Friday, October 23, 2009

Retirement Income and the "Ownership Society"

One of the most pernicious frauds of the Bush-Cheney era was that they were building an "ownership society". The "meat" of that was that people who could scarcely afford it were borrowing shocking sums relative to income to buy homes the equity in which was inflated by the housing bubble.

G.W. Bush said after re-election that he was going to spend his political capital to drive social security taxes into private investment funds. Thank god he threw his political capital down the drain before the free-marketeers damaged Social Security.

The Congressional Research Service has published this report "Income and Poverty Among Older Americans in 2008", released October 2, 2009. Analyst Patrick Purcell demonstrates that persons over 65 - in the second quartile in income (50% to 75%) - are principally dependent on Social Security, not investments.

9% of income is from assets, 22% from pensions (most of which are public sector). To be concrete: If you received $2,000/month from Social Security (which requires earnings at the top of the taxable income range) you would need about $400/month pension and $200,000 in investments to produce the median.

Sources of Individual Income in 2008, Second Quartile, Age 65+
2008 Individual Income of $18,208 to $33,677
DESCRIPTION
Source: Both figures from CRS analysis of the March 2009 Current Population Survey.

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