A coming retirement crisis? Are you worried?

[slash2k]

@Dag_Otto

Isn’t it odd that when the actuaries are working with with their employer’s best interest in mind, say in the case of an insurance company, they can do a pretty damn good job. But they don’t seem to do a good job when it it the employee’s pension at stake.

Actuaries working in property and casualty insurance are usually working with timeframes of just a couple of years, as casualty insurance contracts rarely last any longer than that. Actuaries working in pensions are working with timeframes of decades. The further out into the future you need to predict, the more uncertainty, and the greater the chance that being even slightly off will have compounded effects.

@Dag_Otto

Well, it would be odd if they used actuaries to manage pensions. I suspect that that are never used.

You suspect incorrectly. In the United States, almost all defined-benefit pension plans are legally required to have an enrolled actuary, under the Employee Retirement Income Security Act (ERISA) of 1974.

[Broomstick]

@Urbanredneck

One thing mentioned in the video was people retiring but staying in expensive places like New York City. I dont get why they dont downsize and move someplace cheaper.

Because, just as there are some people who hate living in the big city there are some people who don’t want to live in the country.

Other points people have brought up:

• being close to family/friends/support systems
• being close to needed medical care
• access to transportation when you can’t drive
• some services are more common in cities than rural areas

To which I will also add

• things to do

If you’re healthy and can drive living out in the sticks in a cheaper area might, in fact, be a viable choice. If you can no longer drive it means sitting at home until someone can give you a ride. If you can’t drive and the nearest place to buy food is 30 miles away you’re sort of screwed if no one can give you that ride. Grocery delivery is still more common in cities than rural areas. So are cabs, rideshare, and paratransit.

Then there’s the whole thing with medical care. Some elderly may be capable of living on their own but still need regular medical care to stay that healthy. In the city they have access to all that. In the rural area there may be fewer doctors to choose from, and greater distances to travel. Back when I was flying regularly I had buddies who spend their time (and money and airplanes) to fly rural residents to medical treatment in the big cities, another case of needing a ride to get somewhere you need to go.

Then there are maintenance issues - the further out you go, the more work you have to do around your residence. Now that I’m in my 50’s shoveling snow is a lot harder to cope with than it used to be, what will it be like in my 80’s? (some elderly can shovel snow, but they’re a distinct minority of them). There’s also maintenance stuff like lawn mowing and gutter cleaning. One reason for downsizing out of a house is so a person doesn’t have to do that anymore. Even worse if they can’t do that anymore - one way or another you’ll have to pay someone to do that for you.

On top of that - WTF are you going to do living in a rural area? If you’re retired you don’t have a job. Can’t drive and you can’t go anywhere. What are you going to do, sit at home and watch TV? That’s not healthy. Maybe the local church will have someone pick you up on Sundays and that will get you out of the house, but what if you’re not much for religion? Well, in that case you’re screwed in rural America anyway so far as I can tell - if you don’t go to church you’re ostracized and a non-person anyway. If you’re not Christian even worse.

Sure travel - but if you can afford to travel in retirement you could probably afford to live somewhere more in line with your needs.

Sure, sure, on line stuff - but internet availability and speeds are lower in the rural areas.

In a city, though, there are lots of events, social clubs, discounts for seniors going to museums, etc. Places non-drivers can get to and hang out for a social life. You can go to a corner store. Your internet is better whether for hanging out on messageboards or on-line shopping.

Why move someplace cheaper if there is nothing there but you sitting alone at home hoping someone will give you a ride to the grocery store tomorrow? Sure, staying in a city might be more expensive but at least you’re not a prisoner in your own home.

As noted - there are less expensive cities than New York or LA or Chicago that still have amenities for the aging. And I think quite a few seniors do move out of, say, actual Chicago to the less expensive suburbs, but someone from far away asks “where do you live?” they’ll probably say “Chicago” because who the hell has heard of St. John, Indiana?

[Urbanredneck]

@teela_brown

Yes, I’d like to live in the countryside when I retire, but I have to take into account the nearness of doctors, hospitals, and visiting nurses. Unfortunately, they’re pretty sparse in the remote, cheaper areas that I like best.

What I am seeing all over the midwest is they are opening retirement “communities” for the want of a better word. Basically they are like nursing homes and assisted living where they can live in a cheaper small town but have shuttles and access to go places they want. And there are the doctors and such who can monitor them.

[chappachula]

@Broomstick

Because, just as there are some people who hate living in the big city there are some people who don’t want to live in the country.

If you’re healthy and can drive living out in the sticks in a cheaper area might be a viable choice.

who the hell has heard of St. John, Indiana?

The choice isn’t between two extremes, either big city or else “in the sticks”.
No, I’ve never heard of St.John, Indiana.
But I have heard of Indianapolis, Indiana.
And Cincinnati, and Kansas City, and Louisville and Nashville and Peoria , IL
In these cities you can buy a nice little house for $100,000. Or rent a nice apartment for $600 per month. You won’t be in an upscale neighborhood, but you won’t be in the slums either. Check Zillow dot com.
And these cities all have supermarkets and hospitals, ya know, just like New York. They even have a symphony orchestra, art museum and local theater. (Not as good as Broadway, so yeah, you’ll have to suffer a bit. Life’s tough.)
And if you can’t drive, these cities have Uber, which is a lot more convenient than the subway when you’re 84 years old and carrying groceries.
(And you don’t have to step over a homeless guy.)

Moving to a cheaper city is a realistic option, which does not get mentioned often enough.

[Related subject, for a different thread:]
This strange concept(moving to a cheaper city, in flyover country) applies to the homeless, too. There was an article in the NYtimes just a few days ago about homeless camps in Los Angeles. They interviewed a Starbucks waitress who lost her job after the recent fires burned down half her town, so she moved to LA and is now homeless, living in an unused trailer and shitting in the street. She apparently never thought of moving somewhere other than LA. The cities I mentioned have cheap enough rents that a waitress can live a respectable life…It’s difficult, but better than being homeless.
[/hijack]

[Urbanredneck]

@Broomstick

Because, just as there are some people who hate living in the big city there are some people who don’t want to live in the country.

Other points people have brought up:

• being close to family/friends/support systems
• being close to needed medical care
• access to transportation when you can’t drive
• some services are more common in cities than rural areas

To which I will also add

• things to do

If you’re healthy and can drive living out in the sticks in a cheaper area might, in fact, be a viable choice. If you can no longer drive it means sitting at home until someone can give you a ride. If you can’t drive and the nearest place to buy food is 30 miles away you’re sort of screwed if no one can give you that ride. Grocery delivery is still more common in cities than rural areas. So are cabs, rideshare, and paratransit.

Then there’s the whole thing with medical care. Some elderly may be capable of living on their own but still need regular medical care to stay that healthy. In the city they have access to all that. In the rural area there may be fewer doctors to choose from, and greater distances to travel. Back when I was flying regularly I had buddies who spend their time (and money and airplanes) to fly rural residents to medical treatment in the big cities, another case of needing a ride to get somewhere you need to go.

Then there are maintenance issues - the further out you go, the more work you have to do around your residence. Now that I’m in my 50’s shoveling snow is a lot harder to cope with than it used to be, what will it be like in my 80’s? (some elderly can shovel snow, but they’re a distinct minority of them). There’s also maintenance stuff like lawn mowing and gutter cleaning. One reason for downsizing out of a house is so a person doesn’t have to do that anymore. Even worse if they can’t do that anymore - one way or another you’ll have to pay someone to do that for you.

On top of that - WTF are you going to do living in a rural area? If you’re retired you don’t have a job. Can’t drive and you can’t go anywhere. What are you going to do, sit at home and watch TV? That’s not healthy. Maybe the local church will have someone pick you up on Sundays and that will get you out of the house, but what if you’re not much for religion? Well, in that case you’re screwed in rural America anyway so far as I can tell - if you don’t go to church you’re ostracized and a non-person anyway. If you’re not Christian even worse.

Sure travel - but if you can afford to travel in retirement you could probably afford to live somewhere more in line with your needs.

Sure, sure, on line stuff - but internet availability and speeds are lower in the rural areas.

In a city, though, there are lots of events, social clubs, discounts for seniors going to museums, etc. Places non-drivers can get to and hang out for a social life. You can go to a corner store. Your internet is better whether for hanging out on messageboards or on-line shopping.

Why move someplace cheaper if there is nothing there but you sitting alone at home hoping someone will give you a ride to the grocery store tomorrow? Sure, staying in a city might be more expensive but at least you’re not a prisoner in your own home.

As noted - there are less expensive cities than New York or LA or Chicago that still have amenities for the aging. And I think quite a few seniors do move out of, say, actual Chicago to the less expensive suburbs, but someone from far away asks “where do you live?” they’ll probably say “Chicago” because who the hell has heard of St. John, Indiana?

Again, you would be surprised at the number and quality of senior living opportunities in small towns throughout the midwest. These have all kinds of opportunities for social events and hobbies.

HERE is an example of one place in Viborg SD. Its a combination of hospital and senior living.
I will grant you though that many people who have grown up in a place like NYC are pretty tied to their old neighborhoods and probably get pretty angry at the thought of moving to s cheaper place. However they really ought to look into some of these. I know at the Viborg facility there is a woman who was from Los Angeles.

[Ruken]

@Mallard

Either that or people will be working until they die which will make it more difficult for younger people to find jobs.

@Dallas_Jones

This is part of the real problem, and so am I. I have no required retirement age at my job, I can keep working as long as I want. And it is a mostly easy job. In two years I will be double-dipping, having reached my full retirement age, collecting my salary and social security at the same time. I only plan to do that for a couple of years but many people may decide that they cannot quit working in their old age.

There is the meme of “Boomer, get out of my way!” from young people who are not moving up as rapidly as they had hoped. And they sit in lower jobs that are being replaced with automation and changes in economy, and they rightfully resent people like me.

At some point it becomes a good idea to buy the older generation out. Make it attractive to no longer work. But the economy does not work that way. Every old person who does retire and get out of the way opens up his $42 per hour job that will be replaced by an eager younger person who gets paid $18.

No. You have fallen for the Lump of Labor Fallacy.

[monstro]

@chappachula

This strange concept(moving to a cheaper city, in flyover country) applies to the homeless, too. There was an article in the NYtimes just a few days ago about homeless camps in Los Angeles. They interviewed a Starbucks waitress who lost her job after the recent fires burned down half her town, so she moved to LA and is now homeless, living in an unused trailer and shitting in the street. She apparently never thought of moving somewhere other than LA. The cities I mentioned have cheap enough rents that a waitress can live a respectable life…It’s difficult, but better than being homeless.

Um…how do you know she didn’t consider moving to a cheaper place?

Moving isn’t cheap. Moving without having a job lined up is also very risky if you have no savings.

Most employers aren’t going to hire a person without a home address.

Here’s a tip: When you read a story like that, try to resist the reflex to blame the victim. I read the same story you did and was tempted to be Judgy McJudgerson just like you. But then I reminded myself that people usually have good reasons for their apparently stupid decisions. I’ve moved multiple times over the past twenty years because I’ve always had money in the bank. Even when I was a poor college student, I still had at least $1000 to fund my nomadic endeavors. Not everyone has that. And when you don’t have that, it means you’re either going to make the “stupid” decision to live on the street wherever you find yourself or you take the “stupid” risk to move somewhere else only to wind up living on the street there. It actually makes sense to be impoverished in a big city because at least you will not be alone and there are more resources for assistance and homeless.

Because that Starbucks lady chose to move to LA rather than Bumfuck, she’s received national attention that she wouldn’t have otherwise gotten.

[doreen]

@Urbanredneck

Again, you would be surprised at the number and quality of senior living opportunities in small towns throughout the midwest. These have all kinds of opportunities for social events and hobbies.

HERE is an example of one place in Viborg SD. Its a combination of hospital and senior living.

I will grant you though that many people who have grown up in a place like NYC are pretty tied to their old neighborhoods and probably get pretty angry at the thought of moving to s cheaper place. However they really ought to look into some of these. I know at the Viborg facility there is a woman who was from Los Angeles.

You seem to be talking about places on the continuum from “senior community” to “assisted living” to “nursing home” . Lots of people don’t need that kind of care. For example, take my 79 year old mother. She lives in NYC, and the only assistance she needs is transportation because she can no longer safely drive. She gets to the doctor and shopping and social events independently, when she wants to go, without waiting for a shuttle bus that may have schedule, distance or location restrictions. She lives in an apartment so she doesn’t need to worry about maintaining property or shoveling snow etc. Can she live like that in Viborg, SD? I mean, maybe she can - but it doesn’t seem like a big enough place to have a good public transportation system. And that’s leaving out the fact that her 4 children and 8 adult grandchildren all live either in NYC or within a 45 minute drive.

Sent from my iPhone using Tapatalk

[monstro]

I will also add that moving out of the big city as a member of a minority group is socially risky. You are more likely to find your subculture represented in a large city than a smaller one. And that is especially important if you intend to rely on community services.

Sent from my moto x4 using Tapatalk

[JcWoman]

@Urbanredneck

What I am seeing all over the midwest is they are opening retirement “communities” for the want of a better word. Basically they are like nursing homes and assisted living where they can live in a cheaper small town but have shuttles and access to go places they want. And there are the doctors and such who can monitor them.

I recently did a brief search for those in the Mid-Atlantic area for my mother in law who is pushing 90. (Brief because first she wanted it and then she dropped the idea, and it’s really up to her sons to follow through, not me.) I found quite a few, including several that sounded like places I’d love to live in. What made me leery, though, is that none of them had any price quotes on their website, nor even “call for pricing” statements. They did, however, have “call us for financing options” invitations. That makes me think they’re in the realm of “if you have to ask, you can’t afford it”.

[septimus]

@doreen

… but it doesn’t seem like a big enough place to have a good public transportation system.

I took a bus from Oakland (Airport?) to East Hayward once and was amazed what a horrid, slow and useless route it took. And that’s in a built-up metropolitan area. Outside of a few big cities, U.S. mass transit is useless.

@TriPolar

Did you make SS contributions? I didn’t for a long time since it wasn’t a requirement …

IRS informed me that my self-employed income (1099, Sched C) was all subject to SS tax AND that even my excludable foreign earned income was subject to SS tax! Based on others’ comments, that may have just been the view of one IRS agent … but I paid it. Did I cheat myself?

[Urbanredneck]

@monstro

I will also add that moving out of the big city as a member of a minority group is socially risky. You are more likely to find your subculture represented in a large city than a smaller one. And that is especially important if you intend to rely on community services.

Sent from my moto x4 using Tapatalk

I forgot to mention that the woman I mentioned above who moved to Viborg from LA, was black. Actually she was originally from New Orleans.

See I hear this often that people think that the midwest is full of racists and kkk and they are afraid that being a minority will be all bad when it might not be. Every year I go up there I am seeing more persons of color.

Now granted lets say your Italian and grew up in NYC’s Italian neighborhood where people spoke the language and their is a strong Italian culture, yes, you wont see that in South Dakota. Actually the old cultures are dying out as the kids dont speak the languages anymore. Even Viborg which prides itself on Danish culture, hardly has any Danish speakers anymore.

[Oredigger77]

@Wesley_Clark

You don’t have to live rural to live cheaply. In the midwest and the south medium sized cities and large cities (other than Chicago) tend to be fairly affordable. They have health care options.

Oh, I’m aware they’re more expensive then where my parents are now but they are relatively cheap. My parents are in a 6,000 sqft home on 10 acres that they paid 300k for. Even in cheap cities they can’t replicate that. Of course they can’t take care of it either. We’re currently trying to talk them into Denver or Anchorage so they’ve got a shot as survival past the next 10 years but they don’t want to live in a house where they can see their neighbors or have to have less than 6 bedrooms and two kitchens.

[Dag_Otto]

@slash2k

Actuaries working in property and casualty insurance are usually working with timeframes of just a couple of years, as casualty insurance contracts rarely last any longer than that. Actuaries working in pensions are working with timeframes of decades. The further out into the future you need to predict, the more uncertainty, and the greater the chance that being even slightly off will have compounded effects.

You suspect incorrectly. In the United States, almost all defined-benefit pension plans are legally required to have an enrolled actuary, under the Employee Retirement Income Security Act (ERISA) of 1974.

So, given that 1) pension plans do use actuaries, and 2) retirement plans need to plan for longer time-frames with more uncertainty, then it would seem that retirement plans would need to be more conservative than they are to ensure success. Yet retirement plans tend to be underfunded. Are these actuaries just really bad at what they do, or are they simply ignored? Does ERISA say that that they only have to have an actuary enrolled in some capacity (perhaps sorting mail or mopping floors) or does it say that they have a responsibility for the programs they work for?

Besides property and casualty insurance, insurance companies seem to do ok with life insurance and annuities, which certainly have timeframes exceeding a couple of years. I may be wrong again, but it seems that life insurance companies do better than pension plans working with longer timeframes.

[monstro]

@Urbanredneck

I forgot to mention that the woman I mentioned above who moved to Viborg from LA, was black. Actually she was originally from New Orleans.

See I hear this often that people think that the midwest is full of racists and kkk and they are afraid that being a minority will be all bad when it might not be. Every year I go up there I am seeing more persons of color.

Now granted lets say your Italian and grew up in NYC’s Italian neighborhood where people spoke the language and their is a strong Italian culture, yes, you wont see that in South Dakota. Actually the old cultures are dying out as the kids dont speak the languages anymore. Even Viborg which prides itself on Danish culture, hardly has any Danish speakers anymore.

What you are falling to appreciate is that “black” has its own subcultures and ethnicities. If you are, say, a Haitian American, it might really be important for you to live in a community with a critical mass of Haitian Americans.

My mother is an Afrocentric, social justice-oriented minister of an LGBT congregation. She has a solid community of like-minded folks in Atlanta. But she would be lonely in some other place–even if that place were 100% black and Christian.

Some people are generalists and can fit in anywhere despite sticking out like a sore thumb. But lots of people aren’t like this.

Sent from my moto x4 using Tapatalk

[Really_Not_All_That_Bright]

@Jonathan_Chance

Except it’s not, of course. Underfunded pensions can come about not through non-funding but by companies making optimistic assumptions about fund growth over time.

Say you’re an employer and you offer a pension. You have a pretty good idea that in 20 years time you’ll need $50,000 to fund it for whatever reason (work with me here).

Where you tell your CFO to set the predicted rate of growth can really have an impact.

If you put $10,000 in a fund and assume it’ll grow 5% annually it’ll end up at $26,532.98 in 20 years. You’ll need to invest more money to grow that $24,000. This can hit your bottom line and company growth.

If you put $10,000 in a fund and assume it’ll grow 10% annually it’ll end up at $67,274.99 in 20 years. Voila! Not only can you say on your annual report that the pension is fully funded by expectation but there’ll even be a surplus! You can CUT your investment savings and grow the bottom line THIS year! Bonuses and cocaine for everyone on the board!

And if it defaults or can’t meet it’s obligations? Two points:

1. It’ll be guaranteed by the Pension Benefit Guaranty Corporation so who cares?

2. It’s 20 years off. You’ll be retired and somewhere warm and sunny. So again, who cares?

Assholes.

Shouldn’t the Pension Benefit Guaranty Corporation being checking to see if the pensions it’s insuring are funded with nothing but hopes and dreams?

[TriPolar]

@septimus

IRS informed me that my self-employed income (1099, Sched C) was all subject to SS tax AND that even my excludable foreign earned income was subject to SS tax! Based on others’ comments, that may have just been the view of one IRS agent … but I paid it. Did I cheat myself?

I had a Subchapter S Corp. I never took a salary, I just collected the profits. No requirement to contribute to SS.

[Inigo_Montoya]

So many crises we’re meant to be worried about. Fuck it all. All of it, every last one. NO, Urbanredneck, I’m not worried about a coming retirement crisis, because I don’t believe one is coming. Ever since I was a little kid I’ve been told to be afraid of something–no more petroleum, Soviet nuclear warheads are going to fall like rain, Extra Strength Tylenol might have poison in it, Red Tide!, Ozone hole is going to give us all skin cancer, magnetic north pole is going to flip to south, climate’s changing, global financial depression is upon us–buy all the gold, 7 new crises every damned week if click-bait teasers are to be believed, the entire left coast of the USA is going to burn to a crisp and then fall into the ocean as freakishly monstrous coastal tornadoes whirl flesh-crazed sharks all around us, etc.

So… no. Goddammit, I’m tired of this crap even being on my radar. “Crisis” means nothing to me anymore. Well, that’s not true. “Crisis” means someone out there thinks I still have money to throw in their direction if they can scare me badly enough. The only “crisis” out there is that some billionaire is going to miss out on suckering me out of my pocket change because some other billionaire beat him to it, or that somewhere a lawyer might not get paid. (my cell phone just rang while I was typing this, no shit, “Scam Likely” was the caller ID).

[Urbanredneck]

@Inigo_Montoya

So many crises we’re meant to be worried about. Fuck it all. All of it, every last one. NO, Urbanredneck, I’m not worried about a coming retirement crisis, because I don’t believe one is coming. Ever since I was a little kid I’ve been told to be afraid of something–no more petroleum, Soviet nuclear warheads are going to fall like rain, Extra Strength Tylenol might have poison in it, Red Tide!, Ozone hole is going to give us all skin cancer, magnetic north pole is going to flip to south, climate’s changing, global financial depression is upon us–buy all the gold, 7 new crises every damned week if click-bait teasers are to be believed, the entire left coast of the USA is going to burn to a crisp and then fall into the ocean as freakishly monstrous coastal tornadoes whirl flesh-crazed sharks all around us, etc.

So… no. Goddammit, I’m tired of this crap even being on my radar. “Crisis” means nothing to me anymore. Well, that’s not true. “Crisis” means someone out there thinks I still have money to throw in their direction if they can scare me badly enough. The only “crisis” out there is that some billionaire is going to miss out on suckering me out of my pocket change because some other billionaire beat him to it, or that somewhere a lawyer might not get paid. (my cell phone just rang while I was typing this, no shit, “Scam Likely” was the caller ID).

That is an interesting viewpoint and really not that uncommon. Thanks for sharing.

[aruvqan]

@Urbanredneck

What I am seeing all over the midwest is they are opening retirement “communities” for the want of a better word. Basically they are like nursing homes and assisted living where they can live in a cheaper small town but have shuttles and access to go places they want. And there are the doctors and such who can monitor them.

A bunch of my on and offline friends were all discussing our impending move out to the ass end of nowhere [Dyer Nevada] and joked that because the land was so cheap, we should all go in together, get about 50 acres or so, and set up our own ‘retirement mobile home park’ called FennHafn [Fenn Haven, Fenn are fans of fantasy and science fiction] the requirement for residence being a part of our rather oddly inclusive and extended fennish community. It was pointed out we could save space by building a community club house that the ground floor was a gym [rehab and work out equipment] with the upper floor a single large media library - books, dvd, cd and art supplies so individuals didn’t have to worry about over cluttering their trailers. The overall discussion started when one of my friends who happens to be an upper 60s vintage author and her husband, who own a house in a large urban area in the Pacific NW were commiserating at the inability to find a lodger that in exchange for driving them to grocery shop once a week, to occasional doctor/medical appointments and an occasional movie night [like Star Wars opening] with light housekeeping they would get free room and board. [They have a 4 bedroom classic turn of the 1900s 4square]