what happens to baby boomers who didn't save for retirement?

[TopHatFox]

I guess they just try to scrape by on SS or live with their kids if they have that option?

Or maybe many of them go homeless or die soon after hitting retirement age?

Or perhaps they simply don't retire and work until death?

Or get bailed out by more govt debt?

[tonyedgecombe]

I read recently most expect to work until they are eighty. As average life expectancy in the US is 78 it won't be as bad as they think.

[jacob]

Try calculating the expected payout: https://www.ssa.gov/pubs/EN-05-10070.pdf ... Note that if you're married but didn't have much of an income or any income of your own but you're married, you have the option of claiming 50% of your spouse's benefit instead of whatever you'd get under your own numbers. Should the spouse die first, the survivor can claim 100% of the dead spouse's benefits instead of their own. BTW, this is one fairly good reason to get married. If you're cohabitating with someone else instead but not earning an income, best look for other arrangements.

You can reverse engineer the computation to see that people will hardly be scraping by. If your average income has been $1000/month, then SS will be ~$900/month. The payout is highly progressive, so those who will be cutting down the most will be higher income people. If you make over $926/month, you'll see a 68% drop in payouts from that breakpoint for each average dollar earned whereas below it's only a 10% drop. The next breakpoint is at $5583 where you'll see a 85% drop. IOW, Social Security is emphasis on Security and putting a floor under you... not intended as a party-plan.

Note: The calculation is inflation adjusted and normalized to 2018 dollars.

So insofar SS will still be around, the problems will be experienced by those who spend $1000+/month/person and are still paying off debt. They will now be forced to pay for excess lifestyles of the past by cutting consumables just as their working incomes drops by a lot. Perhaps by living with their kids. Otherwise $900/month/person is hardly destitute. No one will go homeless although some might go bankrupt. Think a 2bd/1ba apartment with basic cable and activities at the Y with transportation provided once a day by a short bus with a lift... for the last years of your life. That only sucks if your expectations were set on annual vacation packages, driving a Lincoln with comfortable fat-ass seats, and seasonal football passes.

Obviously, w/o savings, there's no money for fancy/heroic medical treatments. However, various Medi* entitlements will cover a lot but they will not cover all. Here it's a difference between whether you die on "first class", "business class", or "coach". If you have money, you could buy a new knee or other titanium inserts. If you're poor, you get homecare and painkillers.

Many presume they will keep working. The longer SS can be delayed the higher the payout. However, some will be too worn down or comprised [by bad lifestyle habits] to work even in their 50s. This idea of everybody working into their 70s or 80s ... that will not hold for everybody. Probably only a few. Doesn't matter that the mind is willing if the body is not. (This also presumes someone willing to hire.)

TL;DR - No one will be destitute but many will be in for a rude awakening when they suddenly have to live below their means (as of course they should have been doing all along.)

[Scott 2]

This is an interesting calculator, since it lets you estimate not working as of X date, but not yet drawing upon social security:

https://www.ssa.gov/OACT/quickcalc/index.html

Using my current pay, if I retire today, my benefit is 1,334 at 62.

That number, coupled with Medicare, could be used to justify a much more aggressive ERE strategy. I can live well on $16k a year, especially with only needing to pay for a med-supp insurance plan. Covering my expenses between now and then is much cheaper than covering them from now to an unexpected extremely old age.

I always debate how heavily to weight social security in my planning.

[jacob]

An aggressive strategy for the first breakpoint (at $926):

It'll take 10 years (40 quarters) to qualify. However, to get the result $833 payout (90%), you need to have made 420 (the number of months in 35 years) times $926 = $388920 total. Spread over 10 years, that's $38892/year on average.

Lets save ~75% of that so 25k/year while living on 8k/year. That gives 250k in savings. The Trinity study is now very appropriate. After FIREing at age 32, you can draw 4%*250=$10000/year for 30 years or $833/month. Then you're 62 yo. You can now get 72.5%*833=603/month from SS or wait until 67 (presuming you're not in the worst or worse than worst case Monte Carlo period) and get 833/month.

The fact that those 833 payouts are the same is coincidental.

[George the original one]

My sister is scraping by even though no one in their right mind would hire her even if she were willing to work. She hasn't been willing to work since 2007, when her then-boyfriend convinced her that enrolling in college using student loans & living off government handouts would lead to a better life than working... she maintained a fairly nice student life until she graduated with a Masters and there were no more loans available. The boyfriend was booted out after about 3 years and no replacements have popped up.

She began collecting SS as soon as she turned 63. I don't know if she filed on her ex-husband's SS or her own. Ex-husband nicely sends her money. She also collects food assistance and Medi-whatever. She's now 66, residing in a leaky, smelly, cluttered firetrap of a trailer (5th wheel RV trailer, not mobile home) in a trailer park where the other residents are similar. There's hot & cold water, a working electric refrigerator, but the stove and heating system are propane which she refuses to change tanks because that is too much work, so she overloads the electrical system with electric heaters. The current park manager assists her with unclogging the toilet, repairing broken entrance steps, and attempting to plug roof leaks. The previous manager did the same, but was fired when he went to jail for meth.

Though she owns the trailer outright (bought sight unseen for $12k in this condition!!!), she is hoping to get into government housing. On Oregon's health plan, she's had a hip replacement when turning 63 and is looking for another soon. Dental work usually consists of pulling teeth.

She owns a car bought new in 2012 with inheritance money. I don't know if she's paying state-required liability insurance on it. The car only gets service when something essential breaks and is likely not going to last much longer (cracked windshield, various dents). The car is essential because she chose that trailer which is not within her walking distance of anything "because that was what she could afford". She owes student loan money of an unknown amount that apparently isn't forgiveable, so she's making a monthly payment on it.

[The Old Man]

The Future Financial Status of the Social Security Program
https://www.ssa.gov/policy/docs/ssb/v70 ... 3p111.html
"...continuing taxes are expected to be enough to pay 76 percent of scheduled benefits..."

Social Security will continue, but is likely to be changed in some fashion. In its current form it is not sustainable.

[TopHatFox]

That...kind of sucks. A lot. To have a direct blood relative be in such bad shape medically and financially.

[Laura Ingalls]

Some will be bailed out their Greatest gen or silent gen parents.

Of the people of boomer age people I’m related too:
4 are self-employed
9 working jobs
7 retired
1 disabled
2 dead

They are a pretty diverse group. Two of the employed people have younger Xer spouses and kids at home. Interestingly both of the dead people where super savers.

[EdithKeeler]

My mom lives on social security of $1800 a month (qualified based on my dad’s contributions), plus $100 a month pension. She’d actually be in pretty good shape if she’d paid off her house before retiring.

DBF lives on SS plus income from rentals, which he mostly banks.living on SS is doable if you live in a low-cost area... and have a good supplemental health insurance policy.

[The Old Man]

The biggest problem is not financial, but declining physical and mental health.

[EdithKeeler]

The biggest problem is not financial, but declining physical and mental health.

True.

I had a friend who was a saver, and another friend wasn’t.

The non-saver would always say: “you know the difference between us? About 6 months to a year in assisted living.”

There’s an element of truth to that, I think. I have an elderly friend who moved into a very upscale facility with her husband. My mom, if she has to go into one, will likely end up in a not very nice one. They’ll both be watching TV and taking pills—the biggest difference will probably be the quality of the food..

I’m personally convinced it’s just not worth getting old if you can’t take care of yourself.

[Clarice]

If you have money, you could buy a new knee or other titanium inserts. If you're poor, you get homecare and painkillers.

Well, that may be the case in the future, but right now, at least in California, you can get all the inserts you want on MediCal (insurance for the poor). You also can get Home Health Services - a physical therapist and an occupational will come to your house - or you can find exactly the same exercises online. Home care usually means a person who comes and does your shopping, laundry, cooking, and cleaning because you are incapacitated. These services are more scarce at the government's expense because people want them, but actual caregivers/government money to pay for them are hard to come by. In any case, you'll be pummeled with painkillers. You'll be talked into using them. Also hard to come by are the long-term care beds in nursing homes. Nursing homes want more lucrative short-term patients and the government wants to talk people into going to boarding care. Boarding care in California is a bed in a house where an old Filipino couple will care for an old person and call 911 when he falls and breaks his leg. I assume other states have similar arrangements.

[EdithKeeler]

However, various Medi* entitlements will cover a lot but they will not cover all. Here it's a difference between whether you die on "first class", "business class", or "coach". If you have money, you could buy a new knee or other titanium inserts. If you're poor, you get homecare and painkillers.

Medicare covers knee and hip replacements.

[classical_Liberal]

https://www.ssa.gov/OACT/quickcalc/index.html
Using my current pay, if I retire today, my benefit is 1,334 at 62.

Be careful with the calculators provided by SS. They all make some assumptions wrt past earnings, future earnings, or at which age you will draw benefits. Since ERE folks will probably be nowhere near the normal assumptions, it's very easy to miscalculate your benefit. The only way to accurately calculate your benefit amount is using the formula here. SS updates this annually with new index factors (Inflation) annually.

---------
Don't forget medicare part B, Et al. There are quite a few ways to very quickly lower benefit amount for basic services like outpatient healthcare coverage in part B. So the 77% figure being thrown around is probably not quite low enough once other deductions are in play.

Still, in 2019 the average SS benefit will be $1466. Even if that were to drop to 77% it's still about $1125- $150 for part B medicare = $975 month estimate. With a paid off home, and two or more people in household this is very doable, sans expensive rx medications.

On that note. Living with others, even if not coupled, becomes increasingly more important for independence as people age anyway, think physical and mental limitation onset. Cohabitation with someone(s) should be in everyone's plan after age 70. It will greatly reduce the risk/increase the age in which someone must use assisted living-type services. Plus, it reduces the psychological stress of isolation in the elderly. All of this on top of the standard financial benefits. IMO, 70+ year old living alone is, both in health and financial terms, akin to a broke/unhealthy person who chooses to smoke cigarettes. It just makes the situation worse in multiple realms.

[Scott 2]

Be careful with the calculators provided by SS. They all make some assumptions wrt past earnings, future earnings, or at which age you will draw benefits. Since ERE folks will probably be nowhere near the normal assumptions, it's very easy to miscalculate your benefit.

Good advice. Two years ago I got a benefits summary with the actual numbers. They worked out to $1100 a month. For my planning purposes, I currently assume 50% of that value. I don't think SS will ever go away, but it could definitely change.

[thegreatvoid]

I’m personally convinced it’s just not worth getting old if you can’t take care of yourself.

I´m with the Epicureans on this one. When physical pain gets so intense, that it can not be balanced out by pleasure, I´m out !

[chicago81]

Try calculating the expected payout: https://www.ssa.gov/pubs/EN-05-10070.pdf ... Note that if you're married but didn't have much of an income or any income of your own but you're married, you have the option of claiming 50% of your spouse's benefit instead of whatever you'd get under your own numbers. Should the spouse die first, the survivor can claim 100% of the dead spouse's benefits instead of their own. BTW, this is one fairly good reason to get married. If you're cohabitating with someone else instead but not earning an income, best look for other arrangements.

Wow. I'm embarrassed to admit that I didn't know this. From your comment and from Googling, it sounds like my spouse will be able to collect 50% of my benefit amount, while I am collecting 100% of my benefit at the same time? Even if my spouse never worked (or never reached "40 quarters".) Game Changer for me and the planning in my spreadsheets!

[George the original one]

That...kind of sucks. A lot. To have a direct blood relative be in such bad shape medically and financially.

Yes. She specifically chose this direction in life over a decade ago against the advice of family when there was still a chance to avoid this fate… now she has to live with that choice. At least she's not an addict or criminal.

I got an email from her yesterday saying she's enrolling in training to become a Hospice volunteer.

[FRx]

Mom didn't have enough work credits to get SS but was able to get SSI which is around $850 in California. She gets Medicare as well. She and pops are still married, he gets SS at around $930/month. They both lived lavishly during their working years and relied on their primary residence to be their nest egg which didn't work out.

Mom took a while to adjust to living on so little but she's doing fine. Dad went all in and decided to live out of his car. Both are happier now than they were working full-time.