Retire Your Way Of Thinking

The Associated Press takes a look at retirement for those of us not in the top 1%.

Many boomers expect to work the rest of their lives because they have little cash put away for their old age and they worry Social Security won't cover their bills. Some hope to move to jobs that are less physically demanding. 

The share of U.S. workers who are 55 and older is expected to continue growing, according to the "The Oxford Handbook of Retirement 2013." The group comprised 12.4 percent of the workforce in 1998. The share jumped to 18.1 percent in 2008 and is expected to be almost 25 percent by 2018. 

The book is edited by Mo Wang, co-director of the Human Resource Research Center at the University of Florida's Warrington College of Business Administration. In an interview, Wang said it's a misconception that lower-wage workers are slackers in preparing for retirement.
"People don't have adequate earnings," Wang told The Associated Press. "It's not because they don't want to save. It's because they just can't." 

Many people don't save enough for their own retirement because they lack financial literacy skills, Wang said. Also, he said it can be incorrect to assume that people with lower incomes have more financial concerns than people with higher incomes. Psychologically, the important thing is the ratio of life earnings to wealth - how much money a person earns in a life span, compared to how much of it she gets to keep. 

"Whether they have the 401(k) is not the decisive factor in influencing how well they live," Wang said. "Whether they have their own house is a big factor."

The reality of most Boomers working until they die is here, now.  For my generation it'll be far worse.  Nobody my age, in their thirties or younger, believes we will ever see a dime of Social Security or Medicare, only that we'll be paying in payroll taxes on what we earn for 50+ years and get nothing in return. These are not "entitlements".  These are programs we will pay into all our adult lives that are being plundered by the wealthy.

The biggest single change we must make is to eliminate the cap on earnings taxed for Social Security.  If you earn more than $117,000 in 2014, you don't pay any Social Security taxes on income above that.  Not a single dime.

It's the definition of a regressive tax.  Our system would remain solvent for decades with this change.  But it won't happen for the same reason Social Security is a mess now:  Boomers vote, the rest of us don't give a damn.

That will only become more true as the years progress.