The topic that was discussed this Tuesday has a direct impact on every student in the class no matter what age, race or SES he or she is. Even though young people tend not to think about aging, retirement is inescapable and those who plan ahead spend the last decades of their lives financially secure, the question is how well modern youth saves. From my other class I have learned that the US actually has a negative saving rate now which means that Americans spend more than they make. When I first came to the US I was amazed how much people loved shopping and going out, I have never eaten out while growing up; my mother would always make home-made meals because it was cheaper, but here in the US the market encourages consumers to buy the latest technology and to try new products. Moreover the sales encourage Americans to buy things that they do not necessarily need right now but they purchase them anyways because they are cheap. In Russia there are almost no sales and even when there is a sign “sale” it usually means that the salespeople just increased the old price tags and put a fake sale tag to create an illusion that you buy something cheaper. It was interesting to hear in the class that some students are already thinking about the future and saving their money. From my point of view Russians do save money more than Americans, but at the same time we do not put money in the banks because of the lack of trust in the financial institutions, which has a constant negative impact on our economy. Moreover Russian standard of living and the wage level are much lower than American ones. Also it is much harder for low income families to save money because they need to survive and meet the basic needs of the family, while middle class workers can easily save money by not buying luxuries. Starbucks coffee obsession in the US is a total mystery for me, but people my age spend hundreds of dollars a month on these unnecessary products and then complain that they have a zero balance.
Today the elder Americans rely heavily on Social Security, but originally when the program was passed it was never intended to be the ONLY income for elder people. From Policy and Programs in Gerontology class, I have learned that social security was planned as only one leg of a three-legged stool: social security, private pension programs, and money individual saves over the course of life. According to the Social Security Administration (http://www.adap.net/socialsecurity/The%20Future%20of%20Social%20Security.pdf) for 20% of elder Americans social security constitutes 100% of their income, for 33% of elders – 90% or more, for 65% of elders – 50% or more. Therefore if people do not start saving and investing money, and keep relying only on social security there is a high chance that by 2042 social security trust fund will be exhausted because of the changing demographics. Since there is an increase in aging population, the number of workers per beneficiary is declining, for example, in 1960 – 5.1 workers per beneficiary, in 2003 – 3.3 workers, and in 2011 – 2.1 workers. Statistics show that 79 million “baby boomers” already started retiring in 2008, and in about 30 years, there will be nearly twice as many older Americans as there are today. If we do not make changes in social security in the future it would not be able to meet its financial obligations.
One of the main proposals is to increase the retirement age for the full social security benefit since Americans live longer. Today the full retirement age is 66, it used to be 65, and people who were born after 1960 would retire at the age of 67. In Russia retirement age is much lower than in most European countries and constitutes 55 years for women and 60 for men. The retirement age depends on the life expectancy and differs from country to country. Since the average life expectancy for Russian men is about 63 years, raising the retirement age would mean that many of them would not live until the retirement. Another important factor that should be taken into consideration when discussing the raise of the retirement age is the SES because it largely defines the longevity of life. Access to high quality medicine, good nutrition, ability to pay for the sport activities are the major reasons of the increased longevity of life in the US, but people who are poor or live below poverty level do not have these opportunities. I do not think that the statement “Americans live longer now” is true for ALL people. If we increase the age of retirement it will affect people from all socio-economic classes but would have an especially negative effect on lower class families.
Questions for the class:
1) Do you consider Social Security as your ONLY income after retirement?
2) Do you agree that the retirement age should be increased?
3) What effect (if any) would the changes in Social Security have on the poorest American citizens?
Here is the link to the "Future of Social Security' report:
ReplyDeletehttp://www.adap.net/socialsecurity/The%20Future%20of%20Social%20Security.pdf
There is absolutely no way that I consider social security my only means f income after I retire. I have already invested into a Roth IRA and have savings accounts structured for long term growth. The problem with people in America is that they believe it is the governments responsibility to care for them when they grow old. Retirement is not something that sneaks up on you. Your entire life you are aware of the looming need to create a supplemental income after retiring to live off of. American citizens need to reverse the negative savings index that is plagueing our country and begin saving at least 10% of their annual income towards retirement, on top of other standard savings they should be performing.
ReplyDeleteI feel that because of the social security and Medicare systems breaking down there is a need to increase the retirement age. I believe the retirement age has already been raised to 67 and I think it is possible it will be raised to 69 within two years as the Obama administration comes under more pressure to quickly fix the problem, which is not a quick fix what so ever.
I am sorry, Devin, but i do not agree with your idea of retirement age raise. Just because people are living longer it does NOT mean they are living healthier. Moreover, the raise of the retirement age would affect the poor and low-wage workers the most, because they are the most disadvantaged ones when it comes to health care and the access to all the medical innovations. Just because affluent people are living longer and healthier does not mean that poor workers (especially those performing hard labor, for example construction work) are enjoying the same life expectancy!
ReplyDeleteI agree with you, Polina. Raising the age of retirement is not a good idea. People don't work because they want to, people work because they need to. It is true that people are living longer today, however, as you age you become more dependent and needy whether you are in good health or not. Your ability to perform at work decreases, there are job positions that require more standing, lifting, longer work hours, labor etc and those employers want someone younger and fit for that position, not someone in their later years. Those who have worked till their retirement age are owed what is rightfully theirs at the time allotted. They have paid into the system for years. If the shoe was on the other foot and you felt you were healthy and at retirement age and they raised the retirement age, how would you feel?
ReplyDeleteCertain jobs definitely require more physical strength and health than others, for instance a job of a construction worker is much more physical than a job of a clerk or a lawyer. From my point of view the raise of the age for everyone will make the situation even worse and would put the low-wage workers in a disadvantage position. May be we can raise the retirement age for certain professions, but this is an open question.
ReplyDelete