Archive for the Social Security Category

October 7, 2008

Baby Boomers Cutting Back On Retirement Saving, Expecting To Delay Retirement

According to a recent article in the Wall Street Journal, increasing numbers of baby boomers are no longer contributing to their retirement plans, and are expecting to delay their retirement.

The gradual demise of defined-benefit plans, and uncertainty surrounding Social Security have made 401(k)s, 403(b)s, IRAs, and similar defined-contribution accounts the primary source of retirement support for most boomers. Numerous studies have already shown that the vast majority of workers, especially baby boomers, are not contributing enough to these plans to provide for a traditional retirement at age 65. The new trend toward forgoing contribution to the plans altogether is therefore all the more alarming.

Nonetheless, the ongoing economic downturn is making it harder to meet current living expenses such as rent or mortgage payments, food, and gasoline. For many, there simply isn’t anything left over to save.

With neither significant savings nor a traditional corporate pension to count on, tens of millions of baby boomers will be depending on Social Security to save them from abject poverty. Which was, of course, the reason it was created—and why it needs to be preserved.

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 26, 2008

Social Security, Medicare, Veterans’ Benefits: Please Don’t Call Them “Entitlements”

Im entitled!
“I’m entitled!”

Social Security. Medicare. Veterans’ disability and other benefits. For tens of millions of Americans, they’ve come hard earned: through decades of work, hundreds of thousands of dollars in payroll tax payments, and through the sacrifice of health, mobility, sight, or other basic bodily functions most of us take for granted. These government programs are all that stands between many Americans and abject poverty.

For some politicians and opinion makers, however, they’re “entitlements,” or even “entitlement spending.”

Words mean things. They also imply and suggest things, often covertly. These words provide a particularly disturbing example of just how damaging a hidden emotional message that flies under the radar of critical thinking can be.

“Entitlement” sounds innocuous enough, but it’s objectionable because it conjures up the image of a privilege that neither was earned nor is really needed, but that the recipient refuses to forego because he or she is—well, entitled.

“Entitlement spending” takes this line of thought a step further. It suggests—and is intentionally portrayed as—a troublesome class of government programs that mindlessly crank out, as if on autopilot, ever increasing sums to the “entitled.” The high cost of these programs, so the reasoning goes, depletes the government’s coffers, and makes it necessary to cut funding in other areas where it is more urgently needed.

In reality, the exact opposite is true.
[Read more]

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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