Monday, 24 September 2012

My Day

I made a trip to the Arlington Social Security office today.  Second trip in my entire life...the SS Administration.  The first one was a decade ago in Bama....fifteen minutes in to get a new card.  It was simple and quick. Today?  I stood there for eighty minutes....with two elderly American guys waiting to sign up, and twenty non-Americans (Indians, El Salvadorans, Mexicans, Egyptians, Ethiopians, Lebanese, etc).

When I finally got up to the front, I had only a simple request.  I needed a reset on my on-line ability to their database.  The guy spent two minutes and fixed me up.  Then we spent five minutes chatting over what I might expect at 62....which ends up around $1149 a month, and $1590 if I was waiting until 65.

You don't really start thinking Social Security until you get up into your mid forties, and then you have a curious thought about it.  In the mid-fifties, it's virtually every two or three months that this comes up and you think about early retirement.

The other observation I got out of this trip....was this 1980s design of the office.  All the paintings, posters, and furniture.....all felt Reagan-era.  With the exception of the computer network....everything felt old.

So my final advice.....it's best to get out to the office about thirty minutes before they open and just line up quick to get a number.

American Investor Version 1.0

Up until the last ten to fifteen years, if you were the typical average American.....you had a CD account at the bank and were using that for most of your 'savings'.

With $100k and a five-percent payout, your CD in ten years would have delivered $164k.  It was simple math, protected to some degree by FDIC, and without a risk.

Somewhere in the last fifteen years....our national interest rate game went south.  Today, if you can get two-percent....you'd be lucky on a long-term CD.  Two-percent would pay $122k after ten years.  That's a $40k difference.

Course, everyone will come back and say that car loans today are at the lowest point ever.  Some of the car companies are running their own deal and you might get down between one and two percent.  Used car loans are going for three and a quarter percent.  Yes, this is half of what you had fifteen years ago.

The problem here is that you had simplicity and a pretty good guarantee on your CD to help fix up your lifetime savings issue later in life.  Your expectations on Social Security are probably double what they were a decade ago because you now realize your savings strategy just won't pay off in the end.

So across America, its the same story.  Guys in their late fifties....thinking long and hard over what happens at 65, and how they can survive at the level they expect.  For the last forty years....the CD strategy made sense and you didn't have to calculate risk.  Now?  To make up for the mess....you might have to calculate risk into your life....at a point where it's not a good thing.

It's not simple anymore.