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Those words are repeated in video after video on Facebook by seniors (possibly actors) complaining they can’t pay their bills because Social Security is inadequate and does not keep up with rising costs. “We worked our whole lives and paid into SS and this is what we get?” they ask.
What is disturbing to me are the thousands of “likes” the videos receive and the hundreds of agreeing comments posted every time. In essence, agreement with the basic idea Social Security today is not what was promised. The fact is, it is exactly what was promised by FDR.
“We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age.”
To make matters worse, misinformation and outright lies are rampant-perhaps intentionally.
Nobody stole SS funds, nobody misused the funds, Social Security would not be solvent if we eliminated the FICA wage cap, any illegal collecting of benefits is very minimal, and your benefits are not based on FICA taxes paid as some claim.
SS is insurance; way more than retirement income and provides benefits far beyond any funded by an individual’s taxes.
Demographics are the main cause of inadequate funding at current tax levels. The Trustees have been warning for over a decade changes are needed to maintain promised benefits.
Is this retirement in America? Do seniors reach age 65 assuming Social Security will carry them through? Relying solely or mainly on Social Security when retired is not doing everything right.
According to AARP estimates, Social Security provides these income replacement levels.
• Low earners: ~57% .
• Medium (~$69k): ~42–45%.
• Higher earners see lower rates ~35% at $111k.
It is sad many seniors reach the point of desperation in retirement, especially when it is the result of going through life with a lack of basic financial education and planning.
What is the solution? Essentially a fundamental change in lifestyles before and after retirement, but don’t count on that. Greater financial acumen and prudent behavior? It would help.
Simply increase Social Security benefits to achieve higher income replacement levels? That requires higher taxes, but even before debating that, we need to make the program sustainable as it is.
I see no way to improve retirement income without individuals taking more responsibility during their working lives, something obvious to HD readers.
On a positive note, I have observed quite a few people who never had the interest, nor spent the time, truly mastering moderate- to high-level retirement planning. Their interests were in other areas. That said, they lived/do live financially conservative lives and never had outsized expectations of what Social Security was supposed to provide on a relative basis. Many, but not all, of whom I speak were old enough to have actually lived through—and were historical observers of—the period of time when Social Security was established. On average, I would say these people were/are some of the happiest people I have known. Without ever reading, or perhaps even knowing about, Bogle, they found their own version of “Enough.”
I think these people don’t get enough “press,” but in a way, I have always admired them.
On the less positive side, two thoughts come to mind:
I was fortunate to work with five unions who supported me in our efforts to communicate to their members on how to obtain the most value from their employee benefits. They wanted appreciation from members for what they had negotiated and we both wanted value for the cost of the benefits, the unions well aware they gave up some pay to obtain those benefits. We were both frustrated at the high level of indifference by many workers.
Dick, I’ve had associations with many folks who just don’t participate in our economy in the same way as our readers. Some spend their lives avoiding work. Others avoid work that requires using the English and math that eluded them in school. Even many educated people suffer financial illiteracy.
I once met with a man to show him a better way to invest his IRA dollars. He was saving a pittance in a high-fee fund, but neither his head nor his heart was in the task. Before we began, he told me that he felt like he was placing his money in the hands of the same people who controlled his life in other ways and were keeping him from progressing. He had a college degree, but he was mentally influenced by the struggles his family had known for generations.
I think there is a segment of our population who will never understand the simple principles of personal finance for one reason or another. But we need to keep trying to educate those who will listen.
I think you are right, Ed. It’s a difficult problem. I hesitate to go that way, but it may well be we need some enhanced form of Social Security. Higher taxes to assure future security as a form of forced savings. Similar to Australia perhaps.
We have tried many other options to encourage saving for the future and none come close to universal.
I spent part of my career selling 401(k) plans to employers. I found even the executives at the companies I sold to were woefully ignorant about personal finance. One CFO of a company with thousands of employees asked me after my presentation what a mutual fund was. I also made presentations at enrollment meetings and found it difficult to engage the employees. Their attention span was just not up to listening to a topic they had not encountered before with strange language. One meeting that I still remember involved mostly Haitian employees who did not speak much English. The interpreter later told me that the foremen who the employees trusted told them that the employer was using the plan to steal their money, so no one participated even though there was a generous employer match.
Depending on regular Americans to save enough for a retirement that is decades away is close to hopeless since they need to pay rent and buy food today. I wish we could reform the Social Security system to better serve the needs of the majority of people who need help. I do not think our politics will allow it as raising taxes is never popular. You need to take care of yourself and your family, because sadly, no one else will.
I know exactly the situations you mentioned. I ran into a similar case where a union representative told a group of workers not to use the 401k because the company was using their money.
However, I disagree with you on this
“Depending on regular Americans to save enough for a retirement that is decades away is close to hopeless since they need to pay rent and buy food today.”
Everyone who does save and prepare for retirement still pays for life’s expenses along the way. 80% of more of Americans have no excuse.
It’s not the money, it’s the attitude and discipline to stick to a goal.
As I showed above the lower income have less to accumulate on their own because of the way SS works. Forty years or so is a long time to accumulate money even starting with very modest amounts.
The foreman that Howard describes, the union rep you mention, and all the other random buttholes that people listen too, (I’m struggling for an acceptable adjective here), upset me. This illustrates how important it is for people to take initiative to educate and help themselves.
The main issue in this country is over spending and under saving.
I know people who make from $50K and all the way to $150K with this problem. Most of them know they spend too much but refuse to lower their spendings and save for retirement.
The main benefit I’ve received from HD over the years is clear-eyed information about what’s to come. I’m 59 years old, but I’ve become conversant with Social Security claiming strategies (age 62 / 67 / 70) from Mr. Quinn and others. I generally can quantify how much my wife will pay for Medicare and supplemental insurance – and the amount of the IRMAA discount / premium that we’ll pay. And I give thought to which accounts I use to buy stock ETFs and bond funds to minimize taxes.
But it all takes time. And effort. And, to modestly compliment the HD community, some amount of intelligence and sophistication. No surprise that the gist of RDQ’s column above is that some folks don’t put the time / effort / skill into figuring out these things until it may be too late. Yes, people are surprised by the amount they’ll get from SSA. They shouldn’t be.
Right on target. Too many people just don’t pay attention, don’t ask question or make an effort to be aware of the important things in their financial lives.
I am particularly sensitive to all this because I spent my fifty working years trying to get workers to pay attention, to think about their decisions to educate themselves about retirement, health and other benefits like 401k all in their best interest.
I spent $2,000,000 a year on communications just trying to educate workers, retirees and their families. In the end there was modest success- very disappointing. Perhaps that’s why I’m critical about people who dig their own hole and then complain they should have more – taken from someone else in many cases.
You can lead an American to water, but you can’t make drink….er horse 😁
Yup. I feel a bit proud when I talk to folks (young ones starting out, older folks ready to leave the workforce) about their plan. I tell them that I don’t want their details, but that we should speak frankly about their approach to finances and planning. Too few do this one-on-one or with friends. The workplace outreach that you’ve described over the years is hugely important. Another important component is the direct discussion with people so that we know they understand. That’s what HD has been for me, and I enjoy paying it forward. Don’t be discouraged if some people are still a bit clueless. You can never get 100% of people to agree on anything. . .
I agree, we all must take responsibility for our financial lives.
We realized that whatever we didn’t spend during our working years is what we would live off in retirement, supplemented by Social Security. So we chose a suitable lifestyle that would still be affordable, once retired. That is to say, “live below our means”. To paraphrase Buffett, its not a game which requires a high IQ, but rather emotional discipline.
To me that is the key, a lifestyle that considers one’s entire life, not just phases along the way. We lived off my base salary and during children’s college years a part time job out of necessity, but we saved all the bonuses I received in the last five or so years before retirement. Those investments now generate significant dividends and interest if we need it.