The Fixed Income Myth

[Exile]

When I worked as a bill collector, a common excuse among senior citizens for their inability to make their payments is that they were having a hard time due to being on a "fixed income", usually social security. At the time I didn't understand the significance of that phrase, but I suspected it was a bogus alibi.

Now that DW and I are retired and are the ones collecting social security (which is about 90% of our total income) it turns out that I was right. First of all, we both just received an annual 5.8% COLA increase to our benefits effective this month. Secondly, as a percentage that number is greater than what I sometimes received when I was employed. Finally, social security is a guaranteed income, unlike wages which of course terminate when your job ends.

In short, the only thing that's "fixed" in receivng this type of income is the rigid outlook and entitlement attitude of some of its recipients.

[disneysteve]

Originally Posted by Exile

In short, the only thing that's "fixed" in receivng this type of income is the rigid outlook and entitlement attitude of some of its recipients.

I agree. The term "fixed income" always bugs me, too. I'm 44 years old but I'm on a fixed income, too. My work hours are fixed. The pay I receive for that work is fixed. I can't control either. My wife works part-time. Her hours are fixed. Her wage is fixed. She can't control either.

So I just never understood what "fixed income" meant in the way it is used.

[MiikeB]

I think the people who claim its hard on a fixed income are the same people who could never live within there means, and would always rack up debt until they could work more hours etc and now they do not have that option.

[cschin4]

Yes, that always bugged me as well. "I am on a fixed income" which essentially is saying, "I shouldn't have to pay as much as you" or I should get some type of break. In fact, my neighbors, both of whom are healthy and live on SS and their pension, made some comment to us after we purchased a new car that it was fine for people "like you who aren't on a fixed income". Well, excuse me. They know nothing of our finances and I thought it was a pretty RUDE comment to make.
As for being "fixed", most everyone I know is on a "fixed" income. I have worked on salary where my salary was "fixed".

[GREENBACK]

Everyone who works a salaried job is on a "fixed income". Those that own buisnesses or work for commisions aren't I guess.

[maat55]

My income is not exactly fixed but is predictable. Fixed or not, obligations should be met and prepared for. I truly believe that many think debt, due to circumstances beyond their controll, is society's problem and not theirs.

[asmom]

Originally Posted by Exile

When I worked as a bill collector, a common excuse among senior citizens for their inability to make their payments is that they were having a hard time due to being on a "fixed income", usually social security. At the time I didn't understand the significance of that phrase, but I suspected it was a bogus alibi.

Now that DW and I are retired and are the ones collecting social security (which is about 90% of our total income) it turns out that I was right. First of all, we both just received an annual 5.8% COLA increase to our benefits effective this month. Secondly, as a percentage that number is greater than what I sometimes received when I was employed. Finally, social security is a guaranteed income, unlike wages which of course terminate when your job ends.

In short, the only thing that's "fixed" in receivng this type of income is the rigid outlook and entitlement attitude of some of its recipients.

That's quite a conclusion to draw based on your experience alone. A 5.8% COLA was nice and apparently it was adequate for you but perhaps it didn't cover inflation for others. To refresh your memory, if you have a fixed income and your expenses increase then that CAN impact your ability to pay some of your bills. For example:

If one has a fixed income and gas prices go up over 30% in a one year time frame as they did last year, then wouldn't you think that would have a significant impact on the budget? After all, the elderly have to drive to the store and the doctor's office and other places too.

What if the cost of utilities go up greater than your COLA? Here in the South, we are suffering an extreme drought and some people's water bills have gone up greater than 10%. Also didn't the cost of oil lead to increases to heat one's home?

What if your property taxes go up? A lot of elderly have been squeezed by the so-called real estate boom of recent years which lead to large re-evaluations of home prices and for some property tax increases from 10% to over 50%.

Finally wouldn't one's income relative to their expenses be based on several factors like your personal health and your location? A lot of elderly people are squeezed by costs in medications, often spending lots of money on medications which are changed or discontinued, not to mention costs of co-pays. It's very unfair to conclude that these people are rigid or have a sense of entitlement because based on your experience SS is meeting your needs.

The bottom line is that if you are on a fixed income and you are able to absorb all the above without any change in your ability to pay your other bills then count your blessings. But don't make assumptions about others.

[GREENBACK]

Originally Posted by asmom

That's quite a conclusion to draw based on your experience alone. A 5.8% COLA was nice and apparently it was adequate for you but perhaps it didn't cover inflation for others. To refresh your memory, if you have a fixed income and your expenses increase then that CAN impact your ability to pay some of your bills. For example:

If one has a fixed income and gas prices go up over 30% in a one year time frame as they did last year, then wouldn't you think that would have a significant impact on the budget? After all, the elderly have to drive to the store and the doctor's office and other places too.

What if the cost of utilities go up greater than your COLA? Here in the South, we are suffering an extreme drought and some people's water bills have gone up greater than 10%. Also didn't the cost of oil lead to increases to heat one's home?

What if your property taxes go up? A lot of elderly have been squeezed by the so-called real estate boom of recent years which lead to large re-evaluations of home prices and for some property tax increases from 10% to over 50%.

Finally wouldn't one's income relative to their expenses be based on several factors like your personal health and your location? A lot of elderly people are squeezed by costs in medications, often spending lots of money on medications which are changed or discontinued, not to mention costs of co-pays. It's very unfair to conclude that these people are rigid or have a sense of entitlement because based on your experience SS is meeting your needs.

The bottom line is that if you are on a fixed income and you are able to absorb all the above without any change in your ability to pay your other bills then count your blessings. But don't make assumptions about others.

All these things apply to working people as well. I think the ops point is that the words "fixed income" make it sound like everyone else has a wildly fluctuating income that keeps up with any economic changes....they generally don't.

[Aleta]

When retirees budget , savings in no longer a category as are some other categories no longer needed.. It's not like they would run out the door and pick up another job to compensate for the rising costs (although some have had to).

While I agree that most never saved enough or are not living within their budget; some of their concerns are real. Medications and frequent trips to the doctor and hospital can almost wipe them out of their savings. I watched this happen to my step-father. Everytime he went into the hospital, it ended up costing him almost $10,000. more even though he had coverage.

[disneysteve]

Originally Posted by asmom

you have a fixed income and your expenses increase then that CAN impact your ability to pay some of your bills. For example:

If one has a fixed income and gas prices go up over 30% in a one year time frame as they did last year, then wouldn't you think that would have a significant impact on the budget?

What if the cost of utilities go up greater than your COLA? Here in the South, we are suffering an extreme drought and some people's water bills have gone up greater than 10%. Also didn't the cost of oil lead to increases to heat one's home?

What if your property taxes go up?

Everything you listed is true, but applies to everyone, not just senior citizens and retirees. And I didn't get a 5.8% raise this year. My salary is the same as last year and the year before that and the year before that. So yes, higher fuel costs and utility costs and food costs and property taxes did have a significant effect on my budget.

[asmom]

Originally Posted by disneysteve

Everything you listed is true, but applies to everyone, not just senior citizens and retirees. And I didn't get a 5.8% raise this year. My salary is the same as last year and the year before that and the year before that. So yes, higher fuel costs and utility costs and food costs and property taxes did have a significant effect on my budget.

Aww Steve come on, lol! You just told us in another topic that you have 5 years of income saved up for an EF. I'm sorry but I really don't consider your situation comparable to some 75-year old who lives on $1500 a month and who has to provide not only for their basic needs but has $500 a month in medications and doctor co-pays a month in addition to rising taxes, utilities, gas and groceries.

My point is that every situation is different. I don't judge others based on my situation. I am paid on salary but when my salary was no longer sufficient to meet my needs, I simply got another one and gave myself a 25% raise in the process. Not everyone can do that, young or old and very few elderly. Plus I'm healthy and my healthcare costs are almost zilch. I'm just not prepared to conclude that elderly people who struggle to pay their bills due to being on a fixed income are deadbeats who are using their status as an excuse to escape their financial obligations.

[SacredFaerie]

My client is on a semi-fixed income. (His wife works but he gets SSI.)

They have premium cable with DVR, two phone lines and cell phones with unlimited plans.

It's been reccommended several times that they just keep the fax line (she goes to school online and he needs to fax in timesheets for his aides) and cut back on the cable. They don't listen.

A fixed income is fine and you can get along on it if you adjust your expectations. You can't have everything someone with a job might be able to get because your income won't increase and depending on the area you live you might be getting significantly less than the average worker.

[disneysteve]

Originally Posted by asmom

Aww Steve come on, lol! You just told us in another topic that you have 5 years of income saved up for an EF. I'm sorry but I really don't consider your situation comparable to some 75-year old who lives on $1500 a month and who has to provide not only for their basic needs but has $500 a month in medications and doctor co-pays a month in addition to rising taxes, utilities, gas and groceries.

What I have in savings isn't relevant to my point here. I wasn't trying to judge anyone or say my situation is similar. I just feel that the term "fixed income" really is meaningless in the way it is commonly used. People consider retirees to be on a fixed income and working people not to be. I'm just saying that lots of working people, myself inlcuded, also have fixed incomes. When gas prices shot up, we had to cut back. When food prices climb, we cut back. When utilities go up, the money has to come from somewhere. I can't just print more if it. Saying seniors are on a fixed income and the rest of us aren't makes it sound like we all have some simple way to get more money when we need it.

[jIM_Ohio]

Originally Posted by Exile

When I worked as a bill collector, a common excuse among senior citizens for their inability to make their payments is that they were having a hard time due to being on a "fixed income", usually social security. At the time I didn't understand the significance of that phrase, but I suspected it was a bogus alibi.

Now that DW and I are retired and are the ones collecting social security (which is about 90% of our total income) it turns out that I was right. First of all, we both just received an annual 5.8% COLA increase to our benefits effective this month. Secondly, as a percentage that number is greater than what I sometimes received when I was employed. Finally, social security is a guaranteed income, unlike wages which of course terminate when your job ends.

In short, the only thing that's "fixed" in receivng this type of income is the rigid outlook and entitlement attitude of some of its recipients.

I disagree with you. In a way. Maybe the people feel entitled... that I would agree with (entitlement is bad). But my father collects SS, my late grandmother did too. Neither strikes me with a feeling of entitlement.

Fixed income means the recipient has little control over their income and everyone wants a slice.

Perscriptions. Food. Rent or property insurance payments. Utilities. Clothes.

All basic necessities. In the case of my grandmother her check was so low she could not afford to socialize, which drove her to alcohol which led to her last 7 years being spent in a nursing home with people cleaning up after her. She had no way of increasing her income at 75 years old to earn more. She was not entitled to SS, she needed it or would have been forced to either live on the street or move in with family (family would not have let her become destitute, but she was real close to not having any money at all).

My father has probably close to 85% of his SS taxed, even though the income he earned while working had a SS tax to it, that benefit is now getting taxed because his pension and my mother's pension put them in upper income levels for retirees. The same entitlement you mention suggests the government feels entitled to tax my parents even more. That is not right.

Fixed income means if a school levy passes and property taxes are increased, there is no control for the person who is paying the bill to increase their income. It is very real.

[jIM_Ohio]

Originally Posted by disneysteve

What I have in savings isn't relevant to my point here. I wasn't trying to judge anyone or say my situation is similar. I just feel that the term "fixed income" really is meaningless in the way it is commonly used. People consider retirees to be on a fixed income and working people not to be. I'm just saying that lots of working people, myself inlcuded, also have fixed incomes. When gas prices shot up, we had to cut back. When food prices climb, we cut back. When utilities go up, the money has to come from somewhere. I can't just print more if it. Saying seniors are on a fixed income and the rest of us aren't makes it sound like we all have some simple way to get more money when we need it.

Steve- you and I can EARN more, and my interpretation of fixed income is that a person cannot EARN money, even if they are receiving money from another source (like SS).

[MonkeyMama]

I have to agree with Jim.

Exactly the point. A fixed income like disability, pension, or social security, I usually think in regards to someone who can not work and who can not make more money.

Around here, the rents would eat you alive. (They've gone up like 1000% in 20 years). I know few people on fixed incomes who can do anything to better their own situation. It just doesn't cut it. But working folk change jobs and careers when their income no longer pays the bills. That's quite a luxury.

& remember, people on fixed income often need help - either meaning they live in expensive areas to stay close to family, or they need to hire help, etc.

I can't say I agree with much in this post. My personal experience though is with people truly struggling.

[Goldy1]

Sorry I don't want to hear about your "fixed income" crap. I am in my early 30's and subsidizing your fixed income by paying taxes(not that you didn't work either) but my generation will see social security cut or cuts and medicare cuts(just read about it in Money magazine)

There is a deductable of something like $100 before medicare will start paying doctor bills. I used to do medical billing and on more than a few occasions, I would explain the deductable and seniors would literally blow a gasket for an hour and almost cry b/c I was requring them to pay this small deductable as required by Medicare. Yea try going without heathcare like millions of Americans.

[Investing First Steps]

I've generally interpreted when a retiree says they're on a "fixed income" that they're referring to having "fixed income" investments, say savings bonds, and that income is all budgeted.

On the other side I think this thread shows an interesting microcosm of debate. Basically everyone on this thread is arguing something different that really aren't mutually exclusive:

1.) "Fixed Income" is a strange excuse for not purchasing services, given that very few people really have a bunch of disposable income lying around.

2.) Many seniors for various reasons are having a hard time making ends meet in retirement.

3.) Many younger people have very little pity for the people in #2 because they don't foresee themselves having the possibility to have much government subsidy of their retirements.

I think pretty much all of those are legitimate points, that don't relate to each other much. It's always good to remember that while we can argue about what's "fair" or not, the baby boomers were sold a bill of goods that they would have those payments there when they retired and planned accordingly. I've always thought the notion of retirement was a horrible disservice to society as a whole, but ultimately it's not their fault that they were encouraged to do so.

I think it's fairly easy to have compassion for someone who is late in life, really has very little options for increasing their income and is running out of money.

It's also fairly easy to get angry with those same people for voting for more and more benefits for themselves at the expense of future generations and complaining all the while.

Both are pretty legitimate emotions, but I tend to find that compassion is a safer play in life.

[maat55]

I lean extremely conservative on this subject because I think that many fail to plan for retirement due to the false security of a gov. safety net. I'm surprised at how many think SS with no debt is a good plan.

Hopefully, the rumor of reduced benefits will prompt people to prepare better. SS should be a small to none factor in retirement planning, IMO.

[irmanator]

I assume i will have to pay for my own retirement and plan accordingly, if i don't anticipate ss being there i will not miss it. if it is there it will be treated as a bonus.