<p>"At the end of 2011, according to the Census Bureau’s Survey of Income and Program Participation, the typical American household had just $67,000 in net worth (assets minus debts). That’s the median; half of households had more, and half had less. Excluding the equity in homes, the median net worth was just $15,000.</p>
<p>People beginning retirement had more personal wealth but not that much more — certainly not enough to maintain a middle-class standard of living for more than a year or two. The median household headed by someone 65 to 69 had $171,000 in personal wealth and just $43,000 excluding home equity.</p>
<p>Such families would be destitute without social wealth in the form of Social Security, Medicare and their defined-benefit pensions. The present discounted value of their lifetime Social Security benefits was about $315,000 (according to James Poterba, Steven Venti and David Wise), and the value of their lifetime Medicare benefits was about $190,000 (according to Eugene Steuerle and Caleb Quakenbush). About half of these families also had a defined-benefit pension, worth, on average, $140,000."</p>
<p>So the value of the benefits total $315k+$190k = $505k (or half a million). And the median (or average) worker paid in how much over the past ~30 years of working? </p>
<p>(Run sustainable calculations on a back of a napkin…)</p>
<p>What was the discount rate used to get those values?</p>
<p>How much did the average person pay for these programs?</p>
<p>What rate of return was used on money paid into SS and Medicare?</p>
<p>We have other savings and retirement programs. How much have people saved for retirement? All this tax deferred or tax advantages retirement programs and people have saved what?</p>
<p>Not very much, is it?</p>
<p>People don’t save enough.
How about mandatory savings accounts instead of SS and Medicare?
Well… Private insurance for 70 year olds would be cost prohibitive.
Without all the tax breaks…private insurance is barely affordable now.</p>
<p>How about mandatory savings just for retirement accounts?
The financial industry would love it. The fees would be gigantic.
Jack Bogle says investors who invest in mutual funds take 100 percent of the risk and the upside over time is a little over 30 percent. </p>
<p>Jack Bogle is one if the few people I respect in the financial industry. Those numbers look pretty crummy to me.</p>
<p>I have done a few investments where I take the risk and share the upside. Most of those investments stink. </p>
<p>Anyway, SS and Medicare grew because people are very imperfect and these programs are better than what was there before… Which was nothing…</p>
<p>Maybe most people don’t but there are a lot of Asian folks where saving 1/3rd of your income is common. That savings doesn’t include SS, Medicare, etc. </p>
<p>Part of the problem is with what the Fed has done with interest rates so that pension funds and individual savers don’t have a risk-free option that provides a decent return. Instead, we’re bailing out the banks and the companies that have turned into banks.</p>
<p>We have the numbers on how much people save. </p>
<p>Obviously there are people that do save enough. You do.</p>
<p>But as a whole, society comes up short when it comes to retirement savings.</p>
<p>The amount people have saved throughout their lives is pretty low.</p>
<p>The SS and Medicare numbers help, they are pretty low too.
I would hate to think I would have to rely on SS to live, but there are millions that do…</p>
<p>BCEagle91, you have talked about living in a different country during retirement.
I was talking to a woman yesterday and she said people could live on their SS in Mexico.</p>
<p>Another way to read the figures is to say this: People with half as much in asset value are paying for the retirements of those who on average have over twice as much.</p>
<p>Younger people, whose net asset value is $67,000. are paying the Social Security for a group that has over twice as much in personal net wealth.</p>
<p>TatinG, younger people are going to increase their assets over time. Older people are going to spend down their assets.</p>
<p>Older people need more assets than younger people. Older people are going to need their assets. Older people don’t have enough assets to live on in retirement. Young people can work. </p>
<p>There is a nice show on Frontline about retirement. BCEagle91 Posted a link in the investment thread. </p>
<p>All I’m saying is that the wealthiest age bracket in this country, even before Social Security and Medicare are the elderly. This is not really new information.</p>
<p>In the future as there are fewer and fewer and poorer young people to support more and more and relatively wealthier old people, those young people are going to get resentful and changes to Social Security are bound to come.</p>
<p>Actually we know many, many people in their 80s and 90s as well as some over 100. It’s pretty awful to live in poverty, especially when you age and need increasing amounts of help and medical care.</p>
<p>People see numbers but they don’t understand the numbers. </p>
<p>The see some retired elderly person who is 65…lol, with 200,000 in assets and they see some young person with 20,000 in assets and they think the young person is in trouble. After all 200,000 is more than 20,000, right? </p>
<p>Well… Without SS and Medicare that person with 200,000 better not live that long. Lol</p>
<p>Well by the numbers, a person who will get NO SS will be worse off if SS and Medicare are the two major sources of assets. I know many who won’t get SS but will get a lifetime pension and surviving spouse will get a smaller pension. </p>
<p>It is alarming how little many have managed to save, especially when they have jobs not likely to be available as they age and bodies tire and/or they are laid off or downsized. </p>
<p>Saving well and investing prudently seems a crucial life skill, regardless of what the government does or doesn’t provide. As we’ve seen in CC, resources offer choices to people.</p>