Spinning No Looming Retirement Crisis Attempts To Foist Social security Cuts

We've already beheld how the Repukes have lied through their teeth to try and get a shell of a health care bill passed (Graham-Cassidy) that actually would strip benefits down to the bare bones - even for those lucky enough to have anything. Now, the Goops are trying to peddle the nonsense that everything is just fine and dandy on the income scene - especially for retirement incomes.

First, let's deal with the retirement income scene which Andrew G. Biggs ('Memo To Trump: There Is No Looming Retirement Crisis', WSJ, Aug. 15) claims has now soared. He writes:

"The data show that in 2008 retiring households typically had incomes equal to 95 percent of their incomes just prior to retirement. The figures didn't differ significantly when households were broken down by education level or marital status. This helps explain why three quarters of retirees surveyed by Gallup last year said they had enough money to live comfortably."

Adding:

"In light of rising retirement incomes why do so many people insist on a coming retirement crisis?"

Well, maybe because there IS one. In this regard one wonders what planet Biggs is living on. It appears not to be planet Earth. Maybe it's part of a parallel universe where financial fantasies hold. Accoding to The Hill in a special report:

"The Insured Retirement Institute found that only 23 percent of the Baby Boomer generation and 24 percent of Gen X-ers are confident their savings will last throughout their retirement years.

Small wonder, as more than 40 percent of Boomers and over 30 percent of Gen Xers report having no retirement savings whatsoever.

Of those with savings, only 47 percent of Boomers and 27 percent of Gen X-ers have saved $150,000 or more. With only 25 percent expecting income from an employer-provided pension in addition to Social Security, these are very low levels of savings."

Personal finance specialist Jill Schlesinger supports the preceding take in her May 15, 'MoneyWatch' segment as part of CBS News:

"According to Fidelity Investments, the average 401(k) balance among its 11.8 million accounts increased to $74,600 at the end of the first quarter 2012, a 62 percent increase since the end of the first quarter 2009. While it's good news that balances are up, the number of accounts is alarmingly low for such an industry giant.

Older employees are better off, but not by much. Workers over age 55 have about $130,000 saved on average, and, for those over 55 who have been active in a plan for 10 years, that average jumps to approximately $230,000. That's certainly an advantage for plan participants, but even this group may not accumulate what is necessary to maintain their living standards.

The reason for the trend is obvious: The recession and market crash inflicted pain on retirement accounts, lopping off about a third of their total value. Additionally, as many families sustained job losses and lower incomes, they were forced to withdraw retirement funds or reduce contribution levels"


This comports with other data that have been available for years, including especially the stagnation of wages and the reason so many Americans are forced to live on Social Security alone. Thus, from one government economic site we learn:

"Social Security made up 50 percent or more of the retirement income of 66 percent of Americans age 65 and older in 2009, up from 64 percent in 2008. And more than a third of retirees (35 percent) receive 90 percent or more of their income as a monthly payment from the Social Security Administration."

It appears then that something is rotten in Biggs account, maybe cherry picking data OR not telling the whole truth.  But, of course, for a would be "entitlements cutter" it serves his propaganda purpose. Thus he can use  his baloney to argue that since retirees are "so much better off " then Social Security can be cut.  Hence his message to Trump:

"Given rising retirement incomes the Trump administration should reconsider its pledge not to cut Social Security benefits"

But this is ignorant folly and worse, criminal, if two thirds of Americans have Social Security making up 50 percent or more of their income.   Consider an oldster living on $2,500 a month retirement income, of which half ($1,250) is from Social Security. His rent is $900 a month and utilities comes to $150 a month. Groceries amount to $400 a month, and that's assuming he's on a very abstemious kind of diet. Add in $104 a month for his Medicare premium, $ 140 a month for his Medicare Supplement insurance plan, along with $250 (conservative!) for his Plan D drug plan and you have: a total of $1,944 accounted for.

That leaves about $556 disposable income and if his Social Security is cut by 10 percent, what then? Well, that leaves him with $431 - not much in case the rent goes up, or his Medicare supplement plan premium or his electric bill!

It is clear from this that Biggs is peddling codswallop to try to prompt Trump to break his word not to go after Social Security.  Of course, given Dotard has already broken so many of his promises- including getting Mexico to fund a border wall, bringing jobs back to the USA, and getting a health bill that will be "the best you ever saw", one can legitimately wonder how long before he breaks this one all on his own.  Especially now that he's again on the warpath on learning his Secretary of State called him a "moron" and didn't retract it.

Stay tuned!

Of Retirement Nest Eggs - And The Inadequacy Of Americans' Savings

Columnist Jonathan Clements in Sunday's Denver Post WSJ Section put forth a blunt question:

"If you lost 25% of your money invested in a stock market correction, would you be ok with it?"

He then put it another way: "If you had $200,000 in stock investments and lost $50,000 of it, would you be able to handle it?"

The questions are spot-on given many money and finance gurus expect a correction soon, maybe as early as January or February next year when the Fed will likely start raising interest rates - signaling the end of the cheap money era. Clements suggests many could survive the loss using the buy and hold strategy, but many ordinary workers who had piled it up in their 401ks might have to work ten more years.

But this is the problem with investing in the stock market. It is laden with volatility and your money rises and falls almost daily with the share value. Another reason many of us call it 'phantom money' because it isn't real until you actually cash out, redeem the shares. Another problem, of course, is that many clients get burned by investment advisers and even pension funds when these assume too high a return, often 8 percent or more per annum, when that simply isn't realistic on examining the global situation. The shareholder then has been led into the proverbial fool's paradise.

According to an article in MONEY magazine ('You Call This Retirement?', Feb-March, p. 49), citing stats from the Investment Income Institute,  there is a total savings accumulated for all Americans of $21.7 TRILLION. This sounds like a staggering amount of savings until one realizes that perhaps half of it is for those in the upper ten percent of earners and the rest for 90 percent.

And while 1 in 5 Boomers is already out of the work force, many who've been forced to retire because no one will hire them, the rest scramble to save enough to live off of for 25 or 30 more years.  As MONEY notes: "It's the best and worst of times for Boomers at retirement" - meaning the potential for up to 20 or more years of living (once one hits 65) and doing the things you never could before as well as "fulfilling your bliss" (Joseph Campbell's term)  in whatever ways suit your fancy.

The problem is that without sufficient money to live off,  it portends a time of genuine misery. It is true that for a tiny elite group of lucky Boomers who have a million or more stashed away the warning could be more like: "Don't be the richest corpse in the cemetery" - the warning for too many is "Don't end up a corpse too soon from eating cat food and fried kibbles".

Based on the earlier stats, Fidelity Investments claims that a person 55 or older who has been active in his or her 401k for the past 10 years, is likely to have only about $269,000. This sounds like a grand sum until you realize that a typical couple will need at least $220,000 to cover medical expenses that Medicare doesn't pay for. Most Americans don't have anywhere near that much saved anyway, and a recent WSJ article (Sept. 12) put the median savings at just over $50,000 for the worker aged 60 -64. This is pathetic and portends a life of "cat food" and poverty unless some other means of income is supplied. (Or, one has the advantage of a VA medical benefit which pays for all the things, e.g. dental, glasses etc., that Medicare doesn't)

Oh, and don't look for lotto winnings, the chance of winning even one ordinary lotto (not the Powerball)  is less than two asteroids striking Earth at the same time.

But MONEY has some encouraging words for those who won't be able - for whatever reason - to hit the magic number for retirement nest egg savings (generally computed as at least 80% of your mean salary for the last twenty years,  so if your salary was averaging $50k/ yr. you'd need to have $800,000 saved.):

"Retirement itself is a very modern concept, an artifact of postwar prosperity and longer life spans. For most of history, those lucky enough to reach an advanced age kept working until they were physically unable - so rural life and extended families provided the safety net."

Then the piece puts a downer meme into the mix, noting that the longevity revolution and industrial revolution put an end to that.

But left unsaid is the real problem or issue, which no finance column or magazine has ever had the balls to mention, at least those that I've read: That is,  the genuine problem is we have a population surplus, too many babies being produced, which is creating too many workers chasing too few jobs.  Just tally up the "population replacement" numbers by month since 2000  (avg. about 150,000) and look at the numbers of current unemployed and under-employed. A coincidence they're nearly the same? Hell no! But again, the Neoliberal media doesn't want people to see that, only to blame THEM if they can't secure a decent job to keep them off "entitlements" until they are 70 or so.

Stop the population surplus and you solve the problem Marc Freedman complained about at the end of the article, "too many people being warehoused who no longer have an economic role".

Something to think about!