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If the median family income in 2019 was $68,703 and $15,516 is median social security and couples $30,991 that is a shortfall $37,712. But if they only depended on SS they would pay no taxes on SS unlike paying taxes on their income,. If the median net worth is true at $212k would that be enough with SS? I mean on $68k income that couple is paying at least $5202 SS+Medicare, premiums for medical, and some federal income taxes. How much are they really living on? I'm just thinking that for everyone below the median income while we say SS is not enough is it really not enough? I was just thinking maybe if you are used to living on so little that it is?
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Like you said, with lower income there is no taxes on SS, no FICA, other taxes are no more. By the time of a normal(-ish) retirement date you should have things set like: some minimal savings or investments, a paid for home, most major household items bought, and so on. At that point you shouldn't "need" lots. You won't have a thrilling life, but you should go to a second/third world country to see what "not enough" is really like. Of course there are lots of reasons this might not work out for people, some not their fault. But almost everyone can plan ahead if they want and at least be comfortable, its just that many won't do it no matter how easy their life is. It is what it is - I don't waste lots of time worrying about others' choices.Don't torture yourself, thats what I'm here for. -
The most important point to make initially is the fact that social security was never intended to be a sole source of a retiree's income. When was developed in the '40s (?), the idea was that social security would be 30%-40% of an individual's retirement income. The rest was supposed to be out of personal savings and pensions. With pensions largely in the decline, replaced with 401k's and otherwise, a greater emphasis is placed on personal savings whether inside or outside of retirement accounts.
The numbers that you are pointing out, with social security, Medicare, taxes, etc. no longer coming out of their check is one of the reasons that financial planners will often tell you to plan for roughly 80% of your pre-retirement income. In the case of $68k median income, that's about $55k. With $212k median savings, that can reasonably provide $10k-12k/yr. So just SS & $200k offers ~$42k/yr, mostly untaxed. If there's a paid off home in the mix, that almost approximates the $55k. By no means a luxurious income, but sufficient to live on, so long as you live frugally.Last edited by kork13; 02-18-2021, 03:19 PM.Comment
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I don't think SS was ever designed to be enough. It was a supplemental safety net. However, if you wind up as having that as your only income source, then I guess it has to be enough. I hope to not only be living on that.Comment
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As others have said, it was never meant to be enough.
It was originally intended to be supplemental
BrianComment
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I think it's plenty when the house is paid off and having no kids. Health care is practically free under a Medicare advantage plan. One can downsize their paid off house too.
However I wonder if that median net worth is all house...Comment
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My mother in law lives solely off SS approx. $900 per month.
She lives in a brand new apartment complex that is income based senior housing, gets SNAP card for groceries, gets utility $$ assistance, all medical is taken care, etc.
The kids bought her a cheap car and we got her a cell phone on our plan. She get along just fine on SS only.
From what I see first hand, the poor are pretty well taken care of in America.
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Somebody mentioned the paid off house being a big help.
I tend to think you cannot afford to own a home of any type if SS is all you have. Sooner or later a big maintenance item like a roof or furnace will pop up and you are in trouble.
Plus routine upkeep, mowing, homeowners insurance, etc.
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PIA formula
For an individual who first becomes eligible for old-age insurance benefits or disability insurance benefits in 2021, or who dies in 2021 before becoming eligible for benefits, his/her PIA will be the sum of:
(a) 90 percent of the first $996 of his/her average indexed monthly earnings, plus(b) 32 percent of his/her average indexed monthly earnings over $996 and through $6,002, plus(c) 15 percent of his/her average indexed monthly earnings over $6,002.
So, I guess it would depend on how this is being figured. If the worker is receiving $15,516--that is $1293 per month. The first $996 of that $1293 is being replaced at the rate of 90% of average indexed earnings. The next $297 is being replaced at the rate of 32% of average indexed earnings. If both spouses claim based on their own earnings (i e each spouse earns half of the $68,703), then they will get a higher percentage replaced. (As opposed to one worker and one non-working spouse who would get 1/2 the PIA of the worker).
If you are in a higher income level, your social security monthly income will be replaced at a much lower percentage. But, I think the whole idea for SS was not so much as a retirement plan, but insurance against poverty in old age.Comment
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I think that is a very good point. I was just reflecting on how much we have to pay in property taxes--although some localities do give low income seniors a break on that. We live in a HCOLA --relatively small house-just our property taxes were over 6k last year. (I am also planning for some big ticket items that will need to be replaced before too long.)Originally posted by Fishindude77 View Post
My Mom had a house and we live on opposite coasts, so I couldn't really get over there to do yard work. There was no way she could keep up with the yard work. (When I visited, I used to spend all my time trying to spruce things up.) I was pretty happy when she decided to sell and move to an apartment (which was much closer to where my sister lives).Comment
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But it depends where you live. $900/month is a lot probably in some areas.Comment
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Is Social Security suppose to be a "safety net" or is it an "involuntary government enforced retirement program" or is it a cash cow slush fund for what ever else the government wants to pay for?
The whole "I'm from the government and I am here to help you" should scare the socks off of you. Now consider the fact they are running what may be many peoples only source of income in retirement.
Keep in mind, the government collects this money against your will at the end of a gun. And even then they steal from that pot.
I need to figure out what sort of projected return I will get out of my contributions.
One day you WILL retire. One day you WILL collect your last pay check. There will be no more after that last one. You just MAY live another 40 years past that day.
Prepare now and make hay while the sun shines. Strive for independence rather than dependence on the government for your livelihood.Comment
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I've always done my retirement planning without including SS, but as a higher paid professional, SS will replace a smaller percentage of our income. For about 25% of recipients, it provides at least 90% of their income. About half get at least 50% from it.Originally posted by myrdale View Post
Now that retirement isn't that far off, and I'm less than 6 years from 62, I've started running calculations that include SS just to see how it will impact things.
Steve
* Despite the high cost of living, it remains very popular.
* Why should I pay for my daughter's education when she already knows everything?
* There are no shortcuts to anywhere worth going.Comment
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The biggest impact is longevity insurance. It helps keep the tail end from requiring as much.Originally posted by disneysteve View PostComment
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