #9 on: September 24, 2013, 11:41:11 AM »
The most efficient way to operate a dishwasher is to run it completely full of dishes.  Otherwise, it is probably more efficient to hand wash.  If you are a household of three or less, I can see no reason for a dishwasher.  We have them every we live but stopped using them ages ago for a variety of reasons.

I've seen some studies that say half-full is the break even point.  But it probably depends on your dishwasher efficiency as well as your hand washing efficiency (living the bachelor life, I usually reuse a single plate a few times depending on how "dirty" it got)

From a sanitary standpoint, I think the dishwasher is far superior since it usually superheats the water

bo_knows

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #10 on: September 24, 2013, 12:19:29 PM »
If you are a household of three or less, I can see no reason for a dishwasher. 

As a parent to a toddler, who makes from scratch all of our food and the babies food, and has a dizzying array of glass containers to hold leftovers, I highly disagree. 

I would say that 90% of my anguish over household work (and my wife's) is over dishes and laundry.  If I could magically finish my meal and the dishes would just end up in the cabinet all clean without any input from either of us, I would be happy as a clam.  Same with laundry.

When are the sweet robot maids coming? Sign me up.

mpbaker22

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #11 on: September 24, 2013, 12:45:02 PM »
If you are a household of three or less, I can see no reason for a dishwasher. 

As a parent to a toddler, who makes from scratch all of our food and the babies food, and has a dizzying array of glass containers to hold leftovers, I highly disagree. 

I would say that 90% of my anguish over household work (and my wife's) is over dishes and laundry.  If I could magically finish my meal and the dishes would just end up in the cabinet all clean without any input from either of us, I would be happy as a clam.  Same with laundry.

When are the sweet robot maids coming? Sign me up.

Agreed.  When I lived by myself, with a dishwasher, I just ran it once a week.  I usually had to hand-wash a few of the larger pots and pans, and the dishwasher would clean everything else (weeks worth of plates, bowls, etc.).  Even as a household of one, I think it was probably more efficient than not having one (ignoring purchase costs).

Jamesqf

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #12 on: September 24, 2013, 12:46:33 PM »
Why would a single person even need to run the dishwasher much more than once a week anyway?

Note that it's not even a matter of remark that he actually HAS a dishwasher, and uses it instead of doing dishes by hand.

If you have a newer dishwasher, it's supposed to be more efficient/cheaper to run than hand-washing.

Only if you do your hand-washing really inefficiently.  Like some friends of mine, who leave the hot water running all the time they're "doing" the dishes - by which I mean pre-washing them before they go in the dishwasher.

mpbaker22

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #13 on: September 24, 2013, 01:03:35 PM »
Why would a single person even need to run the dishwasher much more than once a week anyway?

Note that it's not even a matter of remark that he actually HAS a dishwasher, and uses it instead of doing dishes by hand.

If you have a newer dishwasher, it's supposed to be more efficient/cheaper to run than hand-washing.

Only if you do your hand-washing really inefficiently.  Like some friends of mine, who leave the hot water running all the time they're "doing" the dishes - by which I mean pre-washing them before they go in the dishwasher.


No it's true unless you're doing your hand-washing at insane levels of efficiency.
http://www.treehugger.com/kitchen-design/built-in-dishwashers-vs-hand-washing-which-is-greener.html
http://www.huffingtonpost.com/eatingwell/hand-washing-dishes-vs-dishwasher_b_1542991.html

Half-Borg

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #14 on: September 24, 2013, 02:04:03 PM »
Why would a single person even need to run the dishwasher much more than once a week anyway?

Note that it's not even a matter of remark that he actually HAS a dishwasher, and uses it instead of doing dishes by hand.

If you have a newer dishwasher, it's supposed to be more efficient/cheaper to run than hand-washing.

Only if you do your hand-washing really inefficiently.  Like some friends of mine, who leave the hot water running all the time they're "doing" the dishes - by which I mean pre-washing them before they go in the dishwasher.


No it's true unless you're doing your hand-washing at insane levels of efficiency.
http://www.treehugger.com/kitchen-design/built-in-dishwashers-vs-hand-washing-which-is-greener.html
http://www.huffingtonpost.com/eatingwell/hand-washing-dishes-vs-dishwasher_b_1542991.html
Say what?
4 gallons of water? That's like 16 liters. My sink hold 12 liters, it can't be full since dishes need space, too. So I use 10l of hot water.
That water is heated by gas, the dishwasher uses eletricity, which is less efficent, but maybe the dish washer is not heating all of it, let's call it a draw.
I only rinse glasses and very dirty stuff like pans, so I might use another 2 gallones of cold water for that.

I wash amount double the amount that goes into my dish washer in one sink. So the numbers indicate I use about 37% of the water. Even less energy.

I could improve by not filling the sink so much and let the hot and dirty water sit in the sink for a while to heat up the kitchen.

My dish washer broke months ago, I'm too lazy to fix it and running these numbers, I might never do it!

//edit: I also use less soap than the dishwasher recommends to fill in.
« Last Edit: September 24, 2013, 02:08:48 PM by Half-Borg »

mlipps

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #15 on: September 24, 2013, 02:29:28 PM »
Articles like this just leave me flabbergasted. My dad is 61 and on track to retire at 66-not early, but pretty average. He hasn't had a raise in 10+ years and makes $35k. My mom has never made more than minimum wage. My dad has chronic health problems and a HDHP. Do you know how much they have in their 401k, which they started when the company began offering them in 1992? $120,000. How it's possible that that is the MEDIAN 401k balance for folks at that age range just astounds me. Also, my parents are awesome. No, it's not a lot of money, but their SS benefits alone will be sufficient for their modest expenses & the 401k will be a good emergency fund.

MKinVA

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #16 on: September 24, 2013, 02:36:24 PM »
This article and ridiculous Frontline program that was on last spring make me crazy. "I didn't save anything for retirement and now I'm old and have to work." Gee, I believe that is how math works...and has always worked...even before the new math...

Jamesqf

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #17 on: September 24, 2013, 08:57:19 PM »
No it's true unless you're doing your hand-washing at insane levels of efficiency.

I think the Treehugger article is not looking at the numbers correctly. First, as Half-Borg points out, they seem to be overestimating the amount of hot water needed to do dishes in a sink.  That water is also not going to be as hot as the dishwasher will heat its water.

Further, the dishwashing water typically doesn't get drained when the dishes are finished.  It (and the soap it contains - a smaller amount, and less harsh than dishwasher detergent) is then used to clean countertops, stove, maybe the refrigerator, sometimes even the kitchen floor.  And it also gets my hands clean :-)

kkbmustang

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #18 on: September 24, 2013, 09:25:43 PM »
I'm stunned, although I guess I shouldn't be. I don't understand why he doesn't still do consulting. He could do that from home and make more than $8/hr.

He has a small pension, but to only have socked away $90k? Yikes. And the statistics about average savings of those households headed by retirement age people? Terrifying.

sleepyguy

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #19 on: September 24, 2013, 09:54:14 PM »
Those were my thoughts exactly!

Still at least he doesn't seem to be complaining too much.  I guess his kids aren't doing so well with those paid off educations that they can't help their 77yr old dad a few hundred a week.  I still don't believe in paying for kids educations if you aren't funding your future retirement first (yes I'm paying for both my kids university, much cheaper in Canada btw) as you'll be a burden for them down the road.

Tks for sharing the story... I'm glad it wasn't all doom and gloom as he does seem kinda upbeat.


Quote
It seems like another life. At the height of his corporate career, Tom Palome was pulling in a salary in the low six-figures and flying first class on business trips to Europe.

Today, the 77-year-old former vice president of marketing for Oral-B juggles two part-time jobs[...]

Well, right there all sympathy flew out the window.

Quote
When the 2008 financial crisis hit, what little Palome had saved — US$90,000 — took a beating and he suddenly found himself in need of cash to maintain his lifestyle.

Vice President of Marketing of a large company, making six figures ("low six figures") only saves 90K? If he's 77 now, that means he only saved 90,000 dollars by the time he was 72!

Quote
Because he was self-employed, Palome didn’t have a 401(k) account, and he has never had a tax-deferred IRA, or Individual Retirement Account.

How is the average middle-class person going to amass US$1,000,000 by the time they’re 65, which is what they’ll need to get US$40,000 a year in income from their retirement savings?

This whole article is a big "oh poor middle class" session. According to statistics*, self-employed folks are more likely to become millionaires than those who are salary employees! And being self employed has nothing to do with opening a traditional or roth IRA.

Good find, GuitarStv! Another reason to be Mustachian. Nothing scares me more than the possibility of being an old penniless involuntary part time worker.

*The Millionaire Next Door book/studies.

gooki

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #20 on: September 24, 2013, 10:14:16 PM »
“I earn in a week what I used to earn in an hour,”

"Still, his US$1,400 in monthly wages allows him to bolster his savings and provides for some extras"

By those numbers he used to earn $350 an hour. And only $90,000 in retirement savings - WTF? That's like only seven weeks wages for him.

kkbmustang

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #21 on: September 24, 2013, 10:18:37 PM »
Those were my thoughts exactly!

Still at least he doesn't seem to be complaining too much.  I guess his kids aren't doing so well with those paid off educations that they can't help their 77yr old dad a few hundred a week.  I still don't believe in paying for kids educations if you aren't funding your future retirement first (yes I'm paying for both my kids university, much cheaper in Canada btw) as you'll be a burden for them down the road.


This. I can't believe they aren't helping him either especially given he put them through college AND provided home down payments. Now, I don't think they are required to do this, but you'd think there would be some help of some kind. 

I doubt my parents or my husbands parents will be in this situation, but if they were, we'd be helping them out. We help my grandmother out every month. And she has six kids, 4 of whom can help her and do. And then some of her grandchildren as well.

Christof

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #22 on: September 24, 2013, 11:10:54 PM »
Maybe he doesn't want help. My family wouldn't want me to pay them when they still earn their own money.

pachnik

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #23 on: September 25, 2013, 07:22:54 AM »
About his kids helping him out, perhaps he's proud and won't accept their money. 

Personally, my parents are both 77 and if they were working still I would help them out monthly.  But I know my father would probably be too proud to accept it, so I'd just have to give it to my mom for them.  It could be something like this.  Hopefully, should the time come when he can't work at all, his kids will help. 
« Last Edit: September 25, 2013, 07:25:37 AM by pachnik »

Half-Borg

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #24 on: September 25, 2013, 07:34:44 AM »
Can someone please explain how social security in the US works?
Does everyone get it at a certain age? How much is it? Can you boost it up by working?

randymarsh

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #25 on: September 25, 2013, 07:40:27 AM »
Can someone please explain how social security in the US works?
Does everyone get it at a certain age? How much is it? Can you boost it up by working?
]

You're eligible for benefits at age 62 assuming you paid payroll taxes for I believe at least 10 years. You can also delay benefits and in exchange you get more each month when you do start collecting. The amount depends on your earnings. They take your top 30 years and plug those numbers into a formula that results in your monthly benefit. The average benefit is ~1,200. You can work, but your benefit is reduced if you make too much.

RootofGood

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #26 on: September 25, 2013, 07:58:11 AM »
It really isn't that hard.  Save a bunch of what you make.  Invest is wisely.  Sit back and enjoy the ride.  One day you'll have more than enough to live on indefinitely and you can retire.  Or keep working.  Or do whatever you want. 

It isn't magic or some conspiracy.  It is simple math. 

Half-Borg

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #27 on: September 25, 2013, 08:05:41 AM »
You're eligible for benefits at age 62 assuming you paid payroll taxes for I believe at least 10 years. You can also delay benefits and in exchange you get more each month when you do start collecting. The amount depends on your earnings. They take your top 30 years and plug those numbers into a formula that results in your monthly benefit. The average benefit is ~1,200. You can work, but your benefit is reduced if you make too much.
Thank you, sounds like a reasonable system.

I guess an Ex-Marketing Manager gets above average, so he's not working to stay alive, he is working to keep his spendypants lifestyle. No sympathy here.

Insanity

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #28 on: September 25, 2013, 08:35:01 AM »
Only if you do your hand-washing really inefficiently.  Like some friends of mine, who leave the hot water running all the time they're "doing" the dishes - by which I mean pre-washing them before they go in the dishwasher.

I pre-wash all the time.  Maybe it is out of habit (my parents pre-wash).  It just seems nasty to let food sit in a dishwasher for a week... 

Half-Borg

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #29 on: September 25, 2013, 09:23:15 AM »
I wouldn't let it sit for a week either.
What do you mean by pre-wahing?
Just rinsing food off with cold water, neither impacts your wallet, nor the environment too much. I do that for some nasty foods, that stick to the plate.

Insanity

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #30 on: September 25, 2013, 09:37:31 AM »
I wouldn't let it sit for a week either.
What do you mean by pre-wahing?
Just rinsing food off with cold water, neither impacts your wallet, nor the environment too much. I do that for some nasty foods, that stick to the plate.

that's basically pre-washing to me.  Just rinsing it off in cold water using some dish soap.

Albert

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #31 on: September 25, 2013, 11:19:18 AM »
You're eligible for benefits at age 62 assuming you paid payroll taxes for I believe at least 10 years. You can also delay benefits and in exchange you get more each month when you do start collecting. The amount depends on your earnings. They take your top 30 years and plug those numbers into a formula that results in your monthly benefit. The average benefit is ~1,200. You can work, but your benefit is reduced if you make too much.
Thank you, sounds like a reasonable system.

I guess an Ex-Marketing Manager gets above average, so he's not working to stay alive, he is working to keep his spendypants lifestyle. No sympathy here.

Isn't there some hard limit on how much you can get regardless of how much you paid? I've never heard of anyone getting 3-5 thousand a month just from this source... In many other countries you can get large pensions if you had a well above average salary and paid a lot of taxes.

mpbaker22

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #32 on: September 25, 2013, 11:28:37 AM »
You're eligible for benefits at age 62 assuming you paid payroll taxes for I believe at least 10 years. You can also delay benefits and in exchange you get more each month when you do start collecting. The amount depends on your earnings. They take your top 30 years and plug those numbers into a formula that results in your monthly benefit. The average benefit is ~1,200. You can work, but your benefit is reduced if you make too much.
Thank you, sounds like a reasonable system.

I guess an Ex-Marketing Manager gets above average, so he's not working to stay alive, he is working to keep his spendypants lifestyle. No sympathy here.

Isn't there some hard limit on how much you can get regardless of how much you paid? I've never heard of anyone getting 3-5 thousand a month just from this source... In many other countries you can get large pensions if you had a well above average salary and paid a lot of taxes.

The current max is $3,350.  That assumes you retire at 70 and have made the maximum salary for the previous x years.
You only get taxed social security up to a certain income level.  The tax is 6.2% up to $113,700 and 0% on any income above that level.  In turn, you only get paid back based on income up to that level, or something similar.

Albert

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #33 on: September 25, 2013, 11:34:01 AM »
That's a really poor pay-off, no wonder so many retired Americans are struggling.

LalsConstant

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #34 on: September 25, 2013, 11:57:13 AM »
That's a really poor pay-off, no wonder so many retired Americans are struggling.

To be fair, as an American who doesn't think the program is a good idea, I do have to point out that it was never intended to be the sole source of retirement income even by its proponents.

The issue is that so many people don't save at all or otherwise plan financially for retirement it often does end up being many elderly people's only income.

The popularity and perceived benefits of the program are quite high and lead to bad decisions too.  I know in my grandmother's case she believed with all her heart the government would always take care of her so she never saved a dime.

kyleaaa

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #35 on: September 25, 2013, 12:06:44 PM »
This guy was making 6 figures (back when making 6 figures meant something in the 90's) and he only managed to save $90K for retirement??? That was dumb.

Jamesqf

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #36 on: September 25, 2013, 12:09:58 PM »
Can someone please explain how social security in the US works?
Does everyone get it at a certain age? How much is it? Can you boost it up by working?
]

You're eligible for benefits at age 62 assuming you paid payroll taxes for I believe at least 10 years. You can also delay benefits and in exchange you get more each month when you do start collecting. The amount depends on your earnings. They take your top 30 years and plug those numbers into a formula that results in your monthly benefit. The average benefit is ~1,200. You can work, but your benefit is reduced if you make too much.

Not exactly true.  The benefit reduction for working applies only if you are collecting benefits prior to reaching "full retirement age" (currently 66).  Once you reach that age, you get the full benefit regardless of what your earn.  (Per SSA site: http://www.ssa.gov/retire2/whileworking.htm ) And of course, being the government, there are all sorts of complications, like if you live outside the US.

Also, if you keep working and earn more in a year than in one of the (inflation adjusted) 30 or so years the benefit amount is based on, it gets recalculated by replacing the lowest-earning year with the current one.

beltim

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #37 on: September 25, 2013, 12:35:52 PM »
That's a really poor pay-off, no wonder so many retired Americans are struggling.

Despite its reputation, Social Security is a quite progressive system, befitting its original purpose as a Social Insurance program.  It was never intended to be the sole source of retirement income for those in the middle class or wealthier.  The way the payout is determined, is that your average inflation-adjusted income over your 35 highest years is determined, and the monthly payout is:
90% of your monthly income from $0 to $791
32% of your monthly income from $791 and $4768
15% of your monthly income from $4768 and above.

mpbaker22

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #38 on: September 25, 2013, 12:54:57 PM »
That's a really poor pay-off, no wonder so many retired Americans are struggling.

Despite its reputation, Social Security is a quite progressive system, befitting its original purpose as a Social Insurance program.  It was never intended to be the sole source of retirement income for those in the middle class or wealthier.  The way the payout is determined, is that your average inflation-adjusted income over your 35 highest years is determined, and the monthly payout is:
90% of your monthly income from $0 to $791
32% of your monthly income from $791 and $4768
15% of your monthly income from $4768 and above.

Interesting, I'm not close enough to retirement to really care about the payouts, but it is often called regressive because those making more than $110,000 pay a 0% marginal rate.  But these people forget they get 0% marginal benefit over that amount as well.

To Albert - It's not a poor payoff if you've saved like a reasonable person outside of the system.

Also, Social Security returns something like 1.5% on 'investment' (i believe that's real return).

StarswirlTheMustached

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #39 on: September 25, 2013, 03:27:40 PM »
Those were my thoughts exactly!

Still at least he doesn't seem to be complaining too much.  I guess his kids aren't doing so well with those paid off educations that they can't help their 77yr old dad a few hundred a week.  I still don't believe in paying for kids educations if you aren't funding your future retirement first (yes I'm paying for both my kids university, much cheaper in Canada btw) as you'll be a burden for them down the road.


This. I can't believe they aren't helping him either especially given he put them through college AND provided home down payments. Now, I don't think they are required to do this, but you'd think there would be some help of some kind. 

I doubt my parents or my husbands parents will be in this situation, but if they were, we'd be helping them out. We help my grandmother out every month. And she has six kids, 4 of whom can help her and do. And then some of her grandchildren as well.
Maybe they can't get jobs because old foggies who can't afford to retire took them. :P

kkbmustang

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #40 on: September 25, 2013, 09:14:56 PM »
Those were my thoughts exactly!

Still at least he doesn't seem to be complaining too much.  I guess his kids aren't doing so well with those paid off educations that they can't help their 77yr old dad a few hundred a week.  I still don't believe in paying for kids educations if you aren't funding your future retirement first (yes I'm paying for both my kids university, much cheaper in Canada btw) as you'll be a burden for them down the road.


This. I can't believe they aren't helping him either especially given he put them through college AND provided home down payments. Now, I don't think they are required to do this, but you'd think there would be some help of some kind. 

I doubt my parents or my husbands parents will be in this situation, but if they were, we'd be helping them out. We help my grandmother out every month. And she has six kids, 4 of whom can help her and do. And then some of her grandchildren as well.
Maybe they can't get jobs because old foggies who can't afford to retire took them. :P

:-)

RMD

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #41 on: September 26, 2013, 12:16:58 PM »
Buried in the article it does say that his kids offered to take him in and he refuses.  He likes his independence.

kkbmustang

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #42 on: September 26, 2013, 01:36:37 PM »
Buried in the article it does say that his kids offered to take him in and he refuses.  He likes his independence.

I missed that part. Thanks for pointing it out.

Kira

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #43 on: September 26, 2013, 09:15:33 PM »
About his kids helping him out, perhaps he's proud and won't accept their money. 

Personally, my parents are both 77 and if they were working still I would help them out monthly.  But I know my father would probably be too proud to accept it, so I'd just have to give it to my mom for them.  It could be something like this.  Hopefully, should the time come when he can't work at all, his kids will help.

Somehow it does not surprise me at all that there are people who are too proud to accept money from their kids, but not too proud to tell a national media outlet how poor they are.

Adventine

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #44 on: September 27, 2013, 06:33:04 AM »
About his kids helping him out, perhaps he's proud and won't accept their money. 

Personally, my parents are both 77 and if they were working still I would help them out monthly.  But I know my father would probably be too proud to accept it, so I'd just have to give it to my mom for them.  It could be something like this.  Hopefully, should the time come when he can't work at all, his kids will help.

Somehow it does not surprise me at all that there are people who are too proud to accept money from their kids, but not too proud to tell a national media outlet how poor they are.

Pride is a funny, irrational thing.

MrsPete

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #45 on: September 27, 2013, 02:44:30 PM »
Multiple problems here:

- He was earning "low six-figures", yet he wasn't saving.  This wasn't a one-time mistake; it was an ongoing, decades-in-the-making decision.  At that salary rate, he could've saved plenty. 

- When the economy had a downturn, he dipped into his savings to "maintain his lifestyle" rather than cutting back. 

- Between Social Security and a small pension, he has $1800/month.  With a paid-for house and frugal habits, a single person should be able to live on that.  He says he's working these jobs to allow for savings and "extras" like the theater, plane tickets and vacations.   


Christof

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #46 on: September 27, 2013, 05:22:25 PM »
- He was earning "low six-figures", yet he wasn't saving.  This wasn't a one-time mistake; it was an ongoing, decades-in-the-making decision.  At that salary rate, he could've saved plenty. 

I haven't yet found anything that reveals when he was a Vice President and for how long he was it. Anything online with his name is somehow related to the same article. For all we know he could have been a vice president for a few month in 1971 and since then have worked a lot more average jobs for less than six digits.

Jamesqf

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #47 on: September 27, 2013, 05:31:08 PM »
- Between Social Security and a small pension, he has $1800/month.  With a paid-for house and frugal habits, a single person should be able to live on that. 

I live on not all that much more (that is, the amount I spend, not what I earn), and the house isn't paid for yet.

StarswirlTheMustached

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #48 on: September 27, 2013, 05:42:37 PM »
- Between Social Security and a small pension, he has $1800/month.  With a paid-for house and frugal habits, a single person should be able to live on that. 

I live on not all that much more (that is, the amount I spend, not what I earn), and the house isn't paid for yet.
Yeah, my wife and I live on about that-- less, of late. We rent.  And IIRC, Ontario has higher COL than much of the US, too.

Jamesqf

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Re: Nobody in the middle class can retire! It's unpossible!
« Reply #49 on: September 27, 2013, 11:30:13 PM »
Yeah, and I'm supporting two dogs and a horse, too :-)