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19-year-olds’ view of retirement

By Jennie L. Phipps · Bankrate.com
Monday, August 1, 2011
Posted: 3 pm ET

Did you ever see one of those T-shirts that reads, "Be kind to your children. They'll be choosing your nursing home?" This maxim, unfortunately, makes retirement planning sense.

Iowa State University Professor of Economics Dan Otto turned his students loose on the question of balancing the budget and managing the debt ceiling. He says they quickly zeroed in on Social Security, Medicare and Medicaid as unsustainable programs that account for 40 percent of the federal budget and are projected to increase rapidly under current trends. The students agreed that these programs should be reformed or even eliminated. They argued for raising the age of retirement, raising the taxable maximum income ceiling on Social Security and making it easier to save.

At the same time, most of the 19- to 21-year-old students didn't think that they would ever benefit from any of these programs, so they didn't believe it was fair that they should be asked to pay for them. "They have a young person's perspective. They don't believe that they are ever going to get old and sick. If I had to characterize their attitudes, I'd call them Libertarians," says Otto.

Of course, the students didn't always agree with each other. Some had personal experience with grandparents and other older relatives that gave them a different perspective. Ultimately, after much discussion, they agreed on two recommendations that our members of Congress should take to heart:

  • Tackle the problems now. Delaying action compounds the costs and increases the difficulties of dealing with issues later.
  • Take a bipartisan approach. The causes and consequences of the federal debt and deficit issues are societal issues, and dealing with them will require bipartisan efforts.

The class ended before this issue came to a head, but Otto says that his students got the point - solving the problems isn't easy and that made them frustrated -- just like the rest of us.

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27 Comments
Supposedly Shortsighted Youth
August 17, 2011 at 3:33 pm

"They have a young person's perspective. They don't believe that they are ever going to get old and sick."

Really? That's the conclusion you drew? Just because we're young doesn't mean we're shortsighted.

Quite the opposite: I'm 26 and am losing a significant cut of my paycheck to Social Security. Given the current financial crises and the fact that there is a very real risk that Social Security will not be around when I retire (if I get to retire, that is) I would much rather be putting that money into my 401k. This, I can have some certainty, will be there in some form when I want to retire.

But I can't afford to do that, because after taxes and paying off a substantial student loan burden (because the government doesn't think education is worth supporting), I have enough to live on Ramen.

In theory, Social Security was a good idea, and it had a good run... but it's not working now. And until it gets fixed, I'm going to be angry about throwing away my money.

gem
August 17, 2011 at 2:03 pm

Mark B.,

Your comments about paying taxes for things you don't benefit from would make sense if you did not have the OPTION to benefit from these things. If you were out of work and in poverty, you COULD get welfare, if you had children, they COULD go to public schools. Your logic that people should pay for something that they don't even have the OPTION of benefiting from just does not make sense---just thought I should point this out. I also love how this is all the "Liberals" fault? Really America?...I am starting to believe we deserve the predicament we are in because we CHOOSE to continue to be so small.

Ken
August 17, 2011 at 12:26 pm

I am 36 and while I am a libertarian I don't see the 19 year old students expressing libertarian views but pragmatic ones. What I see revealed is the expected bias of their professor when attempting to determine the cause of their perspective. They don't want to have their property forced from them at no benefit to themselves - shocking! Try stealing from anyone's house and see if they like it.

Mike
August 17, 2011 at 8:27 am

Why can't we start an organized decline of social security. We can garantee social security payouts for those over 50, guarantee half for those in their 40s, and offer private accounts to those 39 and below. Yes this would be expensive for the next 30+ years as we would continue to pay into the system at current rates, but everyone would recieve some benefit for their years of the goverment taking 12% of their income.

Karen
August 15, 2011 at 10:35 pm

I'm in my early 30's and I factor in zero for Social Security benefits in my retirement planning. I've also done hospice care for relatives, and I find it abhorrent that Medicare paid $1000 a day so that my grandma could be listed in the local hospice program's database as a patient. If a nurse came out, if any medicines were given, if anything was actually done, that incurred an additional cost. That's both unsustainable and unreasonable. I've heard folks say "Hands off my Social Security! I deserve it!" And they say that my generation has an entitlement attitude?
This is fiscal child abuse!

Mark B.
August 02, 2011 at 2:18 pm

I am a 44 years old and I don't expect to receive even close to what I have been forced to pay into Social Security. FDR, Johnson, and other (mostly) liberal politicians are to blame for this Ponzi scheme. Unfortunately somebody is going to have to pay the proverbial piper regarding the unsustainable Social (In)Security system. I propose that a law be passed that if you are born tomorrow you will no longer receive any Social Security benefits but you will still have to pay taxes to support those who were promised benefits. They will have to fund their entire retirement via 401ks and IRAs. Eventually all of the recipients will die off and so will Social (In)Security and it's associated taxes. I know it is unfair.

Using the argument that I don't want to pay for something I will not benefit from is weak. There are many government programs that individual taxpayers pay into where they receive no benefit. For example, I have never benefited from the welfare system, government funded healthcare programs, and paying for government schools (I don't have any kids) with my property taxes. I wish I could opt out of these. Social (In)Security is no different.

Rins
August 02, 2011 at 10:29 am

"They argued for raising the age of retirement, raising the taxable maximum income ceiling on Social Security and making it easier to save."

Sounds reasonable to me and not at all like people who don't think they'll get old or sick. The ones saying it should be eliminated are going a bit overboard, but raising the retirement age and taxable max income are two good ideas.

People are living longer so they should be working longer and should have to wait longer for SS. If someone is truly disabled before they can receive SS, isn't there some form of SS that goes to the disabled? This isn't a view of someone who never expects to get old or sick...just the view of someone who believes that since we are living longer we should work longer if we can.

And personally, I don't think SS should be a "poor pay for the poor" type situation (granted the max income taxable isn't in the "poor" category...but certainly isn't "wealthy"). There is no reason the wealthy shouldn't be contributing to the ability of the less fortunate to have the basics when they can no longer work. Taking care of the less fortunate is just what a good society should do.

Homeless
August 02, 2011 at 9:45 am

"They have a young person's perspective. They don't believe that they are ever going to get old and sick. If I had to characterize their attitudes, I'd call them Libertarians," says Otto."

I don't think he is giving these people enough credit...they are not thinking they will never get old or sick...they feel they won't benfit because even they know the money will run out before they ever get to retirement. Smartly they would prefer to stop paying into a bankrupting system and put their dollars toward their own retirement. They rather put the money away for themselves and take care of themselves.

Amen to End the Ponzi Scheme!

End the Ponzi Scheme
August 02, 2011 at 7:44 am

I'm in my 30's now, and I don't expect to ever benefit from any of the programs either. All Ponzi schemes eventually collapse, so the only real question is how to prepare to deal with Democrats trying to preserve it longer than it can be sustained.

Payroll deductions starting this year are insufficient to cover the checks going out, meaning the worthless bonds have to start being cashed in. The only place that money can come from is either more borrowing or more taxes.

It's time for the fair tax, make everyone pay into the system. This won't pass because Democrats need to buy votes from the 50% who don't pay in now, but getting everyone to pay has to be the first step. Remember that the rich can go elsewhere, and all that tax revenue goes with them.

Faith
August 01, 2011 at 10:50 pm

Quote: At the same time, most of the 19- to 21-year-old students didn't think that they would ever benefit from any of these programs, so they didn't believe it was fair that they should be asked to pay for them. "They have a young person's perspective. They don't believe that they are ever going to get old and sick. If I had to characterize their attitudes, I'd call them Libertarians," says Otto.

Are you sure the reason why they don't believe they're going to benefit from these programs is because they don't feel they'll ever get old and sick? Because I'm nineteen and I just figure that the government will simply run out and eliminate on social security by the time I'm old enough to collect, and since I'm never going to get that benefit, why pay for it?