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.
Which a cynic would say means they had an opportunity to save tons of money over the course of their life (relative to those who paid for having kids).
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?
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.
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.
Not socializing these costs means externalizing them. Should we all chip in to take care of this very social issue or should we just accept the costs in the form of living in a dysfunctional society with all the ramifications of huge numbers of poor elderly folks? We bear the costs as a society one way or the other.
It seems what you're saying is: you just wish every elderly person just had a wealthy enough family that could comfortably take care of them. But that's completely useless fantasy talk.
"a 300$ ticket is the difference between being broke and having food on the table for her."
And the same could be said for a 18-year-old, living out on his or her own.
But in both cases, it is the result of a poor choice (inattentive driving) rather than a major flaw of society, and has nothing to do with being "too poor to retire and too young to die", as was the supposed focus of the article.
Replace the speeding ticket with medical treatment, and that no longer holds true. Either way, you're missing the point, which is that no one (elderly or otherwise) should have to live a life in which a necessary expense of a couple hundred dollars can cause you to go hungry.
The punishment for this speeding infraction is $300. Think about what kind of effect a $300 fine has on your life, and compare it to the impact on this woman's life. The punishment is to pay a fine, not to starve. We should not punish people with starvation, it's cruel and unusual. The punishment is different for you than for her, and that's not just.
Think about what kind of effect a $300 fine has on your life, and compare it to the impact on this woman's life.
I have. That's why I don't speed.
$300 lost means that I have to find what to cut from a budget to support a family of four, while trying to pay off all my bills with a goal to become debt free before I become this woman's age. Unlike the woman in the article, we don't choose tours of Frank Lloyd Wright buildings over dental care.
I'd like to know how the woman in the article budgeted her money 34 years ago, when she was my age. Then we're closer to comparing apples with apples, even though according to the article she never had children to further strain her finances.
A lot of the discussion in this entire thread involving the traffic ticket focuses on how such a ticket is devastating to the poor and the weakest of wrist-slaps to the uber-rich. I see very little discussion of the potential impact on the majority of us in the middle class, or how personal responsibility factors into the mix.
You're missing my point, which is that $300 has a different impact on different people, which makes the punishment depend on your financial standing rather than on the offense. Yeah, the woman in the article is irresponsible. No, she should not have been fined $300 for speeding.
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.
It's not tricky at all. The government eats that $300 dollars for nothing, you could easily index those fines depending on how much money people actually have. But then you can't overtax the underclass with policing. I live in Canada, you know how much the police harasses me? Not at all. The expensive dinner is three meals, which comes out to around $7/meal; not really that expensive. America has a huge underclass made by shitty government policies that favor corporate interest and complexes like the military industrial complex or the prison industrial complex at the price of its people. It's as simple as that.
And they individualize all of those bad policies and make individuals pay for it, as if it's their fault. It's not.
It sounds like you have never been poor. Poverty and misfortune wears you down. A moment of weakness is inevitable. Moreover financial stress has shown to significantly reduce effective IQ.
What is the purpose of the fine? Is it to discourage people from breaking the law, is it to recover damages, or is it to make income for the government?
This is already being done in places like Finland, where speeding tickets are calculated as a percentage of income. This makes a lot of sense given the simple fact that $300 means very different things to different people. If the goal of a fine is deter law-breaking activity, why not use a system that incentivizes everyone equally?
Nah it is pretty much a universal crime. And I actually think it would be correct to fine different people different amounts - say 10 minutes of income for every mile above the limit, up to a max of some percentage (say 20%) over the limit. That way you have the minimum necessary fine to make it not worth speeding without it being so that rich people can speed with impunity.
If the objective of the fine is to provide a financial disincentive to commit a violation, then the fines should absolutely be scaled for different incomes.
Otherwise, there is no real financial disincentive to the rich (who can hire lawyers with chump change), as is obviously demonstrated today.
Finally, it is extremely difficult to drive perfectly enough to avoid violating the speeding limit. Signs are often missing or covered. Limits change at unexpected locations, sometimes nasty ones (at the end of descents, etc). There is very little culture of speed change warning (varies state to state, but nowhere like, say, the UK).
The poor and the downtrodden have to apply a significantly larger effort to maintain speed limit compliance in their driving, because the downsides of getting a speeding ticket are so financially devastating.
Edit: for those of you saying 'yes': who decides what is "fair"?
This applies to basically everything that a society does. Even in small local elections you have decisions where a significant portion of the voters don't get their way, and those sorts of elections tend to be over things that people largely agree on (paving roads and plowing snow and ...).
This applies to basically everything that a society does.
I completely agree. Couldn't we say, then, that the current system of traffic fines (or at least the one that applies to the woman in this article) is something that has been approved by our society...rich and poor alike?
It's even trickier if you consider that she lost her house in 2008. How?! She is in her seventies, the house should have been long paid out. So this means she borrowed heavily against the house equity and spent all that money. I do feel sorry for her problems right now, but I sympathize more with people who were prudent not to risk their house to pay for expensive toys (Smart car).
> Its tricky to feel sympathy w/ the lady in this article.
...
> and by world standards she's won the lottery to even be alive and living comfortably at her age"
Why does that need to be trotted out whenever a story about someone's misfortune or bad circumstances is written about? It would be nice if people could just be happy with what they have because they aren't living somewhere else, under worse conditions, but unfortunately that is not the way the majority of people think and in fact it wouldn't necessarily be healthy if they did. [1]
I don't wake up in the morning (and don't know anyone who does) and think "wow I am so lucky to have a job and to earn a decent income that slow driver in front of me shouldn't annoy me so much!". If I get a meal that was expensive but was "bad" in a restaurant I don't think "thats fine at least I am alive and can afford to eat here how lucky am I".
You compare yourself to your peers and what your expectations are growing up and what you experience.
Of course life for anyone alive today is better than almost anytime in human history but people's baseline is today and where they are not another time period or where someone is living in a third world country.
[1] Because for only one reason it would also prevent people from striving and trying to make their life better in some way.
Should she go to the dentist, or take a guided tour of buildings designed by her favorite architect, Frank Lloyd Wright? Each cost $100. She picked Frank Lloyd Wright. Her teeth could wait... The biggest blow came in 2013 when she faced $8,000 in charges for emergency dental work and rig repairs.
Is there a website that does the accounting for this?
Do you have a link?
[ Serious question, has anyone done an analysis. I keep hearing "boomer ripoffs" but I'd like an impartial analysis. Also, I don't think the 80 year old in the article is a "boomer"; more likely she's a "boomer's" mother.
]
The cost of going 8MPH over the speed limit being pegged at a week's income is not anything any person chooses. It is imposed, as well as being brutal.
These backdoor taxes on the poor exist for only one reason: concentrations of wealth work very successfully at avoiding most taxation.
She LIVES on the road. There is no "choice" to drive in her case.
And with municipalities steadily losing revenue (see corporate tax avoidance above) signage is commonly foregone, making it far from a settled issue as to knowledge of speed limits.
The word "choice" belongs in different situations than this.
I have mixed feelings too; She clearly had some significant misfortune with the housing bubble, and the US' incentives for people to buy homes is partly responsible, but financially she received a 20k windfall, gets social security, earns enough to not get food stamps, buys organic because she has some beliefs about non-organic food and the reason she is 50k in the hole is because she decided to buy a motor home.
So it sounds like she would be fine if she decided to spend her life/money differently, but she's set on spending money on things she can't really afford, so we get this article...
I'm all for basic income, redistribution of wealth, etc, but I don't think we have enough resources to finance everyone's aspirations via taxation.
> are induced by her own choices (expensive dinner, speeding ticket)
The point of the quoting of the speeds ("43 mph in a 35-mph") was to point out that the ticket she got was part of the trend of local American governments of turning traffic enforcement into unchecked taxation and exploitation of poor people by abusing traffic rules to the hilt to hand out as many bogus tickets as possible in order to turn a profit. This has come up many times on HN.
In this case, it sounds like it was part of a speed trap where a sign is put up to lower the speed on a very short stretch of road by 10mph or so and then a cop can sit there and harvest the traffic; there's one of these where I live, and it makes me furious because aside from being transparently bogus a highly regressive tax/revenue trick, it actually makes everyone less safe because the flow of traffic along that road is always faster than the dip section and if everyone complied with it and braked, that would endanger people and encourage rear-endings. Similar to the abuse of red-light cameras.
Every time I read stories like this, I think of dozens of things, little things, that people can do to improve their situation, one thing at a time.
First off, the speeding ticket. You're in an RV, how do you go 15 over the limit? Doesn't make sense to me. You're wasting gas and painting a big red target on your back for the cops. If I were in her situation, I'd have already trained myself to keep to the speed limit no matter what. It's possible, don't tell me it isn't. Even more possible in an RV with limited acceleration. I found it harder to speed in my 20 year old truck than I did to not speed.
Second, the busted water pump. With all the time she had on her hands, surely she could have done some research in the library on how to repair these things and done it herself as opposed to spending hundreds / thousands on paying someone to do it for her. There was no rush, she was able to take her time finding someone, why not take that same time to save even more money?
I say these things because I used to be really hard up for money and resources, and I was able to get resourceful in return. The human brain is amazing, it finds a way. You just have to listen to it and be willing to try stuff out that's outside your comfort zone. For me this kind of resourcefulness is never too far from my mind, as comfortable as my dev lifestyle is right now, if economic circumstances forced me onto the street, I'd work out a way to thrive pretty quick, I simply cannot abide the slow degradation of self-worth that other people in these sorts of situations seem to experience.
But the more I think about it, the more I realize she's already being as resourceful as she can. It's a reminder that deep down, people really do differ vastly in ability, and that we need to be compassionate and generous to those caught in nasty situations with no way to pull themselves out.
But at the same time we need to encourage the kind of inventiveness and resourcefulness that made America great. Times are tough, but we can be tougher.
I agree with you. I was surprised to read she could afford to pay $25 for a meal! In her broke situation, she should be mastering the art of cooking! Then these $25 would last her for a week or longer, not for 3 meals.
Maybe I do sound judgmental, but I grew up in USSR right before it got collapsed, and I remember how our family tried to survive :-|
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.
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?
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.
Feels like a poor kind of "social security" to have to work if you are elderly. Either something is missing in the story, like an expensive addiction, or the minimum benefits (minimum pensions or social security) are simply too low to actually allow someone to retire on.
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.
If you're making these sacrifices now, your retirement will be an entirely different experience from someone on Social Security. Also, retirement planning is a luxury. Not all have the means to set anything aside.
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.
>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).
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.
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.
I'm okay with sharing my profits with those who have fallen on bad times through no fault of their own. Yes, I worked hard for what I have, but there are those who also worked hard for what they had, but forces beyond their control conspired against them.
But how should one feel when they are being asked to share with someone who spent everything on the present. They benefited then while you benefit now. It might be fair for me to share with them now if they could share with me their own benefits, but alas they cannot. It would be nice of me to do so anyways, but if I am forced to sacrifice reaping the benefits of saving... then why should I have ever saved to begin with?
What lesson do we want to pass on to our children? That if you plan for the future, you will be able to benefit from your savings and we will help you if you suffer bad luck, or that you should live in the now and you will be taken care of in the future even if you don't plan for it?
(And to complicate the matter, most cases are a combination of some bad choices and some bad luck.)
Society is about letting go of some things to get other benefits amortized over a long term. Do you want a safe country? Pay up for a police force and a judiciary. You want to reach old age and live a somewhat satisfactory life in a way that you're also shielded from random catastrophes in life? Well you better expect to put your part in, unless you absolutely believe there is no way you could possibly ever waste your savings or have some sort of problem where you'll end up dependent on others.
Cost of living is not the problem (except for healthcare cost inflation, which Medicare could mitigate if someone could gut Congress of representatives preventing Medicare from negotiating with pharmaceutical companies). The problem is that everyone who collects Social Security is living longer.
The question is: How can you continue to provide a high quality of life to seniors without bankrupting the country.
The answer is universal healthcare, which then becomes a sunk cost for the entire population (Medicare->OneCare).
The answer is removing the social security tax cap at ~$120K (this causes SS to become solvent in perpetuity immediately). This will be done regardless if the SS fund goes broke and must be propped up with the general fund, its just how long you want to kick the can for. (EDIT: Medicare has no cap on the amount of income taxed, only Social Security)
The answer is you increase basic social safety nets that have little marginal cost (there's enough food to feed everyone; distribution is the problem).
The whole point of social security is that it is a social insurance program. It's funded out of workers wages, and paid back to workers in proportion to what they paid in.
If you remove the cap on social security contributions without removing the cap on payouts, how is it anything but a special surcharge on people who earn money from wages?
> If you remove the cap on social security contributions without removing the cap on payouts, how is it anything but a special surcharge on people who earn money from wages?
I never said it wasn't. I can hardly shed a tear (for myself included) for anyone making over $120K/year who pays an extra few percents of tax on income to prevent elderly poverty.
I'm coming to appreciate the plight of the middle class at this point. How the hell am I supposed to put away enough savings for a house, retirement for two, and college savings for 2.5 kids? Between myself and my girlfriend, "household" income is around 200k.
I should be exactly the person opposing these tax increases. I'm squarely in the white, male, 95% demographic.
Yet, the more I look at the financial figures for the total population, the more I realize how lucky we really are. I can't conscionablely oppose paying more in taxes. I just wish the system of expenditure was more rational.
> Yet, the more I look at the financial figures for the total population, the more I realize how lucky we really are. I can't conscionablely oppose paying more in taxes. I just wish the system of expenditure was more rational.
I am not opposed to the tax rises needed to make social security more effective, but if benefits won't be tied to wages, why should funding come out of special surcharges on wages?
If we're going to break the logical connection between the wage surtax and social insurance, let's end the surtax and move social security obligations and funding into the regular budget, so that ALL sources of taxation are used to fund SS.
> It's funded out of workers wages, and paid back to workers in proportion to what they paid in.
No, its not. There are "bend points" where the ratio of earnings to benefits is reduced. (The benefit is 90% of average indexed monthly earnings up to the first bend point, plus 32% of AIME between the first and second bend point, plus 15% of AIME above the second bend point.)
> If you remove the cap on social security contributions without removing the cap on payouts, how is it anything but a special surcharge on people who earn money from wages?
Since the cap on contributions is a per-working-year cap and the cap on payouts is a maximum limit applied after the formula aggregates the lifetime earnings, there is no strong relationship between the two caps.
OTOH, you could uncap both annual contributions and benefits and you'd still improve the health of the trust fund, just not quite as much as you would if you uncapped only annual contributions, so if that's the only objection, go ahead and uncap both, with or without adding a third bend point.
Until we reverse aging this just pushes people who should have been able to retire into the labor market longer and longer while their bodies fail. That is a terrible punishment to inflict on people who expected to be able to live their later years without suffering.
Obviously you can, because real per-capita GDP has more than doubled in forty years. The country is still growing explosively, and can obviously support much higher social security payouts, especially considering we are still spending 1/2 to 2/3 as much on defense which is mostly a monetary black hole (your returns on investment there are probably the lowest of all state expenditures).
So it is important to remember that social security is not a black hole. Some people like my dad exclusively invests his, but for a lot of people it is immediately spent in the economy. The greatest economic stimulus you can produce is direct cash injection into the poor - it produces immediate real goods demand to be met.
It is also why I always go crazy when people talk about "affording" a universal basic income. It is wealth redistribution, not destruction. Wealth is destroyed when it is dedicated to unproductive things, like means testing or incredible bureaucracy. The only risk UBI has is that you redistribute enough that the massive demand increase from the poor does not offset the slowdown of investment at the high end. Its a progressive curve - its not about affordability, it is about finding the maxima that matches peak social stability, equality, and individual prosperity against economic growth and investment.
I should clarify. My COLA statement includes increased medical costs/consumption, longer life, lack of keeping up with GDP, etc. Total lifetime costs might be better phrasing.
The US has near universal basic income for older folks.
No, we don't -- because the amount you get depends on how much you've earned before you're eligible. And because it isn't nearly enough to actually live on (and has stayed flat while living costs have skyrocketed).
The whole point of basic income is that it's (1) unconditional and (2) pegged to actual, real basic living expenses.
The woman in the article receives $1390/month in COLA'd fixed income and free ''major medical'' health care. I can tell you from personal experience: this is ''enough to actually live on''. It's not super comfortable but then we're talking about someone who worked for decades and ended up with a net worth of zero. I'm not assigning blame I'm just restating a fact. Where my family is from in the midwest a studio apartment is $300/month in a safe enough area, and there are plenty of very low cost community resources and activities. Obviously not a highly desirable area but people survive there with a roof over their heads, food on the table, and a community to spend time with. Back to the woman in the article: to me it seems that her real problem isn't poverty but rather clinging to her RV and her wanderlust lifestyle. Which of course she's entitled to do, but we shouldn't look at it as an example of the system failing when it's actually the opposite.
Assuming it's consumer credit (and not student loans) then she's a prime candidate for bankruptcy which would wipe out all her loans. She burns her credit score but it's an easy (probably necessary) trade-off to make. She just needs to move somewhere where her monthly expenses are less than her monthly fixed income, and she will be fine (from a financial perspective).
Exactly. She's already getting her social security and other income. Is she not to blame for 50,000 in credit card debt? Or buying a mobile home, which is never a good investment. It sucks that people are in poverty, but just bailing everyone out after making poor financial decisions is a bad solution.
> You are being down-voted because the US has near universal basic income for older folks
No, it doesn't. The US has a broadly-applicable mostly-mandatory contribution-weighted public pension program, which is almost entirely unlike a basic income.
After her retirement in 2007, she had planned on selling the double-wide to finance a lifelong dream: touring the nation from behind the wheel of Big Foot.
Yes, she is working while she does it, but it sounds like she's migratory by choice.
Yeah, it's hard for me to have too much sympathy for people like this. Living in an RV is expensive once you include depreciation on the vehicle. If she'd kept the trailer she would have been comfortable enough on Social Security.
You do know you're talking about a generation that essentially had every opportunity to provide for themsleves, but squandered decades of prosperity out of their own selfishness, most easily seen in the recent $4 TRILLION spent on war as the domestic infrastructure crumbles, medical care costs skyrocketing, and the largest ideological gap in politics according to some scholars?
Probably akin to The Enlightenment following the Dark Ages, provided my generation can revise the programming of selfishness, greed, and war-mongering international meddling that was presented by our elders. It's honestly not a high bar to clear. It just takes a revision of principles that is deployed through action (and voting).
It's really a indictment of basic income as a concept.
She's 79, gets social security, medicare, and a small pension. She has $50,000 in credit card debt, and drives around the country in an RV. Why do you feel sorry for her?
How much more are you supposed to give her? When she can't travel anymore, she has no assets and will be able to get a subsidized senior apartment. When she can't care for herself, it will be tough without family, but she'll get a nursing care of some sort through Medicaid.
...she'll get a nursing care of some sort through Medicaid.
Having seen what "nursing care of some sort" look like close hand, for friends and extended family members -- it's not something I'd wish on anyone, even my worse enemies.
Did you read all these stories? Yes we have people in financial trouble but damn if they don't all keep digging the hole deeper and deeper. RVs, or any large vehicle purchase, are not wise uses of limited incomes. RVs are money pits even for those well off enough to keep them going all year.
Each story was the same, things go wrong and then they double down on making bad choices. Basic income isn't going to save these people, it might just make some less mobile, so they will be out of sight and people won't feel guilty any more.
We already transfer a fortune from the young to old in this country, doubled down on it with the prescription acts during the Bush presidency and then doubled down again with the ACA during Obama's presidency. We cannot save everyone, especially when they keep repeating the same mistakes.
Want to help those with limited money, the solution is not to give them more money. The solution is to get the government off their backs. When their income gets below a certain threshold we need to back off the taxes, fees, and similar, they pay or go to jail for or lose property for. I have no problem fixing their medical needs but the last thing that will help is to promote their continued wandering which forever prevents them from establishing themselves.
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.
You can go a lot deeper on this. Even today, about 50% of seniors would be below the poverty level without Social Security.
That's mostly okay, because the majority of seniors have the major expenses covered by guaranteed benefit pensions, Medicare and private savings, usually in the form of a house.
But things would get pretty grim without the government programs.
My grandfather has two guaranteed benefit pensions: one FBI and one as chief of local police. But you're right, they're vanishingly rare for anyone in the private sector under 80.
Bankruptcy by medical disaster should be averted by Medicare and a supplementary plan, assuming it's late enough in life. Slightly earlier, and yeah, your savings can vanish.
What about assets? The highest median net worth cohort is households headed by those 65-69, second by those 70-74, third by 75 and older. (as of 2011)
It's one thing to give welfare to older people who can't work to keep them off the streets and quite another to give them welfare so they can give lavish inheritances to their children.
Assets are a great point. Much like lifting the cap on earnings tax, assets should factor into the payout equation, much like they affect student grants.
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.
For about 5 years, I volunteered with the elderly in rest homes. I saw what happens to us as we get old, infirm, sick, and lose the last of our mental faculties. I'm being somewhat serious, in that I've watched the elderly closely and believe they will vote en masse for their own desires and interests until the younger generations are completely unable to survive. I'd probably shock you by also holding a belief that voting and driving are two things senior citizens should prove competent to do in order to continue to be allowed to do them in society.
> For about 5 years, I volunteered with the elderly in rest homes.
Your personal experiences of the elderly in rest homes are probably not a representative sample of the elderly in society, for all the usual reasons that personal experiences aren't representative, plus the fact that elderly in rest homes themselves are likely not representative of elderly in society.
Actually I have a summer birthday so, yes, I do not enjoy them very much. I'm basically very disappointed at the economy and society that I've inherited. Forgive me if I don't wear a smile while looking critically at those who came before me.
You know what they say, "Recession is when your neighbour loses his job, depression is when you lose yours".
It's easy enough to say that it's up to oneself to 'take responsibility', until you find yourself in a place where there are no jobs, and it's really not possible to thrive.
>> "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.
>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.
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.
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.
You don't have to strangle the youth to feed the elderly. IT is always a false dichotomy to think that you need the poor to provide for the poor.
Here are numbers to consider. Per capita real GDP in 2015 in the US was $51,143. Fourty years ago it was $24,693. We have more than doubled our per-person wealth, and are continuing to increase at 2%, roughly twice the rate of inflation.
We are absolutely wealthy as a country. Beyond measure. At some point, it should be reasonable to say some things about how advanced your society should be now. In the past, there have been many points where people and leaders together agreed we were advanced and prosperous enough to invest in our own country. Just in the US, some examples would be:
* Public education. Spending money to make sure no matter your means you have access to a generalized curriculum of schooling.
* Transportation infrastructure. Be it rail, canals, trollies, roads - even the old dirt roads dug out for carriages, airports, subways, bike paths, or sidewalks.
* Clean water.
* Sewage
* Electricity
* Twisted pair
* Coaxial
* Fiber?
* Welfare that tries to insure people do not starve, or sleep in the streets.
* Prisons to remove from society those who cannot participate (and for some reason people who like smoking plants).
* Guaranteed access to healthcare. Oh wait, only first world countries do that.
All of these are expenses, that we pay for in taxes and rationalize as being worth the cost, because our economy can bear the cost. And it has done more than weather these costs, it has exploded even with them upon it, and often because of these expenses - these investments - we are more productive as a result.
Peace of mind in retirement may not be as obviously beneficial to the econonmy as having an interstate highway system, but the benefits now should be apparent in how we can easily see that when children are not burdened to care for their ailing parents they prosper.
So the question is not if the young are suffering for the rich, because social security has existed for going on five generations since the 40s and has had provable economic benefit in the intervening years. It is important to distinguish the benefits of the expense (social security) from the means to pay for it.
This of course ties back into growing wealth inequality, but it is important to separate why it is good to do something and why you might be getting the money to do it the wrong way.
Well now that you mention it... if we have responsibility to the poor of this country, do we not also have responsibility to the poor of other countries? Even more so if you are talking about the US due to all our meddling in the affairs of other countries.
We do feel responsible for the poor of other countries, that is why people donate and participate in charity to such large degrees, and the US spends billions on international aid every year.
However, unless these nations concede sovereignty to the US, we cannot be held responsible for the bad behavior of nation states and be expected to make up for their failings with our own sacrifice.
If everyone wanted to voluntarily join a world government that also provided UBI to every human being I would absolutely be for it, in the knowledge that I would certainly lose a lot of first world conveniences to uplift the extreme poor in third world nations. We could get away with spending a lot less on entertainment and excess and more on guaranteeing human decency to everyone.
But when you start talking about using force of arms to force my own ideals on others and compel them to participate, that is well over a line. It would require the mutual desire and cooperation of everyone to try it.
Yes - they should have anticipated the dramatic changes in technology and economics and planned accordingly. Failure to do so means they deserve to die as penniless cripples.
There's a lot that can be done to lower the amount we spend on the elderly. Something like 50% of health care costs are spent on a small minority of the population in their last year or two of life.
Anecdotally, my grandmother who worked as a state nurse for about 15 years (which is less than I've worked now that I'm in my mid 30's) received a golden pension higher than the average salary in the US along with 100% free health insurance. In the last few years of her life she used probably a million dollars in health services - new hips, massive amounts of brand medication, ear specialists, eye specialists, and finally the last few weeks of life sustaining care in the hospital.
She did not die in poverty. In fact, for the last 30 years of her non-working life, she enjoyed better medical care and a standard of living far better than any of her grandkids who were paying for her.
Given the option would you agree to get a 100% exemption from paying taxes while your grandmother was alive on the condition she would receive non of those benefits?
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.
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.
>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.
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).
1. There is no evidence Boomers did not have enough income to put savings aside; rather, their years of prosperity, bubbles, and behaviors indicate they squandered or bilked each other out of large sums of money.
2. Historical interest rates are about 7% - at least that's the peg for most public pensions rate of growth, which is not unrealistic in a healthy US economy. The Baby Boomer population which did not save enough was tempted by higher returns in the equities or housing casinos, gambled, lost a great deal of whatever wealth they had in bubbles bursting, and now what? I should feel all happy that my government is going to lift the funds out of my pocket?
7% return is a goal. It consists of total (not real, inflation adjusted) returns from interest and dividends and capital appreciation.
"7% interest", i.e. amount paid back from money you borrow out, is pretty rare these days. CDs did pay >8% in the 80s and junk and troubled sovereign might still pay that much.
With lower inflation, some pension funds are targeting a lower return.
> Why did Boomers not have enough income to put savings aside?
Many of them did have enough income to put aside, but chose not to. My father is one of them. He was making 6 figures back in the 1980's when that was a lot of dough, yet he finds himself at 74 still having to work and living essentially paycheck to paycheck. I'm pretty sure he is not the only one like this.
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.
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.
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.
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?
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.
Yes, there are plenty of tropical countries with visa categories specifically for retired westerners. The requirements are often super-lenient (in Thailand you need to show a bank balance of $25,000 or $2,000 a month in income and you can stay as long as you want on a retiree visa).
> 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,
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.
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.
Healthcare spending is at least as broken as education: The US health care system is 50-100% more expensive per capita as comparable European systems, yet less capable. There's lots of savings potential here.
I'm not saying i believe it but the counterargument i've heard to this is that the US also funds the most medical research.
I havent seen anyone clearly explain how more expensive bandaids trickle down into the pockets of researchers, but nevertheless it is a common counterargument to the US spending much more than other countries on healthcare
Only $74bn short? That works out to $232/yr each, or an extra $20 per citizen per month.
That doesn't sound like all that much to spend to ensure Social Security stays available.
I think if you told people "we need to raise revenue through taxes 1.6% to ensure Social Security stays solvent for all working adults", most reasonable people would agree to that. At least, I would hope most people would think that's fairly reasonable.
They'll say "I don't trust the government to spend that money properly. Take $232/yr away from some entitlement program that services people who aren't directly related to me."
You have a gap of .1 tn (a hundred billion dollars) of spend over revenue, implying an annual deficit of that amount.
From what I read the Federal deficit was >$400 billion in 2015 and the majority of states and municipalities seem to run either at neutral or a slight deficit.
What am I missing here or how does the math work out?
In 2015 Federal spend was 3.8t and revenue was 3.2t, so there was a gap of -600bn there as you mentioned. States ran a surplus of 200bn and local ran a deficit of -400bn. Intergovernmental transfers amounted to 600bn. So the total deficit was -200bn (the top level numbers are rounded to one decimal place).
> Expenses increase for the working-age population.
This only happens when your tax policy is setup to fund welfare through the working poor. As an economy as a whole the US has doubled in inflation adjusted wealth in just over ten year (since 2003) and through a recession. It is obvious that the overhead of welfare has not in any way stymied US economic growth, which simply means if the tax burden of the elderly is too great upon the working poor then you are taxing the wrong source of income to fund your retirement program.
> 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.)
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.
> 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).
> The Federal Reserve is not on a "quest" to "raise interest rates and inflation", it is raising interests rates as a means to avoid deflation (or, phrased differently, to maintain, rather than raise, inflation.)
Raising interest rates generally lowers inflation. The Fed recently raised interest rates because it thought the danger of deflation had receded as inflation had begun to increase (though inflation remains below the 2% target.)
The consensus is that Social Security is fixable, mostly. You wouldn't need to pay too much more into it in some manner to make it sustainable. They may need to raise the age again, but since none of the hard decisions have to be made for 10-15 years down the line, no one is making them.
Healthcare is one of the bigger problems. Maybe the ACA will "bend the curve" enough to make it more sustainable. If not, then more cost cuts or higher wage taxes are the future for that. At least the issue is looking better now than it was 5-10 years ago.
None of these are as important as making sure we don't end up in some kind of $1-2Tn war or wreck the environment enough with global warming that we have major infrastructure and agriculture issues.
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.
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.
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.
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.
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.
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.
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.
To me it says a lot about our society if we can't take care of our elderly.
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