Much like the energizer bunny, Obama keeps hitting McCain on the economy again and again.
Tag Archive for 'social security'
Social security is expected to go broke in 2041. The government isn’t prepared to deal with the reality of a very retired population propped up by a much smaller population (Gen X and Gen Y). For all the complaints that Gen Y is the “Entitled” Generation; the Boomers may have to take a look at themselves when it comes to Social Security.
There’s a really thorough article on Social Security over at wikipedia.
The earliest age at which (reduced) benefits are payable is 62. Full retirement benefits depend on a retiree’s year of birth.[27] Those born before 1938 have a normal retirement age of 65. Normal retirement age increases by two months for each ensuing year of birth until the 1943 year of birth, when it stays at age 66 years until the year of birth 1955. Thereafter the normal retirement age increases again by two months for each year ending in the 1960 year of birth, when normal retirement age stops at age 67 for all born thereafter.
Don’t get bored yet.
In 1938, American-citizens had a life expectancy of about 62 years; social security kicked in 3 years after you were likely to be dead. Blacks were particularly shafted by this government policy since they were averaging 53 years.
Fast forward to 2004. Full Social Security benefits kick in at age 67. American citizens average just under 78 years (~75 years for men, ~80 for women). This disparity between blacks and whites is closing a bit, with an average of ~78 years for whites and ~73 years for blacks; women continue to outlive men regardless of race.
So in the beginning the government offered to take care of its citizenry starting 3 years after more than half of them would likely be dead, but today Social Security kicks in 11 years before the average citizen abandons his mortal coil.
I’m not suggesting that the new retirement age should be 81, just pointing out that it’s no surprise Social Security is hurting, since Americans have grown increasingly dependent upon a check that was originally meant to help out those with impressive longevity, not be an expected source of income.
The general consensus is that people work now, so that they don’t have to later. A financially comfortable retirement being the ultimate prize.
But here’s the problem. Seniors are increasingly unable to retire to high health care costs and poor returns on retirement investments. Retirement may be a complete relic by the time Gen Y hits their golden years. With boomers set to begin leaving the full-time work force and social security looking to go bust, (Was anyone else nonplussed by Gingrich sentiment a few year back that it won’t be an issue until his grandkids are adults, so why address a failing social security system now. . . . ARE THERE ANY LONG TERM PLANNERS in our government?), I don’t have high hopes for returns on traditional retirement plans.
Neither does Congress. The LATimes reported on recent study on pension plans and retirement
The study found that, under current trends, 401(k) and similar plans would be able to replace an average of 22% of the income of workers who retire in the middle of this century. That figure is far below the 70% to 80% often recommended by financial planners for a comfortable standard of living in retirement.
While socially security benefits could additionally “amount to an additional 30% to 40% of pre-retirement income for many workers,” that leaves a pretty substantial income gap.
I suppose until someone on Capital Hill figures out how to balance the budget today, long term strategic, financial planning is just a hope and a dream for the citizenry. The problem with public leadership on retirement planning is that they don’t suffer the same circumstances as most Americans; the kind of money exchanging hands in DC means that our elected officials are unlikely to ever face a decision like: hmm, my medications or my mortgage. Thus there’s no incentive to improve the system for everyone else, leaving people to keep their fingers crossed that they’re making the right financial decisions.
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