The Fixed Income Myth

[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.

[snafu]

Aren't SS benefits based on previously earned income? Back in the day a lot of women stayed home, raised their family and did volunteer work. If left for a significant number of years as a widow, their income continued to dwindle. Even the government thought few would live over 65 yrs. At 80+ with their bodies breaking down, RX unbelieveably expensive, rents increased by 200%...they can be tapped out.

[SacredFaerie]

A lot of people raised a good point: A lot of these seniors figured if they got all their debt paid off their SS would take care of them. Obviously that's not the case but they believed the government.

Another thing to think of is that non-seniors with fixed income (disabled persons on SSI) will often have their income cut based on their expected income from a job once they get one. If their job doesn't bring in the amount they lost that's just some tough stuff. Which can lead to frustrations.

[pearlieq]

A lot of people raised a good point: A lot of these seniors figured if they got all their debt paid off their SS would take care of them. Obviously that's not the case but they believed the government.

The government was actually quite clear about SS's role in people's finances. They painted it as one point of the "three legged stool" that was supposed to fund your retirement--the other two "legs" being pension money and your own savings. As usual, only some people chose to listen and act accordingly.

Even now, I think the government is being quite clear about the situation and what one can expect. If there's anyone my age (~30) who seriously expects to be solely supported by social security, they're completely delusional.

Like others have mentioned, there is the difference between the "fixed income" of my grandmother's SS check and my salary. If things get tight, I can easily go out and snag another job, even if it's just stocking shelves at Target or waiting tables.

Does anyone honestly think my 88 year old grandma has that same option? That's why her income is "fixed".

While I think there are tremendous problems with our system, I'm not hard enough yet to mock someone struggling to make ends meet in their old age. $100 could mean foregoing a medication, missing the gas bill, or having to go to the food pantry. And then to have to face contempt? I don't believe in kicking someone while they're down.

Of all the things my tax money goes to finance, this one is WAY low on my list of things to get indignant about.

[asmom]

While I think there are tremendous problems with our system, I'm not hard enough yet to mock someone struggling to make ends meet in their old age. $100 could mean foregoing a medication, missing the gas bill, or having to go to the food pantry. And then to have to face contempt? I don't believe in kicking someone while they're down.

Of all the things my tax money goes to finance, this one is WAY low on my list of things to get indignant about.

Thank you, ICAM.

[cptacek]

Does anyone honestly think my 88 year old grandma has that same option? That's why her income is "fixed".

Well, I don't know. My 83 year old step-grandpa is still farming. You can't get that man to slow down at all. He is still sky diving, flying planes, farming, dancing, painting houses, owns an implement dealership, etc. etc. etc. You can't judge based on age. Maybe your grandma could get a job. Why couldn't she?

I am not being callous here. Seriously, I'm not. But why does our society think all you are supposed to do after you hit 63.5 is lay around waiting to die? Some get sick and can't do any more and those should be helped. But some can do more but just want more SS money instead of working when they are still able.

[SnoopyCool]

I think that a person's situation is is defined by their internal thoughts. My G.Grandmother died this year at 96, and she was still doing business as of last year (selling eggs from her farm, growing tomatoes, etc. to sell). She'd been doing this as a widow since her 50s. Granted, she had her children around her for support, but she lived alone. She was absolutely amazing to me. (Now if someone is sick or otherwise, I think it is different)

Anyway, I understand that it goes both ways. I think that the universe is willing to help more than we suspect. We just have to believe it, too.

[disneysteve]

Regarding SS, keep in mind that when SS came into existence and the "retirement" age was set at 65 (there was no established retirement age before that), the average life span was 61. The government expected that more than half of Americans would die before ever collecting a penny and most of the other half would die soon after. Today, the life span is nearing 80 and the number of folks reaching their 90s and 100 is steadily climbing, but 65-67 is still the "retirement" age.

As for working later in life, I'm sure we all know plenty of examples. My MIL will be 70 this year. She still works full time and doesn't plan to stop anytime soon. My mother is 78 and just recently gave up her part-time job because the commute was getting to be too much for her, not because she couldn't or didn't want to do the job anymore. I have an uncle in Florida in his mid 80s who runs the sandwich shop at the club house of his retirement community. And I have many patients still working in their 70s and 80s, quite a few at full time positions.

If someone can't work due to health/disability, that's one thing. If they just choose not to work, then they can't sit around and complain about being on a "fixed" income.

[SacredFaerie]

If people over 65 are going to be willing to work, employers have to be willing to hire them.

[pearlieq]

Maybe your grandma could get a job. Why couldn't she?

Well, let's see. She can't drive, can't walk, can't transfer unassisted, is incontinent, can't hear well, can't "process" nearly as fast as you or I, has fainting and dizzy spells from her heart condition, and her hands shake so badly she can't write. But I'm sure her assisted living community has a work-release program. Where should she sign up?

I don't dispute at all the fact that people can still keep doing meaningful work as long as their body is willing to cooperate. DH's grandpa just passed at age 92 last week, and he probably could have worked at something up until the last 8-10 years or so. But there are some realities to the situation. Older people have to overcome a huge employer bias to even get hired. Any many jobs that plentiful and easy to get are also too physically demanding for many older people. I was exhausted at the end of an 8 hour shfit at McDonalds when I was 17--I can't imagine many 75 year olds being able to do that without trouble. Finally, older employees would need to find employers flexible enough to either schedule around all of their medical and family commitments and/or offer part time and flex time schedules.

I agree that if someone wants to drop out when they're 62 and perfectly healthy and live on social security then they shouldn't be complaining about it. But I think that's definitely the exception rather than the norm.

[pearlieq]

Regarding SS, keep in mind that when SS came into existence and the "retirement" age was set at 65 (there was no established retirement age before that), the average life span was 61. The government expected that more than half of Americans would die before ever collecting a penny and most of the other half would die soon after. Today, the life span is nearing 80 and the number of folks reaching their 90s and 100 is steadily climbing, but 65-67 is still the "retirement" age.

I read an interesting article that addressed this point. Here's the link: 5 myths about Social Security - MSN Money

Here's what she said:

Myth No. 3: Age 65 was picked as the retirement age because when Social Security was started in the 1930s, most people were dead by then.

The average life expectancy for a baby girl born in 1935 was about 63 years. For a baby boy, it was about 59 years.

But those statistics reflect the higher infant and child mortality rates of the times. If you survived childhood, you had a good shot of living beyond retirement age. Men who lived to age 30 in 1935 could expect to last another 37 years. Women at 30 had a 40-year average life expectancy.

If you actually reached retirement age, your prospects for a relatively long retirement were good. Men who were 65 in 1935 could expect to live another 12 years, while women faced an average 13 more years. (Today, men of the same age can expect to live another 17 years, and women 20 years.)

In fact, about half of the 30 state pension plans that existed in 1935, and many of the private pension plans, used 65 as a retirement age. Most of the others used age 70. Social Security's creators thought 65 was the more reasonable age and believed the system could be self-sustaining if they chose that age.