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Geoff, by the time late-boomers retire we could be hit with a whole lot more changes. God only knows what the situation will be with: Social Security, Medicare, health care in general and long term care options -- right about the time the bulk of late-boomers retire say -- 10 years from now.
Just my luck that when I'm about to retire $#!t hits the fan. I really hope we don't get screwed.
-- Sure as for health care there'll be more and better medical treatments and more cures for things by then…but how will it be delivered and paid for.
-- By then will they have raised the Medicare eligibility age. Chris Christie propose that already. And is a current 55 year-old old enough yet so they WON'T be affected.
-- Sure Social Security will be around (I guess) -- but is a current 55 year-old old enough yet so they WON'T be affected by means testing, should that happen. And if they start that at a given cut off age…SOME one will get screwed. If it's not the 55 year old now, if could be the 54-year-old who misses the cut of by one year. Look at how notch babies got screwed, or how they raised the FRA age to 67 already.
-- Will they change the rules on retirement accounts. O.b.a.m.a. already tried that.
-- How many years warning will we get…and even if we do know it's coming that still doesn't mean we aren't being screwed. If just means we'll KNOW it's happening.
Look at the rule change for Soc Sec. affecting file and suspend…they passed that -- and made it effective in less than six months from passage. Or there abouts, right? Forcing some people to scramble.
When I was 50, I had the same concerns that they'd reform Social Security and I'd get screwed. I'll be 58 in May and I think I'm grandfathered out of anything they do now. I can a "reform" where 100% of my Social Security check is taxable but that's not much of a hit. I can see them messing with COLA calculations that erode me some as I age. I project to be in the 25% bracket. Touching the program is the political third rail. I give very low odds that anything will change in the next 5 years.
If you look at the reports from the SSA, Social Security is only underfunded by about 30% assuming the economy stays flat forever. Bumping payroll taxes, hitting rich people a little harder, and bumping the retirement age a bit fixes the problem. I can't predict how much each of those three will change but they're all bound to change. The program isn't going away because the bottom half would starve. Any means testing will be largely symbolic since only a few percent will have the wealth and income where a Social Security check isn't a significant chunk of their cash flow. Top-5% has a house, a million bucks in savings, and might have a pension. You can pay those people zero and it wouldn't impact the 30% gap all that much.
Medicare, on the other hand, kind of has to change. I have $10K/year (individual) penciled in as my guess about what my costs will be for premiums and supplemental coverage. It's kind of inevitable that there will be a 2-tier system where the tier that doesn't pay anything gets Medicaid-level coverage with long queues to get anything major done. The people who can afford the supplemental coverage or outright pay cash will receive a completely different level of care. I'm wondering if $10K will be enough. It could easily be more than that.
That's shocking, but not surprising that so many people near retirement age haven't saved a dime for retirement. Too many people live their lives for today and do not live below their means. If people actually lived below their means and saved more money, you'd see very few luxury cars on America's roads. I think saving only $500K isn't enough, although people retire with less and lower their standard of living. I'd like to see a breakdown of the percentages in the $500K to $10M or more category.
I think a while back I read there were about 9,000 people with a 401k or IRA higher than $3million.
-- By then will they have raised the Medicare eligibility age. Chris Christie propose that already. And is a current 55 year-old old enough yet so they WON'T be affected.
-- Sure Social Security will be around (I guess) -- but is a current 55 year-old old enough yet so they WON'T be affected by means testing, should that happen.
Chris Christie is out. Trump said no change to SS. Rubio said it will not affect the 55 plus crowd.
Like most mantra's live below your means is another useless one for most folks.
At retirement they have their savings , social security , maybe a pension so the problem is what amount a year is living below my means ? Most folks are clueless as to how to judge just what is a budget that is living below their means.
Pulling 3.5%-4% inflation adjusted from your savings maybe to conservative most of the time if you have 40% in equity's.
Pulling 4% inflation adjusted has been to risky from just cash instruments.
So while example 1 is likely living below your means ,example 2 is not.
So the first question is you need to be educated enough to understand just what your means are.
Other wise live below your means is about as meaningful as don't buy stocks that will go down.
When you have a pension the pay check never stops , same with social security. You know what your means are the same as when working . But when living off your own pile of savings and it has to last longer then you do it is more complex.
Living below your means is advice for young people, not retired people. When you are 25-65, save 6% to 10% of your income every month and stash it a number of different places, like mutual funds, REITs, value stocks, bonds, etc. Then when you retire you will have means to live below. Under the current system, a 401k only has to last until you finally claim your SS, normally no more than 8 years, from 62-70, and often just 5 years, from 65(medicare age) to 70.
Living below your means is advice for young people, not retired people. When you are 25-65, save 6% to 10% of your income every month and stash it a number of different places, like mutual funds, REITs, value stocks, bonds, etc. Then when you retire you will have means to live below. Under the current system, a 401k only has to last until you finally claim your SS, normally no more than 8 years, from 62-70, and often just 5 years, from 65(medicare age) to 70.
Pretty damn reasonable. A simple, but sensible plan. Retire at an age at which the 401k will last until age 70, then take SS at 70 and live on that for the rest of your life.
However, that is predicated on being satisfied with the SS amount at age 70, which depends on a lot of factors including what your earnings have been over at least a 35 year period and what life style you wish to live from age 70 forward.
I've never seen the numbers broken out at this level of detail before.
It was the first time I'd seen the number that the 90% percentile of people who saved for their retirement is $730K. Since 40% have no savings at all, $730K is more like 95th percentile of the age group. That passes the sniff test. 5% will retire with something like $1 million plus their house.
In poor states like the South, I'd say it's considerably less than that.
Geoff, by the time late-boomers retire we could be hit with a whole lot more changes. God only knows what the situation will be with: Social Security, Medicare, health care in general and long term care options -- right about the time the bulk of late-boomers retire say -- 10 years from now.
Just my luck that when I'm about to retire $#!t hits the fan. I really hope we don't get screwed.
-- Sure as for health care there'll be more and better medical treatments and more cures for things by then…but how will it be delivered and paid for.
-- By then will they have raised the Medicare eligibility age. Chris Christie propose that already. And is a current 55 year-old old enough yet so they WON'T be affected.
-- Sure Social Security will be around (I guess) -- but is a current 55 year-old old enough yet so they WON'T be affected by means testing, should that happen. And if they start that at a given cut off age…SOME one will get screwed. If it's not the 55 year old now, if could be the 54-year-old who misses the cut of by one year. Look at how notch babies got screwed, or how they raised the FRA age to 67 already.
-- Will they change the rules on retirement accounts. O.b.a.m.a. already tried that.
-- How many years warning will we get…and even if we do know it's coming that still doesn't mean we aren't being screwed. If just means we'll KNOW it's happening.
Look at the rule change for Soc Sec. affecting file and suspend…they passed that -- and made it effective in less than six months from passage. Or there abouts, right? Forcing some people to scramble.
I am 61 and planned on filing a restricted application on my ex husband's social security at 66 and that got taken away. You always have to have a plan B and C.
You need to understand the probability of surviving to a certain age. There are both genetic components and environmental components and there is no one-size-fits-all answer.
I'm 57. I'm a professional and a doctor's kid so I've always had great health care and nutrition. I don't smoke. I don't do drugs. I drink in moderation. I've been an office drone so I've had minimal exposure to workplace carcinogens. My dad made it to 85. My mom is about to turn 84. I just got off the ski slopes so I'm far more active than most 57 year old men. I have a better than 50% probability of surviving until age 85 and it quickly drops off from there. I have about a 10% chance of getting to 90. Knowing the rough probability of reaching those ages impacts my retirement planning. Deferring Social Security to age 70 makes sense since the odds are high that I'll cross the break-even point.
If you're 57, a smoker, and have been on Medicaid or with no health care at all most of your life, the odds of making age 85 are pretty low. They get worse if your parents died young and if you've been exposed to hazardous work places. The top half lives 5+ years longer than the bottom half.
None of us have an "expires on" stamp on our arm but you can make a fairly good guess based on socioeconomic class, genetics, environment, and behavior.
Sorry ,but statistics don't help you much .
Things only work out as you planned or they don't. Unless you know in advance which side of the statistic you will be on good planning says you still need to plan like you will be the one to live.
If you disagree ,plan the way you see fit but most retirees are not concerned about being the one to die, they are more worried about what if they live and want to make sure they plan out far enough , especially if a couple.
Things only work out as you planned or they don't. Unless you know in advance which side of the statistic you will be on good planning says you still need to plan like you will be the one to live.
If you disagree ,plan the way you see fit but most retirees are not concerned about being the one to die, they are more worried about what if they live and want to make sure they plan out far enough , especially if a couple.
Not so sure that most are worried about planning out far enough. Maybe just the opposite they want the most day one and after that oh well!
Until they find it is them that lived longer then expected and lack of adequate finances has now left them with no choices in life when things crop up and they stress every bill outside the budget.
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