Seniors & Aging

Myth vs. Reality — More Surprises

Like to expose a few more myths?

“Social Security is a bum deal. You pay in thousands and thousands, and if you’re lucky enough to reach retirement age -- and it’s been raised! -- you just begin to get it back, and then you die.”

The critics seem to conveniently forget, or they don’t understand, that OASDI is insurance -- contribution of a known value to a pooling of risk in order to indemnify losses, large and small, if and when they occur. Critics, we don’t hear you fussing about your homeowner’s, auto, or Medicare insurance that you pay similarly for and wouldn’t think of being without. Same idea! And an actuarially very viable program it is, too, ever since 1937, and will continue to be so when Congress ultimately increases funding to cover the increasing benefits and re-funds its embezzlement of the trust funds.

Critics, please also learn that OASDI “ifs” are rare; nearly everyone has only “whens”. It’s a six-way-win deal that’s almost impossible to lose in, and unbeatable anywhere else:

Win No. 1: Upwards of 90% of us reach OASDI “normal retirement age”. More than half of those live at least 20 more years, receiving lifetime guaranteed, inflation-indexed, income-tax favored, monthly retirement checks, far more than we paid in. Retirement insurance!

Win No. 2: If we do predecease our 10+ year spouses, they’ll receive lifetime income thereafter from our account, if it exceeds their own benefit. Death insurance!

Win No. 3: Ditto our ex’s, no matter how many there are. More death insurance!

Win No. 4: When disease or accident disables us after the young age of 50, our lifetime income starts then. Disability income insurance!

Win No. 5: If we become a claim while our children still are growing up, they, too, receive monthly benefits until they’re grown. More death and disability insurance!

Win No. 6: Still want to gripe? Consider this: We get all this at 50% discount. Our employers pay the other half. If we’re our own employers, income tax shelters reduce that cost.

< “Soon we’ll be ‘empty nesters’. The kids will be finishing school and moving out on their own”.

True for many of us, but not so for more and more of us. The gurus observe that an increasing number are happily hanging in at the family homestead while they pursue advanced education (often quite leisurely), work off their huge education loan debt, flail around in pursuit of still-elusive maturity and a track to run on in life, or just simply because it costs less to live at home. We’re even seeing a significant surge in cohabs and newlyweds, as well as single and two-parent/child families, nesting there.

Are we reciprocating later on by moving in with the kids when aging impairs our self-sufficiency? Yes, some, but not nearly in equal numbers.

“Trusts are intimidating, complicated, mysterious, expensive, rich-people’s money-maneuvering and tax-avoiding devices, that the lawyers love to create for them!”

Some are. But the overwhelming number of trusts are simple, miraculously useful, respected, friendly personal business management and estate planning tools that all of us and our beneficiaries can benefit from in handling our own affairs. They’re not subject to most of the rules, limitations, and mandates of state estate-affairs laws. No wonder personal trusts have been a personal affairs tool of choice for decades in parts of the country, and becoming so here.

You can accomplish almost anything (unless it’s illegal, of course) you want, and cleanly mandate the management and disposition of your assets and liabilities now and for generations into the future. You can enable the judgment and wisdom of whomever you want to be in charge, both during and long after (reaching back from the grave!) your lifetime. Your trust can take over the estate-management chores of a will, and can take advantage of many options that the will and its probate estate can’t do.

You can create a trust with one sentence in your will. It can be just that simple. More likely, the separate-document “living trust” that you’ve heard about will be just right. It’s no more “legalese” than your will is. It costs more to create, but it probably will justify its cost in many ways (If it won’t, don’t do it).

< “Years ago our employers enrolled us in defined benefit and money purchase pension plans that they sponsored for us, but many long since have replaced them with less-beneficial 401-k plans.”

Not less-beneficial, retired workers! Not, when we consider the reality that numerous rigid, inflexible, unjustifiably burdensome pension plans that we were in likely would have failed or been terminated or sharply reduced because of projected disaster. Replacement 401-ks have succeeded in the world of economic turmoil and stifling legal restraints, unfunded “promises”, underperforming mandatory investment vehicles, corporate mergers, and actuarial miscalculations that burden pension plans. The result is that we have a commendable money’s worth, instead of little or nothing. And, because of tax incentives, investment flexibility, a legal structure that can be lived with in today’s business climate and a favorable corporate matching-funds incentive, they’re likely to keep on succeeding.

Now, the climax -- Verily! -- Right now, as we speak, we’re actually privileged to witness the birth of a brand new myth! We’ve been echoing the gurus who, for decades, have been proclaiming the constant increase in Americans’ life expectancy. Indeed, many of us now are living proof, looking back on 80, even 90 years of life. But….

< “Newborn Americans in all categories can expect to live longer than their predecessors”…No longer!

Recently Associated Press medical writer Mike Stobbe reported that the Center for Disease Control and Prevention (CDC) has discovered that beginning four years ago life expectancy began to decline, down about a month for each year. Now, after four consecutive years, it’s being declared a trend. All categories except black females are included.

Why? Increasing rates of the usual killers, Alzheimer’s, heart disease, lung disease, injuries, stroke, diabetes, and kidney disease (except cancer). The experts suspect that the massive growth in the rates of obesity, substance abuse, indolence, and anxiety disorders now have reached the point of counterbalancing the life-preserving miracles of medical science.

Thus, a long-standing fact is becoming a myth. Hmmm… …”Privileged” to witness this happening? Maybe we’d rather continue living some of our myths, after all.

Contact Gary Newman at garynewman.clu@gmail.com. Your ideas and comments are always welcome.

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