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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: Jim McMannis who wrote (21823)1/20/2005 1:29:41 PM
From: GraceZ  Read Replies (1) of 116555
 
I think a lot of retires will expatriate just to live somewhere cheaper. They will need to if they plan to survive on just SS.

I have a tenant who worked fairly low wage jobs her whole life. She receives around $700/month in SS minus the Medicare premiums. She used to have a low wage job as well that paid about 12k a year plus health benefits but she recently lost that as her health deteriorated. She now has nothing else but the SS payment to live on. I just can't imagine a private retirement plan where you paid in 12% of your income your whole life where you got such a small benefit. She has probably paid in 65k in total over 50 years. Sounds great to get $700/month on 65k until you factor in the TVM. An S&P index fund or a DOW index fund would have beaten SS by a very large amount. She could have invested the first ten years of her working life and stopped saving altogether and still beat the SS benefit.

Even a late saver would beat SS. We invested 20k total in the house we rent to her 15 years ago and it returns twice that SS benefit now that the rental returns have paid off the mortgage and paid for the capital improvements we needed to do to improve the rent. Plus the rent will rise with the real rate of inflation, not some COLA calculated by the government. A few more years and she won't be able to afford to even rent a room in the house without some other form of income or assistance. She's 67 and she could live another 30!

In the old days, her three grown kids would kick in and pay her expenses, but now, because of SS, everyone seems to think the care of their aging parents is a government problem. I'm sure her sons are struggling to make their own ends meet with 15.4% of their incomes going to pay SS/Medicare. Supporting someone else's mother at the expense of their own.

If a private company had suckered her into such a poor retirement plan they'd now be under Federal indictment.
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