On the bright side, they die younger, so they'll spend less time being poor ;(

I didn't see any historical comparison but I wonder how different this is from past generations. I'm not sure what they mean by this though: That risk has been driven by depressed earnings, depressed asset values and increased health-care costs - not investment assets, right? Cause that's at an all-time high and if they were investing during the recession they'd have seen a great return the past decade. Same with housing, those assets continue to grow post-recession, it's obviously region-dependent but my local housing market is up 10% in the past year alone.

Re: this point: 74 percent of Americans planning to work past traditional retirement age - is that a bad thing, necessarily? 62, 65, 68 years old doesn't represent what it did 50 years ago, people are living longer and thus working longer, when you see how often people drop dead within a year of retirement I'm not so sure it's a bad thing that people are working into retirement.

Health care is the big elephant in the room, obviously. But to me, that just means people have to plan better for retirement. When you see how little people actually budget and save for retirement it's clear they're not even doing the basics needed to cover themselves, let alone their health care costs. I think in most cases it's a matter of poor budgeting and not enough savings.

Always looking on the bright side of life eh?

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"The great pleasure in life is doing what people say you cannot do."

This really shouldn't come as a surprise. The wealthy have been getting much wealthier and the middle class has been steadily losing ground since the mid 1970's, even more so more recently.

That risk has been driven by depressed earnings, depressed asset values and increased health-care costs - not investment assets, right? Cause that's at an all-time high and if they were investing during the recession they'd have seen a great return the past decade.



I don't think they are talking about people who have a lot of investments. 50% of American adults don't own stocks.

Many people in the lower middle classes cannot afford to invest in the market etc. If they own real estate it is in less desirable places. Or they have no role models to do so. Like you I don't see depressed asset values as playing a part. What am I missing?

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They constantly try to escape from the darkness outside and within
Dreaming of systems so perfect that no one will need to be good T.S. Eliot

They should.

and a nice house with a swimming pool

Me too

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They constantly try to escape from the darkness outside and within
Dreaming of systems so perfect that no one will need to be good T.S. Eliot

I feel bad for people that have worked all of their lives and end up this way:



I am a CPA in a small town in Ontario and see this all the time. Retired people, struggling to make ends meet and particularly when one spouse has died. I see them having worked their entire lives, raised their families and having paid taxes, only to have to watch every cent for their entire retirement years. It was an eye opener for me as I am within 10 years of retiring to ensure I don't end up in the same boat.

No surprise. Most middle class either don't have the money to save or they don't know how to save.Now even if they do save, they hold their money tightly and don't want to gamble in the market or invest with a financial salesman.

I strongly believe that personal finance should be taught in high school. How to budget, how credit cards work, how a 401k works, how marketing convinces people wants are needs (everyone needs an iphone!).

The article seems focused on the demise of traditional pension plans and it looks like it was written by a consultant in that space. The usual position is that this is being caused by the demise of traditional pension plans. That is part of it but pensions are unsustainable for the most part with huge future and legacy costs. What tends to be glossed over is that people don't save enough period. They didn't save enough when pensions were common and their behavior didn't change even when pensions started going away. I spent most of my career in the retirement plan space and have worked on multiple initiatives to try to get employees to save more in plans (automatic enrollment, education, bigger match, etc). None of it has much impact. For many employees, any money the company puts into retirement plans for them gets taken as soon as it's available through loans or early distributions. Then they'll leave and if the pension becomes available, they sometimes cash that out too.

It wasn't just low paid employees either, most of them were in a manufacturing environment so it's not minimum wage work. People just have trouble thinking of the future and tend to focus on today. We'd have locations where employees would leave for another $1 an hour at a competitor down the street and give up the pension and generous 401(k) match. They'll be much worse off in the future but that's not what they're focused on. People retiring today are seeing the consequences of decisions made decades ago.

Not sure how to solve for it though. Even if you bring back traditional pensions, they were never meant to replace an entire salary. Most generous ones would top out at maybe 50-60% of a salary in the private sector and that's if someone spends an entire career at a company (40 years). Add that to Social Security and that person would be comfortable but this example is in the minority. Most people got much smaller pensions and were supposed to save on their own as well but didn't. Now the burden is entirely on the employee through 401(k)s and such. It's somewhat cheaper for the company but that's not the primary reason pensions went away. With pensions, the entire burden of risk is on the company to pay out promised benefits and they have to plan for that burden decades out. With a 401(k), they can just project what the employer contributions will cost them in the present. This trend likely isn't to change and if people won't change their own behavior and save more then don't know what a solution would even look like.

but what is the cause?

At least in the US, I think retirement at 62 or 65, was kind of a fluke for the Baby Boomers
Many Boomer retirements were facilitated by defined benefits pensions that have largely been eliminated or significantly cut back. Without these pensions, most people cannot save enough in 401Ks. realistically you need to almost max out your 401K ($18,500 per year) to end up with enough money. Couple that with many 401Ks do not have the best investment options and they still require some level of investment knowledge to have any chance of success, and then still it depends on what the market does.

I think the 40% is an understatement; this number will increase significantly over the next 25 years. I am early/mid 40s, have invested in Roth IRA and 401K since I started working full time at age 24, I make a six figure income and I have just about $500K in retirement savings (I do have significant home equity and substantial "non-retirement" savings I am not counting here, so I am a bit better off than this sounds). Considering I will need at least $2 million to retire (and this is based on assumption I will get SS and healthcare will still be subsidized), I feel like I am in a marginal position at best to retire at age 62, but I also think I am better off than about 90% of people my age.

No, DON'T get the swimming pool, save an extra $100 a month. Don't pay for premium cable, save an extra $50 a month. Live within your means - and besides debt payments retirement saving should be first line item on any budget, which no one does. Too many people who're financially inept and don't or won't sacrifice a bit now to protect their future. Social Security is so far from a 'safety net', it's a starting point, but people don't think of it that way.

What are you doing differently from them to ensure you don't end up in the same boat?? Surely you can tell us a bit about some of their bad financial decisions etc.??

but what is the cause?



In Canada, its similar. The older middle class workers at the big car and tobacco plants as an example, would have pensions that would be combined with the social pensions we have to provide a comfortable retirement. They changed a lot of the defined benefit plans to defined contribution plans and people weren't contributing and are now short of funds.

The real issue is why they weren't contributing to the defined contribution plans, or planning for retirement? I think that as wages increased, people just spent more than they used to. With less taken off their checks because of no pension plans, they had more money in their pockets and retirement was always so far away. I think people spend more without the foresight of what happens when the paychecks stop. A large part of the problem is of their own doing, living beyond their means and that is likely going to get worse.

"No, DON'T get the swimming pool, save an extra $100 a month. "

I can pretty much guarantee that almost none of those 40% have swimming pools.


"Live within your means "


This is the obvious answer.
Its the conservative answer.
Its also not a realistic answer. Not in today's culture, and no one has any interest in changing it. The powers that be don't want you to save. They want you to spend. They also want you to be in debt.


My Dad's a baby boomer. He sucks with money. Always has, always will. The only reason he's not impoverished is because he was lucky enough to have pensions from two government jobs he had. That and the fact that his wife's cancer didn't cost too much money, though they had to take out a second mortgage on their money pit to pay for it.


Anyway, the GOP wants to do away with SSI, so that'll likely fix everything.




In all seriousness, Brownie, I'm with you. It drives me nuts when I see so many people not saving. I live in a neighborhood of half million dollar houses. My wife and I don't have kids and likely make more than most of the neighbors our age. We have the cheapest cars, go on the least expensive vacations, and are slower about putting upgrades on our house than the rest. We are also the only ones who will have our house paid off by 2030. The rest are looking at >2040.

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-----------------------------Baron Von Speedypants
-----------------------------RunTraining articles here:
http://forum.slowtwitch.com/...runtraining;#1612485

Of course as a saver you are better off with everyone else being a consumer. The more they spend the more the economy grows and the more your investments rise.

If everyone lived within their means we might be looking at a lower quality of life for all since the means of the savers would have grown less and thus can't go as far...and companies with slower growth would have less to invest in innovation.

Economies are complicated.

I think some places (states?) have changed the rules where employers can have the default 401k option as enrollment. You have to opt out in order to not be enrolled. This makes a huge difference in the percent of people who sign up. I've worked with people who didn't even sign up at a high enough level to get the full company contribution. Trump has also made some changes to 401k to allow smaller companies to pool together to get cheaper plans.

I agree completely with budgeting/etc. but you seemed to be ignoring that some people don't own stocks not because they don't have a budget or they are spending unwisely, but because they are poor. For example, the average pre-school teacher makes about $33k per year. There's not a lot of fat to invest.

Ummm say what? If you put $18,500 from 30-65 @ 7 percent a year you’re over 2.5 million.

You would have to have one hell of a drawdown on 2.5 million to not be way over okay.


Even 7500 a year gets you over a million, add in SS and you would be doing okay.

In theory your bills should be significantly less once you retire. House is most of the time paid off, cars paid off or downsize to one car. Etc.

yep and since they cherish that small amount they can save, do they want to gamble in the market?

It's allowed in all states as far as I know for private sector. I worked on implementing auto enrollment as well other plan design changes - start at some lower amount like 3% and then automatically increase it until they reach the point of maximum company match. It's a somewhat sad state when you have to count on people's laziness to get them to save but that's life... What would then happen is that we'd see an uptick in loans once people realized they had money in their 401(k)'s.

Sure, those are both true statements. I do think it's actually realistic - to an extent - to say that people CAN and WILL save more in the future. I've seen studies on opt-in vs opt-out when it comes to retirement contributions and it's shocking how much more people will put away when the payroll default is to put 5% or whatever into a 401k, or to take current contributions and increase by 1% automatically every 6 months until they're at 10%. These are things employers are looking at now and hopefully it gains more steam. The best way for us to avoid a retirement crisis once these big generations of pensioners bite the dust is to help prompt people take care of themselves.

See above; use opt-out as the default for contributions and we'll all be in better shape for retirement. Further, public pensions are bankrupting or severely crippling cities all around the country, they're not the answer.


Who, exactly, is saying this? Makes me think of Paul Ryan when he ran with Romney, he had a Medicare and SSI plan that retooled both so they'd survive past the baby boomers. It was spun as a grandma-killing slash to government, no one wanted to actually look at the proposals. I've seen many proposals for SSI reform, some include an increase in benefits age, some include an option to personally invest the money rather than paying into the government pool. None, that I know of, propose doing away with SSI.


And you'll be better off in retirement, too, most of the people driving around in the fancy cars with the big homes are in debt up to their eyeballs. Read 'The Millionaire Next Door', it's pretty shocking how many average, working-class people are wealthy while supposed 'rich Wall Street' types can't pinch two pennies together. Just like weight loss: it's easy in theory to save (as long as you're at least making a living wage, which isn't always the case), in practice most people suck at it and don't have the discipline. Hell my wife and I aren't great at it, which is why we put 12% away before we get a dime and we never ever carry credit card debt. Forces us to living within our means even if we don't always want to.

Where does that pre-school teacher live, if they're married how much does their spouse make, and most importantly what are their monthly fixed costs? At $33K a year you'd pay basically no taxes, maybe a grand or two max. So $2,750 a month, let's say $1,300 in rent/mortgage, $300 in groceries, $150 in a car payment for a used car, $100 in internet/cable, $75 in fuel, $100 in incidentals, $100 in utilities, $200 in entertainment/travel. If this person has a child I'd hope they'd have a spouse who's also making money.

That leaves $225 to save for retirement/rainy day fund. Those are all entirely realistic numbers, I know because my first job out of college I made $34,500 and those were my exact numbers from an old spreadsheet I kept. I got myself into serious debt out of college, took me 18 months to find a real job and the whole time I had to pay rent living with friends. Once I got finances in order and stopped spending like a fool and investing I realized how easy it was to put money away if I really wanted to. Most of the time I didn't want to, it too me into my 30's to really straight up and I've been catching up the last few years, but I've lived the $33K a year life and it is entirely possible to put $100+ away every month if not more.

Your excluding student loans. Most preschool teachers have a degree in teaching, most centers won't hire em without one.

Now add in the terrible medical insurance they have to pay.

I'm not pro-pension, generally. But pensions are sustainable when properly funded. Many pensions current and past are perfectly healthy. The ones that famously blow do so because of gross mismanagement and political shenanigans.



I believe that to be true. Humans are hardwired to discount the future in favor of something today. That is only overcome through extensive education. And I suspect more than just a few months of financial management class. Both sides of my family seem to over-compensate in the other direction. My poor grandmother died in a decrepit house eating frozen dinners with $8M in a *checking account* (despite efforts over decades to convince her to spend a little).

Yeah I didn't bother with health insurance the first few years out of school, didn't have the money for it and I was healthy in my 20's...now in MA it's mandated so I'm not sure what I'd be doing. I did forget about student loans, I was paying $149 a month at that time. So now we're down to $75 in savings :) Still, I think $33K is on the low end of livable wages and $1,300 in housing costs is probably on the high end of what someone making that kind of money is paying; I lived in Boston so even getting a deal from a friend it was expensive, looking at average rent for a 2-bed is $1,200, three-bed is $1,500, so that pre-school teacher could easily cut housing costs to $500-$600 a month and suddenly be flush with $700-800 more. Invest $700 a month starting at age 25 and compounding at 7% you'll be a millionaire by 57; invest $500 a month starting at 25 compounding at just 6% and you'll still just about have a million by retirement age.

"....cars with the big homes are in debt up to their eyeballs. Read 'The Millionaire Next Door'......"

I have. Its a good read.

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-----------------------------Baron Von Speedypants
-----------------------------RunTraining articles here:
http://forum.slowtwitch.com/...runtraining;#1612485

Embedded in your post is a crucial differentiator. Single income households can't financially compete against two-income households (unless one is making a huge income). This has been a drving factor in mobility since women began entering the workplace in large numbers.

100% true. I've searched in the past for an analysis of the housing market and the relationship of women entering the workforce, I haven't had much luck but I think it's a huge factor. We've just about hit a plateau (and may have already) so I think that impact may be stabilizing, but I have no doubt that it's been a major contributor in the sustained growth of the housing market for fifty years.

But that also means that it's so much more difficult to survive in a single-income household, especially when kids are involved. Increasingly, those raised in poor households are raising kids as single parents, whereas this has almost disappeared from upper-middle class and above. Want to talk about income inequality? How about the impact to household earnings/productivity when the two-parent home percentage has gone from 88 percent in 1960 to 69% in 2016. The 31% of single-parent homes are almost exclusively in low-income neighborhoods. When you couple THAT with the rise of two-income households among those married with kids, you start to see how quickly things diverge and become a problem for those single-parent homes. 31% in 2016...that's a massive, massive issue.

I've known many people that don't put money into a 401(k) even when the company is matching.

The conversation usually goes like this.

Me: "You realize you're leaving X% on the table? Basically taking a X% Pay-Cut right?"
Them: "Dude I can't put X% of my pay away. How could I afford that?"
Me: "In 30 years how can you afford not to?"

They still don't. In none of these cases is it people making $20K a year. It's people making well over $70K.

If the point you are trying to make is that people should save for their retirement, I'd say, yeah, no kidding. And I also agree that most people are not disciplined enough to save. But to think that there aren't some people who don't make enough to save is silly. Just off the top of my head your example doesn't include medical/dental/car insurance. Most preschool teachers don't have any benefits. Also, I gave you the average salary, the article I looked at said that 80% of preschool teachers make between $20K and $55K.

I was one of them and it took me almost a decade in the workforce to mature enough to understand how dumb I was. I remember my first manager at my $34K a year job talking to me about 401K and the value of the match. I laughed it off - I had better things to do with my money! as $34 became $54 then $74 and up to about $90ish I kept spending more - it just meant I could buy a better tri bike, or get that Audi instead of the shitty Escort I was driving. I wised up in my early 30's and thankfully I make enough now that we can basically bank all of my wife's income, but it's so easy to say 'that money's more important NOW when I'm young than when I'm old and broken down'.

All that said, people need to wise up at some point.

That's all well and good, I'm not saying it's easy...you're taking one of the lowest paying careers as your example. Hopefully those preschool teachers marry someone with a more lucrative job to balance things out. Case in point: a buddy of mine married a kindergarten teacher, she made crap but he made $100K+. When they had their first she kept working. When they had their second he was making closer to $200K. She quit her job and is home full-time.

I don't know...obviously not everyone is capable of actually putting money away to retire. But I do think people don't make retirement savings at all a priority, if they did they'd see that for the vast vast majority of them they can put $100-200 a month away minimum.

But how? What's the mechanism? This is not a new phenomena. The Social Security Act wasn't implemented because people used to be great at saving. And it's not like it's "bad people". Perfectly hard-working people have this problem.

There have been a few suggestions, e.g. opt-out contribution strategies. But that's pretty weak.

And I'd argue finding a solution isn't just altruism for people who'll live poorly in retirement. There are probably large social and economic costs to having a huge percentage of the population unhappy and with weak buying power over much of their lives.

But how? What's the mechanism? This is not a new phenomena


Unfortunately, the only answer is "Gulp" more government.


Increase Retirement age to 67, and in a few years 68,.....
Increase SS taxes.
SS means testing. If you can afford a winter home in FL, guess what you don't need SS.


Unfortunately, this punishes the people who are currently working, not the ones who got us into this mess.

Middle class families ARE currently working, that is why they are middle class. There needed to be far greater education about finances. It is pretty much WAY too late for most folks. The amount of wealth held by the bottom 80% has plummeted, and it many that will be non-recoverable.

Agree. The people that are working will have to pay. The current middle class will have to work longer and pay more. The future middle class will have to work even longer and pay even more.

The bad news is Social Security is only the small problem. If you look at public employee pensions, the tax payers are on the hook for them too if the pension fund can't pay them. Sears is a small scale example of the problem. For every 3 people Sears is paying a pension to, they have 1 employee. Then there's the national debt.....

The people that got us into this mess, The Baby Boomers, and Gen X will likely escape unharmed. Wait until Gen Y and the Millennials get this participation award.

It's okay, if things continue in this manner, the top 10% will own virtually everything and will all be millionaires. Then, you just lower the estate exemption to 1M, place the taxable rate at 30%, and get all the wealth back when Boomers die.

Anything can happen when enough people do poorly by the system that is presently in place.

That sounds exactly like me and my wife. Credit card debt, new cars all the time, paycheck to paycheck living with very little savings for far too long. Fortunately, the light came on early enough (although I still shudder to think of the amount of $$$ we squandered) that we now have a decent (but not enough, yet) retirement savings, a nice chunk of emergency cash, along with zero credit card debt and most of my son's college saved for as well. And, for the most part, it's not like we lived like paupers along the way; we just made sure that anything we wanted we paid cash for, and we paid off cars and kept driving them rather than trading in perfectly good vehicles.

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Taco cat spelled backwards is....taco cat.

Yeah, I've said much the same the past decade, it sucks but here we are. That said I do think things like the opt-out default will help put a not-insignificant portion of the populace on a better track for retirement. I honestly think that, in my mid/late-20's when I was perfectly happy to spend whatever came in every paycheck, I'd have left the default x% in my 401K and I'd probably have another $80-100K to my name because of it. I'm fortunate in that I've been able to stumble into a pretty decent paying job and a wife who earns good money so we can easily catch up, but a lot of people who are just starting to save in their late-30's and 40's, they just won't be able to catch up to where they probably need to be in 20-30 years.

I don't believe that percentage. Way too low IMO. It will be more than40%.

I guess. But there other potential mechanisms than SS. I'm thinking of incentivizing saving behavior. E.g., if you can demonstrate on a tax return each year a commitment to a savings or retirement-oriented investment account (e.g. IRA, 401(k)) you get tax breaks. Or a cookie. Or something.

The same problem of people having a tendency to discount future quality of life also plagues things like health insurance. So a tax *penalty* could apply, like with ObamaCare. But that well is probably politically poisoned at this point. So maybe just the incentives with no penalty.


Edit:

Another part of the puzzle are private financial institutions. They're not really helping much either. They tend to heavily market credit card spending. And tend to steer naive investment consumers into what are often poor investment vehicles, like annuities or loaded funds.

The government role could be re-structuring its regulation of financial institutions to better match the best long-term interests of consumers. E.g. give them tax breaks for getting good #'s in getting consumers to adopt low-fee, tax-advantaged retirement investment accounts.

But, sadly, the best institution to investigate that - the CFPB - is in the process of being gutted.

It is a good observation. I remember a president not to long ago when the economy was down telling people to, "Go Shopping"

https://www.youtube.com/watch?v=fxk9PW83VCY

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They constantly try to escape from the darkness outside and within
Dreaming of systems so perfect that no one will need to be good T.S. Eliot

We had an Australian girl live with us for six months. Her parents came to visit us at the end. Australia has a system which seems to work well. Being an accountant you are likely aware but I post the link for others to see.

https://www.thestar.com/...from_down_under.html

I think the Kiwis have the same system.

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They constantly try to escape from the darkness outside and within
Dreaming of systems so perfect that no one will need to be good T.S. Eliot

The taxable rate on estates is/was? 55% yet the Trumps paid 5%. (not that I think it should be 55% but it should be a percent that is black and white). And everyone knows there are many many other Manaforts out there hiding their money from taxes by legal and illegal means. Whatever happened to getting rid of carried interest? At least we could keep the country out of the red.

From the article:
In 2010 these union-originated industry funds included nine out of the 10 best-performing funds. All pension funds, whether industry funds or retail funds, are intensely regulated.

I wonder how these funds perform against low-cost index funds. When I see 'union-originated' and 'heavily regulated' I immediately think 'high-fee', but that's just the cynic in me.


That said, this sounds pretty similar to Republican-sponsored SS reform ideas, unless I'm missing something. Election to manage funds yourself rather than dumping in the SSI pool, isn't that exactly what was proposed by Bush fifteen years ago to much derision from the Democrats? Regardless, I wouldn't be opposed to this sort of system, it ties into the market and really, it's a total buy-in of ever working person to contribute to a healthy economy and market. Good capitalism, with a net social benefit, right?

So I am guaranteed to get 7% return? The market has had a great 10 year run, but the future is unknown. What if the next 16 years is like 1966-1982 and the cumulative return is effectively zero? This is the crux of the problem with moving from defined benefit to defined contribution retirement, it is totally a gamble for the retiree. Granted it was totally a gamble for the employers before, but you would think there would have been a middle ground with some shared risk.

Likewise, there could be significant reductions to SS, I am of the age that the year I am eligible to collect SS is the year it goes into the red.

Also, considering the median income is about $60K, do you think anyone at the median or below could realistically max out their 401K?

Australia has 24 million people. Whenever people mention what Australia (or Canada) does with respect to something, they ignore the problem of scalability. Australia is also a very different economy.

For example, when people suggest investing all the SS funds in the stock market, how exactly does the market absorb all that liquidity? Sure we can "invest" it and that will just create an asset bubble; unemployment is at 4%, corporations have lots of cash, interest rates are low, all of which speaks to there are fundamental limits to how fast a huge and complicated economy can grow.

I think it does scale. Our economy and population are roughly the same multiple of the respective Australian numbers. It seems like if the right program is created it would work.

In terms of SS, I am in favor of raising the salary number that is subject to taxation. It would impact me, but at least that would extend and improve the fiscal stability of the program.

drn92

What kind of jobs do you think the average 60-68 year old is going to get?
Continue the job they had at 59.

If it was based on overall wealth, what would stop someone from just liquidating all of their assets, holding cash, claiming they had no money and then collecting SS?
I guess I see your point. I'm sure everyone would sell the condo in Florida, the house in NY, Cash out all the IRA's, and Schwabb Accounts, and have all that cash under the sink.

Then you also have the moral hazard problem, so you are going to punish the people who actually saved? Once people realized they would not be able to get SS if they did save, even less people would save, because what would be the point?
Again, you make a great point. I'm sure all the savers would say screw it. Since the governments is going to screw me over. I'll teach them. I'm going to be poor!

Why couldn't the pool contribute into age-adjusted asset allocated funds with a mix of stocks and bonds that gets more conservative as the individual gets closer to retirement? Folks in their 20's and 30's would be heavy in stock indexes, 60's they'd be more into bonds to protect whatever they've invested. If this is a mandatory contribution during peoples entire income-earning years they'll hit, on average, a 7% stock market return over ~30 years and have their funds protected when they near, and enter, retirement.

no, there would be a point where it wouldn't do any good to save any more because a person will just lose SS with more saving. At that point a person would either hide the savings as cash, or spend it on things or trips instead of saving.

also the government already punishes people with higher incomes that want to save. The only tax sheltered investment vehicle I have is my 401k. I cant contribute to a Roth IRA, and I cant deduct contributions to a traditional IRA. Not by a lot mind you, but just enough over the limits that I cant use them. Thanks to the Fed I get shit for interest rates in CDs and savings accounts, so I have a 401(k) with arbitrary contribution limits and high fees (work for a small company so the total account values are low), and retail market investing.

Yes you can. Back-door Roth. We contribute 13K each year. Do you max out your 401K? We can put in 48K (we are old, so we get higher amounts).

Regarding the Fed, hard to blame them for a poor return on CD's without crediting them for higher returns on assets that benefited from low interest rates. Well, it's never hard to only see one side ;).

FICA taxes will take $200/month alone, so your savings/rainy day fund is now gone. The Federal income tax on $33,000 is $3769 (not "a grand or two, max"), so instead of starting at $2,750/month, the teacher starts at $2,435. So there goes another $300, so the teacher is now in the red. Using your own numbers. Not even counting state taxes, car/life/renter's insurance, etc.

Just because you once did it, many years ago, doesn't mean that everyone is in a position to do it.

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"Go yell at an M&M"

What do you do with those people who made poor investment decisions, had their savings decimated at the wrong time by bad economic conditions, were unlucky in their health situations, got wiped out in a hurricane, were too poor to put enough away, or otherwise don't have the money to escape poverty or even survive in retirement? I guess you could have a government backstop program that might provide funds for such people. Call it Social Security or something catchy, maybe?

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"Go yell at an M&M"

Ever try roofing at age 60? Or masonry? Or factory work?

Everyone who suggests raising the eligibility age seems to forget that the people who need most to retire are those least able to continue gainful employment, not to mention the fact that they *also* tend to have the shortest lifespan.

Maybe that's the kind of society you really want: you get yours, and screw everyone else.

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"Go yell at an M&M"

Not to mention the asinine assumption that the teacher will have a husband or that if she does, he’ll be making $100K.

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clm
Nashville, TN
https://twitter.com/ironclm | http://ironclm.typepad.com

Agreed, I see lots of folks who are pretty much done at 60, while some could chug along a lot longer. Lots of folks without savings are already trying and failing to work until 70.

This SSI replacement is simply a different investment means of the funds put into SSI - you opt in to a target age asset allocation fund. This does not change any of what you speak of, it's just a different means of funding social security monies. Hurricanes? We'll still have disaster relief funds and private insurance. Poverty, too poor to invest? We'll still have welfare.

It sounds like you want everyone to have guaranteed results regardless of the conditions they either find themselves in or put themselves into. I don't think life works that way. I wish I didn't have a bum hip before I'm 40 that will likely need to be replaced before I'm 50. I wish I could've found a job out of college and not racked up $15K in credit card debt before I was 25, or that my wife didn't have $100K+ in student loan debt when she graduated nursing school. Sometimes life sucks, or conditions suck, or results suck...nothing that social security provides--or in my opinion is meant to provide--will ever change these things.

Teachers don't get paid a ton of money. They also have 2-3 months off during the summer where they can earn additional income. Further, my asinine assumption is merely a caveat that, if this is a young teacher, he or she will likely be able to live in a cheap apartment with friends and not pay much in rent - I was paying $1,300 a month in rent but that's way more than what you can find in a 2- or 3-bed around the country. You could easily cut that number in half, perhaps more, depending on where they live. If and when that person wants to take on a mortgage, or have kids, my assumption is that the person is likely married - or at least (in my opinion) should be married before taking those big steps that have huge monetary implications.

No, I want everyone to not have to live in abject poverty while retired in the richest country in the world, no matter how they got there. You seem okay with it.

"Election to manage funds yourself rather than dumping in the SSI pool, isn't that exactly what was proposed by Bush fifteen years ago to much derision from the Democrats?"

Again: what do you do with those who so elected, and have insufficient funds at retirement age? Give them those Social Security benefits they didn't pay into, or leave them to die penniless on the street? Hope they can find charity to support them over their last few decades? Maybe back to the good old days of poor houses? That derision was well-deserved.

As for age asset allocation moving to less-risky investments when approaching retirement: it's being shown that's not the best way to manage your retirement savings, unless you plan on pulling them all at the moment of retirement.

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"Go yell at an M&M"

Well they are not managing the funds themselves they are contributed on their behalf to heavily regulated funds. I think the biggest barrier to such a system working well is the temptation to ease up on the regulation like how the United States banking industry was screwed up leading into the 2007 crash.

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They constantly try to escape from the darkness outside and within
Dreaming of systems so perfect that no one will need to be good T.S. Eliot

We have supplemental security income for low-income retirees, meal assistance, medicaid and medicare, utility assistance. We spend as much per capita in social welfare programs as many of the socialist Euro countries, I don't know what more you want us to do. Some people are poor as shit, some people die because they're poor. I don't like this fact but it's like the war on drugs: some people are unwilling to help themselves, whether it's setting themselves up for retirement or even taking advantage of federal programs when they're retired. One of the biggest issues with poor seniors is them not using the programs available to them, what do you propose we do with them? No, I'm strictly talking about how we better manage pooled funds for retirement so the program is solvent when our kids and their kids want to retire.

Here are a few:

• Decide on what post-secondary education should be. Change our system built primarily on economic standing and massive loan programs, and move toward a more merit-based approach.
• Have universal health care coverage. (I don't care what form it takes, just do it)
• Be honest about actual taxes paid (not marginal rates), AND include all forms of taxation (and keep closing out abused loopholes, see below).
• Be aware of how two-income earners in a household changes mobility. Rather than have a "marriage penalty", there is a gigantic "marriage bonus", especially if both people work. While I know some two income families who can't save, overwhelmingly most the folks falling behind are single or divorced or married w/one income.
• Be honest about the overwhelming advantages our policies grant to folks who have capital, and that we don't tax wealth at all (except for property taxes), and we have no estate tax. We have a system in place which creates more growth and distributes wealth more unequally than any other industrialized country. It won't end well (the strains are already showing)

As an aside, apparently Kushner paid virtually no income tax from 2009 to 2016. We could be more forthright about this loophole, and limit these legal tax avoidance schemes.

Geez...I didn't pose that as a generic question, I was talking specifically about what more can be done for retirement and those retiring while poor. And before you say these all impact that, I know but that's not what I was asking.

Re: post-secondary education, do you really want a merit based system when the overwhelming majority of elite college applicants come from well-off families? There's been a push for more diversity in admissions for precisely this reason. Education starts at a young age, and it starts--and continues--at home. Schools make a difference, obviously, but the kid who goes home to a stable environment where learning is promoted will almost always fare better than the kid who goes home to a single parent who either doesn't have the time and energy, or the desire, to promote education in the home.

As to the 'marriage bonus', even if the two parents weren't both working there's a marriage bonus in that there is a second adult in the home to care for children. Marriage and stable home environments is incredibly important to the well-being and education of children, we SHOULD be promoting marriage and responsible parenting. I don't look down upon single parents--almost always moms--often it's a shitty situation they had little to no control over and caring for kids by yourself is a monumental task. But it doesn't mean we shouldn't be promoting marriage and stable home environments for kids.