July 24, 2012

A New Mandate: Retirement Savings. Really?

Saying "mandate," as in the health care law, seems to be like throwing meat to an angry bear. Even though we have been under a mandate to pay taxes into Social Security and Medicare since 1937, the political turmoil over the mandate-tax definition for so-called Obamacare refuses to go away.

So, it was with more than a little little surprise that I was alerted to an article in the New York Times (thanks, Sonia!). A professor of economics outlines the failure of our present volunteer retirement system to provide a satisfying retirement for many.

She points out that 75% of Americans nearing retirment age have less than $30,000 in retirement savings. To her that emphasizes that human behavior does not lend itself to voluntarily giving up something today to have adequate resources in the future. She predicts a looming disaster as people enter retirement completely unprepared. She discounts the supposed solution, to keep working, as unrealistic due to the sky high unemployment rate for those over 50.

Her answer? She proposes a mandated retirement savings system in addition to Social Security. She argues that the only way we will be prepared to stop working is to be forced to set aside adequate resources. To read the full article click here:

http://www.nytimes.com/2012/07/22/opinion/sunday/our-ridiculous-approach-to-retirement.html?_r=1

I am well aware that many people play completely by the rules, work hard, save, and still get screwed by the failure of their employer to live up to its promises. Investments are decimated when greedy or risk-loving people take advantage of the system and get caught. Those are not the people she is writing about. Those folks are victims that are paying a price they should not have to confront.


I do agree with the author on one crucial point: too many people who aren't in the category noted above do a terrible job of preparing for their own retirement. I guess they assume the tooth fairy will make it all OK. They think they can keep working until their dying breath. These assumptions are the human equivelant of the ostrich sticking his head in the sand.

As regular readers know, I am a big believer in personal responsibility in most areas of life. Last fall I wrote that for retirement we are on our own. The days when we could depend on a company delivering a promised pension and health benefits until our death are over. Even government and public service pensions and benefits are under attack in many cities.

Social Security payments are an important part of most retirement plans. I, for one, am very glad it is there. Likewise, as someone who has never had a company-provided health plan, Medicare will be a life-saver for me when I reach 65.

But, the idea of adding another program to insure that my lack of planning for my future won't put me in a pickle strikes me as way out of line. Of course, her idea hasn't a prayer of even being discussed my those who could do something about it. But, the author is proposing a "get out of jail free" card: no personal sacrifice or planning would be required beyond another tax. "They" would take care of what we won't.

If my satisfying retirement depended on that, I'd be scared out of my mind.


What are your thoughts? Without this author's idea in place, she contends unprepared retirees could bankrupt us all. Or, will they? How far should we go to manage peoples' tendencies? Fill the comment page!

56 comments:

  1. The authors premise that people who retire will live on $100K a year is preposterous. I don't know any retiree who lives on that after they retire. Do you? Telling people they need $2million in a bank in order to retire would turn off anyone. Thus perhaps she has.

    I fall into her category of having a paid off house (which I carefully planned for to happen at my age of 50) and an income producing partner. I pre-calculated that at my retirement I would like to live on $25K a year and planned for 12 years to accomplish this (slow downsizing)by the age of 62. It's a very easy thing to do provided you have no debt, mortgage, car loans, credit cards etc. and MOST people balk when I mention this one fact about my early retirement. Most say they can't live without their credit cards.

    To each his or her own.

    I have every intention of collecting social security at age 62 and banking it while I wait another 5 years till my SO can retire at 62. Together, both of us will earn $25K a year in SS AND have an ample savings/retirement account and sufficient lifestyle intact to coast until we drop dead. Please don't talk to me about inflation, rising expenses, medical bills, waiting till I'm 66 (only $115 difference per month) or whatever. We just keep making adjustments to stay at our $25K target.

    You'll never find my retirement reasoning on any 'expert's' advice column. Why? Because it would put people like that NY Times author out of business. Retirement can be an easy, breezy thing. Just visualize how you would like to live in retirement while you are young and then plan for it accordingly. Take your time. You'll get there.

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    1. The author was using the $100,000 figure as an example of how much that person would need to save. She is not saying you would need that amount to live on in retirement. The average New York Times reader probably has a higher than median income, but not that high.

      Her point is someone should have 20 times their annual income in retirement savings. Thus, if you want to live on $25,000 a year, her guideline is to have $500,000 in retirement savings. That figure is debatable, but her key point is most people save virtually nothing, or not nearly enough. With a nursing home stay costing around $4,000 a month, one major medical disaster can shred anyone's finances very quickly.

      That's where her key premise comes from: we should be forced to save for retirement so we aren't a burden on others. That is where she loses me.

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    2. Bob,
      I understand. But economist are always (regardless of the NY Times) posting $100K and that $2 mill in the bank and I think it discourages people. They think they can't make it. Perhaps more people would even attempt to save if they thought a successful retirement could be possible.

      I see the scary trend starting you are talking about. Haven't we all just been hit with a 'tax' and are now forced to get health insurance so that all, even those not working will get coverage? Will there soon be a new 'tax' to do the same thing for other retirees? Even those who never worked? Will there be no end? Rhetorical questions. No answers necessary.

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    3. For the record I stopped working with a whole lot less in my investments than the 20x of my projected annual retirement figure. As you noted in your original comment my wife and I have continuously adjusted our budget and expectations based on our resources.

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    4. This comment stream makes me feel so much better about our savings. :)!

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    5. Your focus on living well while spending less already told me your family has a firm grip on its finances. The fact that your savings are in good shape doesn't surprise me either. Your blog is a constant reminder we can affect how we live.

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  2. Hi Bob - I really enjoy your blogs! Please forgive me if this is double posted - this is my first comment. I am soon to retire (12/31/12) and have been saving since age 25. We put 2 kids throught school (advanced degrees) by sacrificing expensive vacations and driving 10-12 year-old cars. I do not want to be forced to fund any "Uncle Sam" fund for those that failed to plan.
    Keep blogging - your posts contain valuable information.
    Diane Hubler, Long Beach, CA

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    1. Welcome to the comment section, Diane. In the future if you'd like to have your name appear at the top where "anonymous" is now, choose name/URL under Reply as. Fill in your name and leave the URL blank (that's only if you have a web site or blog you want to link to your name). Then, your name will appear when you leave the comment.

      You and I are on the same page. The last thing I want is to turn over my responsibility for my own financial well-being to the out-of-touch Congress. I fully support Social Security and Medicare...two good deals for retirees. But, above and beyond that, no thanks. Saving and planning are my jobs.

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    2. Steve in Los AngelesWed Jul 25, 09:07:00 PM MST

      Diane and Bob,

      I agree with both of you. When I made my earlier post (which should appear further down), I stated that there should be a mandatory retirement savings program in addition to Social Security. However, I also stated that each worker must make the entire contribution each pay period (or once a quarter for self-employed people). If people overspend and/or refuse to save for their retirements, that is their problem and their fault. I certainly am not preparing and eating my own dinner at home tonight (and almost all nights) to subsidize irresponsible people who go out for dinner and drink coffee at certain coffee houses on a regular basis!!!!!

      Perhaps it is time that I become a Republican. Perhaps Romney would be a better choice than Obama.

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  3. I thought we already had a plan in place to help people be able to retire...it is called Social Security! And it has been borrowed against and used for other purposes than what it was originally designed to do. I, too, agree with Diane...I certainly do not want to have fund another new program or help those that are doing very little to help themselves prepare for retirement.

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    1. This article does, indirectly, raise a more complex issue. For those folks who did plan and save and do their job but were caught in the financial mess of the last several years, what are they supposed to do now?

      It doesn't do any good to throw around loaded terms like "Wall Street" versus "Main Street." The reality is many of those responsible for the recession profited greatly. Looking back through our history they are not the first. Several American fortunes were made during the Great Depression. And, economic inequality is part of capitalism.

      But, what should we say to folks who find their retirement investments gutted through no fault of their own? The author of the NY Times article is proposing an unworkable answer. But, it is too easy to dismiss the real life disaster these people face.

      I wish I had an answer.

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  4. One point Bob. Medicare didn't go into effect until 1965 under Johnson. Many seniors who were on the low end of the economic scale were on something similar to Medicaid I think before that.

    I know the Republicans want everything to be voluntary, even Medicare, but what do you do with all those folks who 1) don't do it either from not having the proper knowledge (that would include most of us ;)) 2) Do everything they the experts say but get caught in a meltdown likes has happened several times in our lives, or 3) just don't want to take the money out of the here and now for a future obligation (I think we can all agree that many would be included in that category)

    Is it alright for our government to just let them die in the gutter? I hope I don't live long enough to see that happening! A tough solutions if it is voluntary and not "mandatory"...

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    1. You highlight the ultimate dilemma. Many would argue that your point (3 above is the main culprit, but that ignores those caught in (1 or (2.

      We also must remember that for the last decade or so, Congress has continually changed the "rules" of investing by only passing emergency stopgap measures in the areas of taxes and bugeting. How can someone plan for the future when the information needed to make good decisions is no more stable than shifting sand?

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    2. Getting Congress to do something even remotely paradigm shifting has always been difficult. FDR wanted Medicare in the original Social Security plan put couldn't make it happen. Truman tried again and no success. It was not until Johnson got a super-majority to both houses that it was pushed through. So that took 33 years!!

      But by definition capitalism is a very unpredictable environment. It is only with proper regulation that it stabilizes to any degree. If you wait for the "necessary information" you could be waiting for another 33 years I'm afraid.

      This problem is just too tough for those now in congress, or anywhere else I'm afraid right now. So planning around shifting sand is just the way of the world now. Get used to it :)

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    3. Steve in Los AngelesWed Jul 25, 09:13:00 PM MST

      rjs: You stated, "This problem is just too tough for those now in congress, or anywhere else I'm afraid right now. So planning around shifting sand is just the way of the world now. Get used to it :)."

      I completely agree with you. You put into words what I have believed for many years.

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  5. I'm torn about this.. I wish others would have saved more for themselves. But my sons who are now in their late 20's can barely get by. I can't imagine how they could be mandated to save anything. They are both college-educated but the economy is so bad that they are fortunate to have good jobs. Rents are so high, food is high, cars, gas etc. They are very conservative. If they were mandated to save, I think we would have to help them buy gas to get to work! No, ultimately I think social security is the only game in town.

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    1. I think we can all relax. There is not a ghost of a chance of this lady's idea happening. As my answer to RJ's comment above notes, there are millions of our fellow citizens who are suffering through no fault of their own, but I don't believe the government can solve the problem in the way proposed.

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  6. It's a bad idea to fully depend on your social security and 401k in this economic weather. How long will this last? Nobody knows. So what every retiree needs to is to save for themselves by investing into something. And investing is not limited to stocks, bonds, and trust funds. A more tangible investment are properties.

    More on investment and real estate at How to Retire Plan.

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    1. As a homeowner for 35 years and a former landlord who owned 4 rental homes, I am well aware of the ability of real estate to be a solid investment. But, the last few years have shown the huge risks involved, too.

      A well balanced approach includes diversification. Your point, with caution, is well taken.

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  7. Tough issue, for sure. The whole concept of retirement is still pretty new. Used to be that having lots of children to take care of you in your old age was the typical "social security". Now the idea/hope that your kid(s) can take care of you is seen as pretty much both impractical as well as selfish.

    Lots of new problem solving certainly is in order, as well as dealing with the question of whether retirement at 62 or 65 or 75 is to be viewed as a "right" or an "issue" to be dealt with.

    Still, I have the feeling that we're going back to a feudal-type era where the nobles live in comfort while the serfs work their tails off in the fields (or battlefields) for "droppings" from the lords and ladies. A bit exaggerated, I know, but the feeling is there ......

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    1. The analogy to the feudal style is scary but probably has some validity, at least to a degree. All that brings us back to the role of personal responsibility and not out-sourcing our future to those less concerned about us than us.

      Thanks, Steve.

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  8. This is actually already being done by my daughter's employer (a VA school system). They are taking 8% of her income automatically through the Virginia Retirement System. (5% to VRS, and 3% to a 'supplementary' retirement system). She's 'vested' after 5 years. I had no idea that the school system did that. She's actually paying for her own 'pension'.

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    1. Really? I have never heard of that either. Unlike a typical 401k I gather she has no option and the school system doesn't match her contributions up to a point.

      That is very interesting. Thanks, Sharon.

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    2. I wonder if that's some sort of teacher retirement plan. My mother taught in the Texas school system for many years, had deductions for the Texas State Teachers Retirement Fund, and is now drawing a pension (for lack of a better word) from it. Sadly, they had invested heavily in Enron so the value (and payout) went down after that debacle, but she is still getting some money.

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    3. Steve in Los AngelesThu Jul 26, 06:10:00 AM MST

      Cari,
      You show just how risky it is to invest heavily in the stock of just one company. It is so important to be very diversified.

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  9. My husband and I made a conscious decision to live on one salary when we first got married, and to commit all excess monies to savings. It was just what we did, adapting our lifestyle accordingly. The first few years were very stressful, I'll admit, but we had enough money to cover our basic necessities. As his salary g of housing, food and transportation. As our salaries grew, first his, then mine, we began to save a larger and larger percentage until we were banking about 75% of our combined incomes. We achieved this by refusing to increase our fixed expenses just because our salaries were going up. Any luxuries we brought into our lives were generally bought used, paid for in cash, and therefore not a fixed expense issue.

    I do not think we were simply "lucky" in being able to save. We made very deliberate decisions every single day to do so, were always the last of our friends to "upgrade," and are still living just as deliberately, even in our early retirement.

    I think most people refuse to face reality - I see it all around me, every day. Someone prove to me that isn't so, and maybe there is another discussion that needs to be had. So far, though, I'm not seeing it. I'm seeing people living the exact financial lives they've elected to live through a lifetime of poor or good financial decisions.

    There are very few victims our there. This is not a case of "needing" governmental assistance in my opinion. This is a case of a whole bunch of folk still needing a reality check.

    And yet, I get that ultimately the responsibility for helping these folk out at the end of the day will fall on people like my husband and I, who did the right thing, lived modestly and saved. How ironic.

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    1. In the midst of a 24 day RV trek (I envy you guys!),you and Mike are prime examples of the end result of sacrifice and focused planning. Instant gratification has become part of the Bill of Rights for far too many people.

      There is a blogger who comments often and I list on my blogroll who shows the flip side of this discussion. Her husband worked 35 years for a major corporation and contributed regularly to his pension. Just before his retirement the company filed for bankruptcy, wiping out a huge part of his pension. Even though he did everything he should, he was ultimately at the mercy of forces bigger than he. Now what?

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    2. Kind of like when those of us without pensions ending up seeing our self-funded retirement portfolios and homes take a massive hit in 2008?

      Which is exactly why over 60% of our current spend is discretionary, leaving us flexible to ebb and flow as necessary.

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    3. Signed in under husband's login on accident. The above reply was indeed mine.

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  10. A small...or maybe not so small...impact might be made for future generations if our education system and our parents did a better job on teaching the "need" along with the ways and means of financial planning for our whole lifespan. We need to implant a sense of self-reliance and responsibility that is sorely missing in boomers and younger generations. Our culture is way too focused on entertainment, lifestyle, and stuff. If we could plant the grains of frugality and planning from an early age they might ...might... have a better handle on retirement when they finally get there. If they could scale their lifestyle down a bit "now" they would have more for later. It's a simple concept that is preached a lot but practiced too little or too late.
    We will always have people who don't or won't think ahead until it's too late. And there will always be those who are dependent due to illness or disaster, etc. I for one cannot turn my back on them. For those, I would always want to provide some degree of support. The hope would be to lessen the number of these people who need help.
    As many have said, it is all fine and good to hope and wait for the government to figure out a plan for us, but we really shouldn't hold our breath should we?

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    1. Excellent overview, Jane. You'll get no argument from me!

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  11. I agree, mandating savings (and especially letting the government manage it!) is a bad idea. But the problem she writes about is real. $30,000 is not enough to retire on for the VAST majority of people, no matter how you tweak your budget. And 75% of folks are right there.

    I know a lot of people seem to think that this predicament was caused by this recession ("through no fault of their own" keeps coming up.) But the U.S. personal savings rate has been going steadily down for the last 40 years. Lack of savings is the problem. Savers used to save between 7-11% of income. In the 80's these rates started going steadily down--by the late 90's we're talking between 2-3%. The savings rate is steadily creeping UP since the recession. The idea that the recession caused low savings rates is completely not supported by the facts.

    Her point in the article is a valid one. We have not been good at saving over the last 40 years. And that has been the time period in which our nation has transitioned from company sponsored pension plans to self-funded plans. The direction of our savings rates has gone in the complete opposite direction as it needs to if we are to fund our own retirements.

    Here is a link to the U.S. savings rates. I can't explain the causes for our national behavior, but those are the facts. It truly is our behavior: http://research.stlouisfed.org/fred2/data/PSAVERT.txt

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    1. Thank you for adding the insight that a CPA/financial expert can bring to the discussion. Some will argue that they can't save, but in many cases those folks are overspending on housing, vehicles, vacations, and the latest "toys."

      $30,000 in retirement savings isn't enough to cover a 4 day stay in a hospital with a minor operation. That amount should be in an emergency fund, not considered a serious attempt at retirement preparation.

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  12. One more thought on the subject of personal responsibility. How 'bout we focus on giving people the right tools? I have noticed that a significant number of my readers that have retired early were in finance/accounting. Probably no accident. Why not teach personal finance concepts in elementary and high school. If we expect people to understand their mortgages, consumer debt, compounded returns, retirement saving, education funding, taxes and estate planning, why aren't we training our citizens to be able to understand these issues?

    I mean, really a much larger portion of our population will face these issues than issues requiring calculus or trigonometry. (And no, I'm not saying we should stop teaching those subjects.)

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    1. Jane made the same point: it is all about education. Expecting people to properly plan for retirement (and basic financial health) without providing the tools would be like expecting me to fly a plane without any lessons. I'm pretty sure I'd crash.

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    2. The last I heard, the schools weren't even teaching anything about budgeting. And, obviously, most parents don't know how to do it, either. If they can't figure out how to live within a budget, how can we expect them to understand all the stuff Syd lists?

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    3. It wasn't until I read "Your Money or Your Life" in the 90's that I understood how money really works, and the true cost of "toys" on my time and life. I think this book, or something similar should be required reading. I wish I had read it when I graduated from high school instead of 25 years later. Fortunately, I did learn, and yes I am a retired accountant, and I retired a couple of years ago at age 57. We live very frugally, the way we have since I got "educated".

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    4. I read Vivki and Joe's book, too. It handles the basics very well and would benefit anyone who spends time with it.

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  13. The government can't manage themselves. They threaten to change social security and medicare constantly, which does nothing but scare people and could actually have a small part in the economic mess we're in today.

    I'm all about helping my neighbor and giving back, but at some point people have to be responsible for their own lives, don't you think? We don't have what we thought we would have but we do have property. We don't know exactly what we're going to ultimately do with it, but I'm glad to know it's a safety net. Someone once said, "They're not making any more land, so real estate is a smart investment." I still believe that, even with the housing decline. That had more to do with banks than actual value of RE.
    b

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    1. The constant state of uncertainty with governmental decisions is rarely about what is best...rather it is what will score political points. I wonder what would happen if the majority of Americans became so fed up they became Independents. The power base of the 2 parties would collapse and we might actually get something positive accomplished. Not likely, it is good to dream.

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  14. Bob, another good post on your blog. The number of responses attests to that.

    I read from a number of folks that we need more education on financial topics, so individuals are better prepared. Usually it is stated that we need to teach this in school. I would agree except that the school curriculum has been highjacked for topics other than the basics - diversity, distorted history teachings, alternative lifestyles, and so on. That leaves little if any time for what is really important, like financial planning. The only alternative is often to educate oneself which I, and I suspect many of your readers, have done for many years. I'll oftentimes try to give advice to others that are less well read on these topics, but quickly come back to the "leading a horse to water" parable. Most peoples eyes glaze over when you talk topics such as investing, savings, living below their means - they want quick and easy answers. Unfortunately they do not exist. So while I have no doubt that the statistics are grim, most are absolutely due to the lack of initiative on the part of the individual. In those cases, another saying is apt = "you made your bed, now lie in it".

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    1. Financial education is probably not best taught in schools. The information in textbooks is out of date even before it is published. If a teacher depends on the Internet who is going to vet all the sources for accuracy and truthfulness? Schools have become caught up in all sorts of political issues and too often respond to the group yelling the loudest.

      How about learning from families and peers? As our present situation proves, that wouldn't be too wise either in many cases either.

      That leaves mentor-mentee arrangements and self-education. Maybe I should start an audio series on how to be in charge of one's financial life. That's not really my field, but it has worked out pretty well!

      Thanks, Chuck.

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    2. There are three great savers in my family. All three took a personal finance class from a millionaire in their freshman year of college. Having a mentor/ teacher at a pivotal part of your financial life makes a huge difference in our experience.

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  15. The government has done such a good job with the money that I have paid in as taxes so far – I cannot imagine why I would want to give them more!!!!

    I feel that there are some things that are simply personal responsibility. If a person is able bodied and capable, one should feel some responsibility for earning a living, paying ones bills, and planning for the future. We all have paid into SS over the years - we have no choice and neither does our employer who matches what we pay in – a cost of having employees that seems to get overlooked by the employee and by the politicians – and so I do not feel guilty drawing some of that money out now that I am of an age that I can do it. But unless I want to drastically lower my expenses, I cannot expect that SS will cover all of the things that I might WANT to do. In which case – just as it is when one is working, you have to plan ahead and perhaps make choices in order to have the funds to cover your desires.

    As far as Medicare goes – private insurance companies make it fiscally irresponsible to stay with them once you reach Medicare age. You have to register and start paying into Medicare once you reach Medicare age, or be penalized later if you have failed to do it “on time”. Plus private insurance will increase rates (if you are in a group, they “zing” the groups rate way up – and if you have individual policies, they raise your rate way up) – so that you are in a position where you are forced into Medicare. We would have liked to stay with our Blue Cross policy when we reached 65 – but by being on the group policy, it raised our group rate 20%. So we are on Medicare – even though Medicare and the supplement and the Plan D cost us more monthly than our Blue Cross had cost at 64. Plus we have less coverage in many things – and for sure less coverage where drugs are concerned!!!

    Bottom line – unless we want to become a Socialist country where we just give it all to the government (I have a cousin in Germany who pays in over 70% a year in taxes – but gets free medical care – and pays almost $10.00 a gal for gas) – and let the government decide how much we need (this would include how much doctors, lawyers, teachers, government workers (this might not be such a bad idea) and others should get paid), we probably should encourage more personal responsibility and less dependence on the government to support us in our “old age”.

    One other thought – if our national motto is IN GOD WE TRUST – how come we keep wanting to take God out of everything? Just a thought. Now you know my thoughts on the matter of another tax to support the aging population!!!

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    1. I am in the last 21 months of my private health care coverage. I am guessing that I will see the same type of situation you describe: staying out of Medicare isn't really a viable option unless the health care law opens up something that starts in 2014. I'm not in love with my health provider, considering I have had 18-20% increases every year for the last seven or eight years. But, having a choice would be nice.

      You have presented your thoughts clearly and logically, Pat. Thank you for being here. There are things the government can do better than the private sector, but providing for my personal retirement above and beyond SS isn't one of them.

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  16. All I can say is, Wow, just wow.

    Didn't George W Bush want to create accounts for the 'younger' generation to replace or supplement Social Security? His thinking was that SS may not be around when they retire so they should start saving on their own now, with some sort of tax credit now, kind of like an IRA. That went over like the proverbial lead balloon.

    Here are my thoughts. 1. I will not give, nor advocate giving, Congress any of my hard-earned money. They can't balance their own budget, why should I trust them with more money?

    2. Too many of my peers (I'm 59) have spent their money on bigger/faster/better things, not saving. Personal responsibility must enter in to any equation.

    3.People point to Canada and England and say that their healthcare is provided by the government. Well, yes and no. People pay into it, as Pat pointed out, but the care provided is not always quality. I have a friend who grew up in Canada, and he has nothing nice to say about it. Long waits to even get an appointment, lack of personal attention, any surgery other than emergency is scheduled many months in the future, to give a few examples. So you get what you pay for, in my opinion.

    I am very fortunate in that I will start drawing my military pension in a few months, and there is guaranteed healthcare along with that. I have quite a bit in savings to supplement that. However, it does frighten me to think about 'what if' I didn't have my pension to rely on? I would have done things a whole lot differently, and it would not have been because some government program made me.

    I feel for those whose retirement savings were negatively affected by events in the past 10 years or so, and honestly, I don't have an answer. For those who chose not to plan ahead and save for the future, I have little sympathy.

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    1. Steve in Los AngelesWed Jul 25, 08:04:00 PM MST

      Cari,
      Thank you for your comments. I completely agree with you especially with regard to what you stated in point number 2 above, in which you stated, "Too many of my peers (I'm 59) have spent their money on bigger/faster/better things, not saving. Personal responsibility must enter in to any equation."

      I am age 56 and have been sacrificing financially for my entire adult life so far so that I will have a comfortable retirement. My sacrificing will continue for about another 4 years and 8 months. In March 2017, my mortgage should be paid off. I have a two-bedroom and two-bath condominium (of 849 square feet) in a suburb of Los Angeles. I do get a small State government service retirement pension and have paid into Social Security and Medicare my entire working life. However, the overwhelming majority of my retirement income will come money I have saved or accumulated completely on my own. I wholeheartedly agree with you that "personal responsibility must enter in to any equation." I also work very hard to stay healthy so that I myself hopefully will not be a burden to Medicare.

      As I live in a large city, I notice, even with the recent recession, there still are a lot of people who dine out regularly in sit-down restaurants and fast-food places and who drive expensive automobiles. What happened to preparing and eating meals at home and driving inexpensive gasoline-saving cars, such as the Toyota Corolla (which is the car I have and my car is almost eight years in age) or Toyota Prius? My car has a five-speed manual transmission, stick shift, and clutch. I prepare and eat almost all of my meals at home. I eat out only about two or three times a month (and one of those times is to a small local inexpensive restaurant to attend the monthly meeting of the investment club that I have been in for many years).

      It is definitely is time for a lot of people out there to finally grow up and to behave as responsible adults (and especially to be responsible for their own sakes)!!!!!

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  17. Steve in Los AngelesWed Jul 25, 07:23:00 PM MST

    Bob,

    TERESA GHILARDUCCI, in her article, stated the following, "The coming retirement income security crisis is a shared problem; it is not caused by a set of isolated individual behaviors. My plan calls for a way out that would create guaranteed retirement accounts on top of Social Security. These accounts would be required, professionally managed, come with a guaranteed rate of return and pay out annuities. This is a sensible way to get people to prepare for the future. You don’t like mandates? Get real. Just as a voluntary Social Security system would have been a disaster, a voluntary retirement account plan is a disaster.

    It is now more than 30 years since the 401(k)/Individual Retirement Account model appeared on the scene. This do-it-yourself pension system has failed. It has failed because it expects individuals without investment expertise to reap the same results as professional investors and money managers. What results would you expect if you were asked to pull your own teeth or do your own electrical wiring?

    Although humans may be bad at some behaviors, we are good at others, including coming together and finding common solutions that protect all of us from risk. Surely we can find a way to help people save — adequately and with little risk — for their old age."

    Perhaps what is necessary is a mandatory retirement savings program, funded entirely by the worker, that would require the worker to contribute 10 percent of their gross income (i.e., the same income on which Social Security and Medicare deductions are based) each pay period (or once a quarter for self-employed people) into a fixed-income investment with professional money management, for which I would suggest the Vanguard Group as their fees are the lowest. The contributions would be taxed-deferred. Any money remaining in each worker's accounts would go to the worker's beneficiaries and could go into the beneficiaries' separate accounts. Contributions must be made for 40 years or until age 70, whichever comes first.

    This approach seems to be the fairest approach for both workers and society in general. People must work to earn benefits from this mandatory retirement program I am proposing just as they must work at least 10 years which consists of 40 quarters at a minimum qualifying income to earn Social Security benefits. For people who refuse to work, I have no sympathy.

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  18. My husband and I just shake our heads and wonder, in disbelief, how far this will all go.
    As Chinese historians, it sounds a bit like the time when the people who were vilified were the ones who knew how to make and keep money and those who were educated. I am not on the communist bend, but we have been shamed for being retired when "so many at the club " cannot find good work.

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    1. I really hope as a society we aren't separating ourselves into something that resembles class warfare. The last time that occurred on a large scale was during the Great Depression.

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  19. Open Comment to Steve in Los Angeles,

    I welcome your passionate and well-thought out comments and participation. But, I must limit any one person's involvement in one particular post so that person doesn't dominate the comments. Of the five you left over night I have posted one.

    A sincere thanks for being part of our discussion.

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  20. I saw the article in the Times. She actually outlined all the problems pretty well, but her solution is kind of dimwitted. . . . or "unworkable" as you more diplomatically say. She has a plan; if we're all forced to follow her plan, everything will be just fine. Like anyone's going to go for that. Seems like ivory tower stuff.

    Btw, as you and others point out we already have a mandated retirement plan. It's called Social Security. It may not be enough to finance a comfortable retirement, but it does keep people from starving and going homeless. And in that sense it's been a successful, if limited, program.

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    1. Social Security and Medicare were universally panned as government intrusion and a forced tax or mandate when they were first introduced. I have never met anyone, regardless of how much they dislike government involvement in their life, who refuses either when their time comes.

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  21. Isn't it sad that we must have a law to make us do what we must? In the end we must count on ourselves. I saw a post yesterday talking about how many people are depending on their inheritance for their retirement plan! Holy Moly! That is very scary.

    b

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    1. I saw that on Grace's blog, too. Scary is right.

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