4/27/2011 1:06 PM ET|
Strapped seniors trying to hang on
Rising prices and static incomes are hitting older Americans hard, forcing further cutbacks in already-frugal lifestyles.
Imogene Goss likes to walk around a lake that is six or seven miles from her home in Kansas City, Mo. It's less hilly than her suburban neighborhood, with no cars to navigate around.
But when Goss, 80, a retired postmaster, calculated that driving to the lake was costing her $5 a week, she brought her exercise routine back home. With gas flirting with $4 per gallon, she also is careful to group her errands. "I have learned very careful driving habits in the last few years," she says.
Rising prices for food, gasoline and health care are hitting older Americans hard. The last cost-of-living increase for Social Security recipients and federal retirees was in 2009, and retirees on fixed incomes are seeking ways to economize as prices of essential goods rise while their incomes remain static.
"Seniors are finding it harder and harder to get by with just their retirements," said Melissa R. Tribelhorn, who works in Seattle for the nonprofit Senior Services, which connects older people with services ranging from transportation to legal aid. "We're seeing a pretty large influx of clients needing our services where a year ago they wouldn't have needed us."
Twenty-three percent of people 65 and older live in households that depend on Social Security for 90% or more of their income, according to a 2010 AARP report (.pdf file). About 26% more receive at least half of their family income from Social Security. Among women, 53% of those 65 and older depend on Social Security for more than half of their income.
An increase in the amount that retirees contribute toward Medicare premiums is likely to wipe out next year's Social Security cost-of-living increase for most recipients.
Retirees also are coping with investment losses and, in some areas, reductions of 50% or more in the value of their homes. That ends their plans to sell the big family home, buy a smaller retirement home and add the rest of the profit to retirement nest eggs. Some won't see the lost equity come back in their lifetimes.
While the standard advice to those who have lost retirement savings is to work longer, many older people who would like to work can't get jobs. The unemployment rate for men 62 and older rose from 3.3% in 2007 to 7.3% in 2010, according to research from the Urban Land Institute. The rate for women 62 and older rose to 6%, double the rate in 2007. Rather than working longer, some older people have been forced to retire early.
The cost of staying healthy
Although all Americans 65 or over are eligible for Medicare, all but the poorest pay a premium that comes out of their Social Security. Basic Medicare doesn't cover expenses such as dental care and prescription drugs, and policies that cover those gaps cost extra.
Bettye Guillory of Federal Way, Wash., near Seattle, has managed to live to 98 so far in relatively good health. To stay healthy, she spends $89.85 every other month on vitamins and supplements such as glucosamine for joint health. She can't afford those vitamins without help from her daughters, who are old enough to retire though both still work.
Guillory's sole income is $1,354 a month from Social Security. Of that, she pays $1,105 a month for room and board in an adult family home (Medicare pays the rest) and about $185 a month for health insurance. That leaves her less than $65 a month for other expenses.
"Everything goes up," she says. "The Social Security used to give me a little more every year."
With less than $65 a month to spend, she can't buy the fresh fruits and vegetables, real orange juice, green tea and organic eggs she'd like to have to supplement the food that's served at her retirement home.
"I'd like to have healthy food to eat," Guillory says. "They give you food that's not really all that healthy. . . . They use the eggs that come in boxes instead of real eggs."
VIDEO ON MSN MONEY
Congratulations you went around to interview a bunch of people who were not smart enough to save money.
Now lets think back 20 or 30 or even 40 years ago when these same people (who are poor now) were enjoying life and spending money and living for the moment (in the 60s or 70s). They probably had neighbors who sacrificed by putting off a vacation in order to put aside a little in a retirement account. These frugal savers are doing fine. The have money to buy food and eat well. They have their houses paid off (you know no mortgage and no credit card debt).
These savers are responsible people who do not make exciting news material for journalists however they are true heroes in our society. If you do the math, taking advantage of compound interests over 20 or 30 years means saving even a little explodes to huge fortunes after many years. These frugal people gave up having the new cars many years ago while the poor seniors in this article spent all their money on the new car.
Now the people who were not responsible want to cry and get sympathy from everyone else. All I ask is that you don't cherry pick and only report on the ones who are hurting. Don't ignore the responsible ones. There are many millionaire seniors out there who made it all themselves. Give some credit to the people who are modest, work hard, and save and are responsible. They deserve some recognition from time to time.
The really sad commentary is that those that have SAVED and paid cash for almost everything, made double mortgage payments, always pay balance on their credit card are not considered for the lowest insurance premiums. Why? They don't show up as the best credit score because of lack of long term loans, low borrowing power on credit cards, etc.
Why wouldn't risk and cost of premium be based on a persons commitment to fiscal responsibility and payment experience rather than a credit score?
My vehicle insurance premium was reduced by 42% after speaking with insurance management about the effect of credit score on my premium.
This system is simply BS.
soth side: "why would you include a retired postal worker getting 2059$ from Soc Sec plus her overly generous pension? Plus why didn't you include how much that pension check is?
EVERYONE who does not receive govt pension should know that she gets at least 20,000-or up to six figures.what a terrible misleading article.Get a job you're more qualified for. "
If I was crude, I'd call you a dumba$$, like Red in That 70's Show was fond of saying, you're not really Ashton Kutcher, are you? The $2,059 is the total of her SS AND her pension, can't you read? "20,000-or up to six figures", where did you get that, out of your butt, where your brain is?
My wife is being forced out of her job after 24 years with the USPS along with many others due to downsizing. Her "overly generous" pension is nowhere near 20K, those people get 1% per year times an average of their highest contiguous 3 years salary, that's less than a lot of private companies used to pay, including AT&T where I worked until getting forced out. The mouthbreathers in this country need to know what they're talking about before they open their great big yaps! Of course, this is the kind of stuff you get from Beck and Limbaugh, the REAL truth!
Well I am not gloating, I am saying that 55 years old is not the time to start retirement planning. Yes I am doing ok at 62, but that don't mean I have money to burn. just like when I was working, I only buy what I need. I bought my first new car three years ago, but I saved for 10 years to buy it.
Before that, I drove old clunker used cars I worked on myself, one was 25 years old, but it got me where I needed to go. Yes life can over throw you sometimes due to things you have no control of, but you do have control over planning for retirement. 25 is a lot better time to start planning than 55. it sure worked for me.
I'm comfortably retired with a teacher's pension plus health benefits and I shop at the Dollar Store, Aldi (often even cheaper), Costco, etc. Most of the best low-priced places in my area were pointed out to me by people with incomes well into six-figures. I used to be stupid enough to buy $199 athletic shoes instead of the virtually-identical made-in-the-same-Chinese-factory $24.99 shoes at KMart. If my register receipt at the supermarket doesn't show I saved 1/3 with manufacturers and store coupons and on-sale items, I'm disappointed. I buy sale items in bulk and freeze.
My post-retirement-learned comparison shopping abilities are worth several thousand to me each year without suffering in quality at all.
There are still items where the quality is much less in store brands and I'll gladly pay the difference, but for the vast majority of food and clothing items you no longer get what you pay for!
Almost all employees, federal, state, and private sector have made concessions in wages to keep any "benefit". "Benefits" did not just materialize from nowhere, they were achieved through negotiated wage concessions. As the cost of "benefits" increased, opportunity for fair wage(CPI) increases were diminished. I calculated the average wage increase in my school district from 1993 thru 2009. The increase in the highest paid teacher salary was 1.53% per year averaged over that period (16 yrs). Where did the wages go? HEALTH INSURANCE INCREASES!
Wages in this district rose 125% (1982-2009). Health Insurance rose 1,508% during the same period. Health Insurance is no longer AFFORDABLE for employers,employees, or taxpayers.
Thankyou Steve, Dan the man and the others who truly knew how to manage money and did not become a drag on society. Both my grandma's, my parents and all my aunts and uncles are retired and live fine. They may not be able to take world trips etc, but they are able to provide a decent life. That is the KEY, decent life. They saved their money and most of you little cry baby people really have no clue how to save money. Saving money is not simply NOT buying the largest tv at the store, it is watching EVERY single purchase or expense. NONE of my relatives had money given to them and they live in modest homes. A large chunk of the population have NO clue what it means to save money and they are the same people who complain they have nothing. I have probably eaten more Ramon noodles and tostinos pizza than people double my age, but i do it so i will not be broke when i retire. Yes there are reasons like health etc that a person could save their entire life and loose everything and i do feel sorry for those people. But the ones who have no clue how much they spend on fixed costs each month (what is a fixed cost is what they are thinking (and no satalite tv is not a fixed cost)) are the same ones who will be wanting something for free in the future. Do you know exactly how much you spend on going out to eat, gas, and EVERY other category expense? Yeah, you may now because you have little, but did you monitor it your ENTIRE life? I have a spreadsheet that can SPELL it out since 1988.
I find it rather funny these days.... The youth want to be on their Parents Health Insurance until they are 27, more youth are lioving with Parents longer, the average youth is requiring money from their Parents well into there mid 30's ---- YET, ask a Youth 35 and and younger if they feel Social Security is an Entitlement or a paid benefit? The answer will shock you most likely - "I SHOULD NOT HAVE TO PAY FOR THOSE OLD FARTS, THEY SCREWED UP AND WHY SHOULD I HAVE TO PAY FOR IT". Well, I don't know about all of you, but I paid the maximum in for the majority of my working life so far (I am 51), it frankly pisses me off that in order to obtain SS benefits I will be coinsidered a freeloader on Government Benefits. If I would have been allowed to invest that same amount for the past 35 years, I would retire today and take no SS benefits whatsoever. The problem with the younger generation today is they do not understand an entitlement and earning a good days work (NOT ALL). Ask many of the youth and they feel it is an American Right to get a College Education at the Governments expense, Healthcare, Food Stamps, Welfare, etc.etc.etc... They feel like they have earnes it - anyway, there parents have paid into that system all of there life and never benefited from it, why shouldn't they! HEY, I am just saying - The guy that sits in teh White House currently has reaffirmed it ... Who would have ever thought in the mid 80's that Unemployment checks would become the new way to make a living for 2, 3, 4 or maybe 5 years ????
Wow. It must be nice that so many posters here started getting ready for retirement when they were in their 20s.
I love their F**K YOU attitudes like all of us are just going to go away. I've got news for you. When in my 20s we were still living under the idea of getting pensions. We knew nothing of the stock market. I still don't. I have blindly chosen plans and have hoped for the best. Then guess what? The stock market tanked and now it's my fault? The tea bagging repubs have made it crystal clear that they want to destroy Social Security and Medicare.
Any Baby Boomer who is not very very very very rich, is a total fool to vote for the repubs in 2012.
Appreciate Teresa Mears' article mentioning the National Council on Aging's campaign called One Away, website oneaway.org.
You just voted democrat. Nobody in the history gave fat cats so much money. Look at the corporations reports- banks - Goldman Sachs never in the past had such bonuses, leeches from GM- they make 60 $/h to make junk ,GE paid no taxes last year - where is democratic justice ?
He tripled our debt and we have 20 % inflation - go shopping. Dollar is getting worthless.
Thanks for all this achievements
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.