Life goes on while governments change. Everyone can be affected by new legislation without any real means of avoiding the consequences. It is election season in the USA with Presidential candidates vying for their party’s nomination while the current administration continues to govern. Those seeking nomination logically need to tell the electorate what they stand for. In the case of Chris Christie, the Governor of New Jersey, who is seeking the Republican nomination one of his proposals relates to the Social Security System. He wants to extend the full retirement age to 69, an extension of two years. The System is already in trouble with people living longer and fewer people paying in. There are not many Republicans supporting the idea of increasing taxes as part of the solution.
Average life expectancy at birth in the USA is 81 for females, 76 for males though there are variations within racial/ethnic groups. It does mean that the average male will live 7 years after the new retirement age of 69 and the average female 12 years. That is a significant period of time when it is likely that the retirees are less active and more susceptible to illness.
Further Christie wants to ‘means test’ the System gradually taking away benefits from those earning above $80,000. That is hardly a sum that will have allowed anyone to have built a significant retirement fund. That is without their facing any financial emergencies in life, raising a family or meeting medical and insurance bills.
Everyone receives a statement on an annual basis stating what he or she can expect to get on retirement, be it at 62, 65 or 70 under the current terms and conditions. The problem can still be those legislators. Estimates suggest that within 20 years taxes being collected will only be able to pay out 77% of the benefits currently being paid. No one can feel secure that they have a proper retirement plan in place on this basis. There is little to stop legislation passing through Congress that changes the current conditions.
Christie’s ideas hardly seem to be a vote winner but realistically he is not going to be the next President of the USA and he is frankly unlikely to get close to the Republican nomination. It does highlight a problem however that every citizen should be aware of; the need to provide for a comfortable retirement.
Lack of Savings
Many might point to the recession as the reason why their finances are not in good shape. There is no doubt it hit many people hard yet the economy is now on the upturn. Current statistics still suggest that there is far too much credit card debt and insufficient saving in American Society. Too few people have any kind of emergency fund that they can use to address something that happens unexpectedly; a medical bill, home or automobile repair. Equally there is reason to believe that too few are prioritizing saving for retirement. Perhaps they do not realize the inherent problems within the Social Security System?
The earlier people start to make retirement provisions the better. Those who begin in their 20s certainly have the best chance of a comfortable retirement. They do not need to put away a huge sum each month to make a difference. Perhaps if they just saved the figure they saved by doing some simple things about their current monthly expenditure? What are those simple things? Getting rid of credit card debt is a start. Companies charge a high rate of interest on outstanding balances. It is far cheaper to take out a personal loan to pay off the balance than to continue to pay a high rate of interest each month on cash borrowed. Likewise it is worth spending some time finding out whether there are cheaper utility suppliers and whether insurance quotes will reveal someone just as good, and cheaper.
It is not easy managing finance with different calls on income at different times of life. That said there is no excuse for not making decisions based upon common sense and common sense dictates that everyone should make every attempt to save rather than rely on the Social Security System to cover all their needs in later life.