Geezernomics 101

[eridani]

The data on household income is from Economic Status of the Elderly in the United States, by Virginia P. Reno and Benjamin Veghte

National Academy of Social Insurance (NASI)
1776 Massachusetts Ave NW, Suite 615
Washington, DC 20036
[email protected]
www.nasi.org
202-452-8097

Bottom fifth 2nd fifth Middle fifth 4th fifth Top fifth
<$12K $12K--$19.9K $19.9K--$31.3 $31.3K--$55.5K >$55.5K
Assets2% 4% 7% 8% 18%
Earnings2% 4% 10% 19% 44%
Pensions3% 8% 16% 26% 18%
SocSec 83% 82% 64% 44% 18%
Other 10% 3% 3% 3% 2%

Asset income is mainly spending interest and capital from savings. “Other” is mainly public assistance (including Medicaid) for the lowest two quintiles.

Let’s look at senior income by quintile. For the elite top 20%, note that the factor most likely to put seniors in this privileged sector is still being in the labor force! They are the ones who have the sort of job that does not turn you into a physical wreck by the time you are 60, and are lucky enough to have avoided being permanently pushed out of the labor force involuntarily. Could they live without their ~$9900/year in Social Security? Certainly—but if it were to be eliminated, why would people in this category continue to politically tolerate being required to pay into it? As a class, they are already getting back less than they paid in. Furthermore, they are likely to be paying taxes on 100% of their Social Security income, which in itself contributes significantly to the total assets of the trust fund. The maximum payout is $28,500/year no matter how much you put in. Only about 17,000 of 34 million+ retirees collect this amount at all, so purported savings from eliminating their payouts would be close to nil. And that means that when people talk about further means testing of more affluent senior households, they intend to set the income level at which seniors are considered “affluent” pretty low.

Looking at the 4th quintile, we notice that these households are more likely to have one or both members in retirement rather than still working. And 44% of their income is from Social Security. Speaking as a member of this quintile, I can state that we would not be forced into poverty or homelessness if our Social Security were eliminated, but we would be almost entirely stripped of discretionary income. Last time I had my car worked on, I went to visit the restaurant that I usually eat at while the work is being done. It was closed. It was one of those restaurants relying on retirees stopping in a couple of times a week for the discounted Senior Scramble, and it was almost certainly a casualty of the Social Security COLA freeze of the last two years. With Medicare assessments going up, it certainly looks like a large percentage of their former customers decided to stay home with their bowls of oatmeal instead. Want to destroy many more businesses like this? Then cut Social Security for the people in this quintile.

The lower three quintiles have Social Security as the lion’s share of income. Cutting any benefits for any of these groups, which account for 60% of all retirees, would be an ongoing disaster. The chained CPI for future COLA increases would take the $15,000/year Social Security of a 65 year old woman and cut it by $1200/year by the time she became 95—assuming she’d get anywhere near that age. The whole point of “entitlement” reform sometimes seems to be making sure that more old people die off. Sure, we make lousy soldiers, what with the osteoporosis, slower reaction times and everything, but is that sufficient reason to deliberately enact policies designed to eliminate us?

Opponents of Social Security agree that with 60% of senior households getting most of their income from it, they can’t impose significant cuts on today’s retirees.

http://www.npr.org/2011/03/29/134942260/democrats-rally-to-support-social-security

Rep. Cantor: I mean, just from the very notion that it said that 50 percent of beneficiaries under the Social Security program use those moneys as their sole source of income. So we've got to protect today's seniors. But for the rest of us? For—you know, listen. We're going to have to come to grips with the fact that these programs cannot exist if we want America to be what we want America to be.

Apparently Cantor wants America to be a nation of destitute beggars scrabbling for an occasional chance to clean the toilets of the upper one percent. Given that average American family incomes have been flat from 1980 to 2000, and have been declining ever since then, on what planet will it be possible for them to save enough to make Social Security unnecessary? Young people are supposed to have fat retirement accounts in addition to paying off appalling levels of student debt, amounting to about $1 trillion dollars as of 2010? By comparison, student debt was almost non-existent for baby boomers, thanks to the NDEA legislation.


There is a very low rate of savings for retirement right now, and that Cantor and all the other Koch whores expect families with steadily decreasing incomes to do better than that is utterly astonishing.

If households with a zero balance are included (38% of 55-64 year olds), then fully 69% of all households aged 55-64 have less than $100,000 in a retirement account. For $100,000 a 65 year old man can by a life annuity yielding $700/month (at 2009 interest rates), and a woman would get $650/month. So the Koch whores envision an ideal America in which the most affluent 30% of senior households live on $7800-$8400 for single people and $16,200/year for the heterosexually married. The other 70% would presumably be allowed to slowly die on the streets.

But not to worry—“bipartisan” compromise can certainly find a halfway point between no Social Security and some parody of existing Social Security. That is, unless people of all ages start raising holy hell now and demand no cuts whatsoever, and preserving solvency by raising or eliminating the FICA cap.

[Frustratedlady]

1. Being a "geezer" I think it is useless to make any decision, or vote for anyone

to make a decision for me, unless I see the ACTUAL status of Social Security and Medicare.

We are given all kinds of scenarios: SS is NOT in need of help; SS will run out of money in 20??; SS can be saved by...take your pick.

I think it is time for whichever department has the authority and the facts to make public the true condition of Social Security. No guesses, no gazing balls, no politicians involved...just the facts.

I also think it's time we were told the truth on WHERE the money is. Has it been used to pay our bills? Is it in a trust fund? Is it gone and they are pulling money from another fund? I hear so many answers to that question, I don't believe any of them. It depends on which party you are listening to, for one. I don't want to listen to either. I want the facts. Then, and only then, we can go from there.

JMVHO

[eridani]

2. You can't just let a trillion dollars sit there, so the trust fund purchased T-bills

This is one of the safest investments there is, and interest on these bills is s significant source of income for the fund. Now of course some our our elected thieves and whores would like to not have to pay back the Tbills. We must not let them get by with this.

[indurancevile]

3. it's easy to do: trustees' annual report.

http://www.ssa.gov/oact/tr/2011/

it takes a bit of effort to get through it all, but there are summary tables.

also note that there are THREE projections about social securities finances, not one, & the assumptions used are different. the scenario that's been the most accurate over the years has social security continuing to run surpluses forever.

there is no mystery either about where the money is. it was borrowed by the us government and used to fund general operations.

the facts are there, you just have to do the slog work yourself instead of reading what other people SAY. The source for 99% of what's said in the press about SS is the annual Trustees reports and the SS history published on the SS website. reading through them will show you how very SELECTIVE what's publicized actually is.

Reading through it will also show you that certain parties are outright lying.

[Wilms]

4. Great post, as is the OP.

Thank you both.