One thing about all of this retirement talk that always bugs me is the assumption that retirement is as certain as death and taxes, and we damn sure better be prepared for it. I am in my mid-40s and I do not plan to retire unless I am physically or mentally unable to work. This whole obsession with retirement seems to me to be a (rather succesful) marketing ploy pulled off by the people who make money off of retirement planning.
What am I missing here?

This statute also requires SS trustees to file promptly with congress their recomendations for correcting any imbalance that causes the trust fund to fall below 20% of any given years projected expenses.

For those who have been receiving SS benefit statemetns for 12 years, in everyone they say the trust fund will be exhausted. This is less than the 20% trigger point. Where is this prompt report to correct the imbalance?

By law if nothing is done, across the board take place.

With Medicare it is a bit different. 50% of Medicare’s funding comes from the payroll tax. 25% comes from beneficiaires in the form of premiums, co-pay and deductibles. 25% is paid from General Revenues. Since these identified rates are identified in statute, they cannot be changed unless congress changes them. So let us say congress keeps this identified split. This means that Medicare expenses will be capped at a maximum of 5.8% of payroll period.

What that means for Medicare is this: Medicare is dipping into its trust fund, thereby spending far more than 5.8% of payroll which it is allowed to do using its dedicated trust fund. However, when the trust fund is exhausted, there will be a dramatic cut in Medicare Spending in the range of $100 billion a year. Instead of spending $400 billion in decicated payroll tax plus $100 billion in trust fund, it will be reduced to $400 billion or 5.8% of payroll.

Also, keep in mind that COLA replaces those basket of goods available to the beneficiarie based on the year they turn 60. Any new products that come out after year 60 is not in their basket of goods. If you want to maintain a standard of living instead of being able to buy the same goods available when you turned 60, requires a lot more. Too many are trying to maintain their standard of living on COLA instead of maintaining their buying power for that basket of goods that were available when they turned 60.

As for the National debt, the last general budget surplus was in 1957. Looking at the interest paid on the debt till 2005 shows that the entire increase in debt of $271 billion to over $5.5 Trillion is due to interest alone. I have not looked at the interest paid on the debt since 2005. Every single stimulas passed by congress since 1957 has never been paid back and the interest paid on this borrowed money has been borrowed itself.

Teh greatest generation has left the greatest debt in the history of mankind.

More precisely, government workers or union workers with a safe defined pension, who bought their house cheap many years ago, and bought their stocks cheap over 25 years go, and have sold them at the peak of the bubble, are going to do well.

Otherwise I cannot see how “The typical couple in 2005 had total retirement income equal to 185% of final earnings, while the median projected couple in 2040 has a replacement rate of 131%.”, unless the 185% and 131% refer to non-inflation-adjusted income. Retire on nearly double their *final earnings*?

There are more comprehensible figures here:

http://www.usnews.com/money/blogs/planning-to-retire/2008/7/1/are-your-retirement-savings-on-target.html
«Human resources consulting firm Hewitt Associates released a report today saying that employees will need to replace, on average, an astonishing 126 percent of their final pay in retirement after inflation and medical costs are factored in. Most workers are on target to replace 85 percent of their income based on Hewitt’s analysis of nearly 2 million employees at 72 large U.S. companies.»
«Social Security replaces, on average, 54.2 percent of wages for low-earning workers and 33.5 percent of income for high earners. To get to, say, a 75 percent replacement rate, you’d have to make up the difference of only 20.8 and 41.5 percent of income, respectively. And if you’re lucky enough to have a pension, you can probably get by with saving even less.»
«Workers between 55 and 64 who have a 401(k)-style plan had a median account balance of $50,000 in 2004, which would provide an income of about $4,400 per year, replacing just 9 percent of income, on average, the GAO calculated.»

Note the fantasy of $4.4k/y during retirement for people who have $50k on average 5 years before retirement.

I agree Mr. Biggs, Americans’ preparedness for retirement doesn’t look so bad when you ignore current realities. (That makes you qualified for congress in the good old US of A!)

Simon, Peter (sort of), Andrew, here. Felix over at the evil Reuters. Scores more if you look carefully. This does not seem to be a reciprocal arrangement. Do you have american pundits manipulating opinion, and perception of threat levels, back in Albion and environs?

http://finance.yahoo.com/q/bc?s=%5EN225&t=my&l=off&z=m&q=l&c=

and

http://www.generationaldynamics.com/ww2010/g070219b.gif

Couldn’t happen here? As the Spartans said: “maybe.”

Couple those charts with a war on savers via ZIRP/QE, american’s inability to save more than 5% of their income and growing debt servicing costs.

I see little reason for optimism.

Cheers,
Carson

I’m not certain what this means (if anything). For example, what is the income and asset profile of this ‘typical couple’? How much of its ‘retirement income’ depends upon social security? What are this ‘typical couple’s’ other sources of retirement income? How much depends upon the equity casino which remains hostage to the dollar carry trade and OTC derivatives leverage? As a member of the age group which retired in 2005, I have watched my non-social security income fall from quite comfortable at that time to roughly zero under the Fed’s zero interest rate policy.

The only people living comfortably on Social Security are working for Social Security.

1,028% more than we earn.

The USDX is going to test the .71 level of support and gold is above $1,100.00.

Retirement? That is like standing on a train track and discussing dinner and a movie as the train speeds towards you.