Forced to slow down, columnist contemplates
the future of retirement
Aug
6, 2019 @ 11:34 am By Mary Beth Franklin
From time to time, I write a "dispatch from the
retirement front" based on personal insights from
living with a retired husband or fielding questions during girlfriend getaways
about enrolling in Medicare and claiming Social Security benefits.
This summer I had my own brush with
contemplating the future of retirement — both from a national policy
standpoint, as well as on a more personal level. Don't worry. I'm not retiring
any time soon. But following some major surgery in July, I was forced to slow
down. For a few weeks, I perfected the art of doing nothing and wondered
whether this is what retirement would be like for me.
My first decision was whether to delay my
surgery until December when I would qualify for Medicare and could
significantly reduce my out-of-pocket costs for the procedure or to get it over
with this summer when my business travel schedule for speaking engagements
tends to be lighter. After weighing the pros and cons, I decided that timing
and health concerns outweighed the financial costs.
Because I spent more time home than usual
during my recuperation, I was exposed to a slew of robocalls, including one
purportedly from Social Security telling me my account had been suspended.
The first hint that such phone calls are bogus
is the recording refers to the "Department of Social Security." There
is no such thing. Besides, the Social Security Administration doesn't call
individuals to tell them their accounts have been suspended due to
"suspicious activity." Crooks are just trying to scare people into
giving them their Social Security numbers and other personal data that leads to
identity theft. Just hang up.
The Federal Communications Commission offers
some great consumer tips —
or helpful client tips — on how to recognize and combat such robocalls and
spoofing, which is when a caller deliberately falsifies the information
transmitted to your caller ID display so it appears that an incoming call is
coming from a local number or a government agency.
I can imagine how scary such phone calls can
be to your retired or soon-to-be retired clients.
In contemplating my own retirement, I examined
what the experts have to say about preparedness and what lawmakers are doing —
or not — to add protections.
About 90% of Americans 65 and older receive
Social Security benefits today. That's more than 64 million people collecting
about $1 trillion in Social Security benefits this year. But there is a huge
gap between the Social Security income retirees receive and the total amount of
retirement income they may need over their lifetime.
New research from
the Alliance for Lifetime Income, a consortium
of leading financial services organizations and non-profit consumer groups,
shows 63% of Americans are unprotected for retirement, meaning they have no
source of guaranteed lifetime income other than Social Security.
More than three-quarters (80%) of non-retired
Americans expressed anxiety that their savings may not provide enough to live
on in retirement, based on an a survey of more than 3,000 U.S. adults that the
Alliance conducted in May 2019. There is good reason for Americans to be
concerned about running out of money in retirement. A June 2019 World Economic Forum
report estimates that 65-year-old Americans could outlive
their retirement savings within nine years.
Given the sheer number of retirees, a
retirement income crisis would be felt far and wide. The U.S. is a mere five
years away from having the most 65-year-olds in history. In 2024, a record 4.5
million Americans will turn 65
While these statistics underscore the growing
importance of Social Security for many Americans, the nation's retirement
program is facing some serious long-term financing
problems of its own.
Beginning next year, Social Security is
expected to start dipping into trust fund assets for the first time to pay all
promised benefits, according to the most recent Social Security and Medicare
trustees report. Those excess revenues would be depleted in about 15 years,
forcing a 20% cut in benefits to all retirees unless Congress acts before then.
No one expects the worst to happen, but Social
Security reform will require bipartisan support, and the sooner lawmakers
tackle the problem, the better. But you would never know it based on the recent
Democratic presidential candidates' debates, where Social Security was never
mentioned, or Congress' inaction on the looming trust fund shortfalls.
To be fair, the House Ways and Means Committee
did hold a hearing to discuss Social Security reform proposals in late July,
but took no action before the House left town for its summer recess.
Generally, Democrats want to protect current
and future Social Security benefits by gradually raising payroll taxes for
workers and employers. Republicans oppose tax increases without program
reforms, and they want to eliminate restrictions on how much people can earn
while collecting benefits before full retirement age. The two parties remain
far apart as the clock continues ticking.
(Questions about Social Security? Find the
answers in my new ebook.)
Mary Beth Franklin is a contributing editor to
InvestmentNews and a certified financial planner.
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