Sunday, February 8, 2015

What about our elderly?

While helping my mother in law to do her taxes, I was horrified at how little income she had, or more correctly, how little she would have had if he late husband had not been a very hard working and frugal man. He spent much of his life working three jobs and carefully saving all he could towards their old age.

My mother in law has lived with us for 4 years now, ever since my father in law went into a nursing home for Alzheimer's. But, were she not living with us, she would be living in poverty without their savings, with those savings she would be fast eating away at her capital just to survive. She would have had mortgage payments and/or property taxes or rent, insurance, utilities, medical expenses and food and certainly her tiny pension would never cover that no matter how carefully she managed it.

What most amazes me is the fact that on this paltry income, she is still expected to pay taxes. Her social security is equivalent to minimum wage, the required distribution she gets from the money they so carefully saved is less than half of that - and is taxed and the small pension she gets paid from her late husband's contributory pension plan is also taxable. When we completed her taxes she still owed the IRS over $500! I don't understand how it is that people who are filthy rich pay less taxes than everyone else while so many of our elderly live in poverty? How can that possibly be equitable!? If we can't increase the minimum wage in Texas, currently $7.25 per hour, at least don't tax it! Currently a single person earning $15,600 per year (and tell me how can anyone live on that?) will pay 10% tax on the first $9,075 and 15% on the balance. Lucky married couple with only one working, will pay 10% on the lot - leaving them $14,000 approximately for two people to live on - again I ask how do they do it?

For the elderly on Social Security (pension) so long as you are getting less than $12,000 per year, you do not get taxed, however if you were wise enough to save for your retirement, you will pay taxes on income from those savings - and over a certain age (currently 70.5 years old) you are forced to take a minimum distribution, if this brings your total income over $15,000 per year, you will be taxed at 10% - that is so long as it remains below $19,050 - after that princely sum, your tax bracket is 15% rising to 25% if you managed to make more than $35,243.

According to these facts, and I could be wrong, if you manage to save for retirement, but don't save a huge sum of money, you will actually be worse off than with no savings - because a small amount will push you into the taxable income bracket without being enough to cover taxes and still have sufficient to live comfortably.

Something is seriously wrong when there are a small percentage of people with so much money, paying so little in taxes, while so many elderly people are living and dying in poverty - and so many children starving in this country, a country that prides itself on being the leaders of the free world and used to be known as the land of opportunity.

My mother in law is one of the lucky ones, she does not have to pay out for property taxes, mortgage, rent, utilities or even food. But it made me think of all of those elderly people who do not have family to care for them, and who never had the opportunity to save for retirement. What sort of a life do they have. It horrifies me.

According to research, US poverty rates are highest for people 65 and older, with 10.5% living in poverty, a large number of these are single or widowed women.

There are also sharp racial differences in the data: the rates are at least 3 times higher for Hispanics and African-Americans ages 65+ than for whites 65+.

I came to this country 20 years ago, following a divorce and the financial devastation that causes, and while I have been saving diligently ever since, I know that there is no way I can ever consider retiring. I must work for as long as someone is prepared to employ me, because the alternative is to quickly reduce to living in poverty. 20 years is not long enough to accrue sufficient finds to retire on. And on that note, I might add that I am horrified when I hear of young people who are not putting money into 401K or other retirement accounts.

Hang on, I am also elderly come to think of it - however I am lucky that I am still gainfully employed with the prospect of being so for the foreseeable future.

And now I have to go look for a definition for that ridiculous statement. Foreseeable future? that is very much a subjective thing I am sure.

Here is what Macmillan Dictionary describes it as:
  • at a future time that is not very distant, and that can be at least partly guessed from present conditions
  • for as far in the future as can be determined, based on what is known now