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Baby Boomers Are Retiring - And It's Going to Have a Huge Impact on the Economy

MULTIZ321

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Baby Boomers Are Retiring - And It's Going to Have a Huge Impact on the Economy
By Stephen McBride/ Mauldin Economics/ Markets/ Business Insider/ businessinsider.com

"Few investors understand the magnitude of the looming demographic crisis and its ramifications.

The first Baby Boomers turned 70 last year. At the same time, the US fertility rate is at its lowest point since records began in 1909.

This disastrous combination means by 2030, those aged 65 and older will make up over 20% of the population.

In the meantime, the percentage of working-age cohorts are in decline. Combined together, these trends create a perfect demographic storm for the US economy.

Here’s why..."

mauldin%201.png




Richard
 

WinniWoman

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Wish I could be counted in the retiring group.
 

am1

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Maybe there is a need to delay retirement age or limit benefits. 15 years ago we were learning about this in our business courses.
 

Talent312

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I'm in the "retired just in time" class; thus, this monkey rests on the back of you working stiffs.

<retirement = endless weekend>
 

WinniWoman

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Maybe there is a need to delay retirement age or limit benefits. 15 years ago we were learning about this in our business courses.

Uh- wasn't this done already? The way things are going, the retirement age will keep going up and up until there is no retirement age. Maybe get rid of SS altogether and let people keep their own money.
 

pedro47

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I am retired, income is up for some that are working full time jobs; white collars jobs, high tech jobs & the military. We are still saving and investing and I pray that the new generation of workers in the USA will start saving early like at 21 or 22 years of age in a ROTH IRA.
 

vacationhopeful

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The SS system is basicly a Ponzi scheme. The government is taking today's collected dollars and PAYING the owed benefits immediately to claimants. There is no investment or pot of gold.

Worked fine when most people did not live beyond 60-65+/- years old.
 

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Maybe there is a need to delay retirement age or limit benefits. 15 years ago we were learning about this in our business courses.


There does need to be changes to preserve the system, one I think is if you didn't earn income and contribute into SS you don't collect off the system, unless your the surviving spouse collecting off the one who worked.

How many ex spouses can one workers SS be collected off anyone know?
 

Sugarcubesea

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Uh- wasn't this done already? The way things are going, the retirement age will keep going up and up until there is no retirement age. Maybe get rid of SS altogether and let people keep their own money.
For me it was, I have to be 67 to collect full benefits.
 

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When the Social Security Act was passed in 1935, the average life expectancy was just 61 years (and only 58 years for the average male), making the system sustainable since benefits only began to be paid at age 65. In addition--as the OP points out in this thread--the median age of the U.S. population was 26, meaning there were many more payers into the newly-created system than those receiving benefits.

The demographic picture has completely flipped in 2017. The median age today is 38, and expected to climb to 40 by 2030. Average life expectancy today is 79, with the highest population of elderly people ever recorded.

Our policymakers haven't helped the situation. In the face of these changing demographics, one can now begin drawing Social Security benefits as early as 62 years of age, when clearly the correct policy would be to increase the starting age well above 65. (If the starting age had been tied to life expectancy using 1935 as a benchmark, it would be about 83 today.) The more farsighted politicians first began raising this issue as early as the 1980's, but organizations like AARP mounted significant pressure against such action, and the whole discussion of increasing the Social Security retirement age became known as "the third rail of American politics".

The best plan is for those of us under 70 years of age to be sure we have built a nest egg sufficient to fund our retirement for at least 20 years--and not to count on any proceeds from the Social Security Administration. If we end up getting benefits, it's icing on the cake, but it's best to plan for nothing and be pleasantly surprised if it happens.
 

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<<The best plan is for those of us under 70 years of age to be sure we have built a nest egg sufficient to fund our retirement for at least 20 years--and not to count on any proceeds from the Social Security Administration. If we end up getting benefits, it's icing on the cake, but it's best to plan for nothing and be pleasantly surprised if it happens. >>
Yeah, that's how I started in my 20s, believing SS would not survive. Past 50 now and more optimistic, but my FRA is a full 2 years past Dad's FRA. That's a pretty drastic "correction" seen in one lifetime; further changes of this nature would need to be enacted on those under 30 at time of rule, preferably 25 yrs old, giving most all of career to prepare. Raising age is not helpful to people that make their living with their bodies and today people do that, not robots. I am a cube-dweller, planning to let it ride until 70 to get max as I have no pension so want SS as high as possible.

I'd prefer we raise the cap on wages subject to FICA as that bar does not move up much and infrequently yet we have a lot of people making well more than $125k (approx. guess for where the bar is set today). To me it is better to increase inflow than cut benefits to retirees even tho this means a bit more for the highest paid.

We could also start nudging up number of quarters contribution required to be eligible for benefits. Not sure how many pay in but not collect, but many die before collecting; adding a bit to time worked further shuts out a few that don't qualify. It's not much, but I think we only need small tweaks and not sure why none done in all this time. Small incremental change is fairly easy to stomach while I could not abide any $ ripped from my mother's hands. Whatever SS is for me, it's fine, my plan doesn't require SS, it's simply Nice To Have.
 

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Each new year, they should raise the age by one year for full retirement age for those born in that year. In that way, an individual would have their working career to plan accordingly.

For those of us, close to retirement or 10 years away or less, I don't feel it's fair to change the rules for those in this age group as they will not have enough time to make up the difference prior to retirement.

It's imparitive to raise the bar passed $125K. It really should be raised to 300K to start and move up each year.
 

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Not everyone are earning between $125 between and $300K per year. There are many in low paying jobs earning less than $50k per year.
 

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Not everyone are earning between $125 between and $300K per year. There are many in low paying jobs earning less than $50k per year.

Exactly. In fact, most jobs.
 

Sugarcubesea

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Not everyone are earning between $125 between and $300K per year. There are many in low paying jobs earning less than $50k per year.
I agree, right now SS contributions are capped once an employee reaches 127K earnings in a year. (I thought it was at 125K, my apologies) I think the cap should be totally removed but for starters at least raise the income cap on SS Taxes to 300K, so that those individuals making more would still have SS taken out of their paychecks.

I don't think I explained myself correctly in the earlier post above...

The Social Security Administration (SSA) announced that the maximum amount of wages in 2017 subject to the 6.2% Social Security tax (old age, survivor, and disability insurance) will rise from $118,500 to $127,200, an increase of more than 7%. By comparison, the 2016 wage base was unchanged from 2015. The cap should be raised each year, is my thought process.

Depending on how much money you earn, you may not pay Social Security taxes on your entire income. That's because a cap is set each year on the amount of income subject to Social Security taxes. Last year, that limit was $118,500, but in 2017, it jumped to $127,200. Now if you earn, say, $50,000 a year, that increase won't make a difference, because you'll still be paying Social Security taxes on your entire income no matter what. But if you're a higher earner making, say, $130,000, you'll pay an additional $539.40 in taxes this year because of that increase.
 

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Is Social Security Disability funded with taxpayer dollars or from worker contributions?
 

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The cap on earnings subject to SS tax is also tied to the max SS benefit one can receive when they start collecting, based on the current formulas SS uses. Removing or raising that cap would also remove or raise the max SS benefit that those high-wage earners would receive in retirement. Not sure if that would really help keep SS solvent or not.

If they raise the earnings cap but not raise the benefits cap, then that just becomes an additional tax for high-wage earners. If that is the case, opponents would argue why tie it to the SS tax? Why not just raise income taxes for those with higher incomes? I'm not going to weigh in on this debate, in respect for TUG's non-political policy -- I just wanted to point out that raising the earnings cap may not really help the SS system, financially.

Kurt
 

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Is Social Security Disability funded with taxpayer dollars or from worker contributions?
Because the Social Security trust fund disability insurance will be underwater beginning in 2028, it's still technically being funded by contributions. But with the looming insolvency of the fund in little more than ten years from now (and assuming Congress does not act to change current policy), the de facto answer is that it's supported by tax revenues.
 

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My grandmother died in 2001, lived to ripe old 88 yo. She collected for over 20 years, plus she had my grandfathers pension income , plus the health insurance provided by grandfathers former job. (Grandfather died at 81yo) She used to complain about $ but in reality she had it pretty good compared to many current day retirees. She did work but not sure for how many years before retiring.
 

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My grandmother died in 2001, lived to ripe old 88 yo. She collected for over 20 years, plus she had my grandfathers pension income , plus the health insurance provided by grandfathers former job. (Grandfather died at 81yo) She used to complain about $ but in reality she had it pretty good compared to many current day retirees. She did work but not sure for how many years before retiring.

I think about my parents, they both had pensions and SS and employer sponsored health care in retirement.
 

SmithOp

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My grandmother died in 2001, lived to ripe old 88 yo. She collected for over 20 years, plus she had my grandfathers pension income , plus the health insurance provided by grandfathers former job. (Grandfather died at 81yo) She used to complain about $ but in reality she had it pretty good compared to many current day retirees. She did work but not sure for how many years before retiring.

I have a tax client with $100k pension from a university system, she did nothing but complain about not getting SS. I tried to explain she didn't pay in during her working career but she kept on claiming poverty...


Sent from my iPad using Tapatalk
 

Blues

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The cap on earnings subject to SS tax is also tied to the max SS benefit one can receive when they start collecting, based on the current formulas SS uses. Removing or raising that cap would also remove or raise the max SS benefit that those high-wage earners would receive in retirement. Not sure if that would really help keep SS solvent or not.

I used to argue the same thing, Kurt. But on further analysis, I now realize that the increase in revenue from removing the cap will greatly exceed the increase in benefits payout. IOW, yes, I think it would really help to keep SS solvent.

Why, you ask? The secret is the graduated benefit calcuation, described in step 5 here:
https://www.ssa.gov/pubs/EN-05-10070.pdf

Those high earners almost certainly have an Average Indexed Monthly Earnings (AIME) in the highest bracket of over $5336 per month of average earnings. For those of us in that bracket, each incremental dollar taxed for SSA yields just 15% of the base benefit. The first $885 yields 90%, and then $885 to $5336 yields 32%. Then you get just 15%. Or, in other words, our incremental tax dollars yield just 1/6th of the benefit compared to those dollars from the lowest income bracket. I'm not saying that's wrong (it makes a lot of sense). But what I am saying is that the cost of providing benefits from that higher cap is much, much less than the dollars that the increased cap will bring in.
 

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There does need to be changes to preserve the system, one I think is if you didn't earn income and contribute into SS you don't collect off the system, unless your the surviving spouse collecting off the one who worked.Tia, you hav

How many ex spouses can one workers SS be collected off anyone know?

Tia, you have to have 40 quarters of earnings of a minimum amount (currently $1260) to get anything at all on your own work record.. If you earned just the minimum for 20 years, your benefit would be $415 a month ... enough to starve slowly on, if you had somewhere to do it.

An individual can claim spousal coverage only from his/her last spouse's account, if they were married 10 years and the claiming spouse hasn't remarried. There is no limit on how many such spouses can claim from the same worker.
 

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A quarter is this case is 3 months? I have paid ss for a few years. Is it worth it to "work" the last amount of quarters needed before 65 to get the minimum payout? If I am in good health at that time of course. I have no pension otherwise.
 

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A quarter is this case is 3 months? I have paid ss for a few years. Is it worth it to "work" the last amount of quarters needed before 65 to get the minimum payout? If I am in good health at that time of course. I have no pension otherwise.
A quarter is $1300, max 4 quarters per year. The 35 years of highest per annum contribution are used to compute SS benefit. 40 quarters is a test of eligibilty regardless of total earnings.
 
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