"... If you're 55 or older, you're okay...".. and other fairy tales
Last edited Tue Aug 14, 2012, 05:19 PM - Edit history (1)
First of all, "let's examine the "you're okay" part.
If you are UNDER 55 you are definitely NOT okay.
Let's assume you are 40, and have been "under-employed" for a while now.
Your house is probably seriously underwater (if you still have or ever had a house of your own that you were buying).
You probably have a few kids too... and your parents are probably still alive. Some of you may even still have a grandparent alive.
You probably want your kids to have a shot at college.
If you have a 401k at work, you might end up with $100K if everything works out "great". but many bosses have stopped matching, or costs of healthcare have forced many employees to even not fund their share fully.
Even with SS & Medicare, the aging of parents is going to hit you in the wallet eventually, at the same time (probably) as your kids might be heading to college/community college. You'd probably like to be able to help them too. There will be little chance of using the house as a cash cow to cushion the blow of borrowing money for college. That ship has sailed.
Most people live & work in areas that have little or no public transit, so you probably have at least one car.
Even if you still have a "decent" family income, one serious illness/accident involving ANY family earner can wipe out whatever savings you might have accumulated.
At 40, you have approximately 30 years to set aside whatever you must live on until you die...and while you are saving/investing, you still have to fund all the costs associated with living in the here and now.
If you have no 401-k and use an IRA, good luck with that. At $5k per year, that works out to a whopping $150K plus whatever 0.01222% interest works out to, plus a coupon (the "reformed" Medicare plan) for health care bought at age 70 (which is probably what retirement age will be by the time you get to retire, will be).
If your house is miraculously paid off by then, you will still probably have to come up with at least $200 a month for insurance & taxes, and another $200 or so for utilities, and then there is food, which will be at least $200 a month. We're already at $600. For at least a while, you will probably be needing a vehicle, so the expenses for that continues.
If you have lost your house, or are a renter, those payments continue.
People without pensions rely on SS, part time jobs and savings to live on.
Social Security is TAXABLE too.
When your "now" income ends, you will probably be living on half the money you now earn.
If you are 40 and can afford to put away $416.67 a month, and never touch it until you are 70, you can withdraw $1k a month for 12.5 years.. (you better hope you don't live much more than that )
Can you do it?
Here's the rub...
MANY people suffer unemployment, for months/years at a time...many others' TAKE-HOME pay cannot sustain $100 a week into savings. ($12hr x 32 hours = $384 gross pay).
= new reply since forum marked as read
The decision means those 55 and above would not be subject to a cut in their promised starting Social Security benefit when they retire, as younger Americans are expected to face.
In political terms, it also indicates a White House decision to ease the concerns of a politically pivotal group as it seeks to build public and congressional support for far-reaching changes in the Depression-era program...
rocktivity
