Editor’s note: This column was originally published Feb. 22, 2009.
McDonald’s, 9 a.m. My coffee, as usual, is tasty and lawsuit hot. I look around and note that virtually everyone here at mid-morning is at least 60 years old. The kids and moms may come in the afternoon. They will certainly be here over the weekend.
But they are not here now.
This moment is for the geezer crowd. And I am now a full, dues-paid member of this group. There is no turning back. This morning I passed the last official age milestone most of us will experience.
My online bank balance showed a new deposit. It was the first automatic deposit of Social Security retirement benefits. I am now one of the 31,528,000 workers collecting retirement benefits. The deposit, $2,620, was net of the $96.40 premium for Medicare Part B. So the full benefit is $2,716 a month.
If that $2,716 a month strikes you as a hefty amount, it is. The average Social Security benefit check is about $1,153 a month. The most you can pull if you’ve earned the wage-base maximum for your entire work life is $2,172 a month. This year the wage-base maximum is $106,400. Only 1 worker in 20 earns that much.
So how did I get the extra $544 a month?
It was easy. I delayed taking benefits. Instead of taking them at 62, 65 or my full retirement age (65 years and 6 months), I waited until a few months after my 68th birthday.
This may be the only form of denial that pays dividends.
Simply ignore that you’ve become a geezer and, month by month, the government will raise your retirement benefits. The delay means that my wife will receive higher survivor benefits in the event that I am not immortal.
If this sounds familiar, I’ve written a lot about it. Delaying benefits is good personal finance. The optimal age to take benefits for a typical married couple is when the husband is age 68 or 69.
My wife, who was also a strong earner, started taking her benefits at 62. She now gets $1,394 a month. So we’ve got $4,110 a month coming in from Uncle Sam.
Why, with that much money I could be drinking coffee at Starbucks!
I find this worrisome.
It isn’t that we haven’t earned it. We have. We’ve worked and paid lots in employment taxes. And we’ve done it for many years. In addition, the benefits that high-income workers receive are proportionately smaller than the benefits lower-income workers receive. Workers who earn less than $711 a month are credited at a 90 percent rate. Earnings over $4,288 a month are credited at only a 15 percent rate. So we’ve paid proportionately more for the benefits we receive than most workers.
So why am I worried? Simple. It takes a lot of workers to support us.
Here’s the math. To deliver our monthly benefit, someone has to have a taxable payroll of $33,145 a month. Here at McDonald’s that translates into lots of hourly workers. And lots of hours. According to, for instance, the median hourly wage for workers with one to four years of experience at McDonald’s is $7.87 an hour. Let’s call it $8. Typical workers will have to clock about 4,143 hours a month to cover our retirement benefits.
A typical McDonald’s has a crew of 50 workers. Most are hourly workers. Few work more than 30 hours a week because, well, things like health benefits are expensive. So a typical worker would have to work 138 weeks, with no benefits, to provide the money my wife and I get, and spend, in a month.
We’re an extreme case, of course. But if you do the math for a more typical retired couple with benefits of $1,876 a month this year, it will still take the typical McDonald’s worker 63 weeks to provide the money an average retired couple receives and spends in a single month.
Fortunately, McDonald’s isn’t the only employer in America. There are lots of companies out there. Some pay the big bucks. The difference is that many of those companies are shedding workers, not adding them. McDonald’s shares, unlike most, are down only 5 percent since the October 2007 market peak. The S&P 500 index is down 46 percent.
There is a message here: Houston, we’ve got a problem.
Scott Burns is a syndicated columnist and a principal of the Plano-based investment firm AssetBuilder Inc.