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Just talked to a retiree...

November 18th, 2013 at 12:55 am

Just got off the phone with a friend who is a retired teacher. She has been retired 28 years and we were discussing the pension system in Illinois and the changes in insurance.

She and her husband were savers when they were young and when they retired, they had investments that were decent. Her husband has since died and she has been careful with both her pension and her savings. We were talking about how the market in the years before she retired went up and down and although they didn't save vast amounts at one time, the compounding interest throughout the years certainly paid off.

A person we both worked with retired ten years ago. His pension is over double what she draws. And he put nothing aside all those years although he made far more money than she did because he wasn't always in the classroom.

Right now Illinois has some major pension problems. One of the things the legislators are looking at is possibly doing away with the cost of living raise. It isn't that pensioners wouldn't get one, but it wouldn't be compounded like it is now. This person is scared that they will no longer compound because he isn't sure how he can make it.

It is sad, isn't it? No, I'm not saying it is sad about his worry about the cola. It is sad that he never planned ahead to put anything away in case something came up. Although he draws a large pension, he cannot make ends meet and often gets a loan from his home equity to give him spending money.

I find that scary. Especially since this is someone who is educated. Yet he lives for the moment and buys expensive toys. He has made fun of me for being "cheap." He's usually making fun of me for something so it really doesn't bother me, but we figure he has quite a balancing act when it comes to paying bills. Yikes!

Educated yes, but lacking common sense. Wouldn't you agree?

Posted in Retirement, Saving Money | 7 Comments »

7 Responses to “Just talked to a retiree...”

  1. judgemental Says:
    November 18th, 2013 at 01:22 am 1384737734
    1384737734

    much?

  2. LuckyRobin Says:
    November 18th, 2013 at 01:36 am 1384738560
    1384738560

    Unfortunately this is going to be the fate of many baby boomers and probably many gen X'ers. They were told they could rely on something that likely will not be there for them or will be, but in a much reduced capacity. It's why I choose to not calculate social security into our retirement needs. I don't believe it will be there for us. If it is, great, but the only people we can rely on is ourselves.

  3. creditcardfree Says:
    November 18th, 2013 at 03:21 am 1384744870
    1384744870

    We were taught to rely on ourselves for retirement. We are looking forward to a military retirement, but we can't count on that in full. Yet. Unfortunately, not everyone thinks the same or was taught the same.

  4. snafu Says:
    November 18th, 2013 at 05:26 am 1384752418
    1384752418

    I fear there will be a whole new category of welfare recipient comprised of those over 65 y/o with no pension, no 401K, no savings who still owe a mortgage or worse have borrowed significantly against home equity. SS was meant to be self supporting from participants compulsory contributions. Age 65 was chosen for initial benefits as so few were expected to live that long back in 1935 during initial planning for the program.

  5. Joan.of.the.Arch Says:
    November 18th, 2013 at 04:04 pm 1384790640
    1384790640

    I worry about my agemates, too.

  6. FreebieQueen Says:
    November 18th, 2013 at 04:17 pm 1384791444
    1384791444

    It's my understanding that in Illinois if you contribute to a state pension you do not pay social security? So if the pension fails or gets cut in some way you do not have social security to help out?

  7. rob62521 Says:
    November 18th, 2013 at 10:06 pm 1384812383
    1384812383

    Freebie queen, you are exactly right...no Social Security. And Snafu, I bet your fear is founded.

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