No. of Recommendations: 4
MissEdithKeeler:

I agree with you. To totally exclude SS from expected total income seems a bit over the top.

To assume that "retirees need enough income to cover 70% of their pre-retirement income" -- without SS -- seems to me to be untrue, unless they try to live the same way they did before!

At retirement, hopefully, people will realize that their way of life will change such that they will cut back on some expenses, so they can live fairly well far more cheaply than before. Hopefully, their kids will be through college and out on their own -- or they should be! And, if they are no longer going to work someplace, expenses associated with that (clothes, travel, dues, etc.) should be less, too.

We've been retired for 20 years now, and, contrary to all advice, we started SS at age 62, thereby losing some of all future income from that. (There were reasons why that all had to happen, but that's an aside.) We also still have a bit left to pay on our mortgage, and we obviously pay property taxes. Medicare covers 80 percent of some things, but we also pay extra for Medigap to hopefully cover the other 20 percent. Hopefully. (Dental costs are another issue!)

We don't expect to ever move; we love it where we are, and those "retirement home" situations make us shudder! Too many people around, for one thing. As I have said before, we enjoy peace and quiet, and our privacy. It's also a helluva lot cheaper to live where we do, even with a mortgage, taxes, maintenance, etc. Our home also provides for virtually all of our living needs on the one main ground floor, which can help as you age.

All in all, we do okay, and I imagine our friends think we're better off than we really are. However, there are reasons why we do "okay". We live a quiet life, by choice. We don't smoke or drink, don't care to go to bars or costly shows, and generally try not to spend frivolously. My wife is also an excellent shopper and saves a bundle on groceries by perusing the weekly fliers and buying what we need from whichever chain store in our area offers the best prices, which can save plenty.

It can be done.

Vermonter
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No. of Recommendations: 3
didn’t include Social Security or other government welfare payments in the total.

----------------

Also worth noting is the author treats SS as just another welfare program.
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Am I being dumb here? Hasn’t the “action” already been taken, by implementing social security and Medicare? Yes, those programs have some funding concerns, but not including them AT ALL in calculations seems.... irresponsible.

I would agree that if you just look at the article that was written, on the face, it does seem somewhat irresponsible. However, if you dig into the report that was cited https://weforum.ent.box.com/s/w6cth9cdasx1k7g1vjnsqxttkv34t2... you can seen that it's about world-wide retirement funding, not just the US, and that the premise of the report seems to be that the government and employer pensions across the world aren't going to be able to provide what they have promised. Therefore, it's going to be up to the individual to provide their own retirement funding:

As discussed in our first report,2 government social welfare systems and employer-based defined benefit (DB) pension plans are under strain around the world. For the eight countries below, which have some of the largest retirement savings markets or are some of the most populated nations, the gap at 2015 was already at $70 trillion. If measures are not taken to increase overall levels of savings, we project this gap to grow to $400 trillion by 2050.

With increasing responsibility placed on the individual to prepare for retirement, we have found that most are simply not saving enough. While there are numerous examples of progress being made to improve retirement systems, further reforms are required in many parts of the world to ensure systems are sustainable, inclusive and provide future generations with retirement financial security.


It's worth noting that in the graphic shown between the two paragraphs above, the US funding gap is expected to increase from the $28T gap in 2015 to $137T by 2050 - which is in line with the expectation that SS will only be able to provide ~75% of it's obligations beginning in 2034.

Since the premise of SS is that it will replace up to 40% of your pre-retirement income, a 25% decrease in SS would mean that only 30% of pre-retirement income will be provided by SS. Given the assumption that you quoted:

The forum assumed retirees would need enough income to cover 70% of their pre-retirement pay, and didn’t include Social Security or other government welfare payments in the total., that means that with SS, 100% of pre-retirement income would be provided IF retirees fully funded their 70%. But that's where the gap is - retirees aren't fully funding their 70%. So, even with SS, retirees might be able to have retirement income of, say, 80% of their pre-retirement income.

Now, you could argue that retirees don't need 100% of their pre-retirement income, and should be able to get by on 80%. But given that in the US, Medicare funding is in an even more dire state than SS funding, combined with the fact that the medical inflation rate in the US is significantly higher than the overall inflation rate, I'm not sure that the typical retiree will be able to get by on 80% of their pre-retirement income. Those who have been putting away 20% of their income towards retirement savings should be able to, but, as we all know, the vast majority of people aren't putting away that much. Therefore, the vast majority will probably end up with a lower standard of living in retirement if these gaps aren't solved.

AJ
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No. of Recommendations: 2
Also worth noting is the author treats SS as just another welfare program.

Since it's a report that looks at government provided pensions across the world, the context is more that SS is just another type of pension that governments across the world provide for their citizens, rather than as 'just another welfare program' within the US.

AJ
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No. of Recommendations: 6
That report is from the World Economic Forum (the folks who sponsor the Davos conference for billionaires each year.)

https://weforum.ent.box.com/s/w6cth9cdasx1k7g1vjnsqxttkv34t2...

Their policy preference would be that Gov't retirement programs be eliminated with the savings targeted at tax cuts for the wealthy.

intercst
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Their policy preference would be that Gov't retirement programs be eliminated with the savings targeted at tax cuts for the wealthy.

I really don't understand the preference for tax cuts.

Why don't we just give them the money? I'm sure they'll know what to do with it better than me, or than the government. Why bother with the dipsy doodle dance?
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No. of Recommendations: 4
MissEdithKeeler:

I agree with you. To totally exclude SS from expected total income seems a bit over the top.

To assume that "retirees need enough income to cover 70% of their pre-retirement income" -- without SS -- seems to me to be untrue, unless they try to live the same way they did before!

At retirement, hopefully, people will realize that their way of life will change such that they will cut back on some expenses, so they can live fairly well far more cheaply than before. Hopefully, their kids will be through college and out on their own -- or they should be! And, if they are no longer going to work someplace, expenses associated with that (clothes, travel, dues, etc.) should be less, too.

We've been retired for 20 years now, and, contrary to all advice, we started SS at age 62, thereby losing some of all future income from that. (There were reasons why that all had to happen, but that's an aside.) We also still have a bit left to pay on our mortgage, and we obviously pay property taxes. Medicare covers 80 percent of some things, but we also pay extra for Medigap to hopefully cover the other 20 percent. Hopefully. (Dental costs are another issue!)

We don't expect to ever move; we love it where we are, and those "retirement home" situations make us shudder! Too many people around, for one thing. As I have said before, we enjoy peace and quiet, and our privacy. It's also a helluva lot cheaper to live where we do, even with a mortgage, taxes, maintenance, etc. Our home also provides for virtually all of our living needs on the one main ground floor, which can help as you age.

All in all, we do okay, and I imagine our friends think we're better off than we really are. However, there are reasons why we do "okay". We live a quiet life, by choice. We don't smoke or drink, don't care to go to bars or costly shows, and generally try not to spend frivolously. My wife is also an excellent shopper and saves a bundle on groceries by perusing the weekly fliers and buying what we need from whichever chain store in our area offers the best prices, which can save plenty.

It can be done.

Vermonter
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