America’s 60-Year-Olds Are Staring at Financial Peril

[easyrider]

I’m a big fan of the new cars with all the safety gizmos like lane keeping, adjustable cruise control, auto breaking, etc., especially as I've gotten older. I’m a good driver and have never been in an accident that was my fault (rear ended at a stop sign!), but I appreciate how these help keep me safer. I think they are well worth the investment in a new car.

I like large luxury vehicles , large suv's and trucks because they fare better in accidents than newer smaller vehicles. I've been in a couple of accidents, no fault of mine, where my vehicle may have had a small rub and the other car was very damaged. I do like gizmos though.

Bill

 

[TolmiePeak]

I like large luxury vehicles , large suv's and trucks because they fare better in accidents than newer smaller vehicles. I've been in a couple of accidents, no fault of mine, where my vehicle may have had a small rub and the other car was very damaged. I do like gizmos though.

Bill

Agreed. People far underestimate serious risks in their lives and far over estimate minor risks. Driving a car is by far the riskiest activity that most of us do. Having a car that will mitigate the chance you will get seriously injured or killed is worth every cent.

 

[HitchHiker71]

I’m a big fan of the new cars with all the safety gizmos like lane keeping, adjustable cruise control, auto breaking, etc., especially as I've gotten older. I’m a good driver and have never been in an accident that was my fault (rear ended at a stop sign!), but I appreciate how these help keep me safer. I think they are well worth the investment in a new car.

The newer safety features are useful without a doubt, though they aren't perfect. Things like phantom braking occur from time to time where the AEB or TACC systems think they "see" something - a ghost image basically - and proceed to slam on the brakes unnecessarily for collision avoidance purposes. In rare cases, this behavior actually causes accidents - people get rear ended when this error occurs. It's happened to a handful of Tesla owners over time.

 

[AlmostRetired]

I am 69, started working at 16 PT through college. I paid for my own college with savings and loans. Worked for IBM for 30 years before being downsized and going to my current company where I have been for 15 years. I can retire but choose not to. I enjoy work and have the best of all worlds. Work from hone, back to PT so I see my granddaughter during the week and travel a few times a year.

Pet Peeve Number 1 - SS is an entitlement program. When I go onto my online SS account, between my employers and I, we have paid close to 1,000,000 combined into SS and Medicare. The benefits well earned.

Pet Peeve Number 2 - my pension is an entitlement or that I am lucky and you are being screwed out of a pension. When I started IBM in 1978, IBM did not pay as well as other technology companies. The reason was they had good medical and a pension plan. I could have gone elsewhere and made more money. I took the pension because I did not trust my savings discipline or investment smarts (took too much risk). In 1999 IBM moved as many people as they could to a cash accumulation account with the rest on a changed pension plan. Anyone joining after 1999 never was offered a pension hence never lost it since it was not offered. In 2008 they froze the pension for everyone. This was the year I left. If you joined and had it taken away, that sucks and I do feel bad. If you joined a company that never had it, your choice. My pension was the by product of 30 years of work. This is not an entitlement. Interesting fact, IBM started the pension plan again in 2023.

I have 2 married sons (33 and 36) and all four are professionals. They are making significantly more that I do right now when I count my pension, my wife's, our SS and me currently working. Based on the cost of things they will have a significantly harder time retiring. Knowing they do not have pensions, I try and encourage them to save more. Somewhere along the line they think I drank some stupid potion and they are so much smarter. I feel bad for future generations, they will have it harder. While I agree with an earlier statement that baby boomers screwed things up, I lay some of the blame on anyone 25 or older. This has to do with the quality of our government officials on all sides of the fence I will keep this apolitical and stop here. How do we fix the problems, I have no clue. I also have no faith the answer will come from my generation so It is time another generation steps up to the plate

As far a living in retirement. I moved all of my investments out of the stock market 5 years ago. Predictability and being able to sleep outweighs increasing assets. My goal is for my wife and I to live as long as we can without being a financial burden to our kids. I created a spreadsheet that I started in 2020. The formula stands the test of time Income-Expenses = Loss/Gain. Loss I go into savings, Gain I add to saving. I assume inflation 3 % and interest rates is 1%. Does not matter was the real numbers are because it assumes a 2% difference. I reduce SS by 22% in 2036 assuming problems won't be fixed and my spending by 15% in the same year.

 

[Tia]

It will get worse as workers realize whats going to happen. Why pay into a system which won't amount to beer money when a worker is allowed to draw from it?

For a snapshot of how bad this is going to be, google "US percentage have no retirement savings" and then just look through the various age groups. Couple that with the 30-odd states which have filial responsibility laws.

Those working for cash or owning a business don't always claim income/pay into SS. Then when it comes to retirement it's 'ooooh what I get so little?! I can't retire.' They get put on something for low income believe SSI. No personal experience just have read. I do know years ago I heard there was one state has a program for no/low documented income an assistance program the gals mother was on it, we were all on vacation having drinks sharing a table at a popular spot.

My own job the match was extremely small.

 

[Superchief]

I worked for 56 years, maxed my 401k contributions, and we always were practical with our spending. I though we were in a good situation when I retired in 2019 at 66+ with some pension and good amount of IRA savings. Unfortunately, one adult daughter got an undiagnosed illness and moved in with us just prior to Covid. Our other adult daughter moved in with us because she could no longer afford to live on her own in apartments in our area. I hadn't expected 25% + inflation in three years, doubling of our property tax to $750 per month, and absurdly high interest rates. Our IRA has taken a significant hit. Given our current political environment, I see even higher inflation ahead, so we will likely be forced to get rid of our timeshares and our house much sooner than expected. We also had to take Medicare a year earlier than planned and are paying a large premium due to a high IRA withdrawal in 2022. I wish I would have shifted a portion of IRA savings to a ROTH account to avoid those MRNA Medicare premiums.

 

[Superchief]

Everything has gone up exponentially - take college tuition. In 1978, tuition at the University of Tennessee was $165 and minimum wage was $2.65/hour. In 2024, tuition is $6,742 and minimum wage is $12/hour - it would take roughly 2 weeks of work in 1978 to cover your tuition - but it would take 14 weeks of work for the same thing in 2024.

Home-buying, with the advent of private equity, has also been made extremely challenging as well. In 1986, the average home in Tennessee was $60,136 and in 2024 it's $365,000. Based on the median incomes at the time ($18,000 in 1986 and $59,000 in 2024) - home buying power has been cut in half.

The world we're facing is entirely different than that of boomers - I don't know anyone my age who isn't working multiple jobs and the majority of us are forced to rent because we can't afford home prices. I work a union job and have a pension - incredibly rare - and we still can't afford to own a home.

As a millennial - I think the idea that we are "entitled" is a bit skewed. Especially considering it had to be ... the generations before us giving us those participation trophies growing up

We have two daughters who are facing the same challenges. As a boomer, I also didn't have to pay for tv, and the cost for phone service was minimal. There are a lot more 'essential' expenses today. Our daughters waste a lot of money at Starbucks and non-essentials and aren't good at managing expenses. It was a lot easier to track spending when we used to have to pay cash or write checks, and didn't have the debit cards and spending apps.

 

[rickandcindy23]

I always liked the idea of our money going into a private savings account that we couldn't use or draw from until retirement. It was discussed years ago by politicians. The argument against was that current retired people would cease getting the SS checks, if everyone stopped paying into the program. The program should be sustainable and shouldn't count on future money to keep it alive. How much money would a person have, if they saved just 7-8% a year for 40 years? It would be a staggering amount of cash.

 

[Superchief]

The newer safety features are useful without a doubt, though they aren't perfect. Things like phantom braking occur from time to time where the AEB or TACC systems think they "see" something - a ghost image basically - and proceed to slam on the brakes unnecessarily for collision avoidance purposes. In rare cases, this behavior actually causes accidents - people get rear ended when this error occurs. It's happened to a handful of Tesla owners over time.

I turn off my collision avoidance systems because they have almost caused me to have accidents several times. I've always been an attentive driver and have good reflexes so I prefer to control the car myself. I also see a lot of unsafe drivers who think the car can drive itself so they text or are inattentive.

 

[ScoopKona]

Those working for cash or owning a business don't always claim income/pay into SS. Then when it comes to retirement it's 'ooooh what I get so little?!

When people realize that the only reason they're putting money into the system is to give a decent retirement to current retirees -- something they won't receive when it's their turn, they'll leave the system in droves. I don't blame them. I retired young for this reason. Why continue to put so much into a program which won't amount to beer money when I'm old enough to draw?

People are only just starting to realize how dire this problem is. Most people were in deep denial about the OASDI trust fund. "Just get rid of the income cap! Means testing!" It's too late. Any tweaks needed to be done 30 years ago. We need to find $14 trillion to shore up the OASDI -- and short of checking under seat cushions and phone booths, any solution is going to be unpopular.

 

[Superchief]

Another major problem with Social Security is that a large portion of the funds are being used for disability payments. It was never meant to be an insurance account. Many of these recipients never paid into it. Social Security trust funds have also been raided for years to pay for other government spending. My biggest issue with being forced to participate in social security was that federal and local government employees had their own separate programs that were typically better. I definitely would have been better off with my own savings program. It also isn't fair that I would have to pay 15% social security if I want to work part-time as a consultant even though I will get no benefit from it.

 

[ScoopKona]

Another major problem with Social Security is that a large portion of the funds are being used for disability payments.

It's a separate trust fund. It's also one that is in no danger of going bankrupt. They're suggesting drawing from DI fund to shore up the OASDI fund (for a few months) when it depletes.

 

[Superchief]

It's a separate trust fund. It's also one that is in no danger of going bankrupt. They're suggesting drawing from DI fund to shore up the OASDI fund (for a few months) when it depletes.

Where does its funding come from? Someone has to pay to fund it?

 

[joestein]

When people realize that the only reason they're putting money into the system is to give a decent retirement to current retirees -- something they won't receive when it's their turn, they'll leave the system in droves. I don't blame them. I retired young for this reason. Why continue to put so much into a program which won't amount to beer money when I'm old enough to draw?

People are only just starting to realize how dire this problem is. Most people were in deep denial about the OASDI trust fund. "Just get rid of the income cap! Means testing!" It's too late. Any tweaks needed to be done 30 years ago. We need to find $14 trillion to shore up the OASDI -- and short of checking under seat cushions and phone booths, any solution is going to be unpopular.

It will be fine. Whatever gap there is will be covered by the gov't. They spend more on other entitlements - I doubt they will cut out SS that people paid into.

The gov't has a deficit of over a trillion dollars a year - but somehow they are not going to cover a couple of hundred billion in SS?

 

[WaikikiFirst]

Whatever gap there is will be covered by the gov't.

Sure seems like there is zero resistance to that approach. Gov't runs deficit. Sells bonds to finance it. The Fed prints electronic money to buy 90% of those bonds.

 

[ScoopKona]

Where does its funding come from? Someone has to pay to fund it?

Part of FICA is diverted to that fund. There's the OAS and DI, which are two funds, managed by the same trustees. (Not like they have the ability to do much other than make projections.) The 2024 report dropped a couple months ago. The trustees say the same thing every year -- just moving the projected dates and cuts each year. I'm only going to speak about the economics of the situation. Because any policy idea are 1) at this point moot; and 2) way too political.

The fund most people care about depletes 2030-ish. And when that happens, automatic across-the-board cuts of 25%(ish) happen. This is the way the program is written. And nobody in the federal government need lift a finger. That's the non-political, continue-kicking-the-can outcome. And since nothing has been done since the 1980s, when we knew this would eventually happen; I think it's fair to say nothing will be done in the five-ish years before it happens.

The HI fund was forecast to deplete in a few years. But that has been pushed back to about the same time as OASDI. I was hoping that would be a preview of what was to come. I think it's worse that everything is depleting around the same time.

I read this every year, even though it no longer affects me. With all the filial responsibility laws on the books, I think it's important to get in front of this and at least be aware of what's coming.

Trustees Report Summary

A SUMMARY OF THE 2024 ANNUAL REPORTS

www.ssa.gov

 

[Ralph Sir Edward]

Sure seems like there is zero resistance to that approach. Gov't runs deficit. Sells bonds to finance it. The Fed prints electronic money to buy 90% of those bonds.

The results (with a lag) is inflation.

 

[joestein]

Sure seems like there is zero resistance to that approach. Gov't runs deficit. Sells bonds to finance it. The Fed prints electronic money to buy 90% of those bonds.

Personally, I am very fiscally conservative. But the gov't is not. So, the idea that they are paying out Welfare, SSI, medicaid, etc... which are payments for the poor, but they are cutting SS because they don't take in enough SS that year? Just not happening.

I can assure everyone here that as soon as seniors hear that SS is going to be cut automatically by 25% - The law to stop any cuts will be passed so fast - it will be a congressional record.

 

[ScoopKona]

Or people could read the trustee's report and learn what's actually going to happen...

 

[DrQ]

I can assure everyone here that as soon as seniors hear that SS is going to be cut automatically by 25% - The law to stop any cuts will be passed so fast - it will be a congressional record.

That's what happened in the 80's when they put in the last "fix". They keep on kicking the can down the road until the road runs out.

 

[rapmarks]

Or people could read the trustee's report and learn what's actually going to happen...

What good does knowing do? There is nothing anyone can do about it. In fact,I understand one candidate said that after we vote for him in November, we will never have to vote again.

 

[ScoopKona]

That's what happened in the 80's when they put in the last "fix".

"Fix" is a funny way to spell "kneecapped the system, which is what put us into this position in the first place."

What good does knowing do? There is nothing anyone can do about it.

There's actually plenty people can do -- if they know it's coming early enough in life to create a financial "plan B."

The people who are in deep denial about this problem think there's an easy fix that we can conjure into existence any time we want. That isn't going to happen because there simply isn't enough money. Nobody in government has taken this problem seriously since 2000 -- and even that was late in the game to shore up the system.

So the only "fix" is at the individual level. We're in a "The Ant and the Grasshopper" fable. But this fable has a lousy ending where the Grasshopper eats pet food in the dark because the Grasshopper can't afford to feed itself or keep the lights on.

 

[joestein]

"Fix" is a funny way to spell "kneecapped the system, which is what put us into this position in the first place."



There's actually plenty people can do -- if they know it's coming early enough in life to create a financial "plan B."

The people who are in deep denial about this problem think there's an easy fix that we can conjure into existence any time we want. That isn't going to happen because there simply isn't enough money. Nobody in government has taken this problem seriously since 2000 -- and even that was late in the game to shore up the system.

So the only "fix" is at the individual level. We're in a "The Ant and the Grasshopper" fable. But this fable has a lousy ending where the Grasshopper eats pet food in the dark because the Grasshopper can't afford to feed itself or keep the lights on.

I don't think anyone here argues against people putting themselves in a financial position to survive if SS is cut. Everyone should be preparing themselves for supplemental income during retirement. I think we disagree on the possibility of SS being cut.

 

[am1]

I always liked the idea of our money going into a private savings account that we couldn't use or draw from until retirement. It was discussed years ago by politicians. The argument against was that current retired people would cease getting the SS checks, if everyone stopped paying into the program. The program should be sustainable and shouldn't count on future money to keep it alive. How much money would a person have, if they saved just 7-8% a year for 40 years? It would be a staggering amount of cash.

It is a ponzi scheme. And the people that never pay in but marry in? Or get started later in life (immigrants) pay pennies in. I paid into the Canadian and American system when I was in my 20s and got the same credits each year that someone paying in at 64 would get. But you cant fight city hall so I left.

 

[amycurl]

Whatever.