The Future of Retirement In America: Is The Glass Half Full or Half Empty?

Are we on the brink of a retirement renaissance or stormy seas ahead? On this episode, we jump into the pressing issues of Social Security, healthcare, taxes, stock market trends, and long-term care. Whether you're an eternal optimist or cautious pessimist, this episode will equip you with perspectives to plan your retirement years with confidence as we ask the longstanding question, “is the glass half full or half empty”.

 

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Transcript: 

Marc:

Are we on the brink of a retirement renaissance or stormy seas ahead? On this episode, we jump into the pressing issues of Social Security, health care, taxes, stock market trends, and long-term care. Whether you're an eternal optimist or cautious pessimist, this episode will equip you with perspectives to plan your retirement years with confidence, as we ask the longstanding question: Is the glass half full or half empty?

Welcome this week to the podcast, folks. Thanks for tuning in with Tony Mauro and myself, here on Plan With The Tax Man. As we get into this week's conversation about the future of retirement America, is that glass half full or half empty? So we're going to dive into that with Tony this week. What's going on, my friend? How are you?

Tony Mauro:

I'm good. How are you?

Marc:

Doing pretty good. So did you like that little intro tease? That was pretty good, yeah?

Tony Mauro:

That's a good one.

Marc:

Yeah.

Tony Mauro:

Yeah, it's interesting because I tend to be on the more optimistic side, but I need to point out some of the other stuff too, today.

Marc:

Okay, well, I was getting ready to ask you. So yeah, I was going to say: Do you find yourself more of an optimist or a pessimist? And does it change on the topics? I think some of us can be optimistic about some things in life but pessimistic about others.

Tony Mauro:

True.

Marc:

So you never know, so yeah, I think that's a great point. Let's analyze both sides of it a little bit. I'll let you debate with me the pros and the cons or the hows and the whys or however we want to go, but we'll start with a biggie. The big ticket item that people often are concerned about, especially if you're getting near retirement age, and of course, our politicians and our lovely, lovely leaders do not do a whole lot to ease our woes about the stability of the Social Security program, right?

Tony Mauro:

Yes, as we're taping this, of course, the political season, it's going to be getting under way here in Iowa, I think, in January.

Marc:

It's under way.

Tony Mauro:

And so I'm sure this topic will come up, and it always does, and as it should, because the whole issue with Social Security is that it's slated to, depending on how you phrase it, run out of money or start paying more benefits than it's taking in at about, I think, 2033 or 5, somewhere right in there. So people are concerned that when they get to that point, "I keep paying in. Am I going to get any benefit out of this?"

Marc:

Yeah, for sure.

Tony Mauro:

And you ask the politicians. They tend to kick the can down the road.

Marc:

I was going to say, yeah, it's a hot potato they don't want to touch, right?

Tony Mauro:

No, they don't want to deal with it. Eventually, it will probably end up being like everything else they do, which is last-minute and patching.

Marc:

Of course.

Tony Mauro:

The optimistic view, in my view, is I don't see how they could let it fail. They may need to make some changes for the viability, because people are living longer, and we're all putting in the same, yes, but it isn't like there's the same amount that people that are drawing on it. But I believe that somehow they will end up with some kind of fix. Now, whether we're all happy with it or not, that's a different story.

Marc:

Yeah, of course, we're never going to all be happy with it, right?

Tony Mauro:

No.

Marc:

But I'm with you. I think the optimistic view is that they're not going to just let it die. They're going to keep it going in some fashion. I guess the pessimistic view would be that there's going to be changes, and what those changes look like could be different, depending on your age group. I feel fairly optimistic though, Tony, that people over 50, such as you and I, we're over that age group now, probably may not see any changes to it. They may grandfather that in, so to speak, but my daughter, at 25 or 26, the thing's going to change for those folks: 20s, 30s, 40s. Maybe they do something as simple as pushing it back. There's no early retirement at 62; they move it to 65. Who knows?

Tony Mauro:

Exactly, and there's a lot of studies and math going on out there, and by the way, I do think you're right, yes. My son is 27. It could look vastly different for them. I still don't think they'll take it away, but there's talk of, like you say, moving the retirement age, maybe either getting rid of that upper limit and/or that whole privatizing thing.

There's goods and bads to all of that, which is a whole five-hour debate on its own, but I think that they do have options to keep it going. But I think with again, people living as long as they are, to me, I think they need to start working on this now and start coming up with some solutions. We don't want to go down the politics road, but you know how it is. They tend to not do that.

Marc:

Indeed. Well, Tony, I sat in with a interview with David Walker, who was the former Comptroller of the United States back in the '80s and the early '90s, I believe, and he talked about that issue. He was like, "Look, many people don't know, but there was a really close right there in the late '80s." Somewhere, I don't remember the exact date, but where people weren't going to get Social Security checks. He's like, "We waited until the absolute ninth hour," however that saying goes, before they fixed things. He says, "Because that's just how they operate." And he's like, "So I feel fairly strongly that they'll do something similar again."

Now, granted, that was 35 years ago, so who knows how things change? But that points to that historical nature that they have, of the thing that they fear the most, they wait till the absolute last second to touch.

Tony Mauro:

Yeah, that's something, I mean, look at the debt ceiling talks every what, six months to 12 months? It's just crazy. How about we just figure something out?

Marc:

Stop spending.

Tony Mauro:

Again, yeah, stop spending. Do something.

Marc:

Put down the checkbook, man.

Tony Mauro:

And yeah, it's unfortunate they do that. It would be, I would think, better politics to tackle some of these problems, even if it takes them 12 years, 15 years.

Marc:

Just get started, like paying down your mortgage. Sometimes you think, "Boy, I wish I could pay this off sooner," and it's like, "Well, you can if you start applying yourself and putting a little bit more onto the mortgage and get it paid off sooner." But it's the principle of doing it, so it's hard, sometimes, to do that, and clearly, our government doesn't do a good job with that.

All right, so that was the first one. Let's go to healthcare affordability in the future. All right, you're an optimist here, Tony, you said. So what's a half-full take on healthcare?

Tony Mauro:

Well, I think the optimistic view, basically, is as we advance technology and things get better in that respect, I think there's more and more talk these days of people trying to remain healthy into their 80s and beyond. And more people are cognizant of that, with the whole internet thing, as opposed to maybe 20, 30 years ago.

Marc:

Thinking about that, Tony, let me ask you this question. My wife and I will have on old TV shows, old sitcoms or something like that, and we've been just enjoying watching old reruns of The Golden Girls, for example. And they're in their 50s in that show. They're in their late 50s in that show, but at the time, when I'm in my 20s or whatever, I'm like, "Now, these people are old. They're in their 60s or whatever the case is, and they look old." And I'm 52, which is the age of one of them on the show, and I'm like, "I do not look like that."

So what's that saying: 70 is the new 50, that kind of thing? So I think you're right. We are better, I think, societally. As we move through time, we tend to look younger and feel younger for longer.

Tony Mauro:

I think so, too. Looking at my own parents and my dad, who's now 82, who still is in pretty good shape.

Marc:

When he was 50, though, you thought he looked old, didn't you?

Tony Mauro:

Oh, yeah, yeah, he was old. So I think it's perspective. Now, to me, old is 90s, and I have an uncle who's still 92, and he's playing golf. So I think with what we're doing today, especially in the technological fields, we are, which I think is part of the negative, maybe living too long, and people are keeping us alive too long.

Marc:

That's true, yeah.

Tony Mauro:

If we can do it comfortably.

Marc:

Right, and that's definitely the half-empty side, is with living longer comes more healthcare costs.

Tony Mauro:

More healthcare, yeah.

Marc:

And it's not cheap.

Tony Mauro:

It's not cheap, and it seems like, again, pointing to my own father, it seems like he's in at the doctor literally non-stop. He's got to go in for a little hernia operation tomorrow, as a matter of fact, as we're taping this, yeah. It's supposed to be in and out, but it's just every five, six months, he's got some things.

Marc:

It seems like almost weekly. Yeah, my mom's like, "Well, going to another doctor appointment. Well, going to another doctor appointment." My brother goes, "Good Lord, how often do you go to the doctor?" She's like, "I'm 82. A lot."

Tony Mauro:

A lot, yeah. But my dad is getting to a point now where he thinks, and there might be a little bit of truth to this, but he is a pessimist, is they constantly just want to do stuff to him to make money.

Marc:

Oh, yeah, yeah, yeah. Let's test for this. Let's test for that. Yeah, I'm with you there, too.

Tony Mauro:

He's definitely a pessimist.

Marc:

That's okay. I'm with him on that one. I'm with you, Daddy Mauro.

So all right, how about tax rates in the next decade? I don't know if we can find an optimistic view here, but maybe we can. The pessimistic view clearly is that the 32-trillion-dollar deficit, that tax rates more than likely have to ... We all feel pretty strongly, I think, that tax rates have to go up at some point, just because we've got to be able to pay for these things. We just talked about Social Security a minute ago, but is there an optimistic view on taxes?

Tony Mauro:

I tend to lean a little more pessimistic on this. I would say the only thing, potentially, is there could be some reforms, and I think it is occurring more at the state levels, at least it is here in Iowa, to benefit retirees by lowering their state taxes.

Marc:

Oh, okay. Okay, well, that's good.

Tony Mauro:

Just to keep people in the states and some different things, but I find it hard to believe that we are not going to have to be taxed in some way, because like I say, we've got a lot of stuff to pay for that we haven't.

Marc:

A lot of stuff.

Tony Mauro:

And I don't see how things can continue to go down. There's an argument out there about, "Well, if the economy grows at a certain clip, that it's going to be less reliance on taxation," but I don't know if I totally buy that.

Marc:

Yeah, yeah. Well, I'm glad you found a positive, though, so that is something to hopefully keep an eye on, especially at the state level, some tax reforms, especially benefiting retirees. That would be fantastic. That would be the silver lining in what is ultimately not a very pretty cloud, right?

Tony Mauro:

Right.

Marc:

Okay, long-term care options, excuse me, for Baby Boomers in general. Like the healthcare, definitely technology's got to be on the forefront here of the optimism side, right?

Tony Mauro:

Yeah, I think with the technology the way it's going and more and more people becoming cognizant of, "Hey, I'm going to need some sort of care, long-term," it doesn't necessarily mean nursing home. The insurance companies and everybody else are coming up with a lot of home healthcare solutions, which people tend to like. A lot of the assisted living facilities are using those progressive types of deals, where you go into assisted living. You're totally on your own, and as you need more care, you could advance along.

But I think most people, most seniors, I know my dad's the same way. He wants to age in his home, and I think that with what he's got and what's available out there, a lot of these long-term care policies allow you to do that, as far as that goes.

I think a little bit in the half-empty. At least here in Iowa, I had to mention it, is there's a shortage of healthcare pros, if you will. And I'll tell you, a lot of our Iowa nursing homes are in the news a lot for poor care and fines and all kinds of things. And so I think maybe that's because of the shortage for healthcare professionals, especially in that area. Maybe they're just not getting the type of people they need. I don't know.

Marc:

Unfortunately, needing workers, sometimes you change the criteria, and maybe you don't always get the cream of the crop.

Tony Mauro:

That could be, but I do think, too, on the negative pessimist side, is I still think there are way too many people that are unprepared and have not talked about this issue with their advisor or anybody else. And I think that's a huge part of a potential problem.

Marc:

Yeah, a huge disservice to yourself and your loved ones, for sure.

All right, let's do the last one here, and we'll wrap it up, and we're doing, again, half-empty, half-full view on some of the big ticket items coming down the pike for us all as we get closer to retirement. The stock market over the next five or 10 years. It's certainly been tough to read it, Tony, because it's been all over the place, and there's historical trends, which I guess you could look at the full side of that, the half-full side of the glass over long periods of time. Again, tech here is probably also helpful, as well, but the market is still going to be what it is, which is volatile, and Lord knows the world is volatile right now.

Tony Mauro:

World's volatile, yeah, and I think I tend to take a little longer view. I am always an optimist when it comes to the market, long-term, and long-term for me is 10 and beyond. Over the five to 10, it is. It's going to be volatile. I think that this is where, especially as retirees need to have a plan, need to be working with an advisor, and discussing where they need to have their money. So based on whatever plan they have, they can earn a reasonable amount without too much risk and hopefully, tax efficiency, as well.

But I think still, the market over all, if it's done right over the long term, is your best bet, especially in retirement and maximizing your income. But there are some, based on their risk assessment and some other things, that they may not be ready for that. And certainly, with all the uncertainty in the world and the negative news, I've actually gone myself to not watching news. I want to read it.

Marc:

Only when you have to. You have to not watch.

Tony Mauro:

But even it's so funny. With the negativity in the news, if you go to a search, and we're getting off-topic, and whatever's on there, and you read that article, it's amazing how many other articles start popping up wherever you're at, online, with the same negative news. It's just like everybody's got their slant on it, and you can get overstimulated, maybe, with negativity.

Marc:

Well, it's not even just watching it on the news now, because it stalks you in your social media things, all this stuff on your phone in general. There's a term for it now. It's called doom scrolling.

Tony Mauro:

Doom scrolling?. I never heard of that.

Marc:

Yeah, if you hadn't heard of that, it's doom scrolling, where you basically just go down this spiral of continuously scrolling through stuff. So you can't get out of the spiral, and often, it's negative, which does not do well for the psyche, so not a good place to be.

So yeah, I think when it comes to the stock market, there's always going to be those pros and cons there. There's going to be bubbles. There's going to be over-valuations. There's going to be good periods, bad periods. So I think we got to take that with that grain of salt. And to your point, you got to work with a qualified professional to make sure that you're dealing with things as they come or as they're going to come, because there's a lot of things that happen to us all as we age, and we got to have a plan for that.

So that's why you need to Plan with The Tax Man, so get on Tony's calendar, if you haven't done so yet, you would like to talk with him. He's a CPA, a CFP, and an EA-enrolled agent for 27-plus years, helping families get to and through retirement and a great resource for you to tap into at Tax Doctor Inc.

You can find him online at yourplanningpros.com. That is yourplanningpros.com.

Tony, thanks for hanging out, my friend.

Tony Mauro:

All right, we'll see you next time.

Marc:

Yeah, appreciate you, and keep that optimistic view, because we need more of that in the world, that's for sure. We'll catch you later here on Plan with the Tax Man with Tony Mauro from Tax Doctor Inc.

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