Updated -Some Observations About SS and Retiree Well-Being

(See Notes) - Added Medicare Premiums 2016

In any HOA, some of the owners and residents are retirees. The incomes of  retirees are determined by pensions, savings and social security benefits. I'm going to quote a well known financial writer "Social Security wasn't designed to be an investment vehicle for retirees; instead, it had the goal of providing at least a modest supplement to retirees' incomes."

The important word above is "supplement." There was no intention for retirees to live entirely from social security. According to the Social Security Administration "Social Security made up 50 percent or more of the retirement income of 66 percent of Americans age 65 and older in 2009, up from 64 percent in 2008. However, in August 2011 the SS Administration stated that "more than a third of retirees (35 percent) receive 90 percent or more of their income as a monthly payment from the Social Security Administration."

More recent data indicates that Social Security benefits represents 90 percent or more of income for about 44% of all retirees who receive benefits. (2012 data, released 2014). Intended or not, for about nearly half of retirees social security income has become their main source of income.

Currently, about 12.5 % of Americans are retired and receiving SS benefits. The SS Administration estimates that 97% of all Americans aged 60 to 89 will receive such benefits. Furthermore, those benefits are modest. "The average Social Security retirement benefit in June 2015 was $1,335 a month, or a bit over $16,000 a year." For retirees over the age of 65 the median benefit  was $19,276 or  $1,606 per month in 2012. Single retirees (including widows and widowers) over 65 received $1,183 monthly in SS benefits while married retired couples received $2,029.

Using Median data can be deceptive. Here are some additional data using quintiles, The advantage of quintile data is it divides the population into five groups. Those groups range from the lowest 20% income via SS benefits to the highest 20%. This provides a better indicator of the income extremes. Here is same information presented in the paragraph above, but for a one-person beneficiary family. This includes all SS income for all beneficiaries aged 65 or older.

• Lowest Quintile: $791 per month.
• Highest Quintile: $1,483 per month.

It is impossible to determine the specific sources of income for the elderly in any HOA, or their net worth. That information is personal and private. The financial status of retirees is also determined by where they live, their earnings while performing their duties during their working years, and their current health.

But figuring out some of this isn't rocket science. The deterioration in retirement income since 2008 should be a cause for concern for all of us. The financial panic of 2008 wiped out a lot of the retirement saving of those over 55 at the time. Extremely low interest rates on cash savings and low bond returns have also taken a toll on the financial health of all of us.

There is no question some retirees are struggling. "Some" might actually be "many."  One thing to be aware of is the current financial status of all of us. HOA board members do get a glimpse into the financial health of the owners of the HOA. This information occurs as foreclosures and delinquencies.

Future Financial Well Being Issues
Another indicator of future financial well being is the national savings rate. This has steadily declined for about the past 40 years. In 2014 the rate reached was a measly 4.8%. The long term average is 8.4%. According to JPMorgan there are an alarming number of people who are not even interested in saving. "In 2014, only 44% had tried to calculate how much money they would actually need to save for retirement."

So, it is common knowledge that we will live longer, but we are saving less. So where and how will those people live? If they are in HOAs, I will expect they will demand lower fees. After all, it is a fact that couples age 65 today have an astounding 97% chance that at least one of them lives another 10 years and an 89% chance that one experiences their 80-year birthday. Most of those 40 somethings and 50 somethings will certainly live to beyond the age of 80. Will they do well on $1,600 a month in SS benefits? Of course not.

From my October 14 post: 
For anyone who is interested, I've read reports that most probably anyone living on social security income will get the same amount in a check next year as they did last year. This is also true for many workers. No salary or wage increases for many in 2016. I do take the well being of our shareholders into account when looking into budgets and fees. [Posted at the Social Security Website October 15: "No Cost-of-Living Adjustment for 2016"  by  Jim Borland, Assistant Deputy Commissioner, Communications, SSA  - "The CPI has not risen since the last cost-of-living adjustment in 2015. As a result, your SSI benefit rate and, for most people, your Social Security benefit amount will stay the same in 2016."]

Medicare Premiums 2016
Why did the Assistant Deputy Commissioner state that the 2016 benefit amount will stay the same for most people? It is possible that some retirees will see an increase in Medicare Insurance costs. These costs are automatically deducted from their SS amount.

According to USA Today: "Retirees have been bracing for a large increase in Medicare Premiums for 2016. However, the US House of Representatives passed a bipartisan budget deal on Wednesday, October 28. It has yet to go to the Senate.Without the deal, some 30% of 54 million Medicare beneficiaries would have seen Part B premiums jump 52% in 2016, from a base rate $104.90 per month to $159.30. With the proposed budget deal, about 17 million beneficiaries would see their Part B premiums rise 14% instead, to a new base rate of $120 per month in 2016, plus a $3-per-month surcharge."

Notes:
1. Click the following to go to the primary source of SS data for this post:
https://www.ssa.gov/policy/docs/statcomps/income_pop55/index.html

2. Click for USA Today article on Medicare Premium increase for 2016:
USA Today - budget proposal could mean no 52 jump medicare part b premiums

3. Expanded this post.

Committee Members

Recent newsletters have included a short statement about committees and a request for owners to join. This is not an accident.

Our association has been operating "short handed" and I've concluded that is exactly what the owners want.  The board could ignore this, and that too is what I have been told some of our owners prefer. "Please, don't bore me with details and just give me the good news." Another position taken is "It's the board's problem." As I stated to an owner recently, we can't very well force people to join, can we? Believe me, if the board could find able bodied, qualified "workers" who were willing to work, we would use them. Observing recent boards, it's included what I would call baskets of mixed fruit. That includes bonafide workers. It has also included those who have a personal agenda, those who will only do those tasks they are willing to do, and the occasional member who does nothing and is apparently there to stack the vote or to act as a pipeline to their friends. I've also been told by "professionals" that this is not all that unusual in associations.

A Brief Segue into "Retirement"
I am opposed to forms of deceit which include  "sugar coating" and political pandering. That's not a good way to be with a group in a popularity contest! In such a group, we are expected to say what people would prefer to hear. Sorry, that's not me!

A few owners actually believe and promote their personal position that this is "primarily a retirement community!" We don't meet the qualifications and I've seen no statistics to support that statement. The opinion of those individuals might simply be a result of the company they keep. For example, membership in the "Club" of their choice of "like minded" thinkers. Or perhaps its based on the observations of those they meet walking our grounds at 10AM and 2PM. Of course, the rest of us are at work or school, because that's what most of those who are not retired or homemakers are doing during the day.

Hmmm, that makes me wonder if there might be another group here which believes "We're an association comprised mostly of moms and stay at home dads?" There may be other groups! It boggles the mind! A possibility that there is actually more than one way of thinking! A while back a person who is now a former board member made the forceful statement to me that for the board "It's most important that we all get along." I was concerned that might be code for "We don't want anyone who doesn't think as we do." So I attempted a dialogue about "diversity" with the perspective of the advantages of a group having "different points of view." That didn't go over very well. Eventually, I was branded as "dangerous" and it required my attorney to handle some of the fall out.


The Definition of Retirement
To avoid confusion, the definition of "retirement" that I am using is "the point where a person stops work entirely." Working people include those who work 40 hours a week, or more and those who are in "phased" retirement or others working part time. Those over the age of 18 who are attending college or other post- high schools are also not retirees. So this is not about age.

If some of our owners are correct in their assumption that we have "a lot of retirees" whatever "a lot" is, then we also have "a lot of" people in this association who can work on committees, attend COD Zoning Board meetings, etc.

What are the U.S. Statistics About Retirement?
Recent polls indicate that approximately 40% of current workers plan on retiring after 65.

"Early retirement" in the U.S. is the age of 62. So what are some of the statistics about retirement? According to the OECD, this is the percent retired per age group:

• Ages 55-59 33% are retired. 
• Ages 60-64 57% are retired.
• Ages 65-69 80% are retired.
• Ages 70+ 95% are retired. 

Sub-Populations of the Elderly
There is no single group of retirees. Some experts use these sub-groups:

• Ages 65-74 "The Young Old."
• Ages 74-84 "The Old."
• Ages 85+ "The Oldest Old."

Changing Characteristics of the Elderly
Those same experts also say that the next wave of retirees, the "boomers" will be very different than the current retirees. Some boomers are in the youngest group of elderly called "the young old." The boomers exercise twice as much as previous generations. Among other things, they bike, swim, hike, sail and ski!

These same individuals also like to live near colleges, beaches and the mountains; and places where the "physical and intellectual" action is.


Conclusion
We have a vacancy on the board and the association routinely asks owners to join committees. According to some owners, we have "a lot of" people at BLMH who are "retired," and I assume that means they have free time.

So why do we have these governance vacancies? There are a number of possibilities, and perhaps all of the following:

1. Things are going so well in the association that there is no perceived need to make a contribution.
2. Many of our owners are younger with children, jobs, extensive duties and responsibilities.
3. Owners who are available feel they don't have the necessary skills.
4. It's socially unacceptable to work with the current board.
5. Owners are apathetic and simply don't care. 
6. Owners would rather complain. 
7. If I'm going to do work, I expect to be paid and this is a non-paying job. 

Notes:
1. This association does not keep statistics about the age of the population. An earlier board felt that even knowing age information was an "invasion of privacy." In fact, we don't know how many units are available for rent. Why is that? Our Bylaws require owners who rent to provide a copy of their lease to management. However, family members are not considered tenants. So if I 'rent' to my son or daughter, that is not considered to be a rental unit. An empty unit which is available for rent is not considered a rental because there is no lease.

2. If statistics are correct and boomers prefer intellectual stimulation, exercise and "action" then BLMH should have a lot of available people for committees. If the opinion of certain owners is correct and we have a "lot of retirees" then we also have a lot of people in the association with a lot of free time on their hands. Do they spend it "making a contribution?" Not for this association. Perhaps for their favorite causes and for their friends.

3.  I'm a "boomer" which is one of those who in terms of age is between the older generation, which some call the "greatest generation" and the younger generations, some of whom have been called the "whining generation." Boomers are a diverse lot. We've experienced multiple economic recessions, we put men on the moon  and the shuttle into orbit, defeated communism, fought a number of hot wars, endured the draft, and many of us scrimped and saved so we could buy homes or condos before there was "free money" available for this purpose. Many boomers are savers and doers. Many have spent a lifetime of work and continuous improvement and education.  Many boomers do not expect to go into full retirement until the age of 70, and a few expect to work at 70+. How is that possible in the current economic situation? It is a matter of employment skills, work ethic, and perhaps some luck. For example, currently there are a reported 600,000 jobs that cannot be filled in manufacturing. These are in many different areas of the country, and the Chicago area has a diverse small manufacturing community. That is but one example. It is true that certain jobs have few vacancies and in the end finding employment today is dependent upon one's skills and work history.