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John Waggoner: MyRAs No Need To Be Hater Over Savings Plan
"Currently, 23% of married couples and about 46% of unmarried people rely on Social Security for 90% or more of their income."
That's frightening. Especially the number for the singles. I suspect most of these folks have no idea what real 10, 15 or 20% inflation (compounded annually) would do to their "standard" of living. Regards
From the article: "The average monthly Social Security payout for retired workers is $1,269."
I don't know whether this is gross or net; but likely the person has also signed for Medicare, which will pull $100/month out of the SS payment. Also, a supplemental insurance plan may be needed to cover what Medicare doesn't cover in costs. This cost could be in the range of $100-$200/month depending upon the plan.
Lastly, a prescription drug program, with these plans having a variety of what is or is not covered. The most inexpensive for the most part is through WalMart/Humana with a monthly cost of $22; which will not cover all drugs and also has a plan deductible for the first $325 of drug costs annually. Medicaid may help here, too.
So, person "x" (single household) receives:
$15,228/year (this number assumes the $100/month Medicare fee is already pulled - 1,500 --- supplemental ins. coverage at $125/month - 264 --- prescription drug insurance at $22/month - 325 --- drug ins. deductible _________ $13,139 net annual or $1,095/month
$11,939 net annual if Medicare needs to be deducted or $995/month (no dental plan)
'Course the $1,095 to $995/month needs to go shelter, food, utility bills, auto?, home or renters insurance, auto insurance, property taxes and whatever else one chooses to include that will nickel and dime this money...... a home phone, basic cable tv, etc.
Reply to @cman: John Waggoner is one of the best financial writers around, and a friend of MFO who looks at our site on regular bases. On several occasions over the years he has taken ideas he's read at FundAlarm and MFO and woven them into a column. Regards, Ted.
Reply to @scott: It's higher than the figures provided.
"Government" to the Census Bureau appears to mean "federal" - all of the programs listed look like federal programs (though some, like Medicaid and unemployment insurance, are state/federal). This seems to be confirmed in this Washington Post blog. (That's a good article, citing both CBPP and Tax Foundation, showing how the assistance is spread across the population.)
So add in state-only programs.
Then there are education/training programs (head start, special ed, student loan/grant programs, job training programs, etc.), disaster relief (Katrina, Sandy, etc.), Section 8 housing, and on and on.
And since data reported is past data, we must remember to include the latest sizable addition to the list of government assistance programs - subsidies for health care (ACA).
I don't know how some people make ends meet (I was always amazed at how my grandmother lived with low SS payments and small savings).
There are programs that help, especially with the necessities you allude to. Medicaid rather than, or in addition to Medicare, lifeline phone service, rent control, etc.
Costs also vary greatly by geography. Here's an AARP article (copied on the Fidelity site), giving ten places to retire on $30K/year. On the other hand, Brooklyn NY made a list last year as the second most expensive "city" to live in (after Manhattan, apparently another "city"), yet the median household income there is below the national average. So there's more going on than just raw numbers.
Comments
That's frightening. Especially the number for the singles. I suspect most of these folks have no idea what real 10, 15 or 20% inflation (compounded annually) would do to their "standard" of living. Regards
http://www.census.gov/how/infographics/government_benefits.html
About 50% is high, but not as high as I'd expected.
I completely agree with your comments.
I don't know whether this is gross or net; but likely the person has also signed for Medicare, which will pull $100/month out of the SS payment.
Also, a supplemental insurance plan may be needed to cover what Medicare doesn't cover in costs. This cost could be in the range of $100-$200/month depending upon the plan.
Lastly, a prescription drug program, with these plans having a variety of what is or is not covered. The most inexpensive for the most part is through WalMart/Humana with a monthly cost of $22; which will not cover all drugs and also has a plan deductible for the first $325 of drug costs annually. Medicaid may help here, too.
So, person "x" (single household) receives:
$15,228/year (this number assumes the $100/month Medicare fee is already pulled
- 1,500 --- supplemental ins. coverage at $125/month
- 264 --- prescription drug insurance at $22/month
- 325 --- drug ins. deductible
_________
$13,139 net annual or $1,095/month
$11,939 net annual if Medicare needs to be deducted or $995/month (no dental plan)
'Course the $1,095 to $995/month needs to go shelter, food, utility bills, auto?, home or renters insurance, auto insurance, property taxes and whatever else one chooses to include that will nickel and dime this money...... a home phone, basic cable tv, etc.
Take care of you and yours,
Catch
Regards,
Ted.
"Government" to the Census Bureau appears to mean "federal" - all of the programs listed look like federal programs (though some, like Medicaid and unemployment insurance, are state/federal). This seems to be confirmed in this Washington Post blog. (That's a good article, citing both CBPP and Tax Foundation, showing how the assistance is spread across the population.)
So add in state-only programs.
Then there are education/training programs (head start, special ed, student loan/grant programs, job training programs, etc.), disaster relief (Katrina, Sandy, etc.), Section 8 housing, and on and on.
Let's not forget refundable tax credits, like child tax and earned income credits.
And since data reported is past data, we must remember to include the latest sizable addition to the list of government assistance programs - subsidies for health care (ACA).
A pretty good list of all the categories (and from there, many government programs) can be found here: http://www.benefits.gov/benefits/browse-by-category/
There are programs that help, especially with the necessities you allude to. Medicaid rather than, or in addition to Medicare, lifeline phone service, rent control, etc.
Costs also vary greatly by geography. Here's an AARP article (copied on the Fidelity site), giving ten places to retire on $30K/year. On the other hand, Brooklyn NY made a list last year as the second most expensive "city" to live in (after Manhattan, apparently another "city"), yet the median household income there is below the national average. So there's more going on than just raw numbers.