Tag Archives: retirement income

AARP Says More Work And Less Retirement Is Good News

Remember when AARP was an organization for retired persons? Remember when the American Dream included a decent job, a house and yard, and retirement?

The acronym AARP was shorthand for “American Association of Retired Persons.” But the organization decided to change its brand. The spelled-out moniker was dropped in favor of just plain AARP.

The capital letters AARP became the full, official name. The letters don’t stand for anything. I’m beginning to wonder what AARP, the organization, stands for.

Did the organization that advocated for retired persons change its identity — and its mission — along with its brand? Has AARP decided that retirement is no longer cool? It almost seems as if they’ve  decided to support WORK and give up on RETIREMENT.

The cover story for the September issue of AARP Bulletin proclaims:

“Good News for Older Workers: Keep, Change or Improve Your Job After 50.”

The “RP” in AARP now stands for “Real Possibilities.” I’m not making this up.

“Tens of millions of older Americans are working today at ages when their parents and grandparents had retired.

Nearly a quarter-century ago, in 1991, only about 1 worker in 10 planned to stay in the workforce beyond age 65. Today, that number has risen to almost 4 in 10.

In 1991, according to the Bureau of Labor Statistics, some 30 percent of Americans age 55 or older were working. By 2013, the workforce participation rate for those 55-plus had passed 40 percent, and it’s rising steadily. The federal Equal Employment Opportunity Commission says the current era marks the first time in U.S. history when four generations — pre-boomers, boomers, Generation X and millennials — are engaged in the workforce at the same time.”

The above quote is from the article, “The Value of Older Workers: Experience makes them better problem solvers and more reliable,” by R.R. Reid in the September 2015 issue of AARP Bulletin. The September issue is not yet up on the website, but AARP Bulletin Today includes many related articles.

The hard copy of the September issue cites excellent sources for the claim that millions of older Americans who would have been enjoying their hard-earned retirement in the late 20th Century remain hard at work in the brave, new 21st Century. So it must be true. People of my baby boomer cohort are less likely to be retired — and more likely to still be working — than were our parents and grandparents, who were probably retired at our age.

300px-SocialSecurityposter2I’m constantly reading or hearing about the difficulties of retirement. Many people say they can’t afford to retire; some say they expect to work until they die. They believe they have little choice. For many, the cost of living outstrips retirement income based on Social Security, pensions, and savings. See the results of AARP’s latest survey of workers aged 55-64.

Retirement income is usually fixed income. The amount of our monthly income from Social Security, pensions, and savings is not likely to go up. Monthly income is more likely to go down, as a retiree burns through savings. Even the annual Social Security cost-of-living adjustment (COLA) is not guaranteed. See the earlier blog post.

Many people fear that their Social Security benefit will, in the not-too-distant future, be reduced to 75 percent of the present benefit. That fear is based on a drumbeat of negative news. (I personally believe that we can and will find a way to preserve full Social Security benefits, and also ensure that Social Security remains viable for our children and grandchildren. Call me an optimist.)

AARP views the trend to less retirement and more work through rose-colored glasses. But I’m wondering if the American Dream of retirement for nearly everyone has ended. Workers in the 1930s to 1970s era were likely to have pensions and to own houses with paid-up mortgages. But since about the mid-1970s, the trend has been away from guaranteed pensions. In the later decades of the last century, many workers began to rely on home equity loans. People refinanced their homes repeatedly, and never paid off the mortgage.

Only in recent years have many baby boomers started to wake up and smell the burned coffee. The new reality is retirement without adequate pensions and savings. And meanwhile, you’re still paying the monthly mortgage. Is the American Dream of retirement about to become a nightmare?

I can hardly wait to see how Robert De Niro plays a 70-year-old intern working for a much younger boss (Anne Hathaway). Watch the trailer. Is it a comedy or a horror movie?

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Social Security And Medicare Are America At Her Best

Editor’s Note: Below is a column I wrote in February 2013, the year I turned 65. I began collecting Social Security earlier, at age 62. In June 2013, my Medicare coverage started, and I retired in October 2013. This article was originally posted on one of my other blogs. Because readers of Retirement Made Simple have shown a deep interest in Social Security and Medicare, I’ve removed it from the other blog and am reposting it here today, with minor updating, including additional links to other sources. As you can tell, Social Security and Medicare are American icons that I feel very strongly about.

An official-looking envelope arrived in the mail this week. (Yes, despite reports to the contrary, we still have mail delivery in the USA.)

Inside the envelope, my Medicare card! Thank God! But how did this happen? How did I ever get to be this old? Never mind.

medical_care_card_usa_sample

Amazing thing is, I didn’t even apply for Medicare. They just send me the card automatically, three months before I turn 65. Part A and Part B, both automatic. It’s effective in June, when I turn 65.

Many people are convinced that all government is inefficient. Anarchists claim government can’t possibly do anything right! Where do they get that idea?

Social Security and Medicare run like well-oiled machines.

The Social Security Administration +++   runs Social Security with amazingly low administrative expenses! And the honest truth is, it’s all been paid for, by me! And by you! Through specifically designated taxes! Is this a great country, or what!

As for Medicare,  +++   I’ve been paying a tax every week since 1966 (which happens to be the year I graduated from high school). For Social Security, I’ve been paying a couple of years longer, ever since I got my first part-time job at age 16. Every week, for 48 years! My money, invested prudently in the safest possible way — U.S. government bonds. Accrued interest!

+++   The two links in the two paragraphs above are the most authoritative sources regarding Social Security and Medicare, respectively.

Saving every week for 48 years. Investing the money prudently. Isn’t that what the investment gurus advise?

How could that possibly be wrong? It feels right to me. All younger workers (by which I mean everyone under 62) need to read the following article by Motley Fool, as printed in USA Today in September 2015:

“The average American is just plain wrong about Social Security’s importance.”

Why is it that so many poorly informed workers are ready to give up on Social Security???  And why is it that Social Security and Medicare are the two programs the wealthy hate the most? I don’t get it.

— John Hayden

Other related articles
Personal Finance Guide for Seniors (medicaresupplementalinsurance.com)
Watch out for Medicare card calls and other scams (utsandiego.com)

And finally, from Atlantic Magazine in 2012:

Don’t Cut Social Security, Double It

Social Security Cost-Of-Living Increase For 2016 In Danger

This just in from AARP:  The annual cost-of-living (COLA) increase for Social Security recipients is probably not going to happen in 2016. Retirees depend on the COLA to keep the value of their Social Security benefit from depreciating over time.

Meanwhile, Medicare Part B premiums are almost certain to go up in 2016. Silver lining: if there’s no Social Security COLA, retirees whose Medicare premiums are deducted from their monthly Social Security benefits will not have to pay the higher Medicare premium

Here’s the full text of the AARP statement that landed in my email Friday:

 “Nearly 60 million Social Security recipients will probably not get a cost-of-living increase next year, according to projections in the 2015 Social Security and Medicare trustees reports.

This would be the third time Social Security beneficiaries have gone without a cost-of-living adjustment (COLA) since 1975, when automatic raises were put into place. The COLA this year was 1.7 percent, making the average monthly check for retired workers $1,334 as of May.

Increases in benefits are tied to the third-quarter average inflation rate compared to the same period the previous year. Inflation has been virtually flat in 2015, due to the crash in oil prices, says Michael Kitces, director of research with Pinnacle Advisory Group in Columbia, Md.

While that makes a COLA appear unlikely, it “is a projection and could change,” says Nicole Tiggemann, a spokeswoman with the Social Security Administration. But it would take a dramatic upturn in prices in the next few months to trigger a COLA for 2016.

AARP and other advocacy groups have long argued that the Consumer Price Index (CPI) used to determine the inflation rate and calculate annual Social Security COLAs doesn’t accurately measure the spending patterns of older Americans.

“Older Americans tend to spend their income differently from the working population that is measured by the current CPI,” says Alison Shelton, senior strategic policy adviser with the AARP Public Policy Institute. For instance, they spend more on health care, a cost that tends to rise faster than the inflation rate, she says.

The net effect of this difference has been about 0.2 percentage points a year, she says. In other words, if the standard inflation rate is 1.5 percent, for older consumers it feels like a 1.7 percent increase. “It tends to add up,” Shelton says.

The lack of a COLA would also have an impact on Medicare beneficiaries. Most of those who have Part B premiums deducted from their Social Security checks would not see an increase in those payments because rules hold them steady when there is no COLA. That’s about 70 percent of Medicare beneficiaries who now pay $104.90 a month in Part B premiums.

The rest of the Medicare beneficiaries — including those with higher incomes, those who didn’t participate in Social Security at their workplace and new beneficiaries — would bear the brunt of any premium increases. The latest Medicare trustees report projects that the base premium for these groups next year would rise to $159.30 a month under this scenario.”

More than the COLA is in danger, in the medium run and the long run.

I used to be confident that Social Security would continue to provide an income floor for older workers, at least for the foreseeable future. However, a number of developments in recent years have shaken my faith.

The inability of the American political system to effectively manage public revenues and expenses, the faltering economy, the embrace of austerity in advanced Western nations, and finally, the steadily increasing concentration of wealth among the few and impoverishment of the many, all these changes give me reason to worry about Social Security.

Most of all, the steady drumbeat of propaganda against Social Security seems to be creating a self-fulfilling prophesy of failure.

I personally don’t think the demise of Social Security is inevitable. But the prospects for deep cuts in the Social Security program seem to be growing. Same thing is true for Medicare and Medicaid, I believe. A likely outcome in my opinion: one of the three — Social Security, Medicare, or Medicaid — might be sacrificed in an attempt to save the other two.

Housing And Money And Cars, Oh My!

Quickly, without overthinking it, here are some of the retirement issues that fascinate me.

Shelter from the storm

First and foremost on my mind right now is:  Where am I going to live? Not as simple as it sounds.

One of the wonders of retirement is that we have freedom, perhaps for the first time in our lives, to choose our geography and environment. Stay put? Or resettle in Florida, or Alaska, or Panama, wherever?

It’s not simply a matter of what part of the country or the world; it’s also, what kind of environment? City, rural, small town? How important is it to be near family?

And critically, what kind of housing? Big house, little house, condo, apartment, tent, travel trailer.  For the sake of completeness, the options for some are reduced to: Sleep on a park bench, or a heating grate, or in the woods.

The many aspects of where and how to live are a consuming interest for me at present.

Dollars and cents

Financial issues loom large for many retirees. As I said in the previous post, Retirement Made Simple is NOT a blog about saving and investing for retirement. Too late for that, for me and for many! From where I sit, the money issue is about making do with what we have. How to conserve and use wisely the limited resources available?

The scare tactic favored by the investment industry is warning workers that if they don’t save and invest enough, they risk running out of money before they die. Talk about morbid advertising! For those of us not in the investment class, that is, for the rest of us, the issue is more immediate and more pressing.

The issue most retirees grapple with is: Retirement resources are limited. In the absence of a winning lottery ticket, or returning to paid work, my retirement income is fixed. It’s not going to increase, beyond the paltry annual Social Security cost-of-living increase, which is at the whim of Congress. Given the  present political climate, the cost-of-living adjustment could very well disappear.

Cut to the chase: For the rest of us, the retirement imperative is budgeting and economizing. Scrimping and saving. Or to put it in a more positive light, living a simple and frugal lifestyle. I suspect I’ll be talking about budgeting and simplicity a lot.

Hell on wheels

My car is an important resource. It grants the miraculous freedom of going to the grocery store or going on a cross-country road trip.

Most of us dread the moment when some responsible relative might confiscate our car keys. Or the day the state replaces our DL with a mere ID card because we can’t pass the eye test. Or even the time when we simply can no longer afford the luxury of a car.

There are other alternatives to a car, but those alternatives are closely related to local geography (see Shelter from the storm, above). In all too many modern American suburbs and rural areas, a car is not a luxury, it’s a necessity. We should seriously look into alternative modes of transport before the car issue becomes a car crisis.

And the list goes on

There are other issues of concern to retirees. Primary among them is health and illness. I’m not very well informed about health issues, but that probably won’t prevent me from writing about it.

I won’t avoid issues such as aging gracefully, playing a positive role in our family and community, and simply enjoying life. These are important parts of retirement, but I’m nearly clueless about such things. Nevertheless, I look forward to learning about those other aging issues, and probably writing about them.

And that’s a quick preview of what I hope to explore with you on this blog. Have I left out anything important or interesting? What would you like to talk about? Your suggestions are welcome.