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November 17, 2008

Franchises: Beware the Risks


Many baby boomers who have lost their jobs to downsizing, outsourcing, or the economic downturn are considering buying a franchise as a path to entrepreneurship and a good income.

Sometimes it works that way—but sometimes it doesn't. One Subway owner lost his business because he wasn't able to come up with just under $3,000 he owed in back taxes.
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November 5, 2008

After the Election: The Real Work Begins

roll up our sleeves

After over a year of non-stop campaigns and hoopla, the spectacle, and ordeal, of a Presidential election is finally over. The candidates, and the American people, can breathe a sigh of relief.

But not for long. President-Elect Obama has his work cut out for him. He’ll face an economy slipping into recession, a nation divided over our continuing role in Iraq and Afghanistan, astronomical government deficits, and teetering financial markets.

Hopefully, he and the new Congress will be able to work together to solve these and our nation’s many other problems. And to ensure future retirees’ financial security at the same time!

At AAFR, we wish him, Vice President-Elect Biden, and our other elected officials, Republicans, Democrats, and Independents, all the best in their endeavors. And we salute Senator McCain, Governor Palin, and those departing from the Congress for their essential contribution to a vibrant American democracy.

As Thanksgiving approaches, we would all do well to reflect on the blessing of a free, orderly, and non-violent process of selecting those who will bear the responsibility for governing us.

As the example of many other countries shows, it is not something to be taken for granted.

September 27, 2008

Milestone: First Baby Boomer Receives Social Security

It’s now official: baby boomers have started to collect Social Security.

The first one is named Kathleen Casey-Kirschling, and she was born one second after midnight on January 1st, 1946. (Baby boomers are generally defined as all those who were born in a year from 1946—the year after World War II ended—until 1964—the year the birth control pill became available.)

Kathleen is a 62-year-old retired teacher living in Earleville, Maryland and Vero Beach, Florida. Here is a video of her promoting the use of the Social Security Administration’s online application system:

There are about 80 million baby boomers in the U.S. Over the next twenty years, they will become eligible for Social Security. That averages out to about 10,000 new recipients per day.

If present trends continue unchanged, the Social Security system will have to start paying out more in benefits than it receives in contributions in 2017. Its reserves will be completely depleted in 2041. Kathleen will be 95 then, but the youngest boomers will only be 77..

September 7, 2008

Obama: Don’t Privatize Social Security; McCain: Yes, Er No, Er Maybe

At a national AARP event, Barack Obama has reiterated his opposition to privatization of Social Security:

“[S]ecuring your future starts with protecting Social Security… For millions of Americans, it’s the very difference between a comfortable retirement and falling into poverty. More than half of seniors depend on it for more than half of their income. And as the first baby boomers become eligible for benefits this year, there are steps we can take to secure its future for generations to come. That doesn’t mean embracing George Bush’s failed privatization scheme, as John McCain has.

That’s a clear statement. John McCain appears, or appeared, to be on the other side of the issue. He has

OTOH, he has also backpedaled. He has said that he “has not made [Social Security privatization] a campaign promise.” He has even declared, “I’m not for, quote, privatizing Social Security. I never have been. I never will be.”

Where does McCain really stand on privatization? Who knows. It sounds like he was orginally for it, but decided to hedge his bets once he saw how unpopular the Bush plan was.

August 20, 2008

Current retirees slated to receive big Social Security benefits increase

Next year, current recipients of Social Security can expect the biggest annual increase in benefits in 25 years.

After decades of miniscule increases—last year’s was a paltry 2.3%—the Social Security Administration expects that next year’s benefits will be about 6% higher than this year’s. To be exact, if there’s no additional inflation, the increase will be 5.7%, but that’s an unlikely scenario given the soaring costs of food, oil, and other essentials.

How should future retirees view this development? It depends.

Without a doubt, recipients of Social Security can rightfully expect their benefits to keep pace with inflation—otherwise, they’re getting poorer. And while there’s no proof, rumors persist that the government manipulates the CPI to rein in so-called entitlements like Social Security. In any event, retirees will need the 6% increase just to hold their ground.

On the other hand, the “return on investment” of Social Security has been high for current retirees and is dropping. The well is running dry. If current retirees are too well taken care of, the cuts that future retirees will have to suffer will be all the worse. Where’s the fair break-even point? We’re still working on that. Stay tuned…

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