How do people without millions manage to retire? (accidents, years, grandmother)
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<snip> laws were changes so pain and mental suffering now allows folks to collect . you used to have to meet strict physical disability requirements
a dollar paid in as social security payroll taxes gets split up in to 3 funds , regular retirement ss , ssdi and survivor benefits . so ssdi ran dry with so many jumping on the band wagon and had to have money re-allocated from retirement ss . <snip>
Mathjak, you drank the kool aid. The mental impairment standard was changed by Reagan (of all people) over 30 years ago and even before Reagan was President, mental illness was included in the list of medical impairments that could render one disabled.
"...realistically evaluate the ability of a mentally impaired person to engage in SGA in a competitive workplace."
Ronnie (and Congress) decided the mental impairment regulations did not accurately reflect the fact that many mentally impaired people cannot perform in a work environment. He also supported, amazingly enough, a common sense requirement that Psychologists or Psychiatrists, should review and sign off on a disability decision when the claimant had mental health impairments. Before this legislation, SSA used docs such as retired orthopedists, etc. to evaluate mental impairments.
Also, there are only two trust funds, the DI fund that you noted and the OASI fund that pays out both retirement AND survivor benefits. It's dishonest to criticize the transfer of OASI funds to the DI fund without noting that DI funds were previously transferred to the OASI fund. It's a two way street here; one could argue the DI fund would not have needed this recent transfer had the DI fund not been previously raided to save the OASI fund. The actuaries, rightly so, had predicted and taken into account the effect of an aging Boomer generation on the DI fund. However, they did not anticipate a reduced birthrate by our generation nor did they anticipate the reduction of FICA contributions due to high unemployment during the unanticipated Great Recession. IOW, s*** happened.
I would just 'guess' that most readers / posters in C-D retirement today, ARE interested / conversing regarding their current retirement pensions / finances, not the 'potential' pensions of their grandkids.
Different world, definitely different career / savings / retirement plans needed for our grandkids. But there are PLENTY of great options for them, and WE can even HELP offer guidance and experience, apart from 'boomer remorse'!
Definitely DO NOT follow what worked for US
I will have to say... I had never expected to meet so many 20 and 30 somethings with MILLIONS $$ net assets. Most don't even consider BUYING a home! ('Conventional wisdom' has now aged, as it should...)
Perhaps....but acquiring so much college debt was very ill-informed of them - particularly if they also picked a low paying profession without doing a cost-benefit analysis.
Other than that, I think "kids" nowadays are too pessimistic. I didn't even WANT to buy a house the year I got out of school and I certainly never EXPECTED I'd be able to! Downpayments take time to save for! And I didn't expect my "starter" home to be that luxurious even after saving for a downpayment for nearly 10 years!
So you can choose to be pessimistic by having set highly unrealistic expectations to start with - and I believe that's largely the case here with those who are under 30.
People always tell me (here at least) that you shouldn't count on your inheritance because health expenses may take it all. I think the average American something like 200k - 300k saved for retirement. My parents have multiple millions, and I am told that all of this can go towards healthcare. How does the average American afford to retire if multiple millions could potentially be needed for retirement?
What you need in retirement greatly depends on how you want to live and what your expectations are. One of the best things to do now, while you are working is figure out what you spend a year now. Remember, do this minus what you spend on any savings such as an IRA or 401(k). Then look into costs that you won't have when you retire such as clothes for work and commuting costs come to mind for most people. Having your mortgage paid off by then greatly helps too.
Then login to the Social Security website, and it will do projections to create a personalized statement for you. You can figure out in today's money what you month payments will be depending on what age you retire at.
Is social security isn't enough after doing this calculation you can look into changing your retirement plans. Maybe you work later, downsize and decide to move to an area which is less expensive and rent. This all has to do with your comfort. I imagine there are people living on social security who are renting a room in someone's home or studio apartment in a less expensive state to make ends meet.
When you do retirement planning, the most important question to answer is how much money would you need to spend when retired.
When I took my dog out earlier this evening, I walked by a nice brewery where they sell good pizza and I felt sorry for myself for a minute that I couldn't afford to go have a beer and a pizza at a restaurant. But, I came home to a house with a full pantry and freezer.
You just have to look at the upside. But, yes, you can live just fine on very little in retirement in the U.S.
Thanks for sharing your experiences with us. I think your post shows it's about managing expectations too.
I'm 34, wife is 31. My wife and I make combined about 80k. If I retired at age 67 that would be 2049, 7 years after social security is supposed to go broke. Personally I will never make more than the high 80s or low 90s in today's dollars, I will start to max out the salary scale in about 14 years.
I'm in the public sector, there is some kind of pension... it's not defined benefit anymore though, just defined contribution. They changed the system over for anyone hired after 2003, long before I ever started. I'm not sure how it works but I know it's not nearly as good as what came before... those hired before 1989 basically retired on full salary. It's such a political football too that I have no confidence it will be there in the 2040s... the legislature will probably just eliminate it rather than raise any taxes to keep it solvent.
Without SS or that pension, the retirement calculators say I'm going to need 3.2 million to retire. That seems SO hopeless! It says I need to be putting about 27% of our income into retirement savings.... you're supposed to save 20% automatically for expenses which we do... we actually save 33% of our income and sometimes closer to 40%... but that doesn't all stay in savings... we use that to be debt free, ie: we bought my wife a new Subaru to replace her 17 year old Pontiac- that was about 15 months worth of savings. We expect the next 36-60 months worth of savings will go towards a down payment on the next house.
According to the calculators, to retire we need to be saving about 47%, more than half of that going toward retirement! WTF!? And that assumes we never lose these jobs, never have kids, never move up to a better house and nothing ever goes wrong like a health issue!!!
My vague plan is to keep our house, as well as whatever houses we move into after this one, as rentals. It's rental value is already 80-100% greater than the mortgage payment (lucky). I overpay the mortgage by enough to pay this one off in about 13 years. We plan to move out in 3-5, so there will be less than a decade of mortgage payments to make before it becomes a debt-free, cash producing asset.
I never thought I'd have to choose between having kids and retirement, but at our age we don't have much longer of a window to have kids so it is really looking like that. My wife thinks retirement is a crock, can't imagine herself not working, it's too impossible to save that amount anyway and that I waste time and energy stressing about it.
Last edited by redguard57; 11-05-2016 at 11:34 AM..
This thread at times has strayed from the OP's question. So I guess I'll ask?
Some posts seem critical of social services for those (retirees) "in need," so I'm just asking? Should we have NO social safety net? No one has suggested that (I don't' think). But, I'm wondering about the tone I picked up in some posts.
Are you suggesting we shouldn't help provide for those who can't work? OR, just pointing out that some people need to be mindful of the fact that taxpayers are funding that safety net, and therefore supporting certain retirees?
And of course, many of those who can't work anymore DID at one time pay taxes as well.
And, does it really even matter why a person legitimately needs taxpayer support? Does it matter that they're "retired" or are just truly disabled….whether mental or physical. Who's going to support all the autistic kids who'll be adults in the decades to come, and may never have been able to work? Or what about the mentally disabled, whose parents get too old to keep then anymore? Maybe those parents did have money, but that money paid for their own care. Whether the person is subsidized in an apartment and with food stamps…or subsidized in a home or facility…it's still the taxpayer paying for it. And one of the parents of that now disabled adult with some God awful mental and physical disability has worked all their life, so shouldn't their child get some help.
((And as an aside many parents of disabled adults say they're not enough help out there. YES, when a person has a child they "take the chance" the child could be disabled. But as a society we still need to decide what's to be done now that the person is HERE. If you have a child who's basically a living vegetable….who will be an ADULT one day with parents who are in their 80s and perhaps no siblings, then what??)
As I said, no one has suggested we should let people -- retirees or otherwise -- die in the street, with no food shelter or medical care. I'm just wondering -- again -- are you suggesting we should lessen the support, or that we just need to look at what would happen should the net…..become unsupportable…and break…..
Perhaps I misread some posts as critical that were not intended that way, if so -- that's my misunderstanding of the text and tone.
I'm 34, wife is 31. My wife and I make combined about 80k. If I retired at age 67 that would be 2049, 7 years after social security is supposed to go broke. Personally I will never make more than the high 80s or low 90s in today's dollars, I will start to max out the salary scale in about 14 years.
I'm in the public sector, there is some kind of pension... it's not defined benefit anymore though, just defined contribution. They changed the system over for anyone hired after 2003, long before I ever started. I'm not sure how it works but I know it's not nearly as good as what came before... those hired before 1989 basically retired on full salary. It's such a political football too that I have no confidence it will be there in the 2040s... the legislature will probably just eliminate it rather than raise any taxes to keep it solvent.
Without SS or that pension, the retirement calculators say I'm going to need 3.2 million to retire. That seems SO hopeless! It says I need to be putting about 27% of our income into retirement savings.... you're supposed to save 20% automatically for expenses which we do... we actually save 33% of our income and sometimes closer to 40%... but that doesn't all stay in savings... we use that to be debt free, ie: we bought my wife a new Subaru to replace her 17 year old Pontiac- that was about 15 months worth of savings. We expect the next 36-60 months worth of savings will go towards a down payment on the next house.
According to the calculators, to retire we need to be saving about 47%, more than half of that going toward retirement! WTF!? And that assumes we never lose these jobs, never have kids, never move up to a better house and nothing ever goes wrong like a health issue!!!
My vague plan is to keep our house, as well as whatever houses we move into after this one, as rentals. It's rental value is already 80-100% greater than the mortgage payment (lucky). I overpay the mortgage by enough to pay this one off in about 13 years. We plan to move out in 3-5, so there will be less than a decade of mortgage payments to make before it becomes a debt-free, cash producing asset.
I never thought I'd have to choose between having kids and retirement, but at our age we don't have much longer of a window to have kids so it is really looking like that. My wife thinks retirement is a crock, can't imagine herself not working, it's too impossible to save that amount anyway and that I waste time and energy stressing about it.
Yes it seems daunting doesn't it. If you are still working for the public sector job then my suggestion is to follow the rules as much as possible. If you are working in the private sector and your employer is offering a 401k use that vehicle to save as much as you can. Save at minimum up to the match and if the investment choices are good put as much as you and your wife can. When you think of the money in those terms that you speak on above it is overwhelming. But it is doable. You just have to put your best effort to it. A few more points though. Do not forget to live while you save. Do not forget to pay yourself first. Do not plan for your children's education unless you have your retirement plan paid on.
The traditional model for many was a home fully paid for that could be sold to supplement the golden years.
I've managed Section 8 Housing since the 80's back from a time that many had no idea such programs even existed where a rent subsidy meant living in a neighborhood instead of the projects.
For some it is a generational way of life... I know many 4 generations on public assistance.
Still was left speechless one day when I declined a service call because I needed to get my taxes done... the Grandmother, head of household, living in a nice suburban home I managed said she has never paid taxes...
It did provide an insight to a life where all the basics are covered with benefits transferring should you want to relocate...
So there are plenty that maintain the same lifestyle into retirement without millions or even thousands...
A study a few years back said a Bay Area family of 4 would need an income of 65k to equal the low income benefits provided starting with housing, medical, food, education, childcare, etc...
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