# Explain "retirement" to me **URL:** \ **Category:** In My Humble Opinion\ **Created:** [December 3, 2024, 3:25pm UTC](https://boards.straightdope.com/t/explain-retirement-to-me/1011120 "2024-12-03T15:25:00Z")\ **Posts on this page:** 20\ **Page:** 7
**Author:** ![Jasmine](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/jasmine/32/2964_2.png) [@Jasmine](https://boards.straightdope.com/u/Jasmine)\ **Post date:** [December 18, 2024, 1:00pm UTC](https://boards.straightdope.com/t/explain-retirement-to-me/1011120/121 "2024-12-18T13:00:46Z")
> [@Reply](#): > > How did retirement use to work (or maybe still does, if you’re lucky enough to have a middle-class job and lived a more financially sound life than I did)? Luck actually plays a minimal part in your situation. Your life style, which you have chosen and followed for your entire adult life, has created a scenario where you probably have paid a minimal amount into social security. Couple that with the fact that you have no IRA or other retirement fund, you have no personal savings, and you have no pension. This is not “new”. People in your situation have always existed and, if they don’t have an extended family that can or will shelter them, they usually end up in second of third rate facilities that take whatever social security they get every month in exchange for a roof over their head and minimal care. Your medicare comes out of whatever social security you receive, but the supplemental plan you need for meds is an added cost. I strongly suggest that you become extremely proactive financially NOW, otherwise you face a bleak future. ---
**Author:** ![doreen](https://avatars.discourse-cdn.com/v4/letter/d/858c86/32.png) [@doreen](https://boards.straightdope.com/u/doreen)\ **Post date:** [December 18, 2024, 1:22pm UTC](https://boards.straightdope.com/t/explain-retirement-to-me/1011120/122 "2024-12-18T13:22:11Z")
> [@OldOlds](#): > > It may be the case that the benefit wouldn’t be enough to be worth it, but as long as the earnings on the money taken in don’t exceed the benefits paid out, it could be done. You can’t possibly know that in advance, not with a fixed, guaranteed benefit that’s worth bothering. You can try to predict but again, someone will have to make up the shortfall - or else the guarantee will be so low that few people will join . > [@OldOlds](#): > > I acknowledge that guaranteeing the money would be a challenge. But again, if State Farm can get reinsurance for when the Big One hits, it seems like a plan like this would be able to get a similar coverage. I’m sure it would be possible - the question is what entity would be willing to take on that responsibility and why? > [@OldOlds](#): > > I’m not aware of annuities providing health coverage (but maybe some do?) Plenty of pensions don’t provide healthcare - maybe most. In fact, although I have healthcare coverage in retirement, it doesn’t come from my pension. I have one of those pensions in which multiple employers participate and my former employer provides healthcare while most of the others don’t. My husband was constantly being told by his co-workers that I wouldn’t have insurance when I retired- because their spouses were in the same pension but their former employers don’t provide coverage. > [@OldOlds](#): > > Anyway, even if it doesn’t work I don’t think it’s an absurd idea. It’s not an absurd Idea - it’s just that what you seem to be describing is SS and Medicare with some tweaks and really, that’s the only way to do what you are talking about - have a single program on a national basis with almost mandatory participation. ---
**Author:** ![Munch](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/munch/32/5281_2.png) [@Munch](https://boards.straightdope.com/u/Munch)\ **Post date:** [December 18, 2024, 1:27pm UTC](https://boards.straightdope.com/t/explain-retirement-to-me/1011120/123 "2024-12-18T13:27:27Z")
> [@OldOlds](#): > > but I would think that a professional manager should be able to do the math Local and state governments are some of the last hold outs offering pensions. They expend massive amounts of resources to “do the math”, and still manage to fuck it up every now and then. AND they have the safety net of being able to tax the citizenry to make up for losses. ---
**Author:** ![puzzlegal](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puzzlegal/32/3827_2.png) [@puzzlegal](https://boards.straightdope.com/u/puzzlegal)\ **Post date:** [December 18, 2024, 1:43pm UTC](https://boards.straightdope.com/t/explain-retirement-to-me/1011120/124 "2024-12-18T13:43:37Z")
> [@doreen](#): > > Or it could be an insurance product - in which case, I’m pretty sure it’s available already in a slightly different form ( an annuity) Yes, you can buy an annuity from a life insurance company. ---
**Author:** ![We\_re\_wolves\_not\_werewolves](https://avatars.discourse-cdn.com/v4/letter/w/838e76/32.png) [@We\_re\_wolves\_not\_werewolves](https://boards.straightdope.com/u/We_re_wolves_not_werewolves)\ **Post date:** [December 18, 2024, 1:44pm UTC](https://boards.straightdope.com/t/explain-retirement-to-me/1011120/125 "2024-12-18T13:44:34Z")
> [@Voyager](#): > > I agree we need more education early in life about saving, but I don’t think you need to be a rocket scientist to figure out that you should. Yeah, I mean, part of this is personal responsibility too. Yes, it would be great if schools taught personal finance, if everyone’s parents passed down the importance of saving for retirement, and if jobs did a better job educating new employees regarding 401k basics. But regardless, there are tons of resources out there to learn, and young adults entering the workforce are doing themselves a disservice if they do not take the time to learn this stuff. The details get complicated, but at it’s heart the basic idea is that you need to save for retirement. If you spend an hour or two a week reading and learning the basics, you will have a solid grasp of the fundamentals in a month or two. I don’t have a lot of patience for those saying they “don’t understand this stuff.” Spend some time so you DO understand it, it’s kinda important! ---
**Author:** ![CoolHandCox](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/coolhandcox/32/16233_2.png) [@CoolHandCox](https://boards.straightdope.com/u/CoolHandCox)\ **Post date:** [December 18, 2024, 1:56pm UTC](https://boards.straightdope.com/t/explain-retirement-to-me/1011120/126 "2024-12-18T13:56:13Z")
This is basically describing Social Security and Medicare. ---
**Author:** ![Reply](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/reply/32/15952_2.png) [@Reply](https://boards.straightdope.com/u/Reply)\ **Post date:** [December 18, 2024, 2:37pm UTC](https://boards.straightdope.com/t/explain-retirement-to-me/1011120/127 "2024-12-18T14:37:49Z")
So now I’m curious. What do other countries (especially developed ones with healthcare) do about retirement? Are the elderly there likewise expected to have been financially literate and wealthy enough early in life, or they’re just screwed? What about, especially, the collectivist countries that place a heavy emphasis on family and the elderly? * * * Edit: From a cursory search, looks like many have some sort of [public pension fund](https://en.wikipedia.org/wiki/Pension_fund#Largest_pension_funds) combined with mandatory employee savings, and also encourage outside investment. Interesting. ---
**Author:** ![doreen](https://avatars.discourse-cdn.com/v4/letter/d/858c86/32.png) [@doreen](https://boards.straightdope.com/u/doreen)\ **Post date:** [December 18, 2024, 3:16pm UTC](https://boards.straightdope.com/t/explain-retirement-to-me/1011120/128 "2024-12-18T15:16:26Z")
About those “public pension funds” - remember that the Social Security trust fund fits that definition. Also, I haven’t looked up every single country’s government pension - but for the ones I did look up, the average payment is generally not all that much more than the average SS benefit of $22K for a retiree and sometimes it’s much less so it seems that most people in most countries will need additional funds, whether it is some sort of pension from an employer, or mandatory savings or voluntary savings. As far as cultures that rely on family , from what I have seen (regarding people I know from such cultures) it doesn’t involve cash. That is, children will “take care” of their elderly parents but not by giving them cash to pay their bills so they can live on their own. It either involves having the parent move in with the child or the child providing physical assistance (cooking , cleaning, shopping etc) to a parent who lives nearby so that the parent doesn’t need to move to an assisted living type facility ( which may not even exist in those countries) > [@Reply](#): > > Are the elderly there likewise expected to have been financially literate and wealthy enough early in life, or they’re just screwed? I think you are kind of hung up on this - it doesn’t take financial literacy to figure out that you need an income if you ever want to stop working and just by following the news it should be clear that SS usually isn’t enough. And that’s assuming you’ve never heard anyone in your life complaining about how little it is. And it doesn’t take being wealthy to save _something_ - my son, who is now 34 has been saving for retirement for 10 years, starting when he earned $26K. I’m not at all saying it’s your fault you didn’t know to do this- but it’s not unreasonable for “society” to expect adults to figure this out. Especially a society where lot so f people would like to eliminate SS in favor or individual voluntary savings. ---
**Author:** ![Reply](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/reply/32/15952_2.png) [@Reply](https://boards.straightdope.com/u/Reply)\ **Post date:** [December 18, 2024, 3:45pm UTC](https://boards.straightdope.com/t/explain-retirement-to-me/1011120/129 "2024-12-18T15:45:48Z")
> [@doreen](#): > > the average payment is generally not all that much more than the average SS benefit of $22K That’s a good way to think about it. The OECD has some data on this: [https://www.oecd.org/en/publications/pensions-at-a-glance-2023\_678055dd-en/full-report/component-16.html#indicator-d1e22867-c4d7ba937f](https://www.oecd.org/en/publications/pensions-at-a-glance-2023_678055dd-en/full-report/component-16.html#indicator-d1e22867-c4d7ba937f) Averaged across OECD countries, generally people earning 1x the mean income (for their country) can expect 50% of their wages in mandatory retirement. Those earning half the average wage can expect a little more (65% of their wages), while the wealthier (2x mean) can expect less (42%). Presumably, if this is a mean wage and not median, in reality the actual poor (far below 0.5x mean wages) are a lot worse off… Denmark seems especially generous in this regard, providing 117% of working wages for its poorer people (as in, they’ll have _more_ money in retirement than while working). It’s an [interesting, multi-pillar system](https://en.wikipedia.org/wiki/Pensions_in_Denmark) that provides a universal basic income of about $24k/year USD max, a mandatory job pension that’s usually 2/3rd paid by employers, along with individual and collective-bargaining supplements. (It’s not clear to me how these collective agreements were negotiated, whether through unions or government oversight or some other sort of collective, sector-based employer-employee bargaining). ---
**Author:** ![Reply](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/reply/32/15952_2.png) [@Reply](https://boards.straightdope.com/u/Reply)\ **Post date:** [December 18, 2024, 3:57pm UTC](https://boards.straightdope.com/t/explain-retirement-to-me/1011120/130 "2024-12-18T15:57:09Z")
> [@doreen](#): > > I think you are kind of hung up on this - it doesn’t take financial literacy to figure out that you need an income if you ever want to stop working and just by following the news it should be clear that SS usually isn’t enough. Oops, just saw this part (think you edited your post?). I’m not really asking for myself (anymore); this thread has taught me a lot, and I’ll start putting money away as soon as my job situation stabilizes. I’m not trying to be defensive about the situation; after all, I did start this thread and was upfront about my own financial illiteracy 🙂 I’m mostly just curious about how societies, in general, handle this problem, especially given the population pyramids in some societies (fewer kids making it harder for them to fund eldercare). It’s interesting to think about, especially since I learned (from this thread) that as a concept, “retirement” itself has only been around for a few decades. > but it’s not unreasonable for “society” to expect adults to figure this out. What’s interesting to me, at the population level, is that I _think_ this means we’re trading “most people can retire, but future generations have to work to subsidize previous generations’ retirements” for “we will no longer burden future workforces with shared retirement debt, and whether an individual can retire depends on their own savings”. I guess the older models depended on infinite population and wealth growth? Seems like many of the systems were set up in those booming post-war years and could not be sustained indefinitely. I’m also curious as to how less-capitalized countries (China, etc.) plan on handling this, especially the gap between their poorer and wealthier citizens. ---
**Author:** ![Reply](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/reply/32/15952_2.png) [@Reply](https://boards.straightdope.com/u/Reply)\ **Post date:** [December 18, 2024, 4:03pm UTC](https://boards.straightdope.com/t/explain-retirement-to-me/1011120/131 "2024-12-18T16:03:35Z")
One more adjacent thought: I wonder if part of retirement planning for someone like me (starting late, low to median wages) might also include a plan to retire elsewhere, in a more affordable country. That might mean investigating residency & citizenship requirements abroad and planning a few decades ahead of time. $500k in retirement savings, for example, might not be a whole lot in the US, but could perhaps buy residency and a good life elsewhere? ---
**Author:** ![Crafter\_Man](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/crafter_man/32/458_2.png) [@Crafter\_Man](https://boards.straightdope.com/u/Crafter_Man)\ **Post date:** [December 18, 2024, 4:20pm UTC](https://boards.straightdope.com/t/explain-retirement-to-me/1011120/132 "2024-12-18T16:20:19Z")
> [@msmith537](#): > > I think if you grow up with parents who are broke or flakey with money or have weird leftist beliefs that money is evil or whatever, or have so much money they don’t really have a concept of it , that can make it difficult to learn good fiscal habits. Yea, a lot of it has to do with your upbringing & culture. I have a friend who just turned 60. About 20 years ago I asked him if he was contributing to his 401K at work. He said, “Absolutely not! The stock market is a gamble, and you can lose all your money!” I don’t think any amount of “education” would have convinced him otherwise. Today he and his wife are planning to “retire” in a couple years, with no assets, almost no savings, and no retirement funds. I am not sure what their plan is. They bought a trailer a few years ago, and a couple months ago they purchased a small plot of land in a rural area of Kentucky. They’re both in poor health. I think their plan is to live on social security, drink, and smoke pot until they die. ---
**Author:** ![snowthx](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/snowthx/32/10660_2.png) [@snowthx](https://boards.straightdope.com/u/snowthx)\ **Post date:** [December 18, 2024, 4:33pm UTC](https://boards.straightdope.com/t/explain-retirement-to-me/1011120/133 "2024-12-18T16:33:50Z")
> [@Reply](#): > > What’s interesting to me, at the population level, is that I _think_ this means we’re trading “most people can retire, but future generations have to work to subsidize previous generations’ retirements” for “we will no longer burden future workforces with shared retirement debt, and whether an individual can retire depends on their own savings”. Keep in mind systems like our Social Security were initially meant to prevent old people from dying on the streets: > **[History of Social Security in the United States](https://en.wikipedia.org/wiki/History_of_Social_Security_in_the_United_States)** > > A limited form of the Social Security program began as a measure to implement "social insurance" during the Great Depression of the 1930s, when poverty rates among senior citizens exceeded 50 percent. > The Social Security Act was enacted August 14, 1935 (89 years ago) (1935-08-14). The Act was drafted during President Franklin D. Roosevelt's first term by the President's Committee on Economic Security, under Frances Perkins, and passed by Congress as part of the New Deal. The Act was an attempt t... _The Act was an attempt to limit what were seen as dangers in the modern American life, including old age, poverty, unemployment, and the burdens of widows and fatherless children._ It was meant as a safety net because back then, people _were_ dying in the streets. We have largely prevented that sort of thing happening for the most part, and today workers have accepted paying into this system so they, and we as a society, do not have to confront that kind of poverty any more. ---
**Author:** ![MrAtoz](https://avatars.discourse-cdn.com/v4/letter/m/45deac/32.png) [@MrAtoz](https://boards.straightdope.com/u/MrAtoz)\ **Post date:** [December 18, 2024, 4:34pm UTC](https://boards.straightdope.com/t/explain-retirement-to-me/1011120/134 "2024-12-18T16:34:26Z")
My parents were absolutely terrified of the stock market. But given their ages, you can understand why. They were both children during the Great Depression. Their earliest memories were of people who had good jobs and plenty of security, suddenly losing those jobs and that security, and having to live in the streets. And what caused it? This mysterious thing called “the stock market.” Is it any wonder they thought it was dangerous? To a lesser extent, you can see the same attitudes in people who were ready to retire when an economic downturn came along that greatly reduced the value of their retirement accounts, just when they needed them. A bad experience in the market can make people cynical about it. ---
**Author:** ![doreen](https://avatars.discourse-cdn.com/v4/letter/d/858c86/32.png) [@doreen](https://boards.straightdope.com/u/doreen)\ **Post date:** [December 18, 2024, 4:35pm UTC](https://boards.straightdope.com/t/explain-retirement-to-me/1011120/135 "2024-12-18T16:35:12Z")
I know someone who is not much different. He has some retirement savings, only because a prior employer put some papers in front of him and told him to sign. His “retirement” plan was to buy a trailer and put it on his brother’s property in Florida and get a job ( how that’s “retirement” is beyond me). Which is now out of the question because the brother is selling the property and moving to an apartment. What’s really bizzare is that it has zero to do with his upbringing - there were 5 brothers and 4 of them ended up with pensions and savings and houses. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [December 18, 2024, 4:37pm UTC](https://boards.straightdope.com/t/explain-retirement-to-me/1011120/136 "2024-12-18T16:37:15Z")
> [@Crafter\_Man](#): > > I have a friend who just turned 60. About 20 years ago I asked him if he was contributing to his 401K at work. He said, “Absolutely not! The stock market is a gamble, and you can lose all your money!” I have a co-worker who thinks that about the stock market so instead he’s been buying land. I believe he lives in Utah so perhaps he will do OK with those investments. ---
**Author:** ![filmore](https://avatars.discourse-cdn.com/v4/letter/f/7993a0/32.png) [@filmore](https://boards.straightdope.com/u/filmore)\ **Post date:** [December 18, 2024, 4:37pm UTC](https://boards.straightdope.com/t/explain-retirement-to-me/1011120/137 "2024-12-18T16:37:17Z")
> [@Reply](#): > > $500k in retirement savings, for example, might not be a whole lot in the US, but could perhaps buy residency and a good life elsewhere? Yes, some people do move to other countries. There are large, ex-pat communities of US retirees in countries like Mexico, Honduras, and Costa Rica. It sounds like it can be an enjoyable retirement for people who are okay with that lifestyle change. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [December 18, 2024, 4:38pm UTC](https://boards.straightdope.com/t/explain-retirement-to-me/1011120/138 "2024-12-18T16:38:16Z")
A big stumbling block to overseas retirement is access to healthcare. I don’t think Medicare pays for treatment outside the US. ---
**Author:** ![doreen](https://avatars.discourse-cdn.com/v4/letter/d/858c86/32.png) [@doreen](https://boards.straightdope.com/u/doreen)\ **Post date:** [December 18, 2024, 4:43pm UTC](https://boards.straightdope.com/t/explain-retirement-to-me/1011120/139 "2024-12-18T16:43:42Z")
> [@Reply](#): > > What’s interesting to me, at the population level, is that I _think_ this means we’re trading “most people can retire, but future generations have to work to subsidize previous generations’ retirements” for “we will no longer burden future workforces with shared retirement debt, and whether an individual can retire depends on their own savings”. I’m not sure it was ever “most people can afford to retire” for any length of time. A few decades maybe - but if what you mean by “retirement” is living a decent life independently without working and without having any other assets, that wasn’t common for very long if at all. I’m trying to think back and I can’t think of anyone I know who actually retired and lived independently with no assets, no savings, no income other than Social Security. Not even my grandparents and their siblings who retired in the 60s and 70s. Not even my great-grandparents who either managed to own houses or ended up living with their children. ---
**Author:** ![Tamerlane](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tamerlane/32/7602_2.png) [@Tamerlane](https://boards.straightdope.com/u/Tamerlane)\ **Post date:** [December 18, 2024, 5:28pm UTC](https://boards.straightdope.com/t/explain-retirement-to-me/1011120/140 "2024-12-18T17:28:23Z")
> [@doreen](#): > > I’m trying to think back and I can’t think of anyone I know who actually retired and lived independently with no assets, no savings, no income other than Social Security. My mother did (unlike my father and step-mother, she didn’t have a pension or IRAs, just a tiny bit of saved cash in a CD) and in a relatively pricey area to boot. Well, sorta. But she worked until she was 70 to get the maximum benefit, was legitimately as poor as a church mouse and was only able to make it work at all because beyond being insanely frugal, she had medical issues that allowed her to get a subsidized [Section 8](https://en.wikipedia.org/wiki/Section_8_(housing)) apartment. I also paid her phone bills and bought her what appliances and electronics she’d tolerate me buying for her. It wasn’t exactly high living, but it was an existence. Since she absolutely refused to pony up for extra medical insurance beyond the free Medicare A (and refused even to let me pay for it for her), that plus doctor avoidance got her in the end. But allowing for all the subsidized hedges above, she did live an independent lifestyle. Plenty of people do survive on SS - it’s certainly more workable in lower cost of living areas. As noted as a program it has been massively successful in keeping the elderly housed and fed compared to yesteryear. But, yeah - generally not exactly a retired life of endless golf and lunches at little cafes. [Previous page](https://boards.straightdope.com/t/explain-retirement-to-me/1011120.md?page=6) [Next page](https://boards.straightdope.com/t/explain-retirement-to-me/1011120.md?page=8)