Cat food retirement plans

One of my local papers, Raleigh's News & Observer carried two stories on tapped out seniors.

With all our apocalypse-in-progress and post-apocalyptic novel reviews, we tend to focus on the end of everything.  But our economy is suffering through an enormous amount of one-at-a-time collapses.

The stories overlap a little, but we will start with the income side first.

Forced to Early Social Security, Unemployed Pay a Steep Price

Motoko Rich, New York Times, 9 June 2012

Even as most Americans are delaying retirement to bolster their savings accounts, the recession and its protracted aftermath have forced many older people who are out of work to draw Social Security much earlier than they had planned.

According to an analysis by Steve Goss, chief actuary for the Social Security Administration, about 200,000 more people filed initial claims in 2009 and 2010 than the agency had predicted before the recession and he said the trend most likely continued in 2011 and 2012, though that is harder to quantify. The most likely reason is joblessness…

Drawing Social Security early has repercussions that will be hard to overcome… Those who collect early get 20 to 30 percent less a month than they would get if they waited until full retirement age, which varies by year of birth.

According to an analysis by Richard W. Johnson, director of the retirement policy program at the Urban Institute, 37 percent of older workers who lost their jobs between 2008 and 2011 and did not return to work ended up claiming Social Security as soon as they turned 62.

So right off the bat, many older workers are headed into employment with a much more restricted income stream than they might expect.  Of course stories about the difficulties of the 55+  crowd finding work go back to the 1990s.

But we also have a bottom line problem in our country.  We haven't been living within our means at almost any level since... Well I don't know, sometime before the Vietnam War.  So that curtailed income is colliding with a lot of debt.

Seniors struggle under growing debt load

Hanah Cho, Baltimore Sun, 9 June 2012 (via Charlotte Observe)By Hanah Cho

From 1992 to 2007, the percentage of households of people in their mid-50s and older with housing and consumer debt rose from 53.8 percent to 63 percent, according to the Washington-based Employee Benefit Research Institute’s [EBRI] research using government data. The problem is even more acute for those 55 to 64, with 81.7 percent carrying debt.

In the same period, the average overall debt for these 55-and-older households more than doubled, to $70,370, according to EBRI.

Some older consumers also are saddled with credit card debt. Among Americans 65 and older, for instance, the average amount of credit card debt rose to $10,235 in 2008 from $8,138 three years earlier, the largest percentage increase among all age groups, according to a survey by Demos, a New York-based public policy institute.

Moreover, other older Americans are haunted by student loans years after they, or their children, left school. Adults 50 and older owe 17 percent of the nation’s $870 billion [now over $1 trillion] in student-loan debt, according to a report in March by the Federal Reserve Bank of New York.

Of course you know the Baby Boomers just love being called "Seniors."

It is obvious that some people could have done a better job planning.  No doubt about it.  But before we get too busy casting stones, it should be remembered that the wages of the blue collar works have -in inflation adjusted terms - stagnated since the mid-1970s.

So intermixed with all the discussions of how to plan for the end of the world scenarios, there needs to be a greater emphasis on just staying on the road until we get to the end: either our own personal end, or the great final dead end.  Living in mobile home with six other seniors as roommates, eating cat food, while you ponder over all the cool equipment you used to own, is not a great endgame strategy.  I did the roommate thing as an adult when money was tight, it boggles my mind to think of doing it at 65+.