
Retirement Nomads: Too poor to retire and too young to die - uptown
http://graphics.latimes.com/retirement-nomads/
======
roymurdock
Here's a breakdown of the US 2015 combined (Federal, State, Local) government
spend:

    
    
      Total Spend: 6.18tn
      Total Revenue: 6.08tn
    
      Healthcare: 1.32tn     (21.3%)
      Pension: 1.20tn        (19.7%)
      Education: 0.93tn      (14.8%)
      Defense: 0.80tn        (13.1%)
      Welfare: 0.50tn         (8.2%)
      Other*: 1.43tn         (23.1%)
    
      *Other = Protection, Transportation, General Government, Interest
    

Currently, social security is taking in ~$74bn less in payroll taxes than it
pays out in benefits. The $2.83tn fund is invested in federal debt that pays
3.4% interest. So the interest payment (from the Federal government) of $96.2b
is enough to cover the deficit.

By 2020, interest will no longer be enough to cover the deficit between
revenue in from taxes and expenditures out to retirees. At that point, the SS
fund will need to start redeeming treasuries for cash. The federal government
will then need to issue new debt and/or raise taxes to cover SS treasury bond
redemptions.

If the Federal Reserve follows through in its quest to raise interest rates
and inflation, it will be relatively expensive to raise the $2.83tn in debt
that we will need to fund SS through 2029, when it is projected to completely
deplete its reserves of treasury notes. At this point, SS will only be able to
pay out 75% of promised benefits given the current tax rate and demographic
trends.

Healthcare expenses lean heavily towards the old but are funded by the working
age population. What happens as the birth rate decreases and the average
individual lives longer? Expenses increase for the working-age population.

I'm less concerned about spend on education (which is broken) than I am about
how we plan to fund our health care and pension systems. The only feasible way
I can see is through increased taxation. I just started working last year.
Hell of a time to enter the work force! Overall it seems to me like we are
paying an increasing amount of our federal budget on the older population than
we anticipated we would need to and that we did not adequately provision for.

~~~
dragonwriter
> If the Federal Reserve follows through in its quest to raise interest rates
> and inflation, it will be relatively expensive to raise the $2.83tn in debt
> that we will need to fund SS through 2029

The Federal Reserve is not on a "quest" to "raise interest rates and
inflation", it is raising interests rates not as a goal of its own, but as a
means to restrain, rather than raise, inflation. (h/t to laurencerowe for
catching the dumb mistake I made earlier here by reversing the effect sought
-- the correction actually makes reality _farther_ from "raise interest rates
and inflation" than my initial response.)

And even with rates _much_ higher than any that the Fed is likely to raise
them to between now and 2020, new government debt has been fairly cheap. Not
_as_ cheap as it is now, but not particularly expensive.

Further, if it is more expensive to issue new government debt, than the
returns on the Trust Fund will be greater, and it will not be exhausted as
soon. (In fact, the "low cost" alternative scenario -- in which Social
Security is solvent as far out as projections go -- is, compared to the
intermediate projection, based on higher interest rates, higher inflation, and
higher employment [the latter of which is one of the factors which lead the
Fed to seek higher interest rates, since balancing inflation against
employment is a big part of what they do]. So the Fed being on that "quest"
is, arguably, a positive sign for Social Security.)

(Anyhow, the most recent -- 2015 Trustees Report -- intermediate projection is
for exhaustion of the Old Age & Survivors Trust Fund is in 2035, not 2029.)

~~~
roymurdock
> to maintain, rather than raise, inflation

 _The Committee judges that there has been considerable improvement in labor
market conditions this year, and it is reasonably confident that inflation
will rise, over the medium term, to its 2 percent objective. Given the
economic outlook, and recognizing the time it takes for policy actions to
affect future economic outcomes, the Committee decided to raise the target
range for the federal funds rate to 1 /4 to 1/2 percent. The stance of
monetary policy remains accommodative after this increase, thereby supporting
further improvement in labor market conditions and a return to 2 percent
inflation._

[http://www.federalreserve.gov/newsevents/press/monetary/2015...](http://www.federalreserve.gov/newsevents/press/monetary/20151216a.htm)

> exhaustion of the Old Age & Survivors Trust Fund is in 2035, not 2029

 _Social Security’s combined reserves likely will be fully depleted by 2034,
according to the trustees’ intermediate forecast. The disability-insurance
trust fund could run dry as soon as the end of 2016, while the old-age and
survivors’ fund is expected to be depleted in 2035 – assuming it’s not tapped
to backfill the disability fund. (The Congressional Budget Office, in a
separate report that uses somewhat different demographic assumptions, projects
that the disability fund will be exhausted in fiscal 2017 and the old-age and
survivors’ fund in calendar 2031; if the funds are combined, they would be
exhausted in calendar 2029.) The exact depletion dates depend, of course, on
future demographic and economic trends. After the reserves are exhausted, the
system still will be receiving tax revenue, but it will only be enough to pay
about three-quarters of scheduled benefits – unless Congress changes the
benefit formulas, raises the payroll tax, or makes other changes such as
raising the cap on taxable wage income (currently $118,500)._

[http://www.pewresearch.org/fact-tank/2015/08/18/5-facts-
abou...](http://www.pewresearch.org/fact-tank/2015/08/18/5-facts-about-social-
security/)

------
s_q_b
Before Social Security, over 70% of seniors died in poverty. Today, that
number is less than 10%.

The amount of transfer payments to the elderly is so much larger than to any
other age group, but unless you're willing to let those below the median
income die in abject poverty, it's necessary.

~~~
6stringmerc
I'm not an advocate of "debtors prisons" as a traditional concept, but I'm
also very reluctant to sympathize with those living on a fixed income who
refuse to pick up and move to an area where the cost of living adequately
aligns with their financial means. As in, if a person is old and broke, they
should be grateful to have the freedom to move to a cheap place to live, not
bemoan that they can no longer afford their house near the beach or whatever.

I'm hoping there is some kind of reckoning whereby these poverty-destined
seniors can be inevitably moved to dense housing and care facilities for cost-
effectiveness...well, not counting the immense medical bills they'll probably
try to rack up on their way out the door. Want that new hip at 74? Sure, just
pay for it all out of your pocket.

Might sound cruel, but strangling the youth to feed the elderly, as would be
the alternative, doesn't work in the US economic model.

~~~
k-mcgrady
>> "Might sound cruel, but strangling the youth to feed the elderly, as would
be the alternative, doesn't work in the US economic model."

It sounds very cruel. There's most certainly a balance we can strike but when
politics, particularly in the US, is so two sided balance is hard to find.
Picking up the elderly and forcing them to move is pretty drastic. Imagine
being 10-20 years from death and having to leave your home, family, friends
and community. When your partner dies you're going to be pretty damn lonely
and I doubt you'll survive long - or want to survive long.

>> "not counting the immense medical bills they'll probably try to rack up on
their way out the door. Want that new hip at 74? Sure, just pay for it all out
of your pocket."

There's absolutely no reason we can't afford to provide free health care to
everyone. Health care should not be something you get if you can afford it. I
doubt you'll be espousing this same view when you can't walk due to a bad hip
and can't afford a new one possibly due to factors outside of your control. If
we can afford endless, unnecessary wars, and the bailing out of large
financial institutions we can afford to help everyone to lead bearable lives
with adequate medical care and decent financial benefits where necessary. Sure
there will be people who abuse those systems but from what I've read it's
negligible.

~~~
6stringmerc
> _I doubt you 'll be espousing this same view when you can't walk due to a
> bad hip and can't afford a new one possibly due to factors outside of your
> control._

Sigh, this is unfortunately a subject I refuse to go into much detail about,
but this view was entirely crafted under the auspices of having an expensive,
lifetime handicap. Pre-ACA, I lived constantly under threat of medical
bankruptcy and pre-existing condition rules that were written to benefit big
companies at the expense of my health. I had to make a lot of compromises, and
still do, and I have very little sympathy for those who have lived a long and
productive life and will do anything to stay alive, I just don't feel that way
personally.

I know I take more out of the health care system than I put in. At least I can
admit that. What we're dealing with in the case of the elderly is straight up
denial that they could have any responsibility for their station in life now,
and I'm not buying it.

~~~
k-mcgrady
Sorry to hear about your health issues. I can see your point of view on this
but I just don't see why it sound be an issue at all. I believe it's perfectly
possible for us to be able to provide free health care to everyone if the
government stops wasting significant amounts of money on unnecessary ventures.

~~~
6stringmerc
Thanks for the response, and practically speaking - also philosophically - I
am in agreement with you. I frankly don't understand why we don't make
compassion and care a higher priority! With this noted I hope we can both work
towards it in our own small ways, cheers.

------
rdlecler1
Poverty begets poverty. I think this is going to become increasingly common.
Her generation had all the benefits of a 66 year economic boom, and still
there are many who will live out a good portion of their lives in poverty.
What about subsequent generations that have been saddled with their debts, who
can't afford housing, and who must pay their entitlements?

------
kafkaesq
_Westfall — 5 feet 1 tall, with a graceful dancer’s body she honed as a tap-
dancing teenager — is as stubborn as she is high-spirited. But she finds
herself these days in a precarious place: Her savings long gone, and having
never done much long-term financial planning, Westfall left her home in
California to live in an aging RV she calls Big Foot, driving from one
temporary job to the next._

This is just shameful.

You can debate all you want about implementing basic income for the general
population. But there should be no hesitation at all about applying it to
seniors. As in, right now.

And the trickle-down effects of the basic message: "If you can take care of
your self until age 65, you've got it made" \-- will be enormous.

~~~
knicholes
I find it unfair that I'm expected to make sacrifices while I'm young to
ensure a comfortable retirement and also have to pay for other's retirements
because they failed to do so.

~~~
lukev
Why? Why is that?

Say you encountered a local situation where you meet someone in real danger,
and for some contrived reason _only you_ are able to help them (say, they
knock at the door of your remote house during a blizzard or something, if it
helps to make it concrete.)

The majority of society would say it is your ethical duty to help a person in
such a circumstance, even at moderate inconvenience to yourself. You wouldn't
necessarily be expected to sacrifice your own safety, or even your own
fortune; but in general, most people would frown on your choice of a fancier
car or a European vacation over someone else's _life_ , in this kind of local,
specific scenario.

So what makes that ethical obligation go away, just because it can't be pinned
on any specific individual? Why does this ethical logic apply in a 1:1
scenario, but not in the many:many situation we find in society?

It does. And that is the basic ethical argument behind government welfare.

There may be room for discussion over how dire someone's straits must be
before it's ethically mandatory to step in and help; fair enough. Maybe a
"working senior" qualifies, maybe they don't.

But that doesn't change the underlying point. Your life is _not_ just your
own. You live in a society, and that comes along with ethical obligations,
both in direct circumstances of your life and indirect social issues.

We as a society shouldn't abandon a physically or mentally handicapped person
to the streets anymore than we should walk whistling past someone lying on the
road, injured by a hit-and-run.

Existence as human beings, and humans in society in particular, does impose
moral obligations.

~~~
Lawtonfogle
>The majority of society would say it is your ethical duty to help a person in
such a circumstance, even at moderate inconvenience to yourself.

A stranger man knocks on the door of a single mother with a young daughter
(yes, I am piggy backing on stereotypical social norms). Does she have an
ethical duty to put both herself and her child at potentially great risk
(which is probably largely overblown by 24 hours news and crime based TV
shows)?

>but in general, most people would frown on your choice of a fancier car or a
European vacation over someone else's life, in this kind of local, specific
scenario.

The difficulty is when they enjoyed their European vacation in the past while
you saved up for yours now.

Or to put in a more generalized term, the ethical obligation to share wealth
even with those who are themselves responsible for not having wealth
encourages one to never save up wealth to begin with (not in an all or none
sense, but as a pressure which can be increased or decreased).

~~~
Daishiman
It's funny that you mentioned the first scenario because that one of the exact
reasons why government emergency services exist; you still bear the cost but
your physical safety is much more likely to be assured.

~~~
Lawtonfogle
So sometimes we find that bearing the full cost, including the cost to safety,
to be too great but we find a solution with a different cost (maybe not always
lower as there are multiple dimensions of cost) that we are willing to enforce
on people.

But even given emergency services, there are still limits where they are
unable to provide help. And in those cases, while we are free to judge a
person regardless of what they choose, we do not force them to render aid.

------
6stringmerc
> _Nearly one-third of U.S. heads of households ages 55 and older have no
> pension or retirement savings and a median annual income of about $19,000._

So now we finally get to the root of why Baby Boomers are so upset with the
Millenial generation - there's nobody to bail them out of the mess they
created.

~~~
toomuchtodo
Perhaps you should ask the questions:

Why did Boomers not have enough income to put savings aside?

If savings was put aside, what rate of return did it earn? And what remains of
those savings?

But heh, f___ old people for decisions that were made before you were born,
amirite?

~~~
CocaKoala
>Why did Boomers not have enough income to put savings aside?

To be fair, plenty of millenials don't have enough income to put savings aside
either, and they're not even getting social security benefits.

~~~
Lawtonfogle
Which adds another grim view to this problem. Every dollar spent today to help
the elderly who are poor is a dollar less for when we are elderly, and it is
looking already like our situation is going to be even worse (even if you
ignore the big issues like climate change).

------
xutopia
I feel so sad when I read stories like these ones... a 300$ ticket is the
difference between being broke and having food on the table for her.

To me it says a lot about our society if we can't take care of our elderly.

~~~
dreamdu5t
While I agree with your sentiment, I do not agree that it is my responsibility
to take care of your parents. I want to take care of mine, and socializing
these costs just means I'm forced to pay for your parents at the expense of
mine. There is no replacement for the family unit. Obviously I feel
differently about people who have no family, but that is the exception not the
norm.

~~~
exhilaration
You're pretty confident that you and/or your savings will live to take care of
your parents. What if you get hit by a bus? Or lose your ability to work?
Isn't that what a social safety net is for?

~~~
caskance
For most of us with dependents, that's what private life insurance is for. The
social safety net is for people too poor or irresponsible to have life
insurance.

~~~
jtuente
Do people not understand the safety part of the safety net? It's not there
because you expect to fail, it's there for if you happen to. I don't keep a
fire extinguisher in my kitchen because I expect to set it on fire, but rather
I want to be able to stop a fire should one ignite. If you're reliant on a
safety net, then you've failed at what you were trying to do.

~~~
caskance
What does that have to do with what I said? Why do you think I mentioned life
insurance?

------
maerF0x0
Its tricky to feel sympathy w/ the lady in this article. She's part of the
most benefitted generation, the "hardships" shown are induced by her own
choices (expensive dinner, speeding ticket) and by world standards she's won
the lottery to even be alive and living comfortably at her age.

Alas, thats the trick with other people's stories-- difficult to project how
it would feel if I were in their shoes.

~~~
kafkaesq
$300 is beyond exorbitant for a speeding ticket. It's vindictive and
exploitive.

~~~
JoeAltmaier
...and totally, completely avoidable.

------
pcardh0
I think she should explore the lucrative career of drug mule. She already has
all of the equipment for the job and she is pretty low in the profiling
category. If she gets caught, the housing and food problems go away. Sounds
like a Win/Win/Win situation.

------
Mikeb85
I was going to write a post about how you can't have a great social net as
well as low-tax laissez-faire economy.

But this article paints a portrait of a woman who never saved, made many bad
decisions, spends too much, and, even when faced with poverty, continues to
try to "have it all". Maybe it's commendable, I've always thought it would be
fun to be a ski bum or something (and I have taken 6 months off at a time
before to go travel, camp, ski, etc...). But if I were to make that choice, it
would be just that - my choice, and I certainly wouldn't complain about the
consequences.

------
MrMullen
Why don't these people move to a place where it is much cheaper to live? Costa
Rica _, Panama, and Mexico all come to mind. Living in the US is expensive and
you can live much cheaper in other countries and have the adventure of living
in another country.

_ [https://internationalliving.com/countries/costa-rica/cost-
of...](https://internationalliving.com/countries/costa-rica/cost-of-living-in-
costa-rica/)

~~~
mmagin
Do the countries you mention want immigrants who are not likely to benefit
their economy significantly and who probably don't have fluency in the local
language?

~~~
MrMullen
Costa Rica and Panama happily take America retirees. America retirees have a
guarantee income, they don't cause trouble and health care is affordable in
those countries. The retirees should learn spanish but there is no reason they
could not stay in their own enclaves, if they had too.

------
x5n1
Just shows that the US government can't afford to launch any wars or flex its
muscles, when it does so it does it at the cost of all these people who have
paid a life's worth of taxes, and have nothing show for it. The corporate
interests and the government has eaten all that work and not given them enough
to live off in their old age.

~~~
refurb
_all these people who have paid a life 's worth of taxes_

The social security benefits she receives are based off her lifetime earnings
and thus the taxes she paid.

~~~
tamana
That's not true. SS taxes are an entry ticket, but the benefits are paid
without regard to any sort of national investment of those twx payments.

~~~
refurb
They aren't based on off the investment of those contributions, but yes, they
are based off the income you earned over your lifetime.[1]

[1][https://www.ssa.gov/retire/estimator.html](https://www.ssa.gov/retire/estimator.html)

------
caskance
No matter how much social security is, some people will manage to spend so
extravagantly that it is not enough. An anecdote of one such person is not
very convincing.

------
stcredzero
Bill Staines – A Cowboys Hard Times

    
    
        Well, I once was a cowboy, and I used to run wild.
        And I rodeoed, wrangled, and rambled in style.
        But I'm too old for horses, too old for the show,
        And I'm too young for Heaven; now where shall I go?
    

You young whipper-snappers might think that's quaint. But get ye into the
position of manager, guru, or entrepreneur, or this can happen to a coder too.

------
jdhzzz
I stopped reading when I read: "Eight in 10 Americans say they will work well
into their 60s or skip retirement entirely." Uhm, the system is kind of
designed that way. Why is alarming that most will work "well into their 60's"?
How do 1 of 5 get by without working well into their 60s? Sign me up.

------
thinkingkong
Hopefully at some point in the future we look back at situations like this
with a sense of perplexion.

I worry though, that if we do roll out some form guaranteed minimum income,
the moral highground of those against welfare and social assistance will be
replaced by the moral highground of those who work to supplement their income.

~~~
PavlovsCat
Greed and taking advantage of people will not lead to the opposite when taken
to big enough extremes. It's not the suffering which causes revolts that is
the problem, it's the possibility of revolt. Once that is taken care of the
suffering can be ignored or even enjoyed, depending whether the person is just
a coward or a sadist.

When enough people are so disenfranchised that they _need_ "handouts" to
survive, I wouldn't be surprised about the decision to simply get rid of those
people, then revising history to turn that into the best possible solution for
an unfortunate problem nobody was guilty of creating. It'd be just more of
what we're doing already.

------
robertcorey
She made several major financial mistakes in this article. 21.36 would have
gotten her a months worth of beans and rice. But we shouldn't write people off
for making poor financial choices. Maybe SS payments could be offered in the
form of room and board for those struggling to manage their cashflow.

~~~
nikdaheratik
And there were parts of the article where she lived off of rice and milk. It's
not the $20 meal that's costing her, but the higher cost of living from living
in an RV + the unfixed employment income and the fact that she doesn't have a
lifetime of savings to fall back on.

------
jkot
> _she pulled into the Town & Country Family Restaurant to take the edge off
> her appetite .... After much consideration, she ordered the prime rib
> special and an iced tea — expensive at $21.36,_

I guess that is really bad for US.

~~~
Afforess
Terrible in terms of frugality. The article suggests she saved leftovers and
used it for 3 meals total. However, that is still $7 a meal, very pricey. It's
not terribly hard to have $1 (or less!) meals if you grocery shop and cook for
yourself.

------
brandonmenc
A cautionary tale for the child-free. multi-generational households are one
way to assuage this problem.

------
pcardh0
Obviously we need more immigration to solve this problem. A larger pool of
unskilled labor would increase wages. As everyone knows, when you increase the
supply, the price always rises.

~~~
tosseraccount
Immigration system as ponzi scheme to pay for old people?

------
guelo
401K is a massive Wall Street ripoff and a massive failure. The disaster is
just beginning.

~~~
tosseraccount
What are their returns, compared to say, social security investments or
private pensions?

~~~
refurb
I know I much prefer relying on the benevolence of a corporation to correctly
run a pension program so that it doesn't go bankrupt and leave me high and
dry.

Much better than controlling my own retirement.

