I do not think “fixed income” ever meant “poor” as such, and certainly not someone living on welfare or social security benefits. As Shagnasty says, it was primarily about people living off annuities and the like (perhaps including living off the interest on a fixed principal, which might not be fixed, since interest rates may vary, but would not necessarily rise in line with inflation). If the annuity (or principal) is large, they might be very rich, but it might not be large.
As I recall it, the talk about people on “fixed incomes” was part of the concerted effort, in the 1970s when inflation was high, to persuade us that inflation was a very bad thing. It is comparable to the currently ongoing efforts to persuade us all that government deficits are very bad things, much worse than something that actually affects people’s lives, like a sluggish economy with low wages and high unemployment rates.:rolleyes: High inflation is a bad thing, of course, for the wealthy and for financial institutions (which are normally creditors). However, (unless you get into Zimbabwean style hyperinflation, which is not what anyone was really talking about) it is not necessarily all that bad for people living on wages or salaries (or, come to that, government benefits) so long as those rise, as part of the general inflation, more or less in line with costs (as, on the whole, was happening in the 1970s, albeit not without friction). Furthermore, for debtors, such as middle class homeowners with mortgages, inflation can be a positively good thing: the value of their debt steadily declines, while the value of their property (at least its monetary value) increases.
Thus, in order to get “ordinary people” on board with the idea that something must be done about inflation, they were presented, by the powers that be (and opinion makers owing their livelihood to the patronage of the wealthy or the financial institutions) with the specter of what a horrible effect inflation would have on some poor elderly person living on a small annuity. You workers are so wicked and selfish to threaten to strike unless your wages are increased in line with price inflation! Think what this inflation is doing to old people on “fixed incomes” who cannot go on strike for more. No doubt there were some people unable to earn and living on small annuities (or interest from relatively small investments) in the 1970s, but I doubt if there were very many; the idea of them was essentially a propaganda tool.
I think the term dates from the nineteenth/early twentieth century and originally referred to incomes which were actually fixed - as in, they absolutely did not vary.
There’s line in Price and Prejudice, in which Mr. Collins points out to Elizabeth benefit (as one of the reasons why she should marry him) that “one thousand pounds in the four per cents . . . is all you may ever be entitled to”, meaning that what she would inherit from her parents would be a nominal holding of a thousand pounds in perpetual government securities (“consols”) paying four per cent, meaning that her income would be forty pounds a year for life, regardless of how long she lived.
This came to be associated with poverty for two reasons.
First, perpetual fixed income securities were a very low-risk investment, and they were favoured by people who were very risk-averse, who tended to be people with little money to begin with. It was (comparatively) poor people who invested their wealth in securing a perpetual fixed income. The land, the bulk of the wealth, would be left to the eldest son. Younger sons could take up professions; daughters could seek to marry advantageously. The rest would inherit a modest capital, accumulated by their father out of the surplus income from the land during his life, and this would typically be invested in some safe security, very often consols. These people may not have been poor by the standards of the peasantry and the proletariat, but they lived much more straitened lives than their more fortunate siblings.
Secondly, it was a disastrous strategy during times of high inflation. There was galloping inflation in Britain during and in the years after the Great War, for example, and a great many unmarried ladies and dim youngers sons of genteel background who lived on fixed incomes found their real incomes reduced to a fraction of what they had been. It’s largely because of this that living off a genuinely fixed income has all but come to an end.
Neither wages nor government benefits nor social security are fixed in this sense. Wages can go up through career progression, or general economic prosperity; government benefits and socials security can (and do) rise for political reasons.
For the record, income is typically viewed as “earned” or “unearned”. Earned income means wages, tips, bonuses, farm/business earnings, that sort of thing. Unearned income includes (in the US): social security, disability, TANF, child support, alimony, cash gifts, interest, dividends, etc. Payments through government programs are very definitely income, but you may be thinking of income strictly in terms of earned income.
Sorry, I just don’t see it. If someone is unable to change careers, or to get an additional job the way you describe, it is because of his age, not because of the sort of income he is currently getting. Just one example: A policeman of any age is unable to ask his boss for a raise, but a second income as a security guard is feasible, no?
Because of age, disability or whatever else that qualifies that person for the fixed income. The same things which grant them that specific income make it impossible for those people to get another.
And md2000 used a cop with a second job as a specific example of someone who is NOT on a fixed income. You seem to have thought he was talking about cops as people on fixed income.
I’ve read lots of 19th century stories where rich people were described as being worth “ten thousand a year” or in other fixed income terms as well. I don’t think there’s anything prejudicial about it, other than the same modern meaning: if you’re on a fixed pension or allowance, you probably don’t have much room to pay for unexpected costs that might pop up.
Really? In what way does qualifying for Social Security because of age thereby make it impossible to get another income? Aren’t there lots of people out there on social security who also have additional jobs? In fact, aren’t we told that Social Security is NOT intended as retirement income, but merely as a supplement to such income? This is why I (like the OP) never understood describing such people as being on a fixed income.
No, my point was that - except for those who are permanently disabled - I can’t imagine anyone for whom a second job is impossible. An infirm 80-year-old might not be able to get additional income, but one who is somewhat healthy would not find it to be impossible. The salary might not be worth working for, but that’s not the point. The point is that being on some sort of retirement income does not necessarily mean that there’s no way to make additional income.
In many countries, holding a job makes you lose any and all retirement benefits: either you’re “an active worker” or you’re “retired”, you can’t be “in a second career (whether that’s supermarket bagger or high-flying consultant) while getting retirement benefits from a previous job”.
If you can modify your income, it’s not fixed. If you can’t, it’s fixed. Even in the US, many people who qualify for retirement benefits because of age would qualify for them because of infirmity, but “I’m 80yo” is instantaneous to prove, whereas “I’ve got a list of ailments and pains which makes holding any productive job impossible” would be a pain in the ass (to add to hip pain, knee pain, bad kidneys, etc.). What’s the hard part to understand?
I’ve always understood the term to mean an income that doesn’t change with inflation. So a person on a fixed income will slowly lose the ability to maintain their standard of living as inflation drives up costs. Things like annuities and some pension funds pay fixed dollar amounts and, I believe, early SS payouts did too. Those who got all their retirement from those are on a “fixed income” and you could expect to see them decline in wealth over the years. These days SS and government pensions are NOT fixed income. In fact, they get higher cost of living raises that federal employees.
I always looked at “fixed income” as meaning old folks who were on some sort of defined benefit plan or annuity, and therefore were unduly impacted by things like tax increases, etc…
The idea being that the pension plan wouldn’t necessarily include cost-of-living increases, etc… like SS does, so that if the govt. takes another $30 per month in taxes or fees, that’s $30 a month less that the person has to make do without permanently, and if they’re already hard-pressed as-is, then this may be a real hardship.
Basically what Shiftless said, but put a little differently.
A second job can impact the amount one receives from Social Security. I can’t remember the cutoff at the moment, but when your income reaches a certain point, your SS check starts becoming smaller (assuming your other income is being reported). In other words, you can’t take a $40K consulting job and receive full SS at the same time. I was supplementing SS at one point by working for the Census Bureau; not because I needed the money, but because I was bored. I’d forgotten what a pain in the ass the government is and quit doing it after a couple of months. The pay was low enough that it didn’t affect the SS check.
You’re right: SS is intended as a cushion, not as your sole means of support. That said, people don’t save like they used to. According to this article, a typical household (not single person) only has about $120K in IRAs at age 65 and only 42% have an actual pension income. That may sound like a lot, but it’s not nearly enough to survive another 20-30 years.
Also - not everyone at 70 is the sprightly old guy who walks 5 miles a day at a killer pace. Some people are lucky to make it to 65 and still hold a job. Some people may not be up to a significant part-time job, not because of any explicit serious disability but just general debilitation from old age. And… people in that situation may find it difficult to get hired even if they wanted to work themselvs into an early grave.
Yes, there are special exceptions - IIRC, some police forces require department approval if the cop wants to moonlight; but in general, a person NOT on a fixed income means they can readily do other things to change(!) their source of income, for better or worse.
A person on fixed income has very little such choice.
(A funny situation - my pension is not affected by whether I have a subsequent job, but I saw this situation. In fine corporate fashion the company I worked for laid off an load of headcount to cut costs, giving longer term employees nice pension arrangements. They subsequently retained one of these as a consultant, because he was VERY good at what he did. When they realized he was costing them twice as much, they asked him to come back on payroll. He declined, since that would mean lower pay and his pension arrangement would be reset as if he never left… I think he was laid off because he told his boss how stupid the guy was. This only proved his point. )
I knew that was true when collecting Unemployment Insurance, the logic being that if one has such a job, then he’s not totally unemployed. But I’m genuinely surprised that it applies to SS as well.
Yes, but that additional income doesn’t eliminate the social security benefit for quite a while-you lose $1 in benefits for every $2 earned over 14 thousand something dollars.It lowers the social security check, but the total income will never be lower due to working. And that’s only if you’re below full retirement age- after that,there’s no income limit. You might not want to take a job because the increase in income isn’t enough to be worth going to work, but that’s a different issue.
I’ve mostly heard “fixed income” to refer to retirees (not those on welfare or unemployment), and usually in such a way as to imply ( but not state) “poor”. Because you can’t really say “I’m poor” when you’re collecting a $60,000 pension plus social security plus making withdrawals from a deferred compensation plan. If it were used only to apply who truly cannot change their income (some those who are too infirm to work) it would be different, but the way it’s used now makes no sense. My mother’s on a “fixed income” because she gets social security although there’s no reason she couldn’t get a part-time job if she wanted to , but I’m not on a “fixed income” (although I haven’t gotten a raise since 2008) because just like my mother, I can get a part-time job if I want to.
on preview- md2000, your example is almost exactly what I’m talking about. He’s collecting his pension and the same company hires him back as a consultant. He’s in no way on a fixed income- his skills must make it relatively easy to find work if the company he retired from is willing to hire him as a consultant at twice the cost. But normally when I hear the term “fixed income” , he would be included simply because he receives a pension/Social Security.
It’s the same logic. If there weren’t any earning limits, then younger (and more) people could do what some of my coworkers do- collect their full social security benefit while continuing to work full time at the same well-paying job. They’re not retired in any sense of the word, and the only effect on their social security benefit is that some of it is taxable.
But typically ten thousand a year wouldn’t represent a fixed income; it would be somebody’s estimate of the rent roll of an estate owned by the person on question. Nobody with a fortune of two hundred and fifty thousand pounds invested it in the four per cents.
Landed wealth was often quantified in terms of the rent roll rather than the capital value of the land, mainly because the landowner often couldn’t sell the land, either because it was entailed to his heir or because it was simply unthinkable to alienate the family estate. But in this context ten thousand a year is not a fixed income, because rents could and did go up (and down) according to the prosperity of the agricultural markets. Furthermore the rental value of land could be increased by improving the land, or by developments such as the growth of towns, the construction of railways, etc. So good management and/or good fortune could raise your income.
The OP was using “fixed income” as a euphism for “on the dole / on pogey / on welfare”. The sad case is that the majority of people on fixed incomes are likely seniors who worked all their life to limited reward, and this is what they have to look forward to.
The other case is of course welfare families,usually single mothers. Again, their income is limited and until the kids are old enough to not need daycare, the mother’s options may be limited if she never had good career prospects to begin with. Note in this case, any part-time income or child support are deducted from her welfare payments, thus she really cannot get ahead.
Some fixed income people - retired members of parliament, retired generals, retired top management, etc. are on a very good income - but usually these types have had sufficeint money that they have significant investments above and beyond their pension, and so are NOT really fixed income, they have plenty of investment income.
“Fixed income” is usually shorthand for people who have limited options and are royally screwed if prices start to rise.
When my husband and I were working we got paid every two weeks. Sometimes we could work overtime.
On Social Security you get a check once a month. Which means that every 2-3 months there’s a 5th week included in the month. Anybody else familiar with the dreaded 5th week? You know it’s coming…you try to plan for it…
Sometimes you can.
That, to me, is what a fixed income means.