He pulled a two pound coffee can from under the counter and hurled its contents, thousands of pennies, across the worn Formica counter.
"That's what it's like! Every month ends like this--- a banquet of pennies."
I remember that as though it happened yesterday. But it was in 1963 in the pre-gentrification South End of Boston. One worker in three retired to poverty in those days.
Today things are better.
In recent years only one worker in ten has retired to poverty. It's a change in the right direction but the income figures for senior citizens are still pretty scary. Not far from the glitz of Naples or fashionable St. Armand's Circle in Sarasota, Florida--- an entire area known as God's vestibule--- thousands of seniors molder away, counting pennies at the end of each month.
A new report from the Congressional Research Service, "Income and Poverty among Older Americans," spells it out. It's something that should be read, as a cautionary tale, by every twenty-something because it's the straight statistics, not a sales brochure for mutual funds or annuities.
Here are some of the highlights:
-- Poverty is, well, poverty. The good news is that only one senior in ten lives in poverty. The bad news is that the poverty threshold for a single person 65 or older is $9,060 a year. For a couple the figure is $11,418. This isn't shabby chic or senior funky. It's hunger.
--- Seniors are fat cats with incomes of $50,000. The data for this report comes from the Current Population Survey done by the Census Bureau. Unlike the IRS data used in a recent column on income distribution, the survey reports income of individuals, not households, so it can't be compared. But a person 65 or older is in the top 25 percent of all seniors with an income of only $26,777. They're in the top 50 percent with an income of only $15,199.
--- Most income comes from Social Security. Seven in ten seniors received at least half their income from Social Security. Nearly four in ten received at least 90 percent of their income from Social Security. In 2005, according to the report, the monthly average Social Security check is $963 for a single person with a couple collecting $1,583.
---Very little income comes from personal savings and investments. For all the exhortations to save from the investment/retirement complex, for all the Savings Bond drives at work, most seniors don't have much interest, dividend, or capital gains income. The median reported amount (half have more, half less) was $1,000. In today's markets that implies a nest egg of about $25,000 or less. Except for the genuinely wealthy, seniors have most of their net worth in their houses, cars, and other possessions. There isn't much of a cash cushion out there.
There are, of course, some mitigating factors. The cash income of seniors is relatively unencumbered. They don't pay employment taxes unless they work. Most pay little or nothing in income taxes. And they aren't putting money aside for the future because they are living in the future. Also, many own their houses and cars free and clear--- so little of their income goes to monthly debt payments. And they have Medicare while millions of younger people who work have no medical insurance at all.
So it's a little less scary than the dollar figures indicate.
But the operative word is "little."
What does this all mean?
Seventy years after the creation of Social Security, 40 years after the creation of Medicare, and decades after the creation of tax deferred savings plans, millions of Americans---most--- are still vulnerable, still poor in financial assets, and still ending their month with a "banquet of pennies."
A tiny--- almost laughable---amount of monthly savings can make all the difference.
Tuesday: The value of delaying Social Security benefits
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