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CAUTION: Read the following with the understanding there are exceptions. There are people who through no fault of their own reach old age in poor financial shape, who were overwhelmed with misfortune and simply had little chance of success in their later years.
THIS IS ABOUT THE MAJORITY of the complaining over 65 population who are in the place they are, not from misfortune, but from inaction, poor decisions and a tendency to live in the moment and ignore the future.
Except for defense, the largest chunks of federal spending are on senior citizens and yet I often read something like this from a recent Time article, “Someone who has worked for 55 years like me should be able to retire.”
The same Time article says this. “The growing class of people who want to stop working, but can’t, represents a crack in a social compact that assured citizens who worked hard that they could take it easy when they hit 65, if not before.”
Assured they could take it easy? Not even the original intent of Social Security did that. Where did guarantees come from?
How did age 65 become synonymous with entitled?
“IRMAA premiums are unfair, Social Security should not be subject to taxation – I paid for my benefits working forty years.” Well, no you didn’t.
“I think Social Security benefits should be tax-free” – how do we make up the billions in lost revenue to both the Social Security and Medicare trusts?
I read about seniors who don’t think they should pay property taxes once they are 65, because they paid their working life and do not have children in school. In New Jersey you can have your property taxes frozen if you are over 65 and have income under $168,268 – about twice the national household income – are you kidding me?
But it gets better. A new program will cut property taxes in half up to $6,500 if you are 65 and have income up to $500,000. To me that is ludicrous.
Reaching age 65 and retiring may be an accomplishment, but it should not be a free pass. Most people have 40-45 years to plan and prepare for retirement and they get tax breaks to help them do so.
My biggest gripe in all this is that giving more to seniors creates a greater burden on young families, transfers more of a tax burden to them, makes their journey to age 65 harder.
There are no guarantees in life and there should not be just because you were fortunate to reach retirement age- even if you screwed up the journey. It’s not like getting older is a surprise.
I both agree with Richard, and like the present system where seniors like me can live it up.
If I were working, and I had a salary equal to the income I have as a retiree, I would pay at least twice as much in income tax – and that’s not even counting the employer’s share of FICA.
Provocative as always Richard. But regardless of how they got there, there is a large swath of seniors or soon-to-be seniors that are at the doorstep and realize that they’re objectively unlikely to support themselves for a significant duration in retirement, at least at the standard of living they enjoyed during their working years. As Richard points out, this can be due to a myriad of reasons both internal and external, but the end product remains, a group of seniors with simply not enough money. I find two likely and interlinked primary reasons. The first has been proven with time. The transition from defined benefit plans (e.g., pension plans) to self-directed 401(k)s is the biggie. Left to their own devices, even with ample direction, warnings, and caveats, it’s simply human nature to think short term (i.e, immediate gratification) over long (i.e., a retirement of unknown duration). Steps have been taken by government in recent years to address this (e.g., automatic enrollment in 401(k)s), but for probably 2-3 decades of seniors the damage is already done). The second is not a revolutionary thing, but really a evolving state of the country. Think of how many multi-generational households you know in the US? I personally can think of none, and the closest I can relate to is my own extended family, and the only reason that doesn’t exist for me currently is that the older generation has all passed. But the point is that seniors are essentially on their own financially, leaving for the most part SS and whatever individual retirement savings a senior accumulates.
And the net result? For many that simply falls short of the mark. So what does my crystal ball say? I think SS doesn’t get cut, period. And the part that will impact the entire economy? Sorry, but I think we’re going to see for a few decades that economically challenged seniors will be a drag on the American economy.
Human nature is a major factor as you say. The demise of pensions in the private sector not so much as barely half of workers ever had a pension and those that did had to work decades with the employer to gain real future income and job tenure has always been around five years.
A few years ago I never would have said this, but now I firmly believe the universal answer is a greatly enhanced – and paid for – Social Security system, but that’s not going to happen anytime soon.
Averages tell us how the nation is doing as a whole. Medians tell us where the breakpoint is between the upper and lower 50%. Data from the FED collected in 2023 on US household wealth can be found at http://www.dqydj.com
The average household net worth was $1,059,470, and the median was $192,084. (median retirement account balances 13,000 + median other financial assets 16,000 + median home equity and other personal property 163,084 = 192,084). For those households 65-69 years old, the numbers are 8,700 + 41,950 + 342,830 = 393,480). Which means that 50% of those households have less than these amounts. These data do not include the present value of any pensions but as Dick says, only a small minority have them.
Bernstein wrote many years ago about the large number of workers who are unprepared for the task of financial planning for their retirement and likely poor results they will achieve. Your proposal of enhanced social security makes sense, but the lack of any needed reforms to just keep the existing system sound is not encouraging.
We have been out of town, so just getting to this long post and comments. I read the article too. I consider Spouse and myself regular Americans. SS helps us to remain independent and hopefully we will not be financially reliant on our kids as we get older. We can use our SS and small pensions for regular expenses and the other accounts for big things, fun and extras. Hopefully it will be enough for LTC. We are ok paying our fair share of taxes for the common good, but will take advantage of any discount programs we are eligible for. Chris
There is a lot of truth to the rant. In my humble opinion, it stems from the fact many people are not prepared financially to retire so they complain about everything.
“You can either sacrifice while you’re young, or sacrifice when you’re old, but you will sacrifice at some point.” No one enjoys paying taxes but someone has to for this thing to work. I agree that when it comes to taxes, most of us are whiners. It is also what keeps taxes from escalating beyond our means at the discretion of the “tax collectors”. Social Security is no longer a stop gap for many people, but an additional income source that helps us transfer more to the next generation instead of spending down our savings. Younger families seem to be doing fine, but I agree with your general premise.
A rant with a lot of truth. I am 80 and DW is 82. We have been retired 15 years. We are in great financial shape and feel very blessed. I do not like to pay taxes but I expect to pay my fair share. I paid IRMAA premiums for several years while doing Roth conversions. I do have empathy for those less fortunate seniors but there are limits to what govt can or should do for them.
An entertaining rant, but nonetheless still a rant. And a rant with strong political implications.
How so? Societal implications perhaps, but why political? Do you agree with the allocation of resources or not?
I bet most people would agree with helping us seniors, but with no consideration of the consequences.
“How did age 65 become synonymous with entitled?” A good question.
The Great Society program of President Johnson labeled Social Security as an entitlement and defined retirement at 65 with the addition of Medicare. The program moved far away from Old Age and Survivors benefits.
Remember, in 1935 when Social Security started, the average life expectancy was 60 for men and 64 for women. It was never designed as a retirement plan.
Just a guess, but I doubt many of the complainers are readers of this forum.
While it is true that the life expectancy for a white male (stats I could find) at birth in 1930 was 59.1 years and in 1940 was 62.8 years, the l.e. of a 40 y.o. male was 69.2 and 70.0, respectively, and 74.7 and 75.1, respectively, at 60 y.o. It seems pretty clear that with roughly half of 60 y.o., males expected to live another 15 years, it was designed to be a significant contributor to retirement. BTW, although a much smaller portion of the working segment outside the home, w. females add about 2 years to each of the above life expectancy stats.
We may forget that as currently configured Social Security “Benefits are calculated so that a median earner will receive Social Security retirement benefits that replace about 40% of final income.” In other words, if one wanted to maintain the same total income in retirement, they would need to save enough to make up that 60% annual difference. In my case we are about in that range. In 2024 34.6% of our gross income was via my SS retirement benefit. 58.9% was from retirement savings and pension. The remainder, 6.6% was via dividends and interest in taxable accounts. However, we spent only half of our 2024 income, including taxes. (Some rounding).
Running the SS Quick calculator, a final salary of $60,000 at age 67 gets you 38% and at $75,000 about 35%.
The thing is, are we talking individual or household income? Married or single? Add a spousal benefit to the $60,000 and replacement is about 57% which means the savings goal is replacing around 23% using the conventional 80% guideline. A nest egg of about $350,000 would do it.
‘This sounds too easy. A couple with a household income of $60,000 only needs to accumulate $350,000 over a lifetime to retire with 80% final income replacement?
My numbers are for household, two wage earners, one drawing SS retirement benefits, one drawing a pension. Were both drawing SS retirement, rather than one drawing a pension, the percentages would be about the same. G’s pension is about what she would draw if she were to take a SS benefit. She worked for decades in private industry and contributed to SS and she also worked in the public system which provides the pension. The SS Windfall Elimination Provision (WEP) prevents her from accessing most of her SS benefit. We’ll see what’s so when she reaches age 70. Bottom line is, twice the earnings does increase the total benefit, but in our case my numbers indicate that the percent of income made up by SS would be about the same were we both to take it (rather than her pension).
Didn’t they just eliminate the WEP last month? I heard they’re giving retroactive payments as well, so definitely worth looking at if it’s applicable to your situation!
Good catch! Here’s the February 25, 2025 Social Security website on this. “These provisions reduced or eliminated the Social Security benefits for over 3.2 million people who receive a pension based on work that was not covered by Social Security (a “non-covered pension”)…..” Well, this will of course increase the outflow from the trust fund. https://blog.ssa.gov/social-security-announces-expedited-retroactive-payments-and-higher-monthly-benefits-for-millions-actions-support-the-social-security-fairness-act/
I’m subject to WEP because I get a minuscule part of my pension from the UK branch of the megacorp. I was notified by SS this week that my payment would increase. It also said:
“If you are due retroactive benefits as a result of the Social Security Fairness Act, you will receive a single retroactive payment that covers the increase in your benefit amount back to January 2024.”
I totally agree with your thinking on this topic.
Facebook post today.
“Let’s take care of our seniors! They are on a FIXED INCOME! Inflation is bad enough. END PROPERTY TAX for 65 and older. No taxes up to $100k income. Let them retire!”
It’s a complex and highly individual thing but the harsh reality is that how comfortable one is in retirement is the output of many many life and spending decisions from the choice of how many kids to have to one’s level of aspiration re home to whether to devote more of one’s energy to work over home/personal to chase better paying roles.
And a big part of it is how you choose to pay current you/yours vs future you in the form of savings ratio.
It strikes me as a reasonable proposition that someone who has worked 40-45 adult full years ( or equivalent) ought to be able to retire in reasonable comfort but to get there they need to have kept their side of the social contract in terms of prudence and self provision. I think that’s why state support is what it is – there is too high a political risk in directly calling out -” it was your own choices that meant 5 kids, 3 divorces, new autos and $100k down the drain in get rich quick schemes”. Then of course there are many people who were never dealt the cards in life needed to build future prosperity.
Better stop I’m feeling a bit like Mr Quinn
Great summary Bbb and I love your reference to R Quinn! lol 😂
I think you said pretty much what I said. Be careful your age may start to show.
I think so. I’m now worried ;).
To be fair I think I’m mainly talking about the coulda been affluent who aren’t ( and actually I think luck probably gives many an out in supersized house values that would give a lot back if they could ever bear to downsize radically).
I recognise that guys like the one central to the Time article are never would be affluent but he probably enjoyed a lifestyle as a ski bum and on the hippie trail that contemporaries who sacrificed that for a suit and cubicle slavery never had. So I don’t really pity him.
I have more sympathy for e.g. the woman abandoned with 2 young kids by a deadbeat partner whose working efforts are entirely dedicated to giving them a fighting chance but who misses out on the catch up older working years once they’ve fledged with low paid work around care responsibilities for a parent.
But then I don’t think the state should be judging anything on the quality of the sob story.
An easy way to fix the SS program and reduce the burden on younger generations would be to means test benefits. That could easily be done by reducing the SS benefit one dollar for each dollar of income over either 200% of the national median HH annual income or $150,000, whichever is larger. Someone with pension and investment income of say $175000 would then lose $25k of their benefit. The prior year income would be the base for the benefit in the next year.
I think you have often said that you don’t need your SS for retirement expenses.
I strongly disagree, not from my personal perspective, but because we should be very careful deviating from the original design of the program which works fine if Congress does its job. We don’t want it turned into a form of welfare or becoming part of the annual budget debacle. That includes the bad idea of taxing all earning, but without proportional added benefits. The benefit formula already provides a higher proportional benefit for lower income earners.
I would agree that anyone starting SS with the maximum benefit at FRA does not need a COLA.
If the tax rate was automatically adjusted each year reflecting income needed by the trust actuarial determined all would be fine. Right now the shortfall is 3.5%. We could also add an extra half percent to employer portion.
I think your grasp of data is pretty good. I would ask you to tell us what % of people who retire have only SS as a source of income?
Can it be possible that this many people fall into the group you describe as: “There are people who through no fault of their own reach old age in poor financial shape, who were overwhelmed with misfortune and simply had little chance of success in their later years” ?
Is it possible that the bottom 20% just don’t earn enough to really have a life, let alone save for retirement?
I tried to find that percentage and I got so many different percentages from different sources I’m guessing nobody really knows. Much of it is based on surveys which are questionable at best.
SSA estimates: 4.8% to 17.9% of elderly beneficiaries are estimated to be completely dependent on Social Security for their income.
Other sources say higher.
How can you say that a COLA isn’t needed? Even if inflation is “only” 2%, purchasing power is significantly eroded over a 20 to 30 year time span. And what if we get more serious inflation?
I didn’t say that. I said people who retire with the maximum FRA Social Security benefit should not receive a COLA – from SS. That is because they earned at or above the taxable wage and thus should have been able to accumulate investments to deal with inflation on their own.
I could also make the argument that people who could afford to retire before their FRA and even before age 62 should also have investments to manage inflation on their own. It seems to me that is part of the planning process. Those are choices most people can’t afford to make.
Seems like a way to penalize the prudent who have worked hard and saved for their retirement years… Let’s put some more hate on the top 10%. Success brings out the worst in those that have not strived to reach it.
The “planning process” includes the expectation that SS will come with a COLA. Of course, so should pensions, I have no idea how American employers managed to evade that.
COLAs add to the cost of pensions, a variable and often unpredictable cost and it may be at the worst time for an employer trying to deal with inflation in other aspects of its business. Even the state of NJ suspended its state worker COLA because it wasn’t affordable until the plan was better funded.
The message people need to hear is plan to death with inflation in retirement. I did that by setting up dividends and tax free interest. I have yet to tap as income, but it’s there when needed and in the meantime keeps increasing via reinvesting.
Or you could invest in stocks that don’t pay dividends or funds that don’t emphasize them. That doesn’t really matter. Bonds are not as good for dealing with inflation.
We’re not talking about you. We’re talking about the average employed person.
Since UK employers provided COLAs, I fail to see why US ones should not.
I am talking about average employed people who have the ability to plan for inflation. I bet you considered inflation did you not.
I might be OK with that provided RMDs were not considered income. I’m already penalized for having saved by being hit with IRMAA. (And no, when I was working, Roths were in the future.) However, current retirees have planned for that income to be there. Most are not in Quinn’s position.
Also, it could undermine support for the program as a whole.
Another fine rant from the grumpy old man, and I love the first paragraph disclaimer. This ties in well with Jonathan’s Solve This Problem post. The quotes from the Time article are ridiculous. Even if Social Security was meant to somehow guarantee retirement at age 65, it would surely require an adjustment based on increasing life span.
I totally agree with you, I’m just not sure our whining about the whiners accomplishes anything.
Social Security for retirees was meant to fix the problem of so many seniors living in poverty when they retired prior to the mid thirties. It was not designed to pay for an extravagant lifestyle.
Social Security also did not plan for a post WW II baby boom with a decreased fertility rate in the following generations resulting in fewer young workers to pay for such a large retirement population.
I agree David
It gives me something to do with my coffee in the morning. You should see me on all the social media sites. There is fantasy land worth ranting about.
I’m sure that results in your posts getting rave reviews. 😂
Well, why stop by critiquing only senior citizens?
“THIS IS ABOUT THE MAJORITY of the complaining…….who are in the place they are, not from misfortune, but from inaction, poor decisions and a tendency to live in the moment and ignore the future. “ That statement could be applicable to a larger portion of the population.
I do appreciate Mr. Quinn’s statement that “I read about seniors who don’t think they should pay property taxes….”. Our individual property taxes were published annually in the local paper. I could have taken a senior discount, but never did. I was surprised to find that some people actually read the rolls to see what their neighbors were paying and I was told I was “stupid” for not taking my discount. My response was that these taxes paid for schools, some services as well as certain retirement benefits of others, etc.
I think the larger issue is this demand for services that are then to be paid for by others. However, that disease infects a substantial portion of society.
Providing benefits to a part of society is a transfer tax and this has a serious negative impact on many aspects of society. For example, education debt forgiveness transfers the costs to others. It doesn’t promote financial independence and may support future bad decisions, such as purchasing things one cannot afford, including a home. Financial education should become like muscle memory and freebies don’t do that. We have been here before, and that led to the banking crisis of 2007 and subsequent financial hardships and bailouts, at great cost.
Some politicians say we should all pay our “fair” share but it seems what is “fair” is purely subjective. Taxes for thee, but not for me seems to be most popular.
Your biggest gripe is, IMHO, 100% correct!
I don’t want to be a burden on my children or grandchildren. For that matter on ANYONE’S
children or grandchildren.
Sure we both paid into Social Security and Medicare. But I bet if I ran the numbers we will have received more than we put in.
I’m not complaining. I know I’ve been blessed with good fortune.
I ran the numbers, within six years of starting to collect SS we received in benefits all I and my employers paid in FICA since 1959 That was eight years ago.
The power of compounding is amazing, and that is how you can pay in such a small amount and receive a large amount many years later.
My experience is similar, but I didn’t account for inflation. I paid in from 1963-2022. However, because I owned a closely held company 1978 to the present I paid the employer’s portion and later self-employment taxes.