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Comment by morgante | Hacker News Reader

> I have always found it to be extremely annoying when I hear people talk of senior citizens being "On fixed incomes"

It's such a ludicrous statement.

Are the rest of us on variable incomes which we can scale up and down at will?

When I hear senior citizens on fixed incomes, I assume we're talking about people who have left the workforce, permanently. Unlike almost everyone else currently in the workforce, there is absolutely no expectation of any future change in income. In this regard, it does not seem silly at all.

> Unlike almost everyone else currently in the workforce, there is absolutely no expectation of any future change in income.

Social Security is adjusted for inflation: https://www.ssa.gov/news/cola/

Likewise bond yields and stock prices will change with inflation/deflation.

Any retirement scheme not adjusted for inflation is a rip-off at best and a scam at worst.

Matching inflation would be no change in income, which is exactly why they do it.

> Social Security is adjusted for inflation:

Which makes it fixed in real terms.

> Any retirement scheme not adjusted for inflation is a rip-off at best and a scam at worst.

Fixed (in nominal terms) annuities are not-infrequently used as retirement vehicles (and many pensions are either fixed or have less-than-full COLAs.)

> Which makes it fixed in real terms.

So where is the problem? Inflation adjusted income has barely increased at all for anyone but the top 20% of earners since the mid-1960s: http://www.advisorperspectives.com/dshort/updates/Household-...

> Fixed (in nominal terms) annuities are not-infrequently used as retirement vehicles

Which is why annuities are almost always a rip-off.

> So where is the problem?

Whether or not its a "problem", that is an explanation of why it is an accurate description of the scenario faced by the group in question, and a useful label.

> Inflation adjusted income has barely increased at all for anyone but the top 20% of earners since the mid-1960s

Its barely increased for the averages of segments of the income distribution. That doesn't mean individuals don't see income growth over time (and even move between, e.g., income quintiles), it just means that (except in the top ranges) the overall distribution isn't moving up.

That's an important issue, to be sure, but its a different issue that individuals on fixed incomes and the impacts specific policies, etc., may have on the, distinct from the rest of the population which makes it useful to identify and discuss them as a group with a label.

If bond yields adjust to rising inflation, that means their prices go down and their coupons stay fixed. For stocks, prices follow the prices of bonds, and earnings take a hit, so you also a get hit on the dividends side. So it's not a good story for retirees.

National inflation doesn't cover local cost-of-living variation.

No, but if you take out housing that's a big part of the variation. And, historically, it was assumed that many on a "fixed income" would own their houses and/or move to a lower COLA area (e.g. the stereotypical retire to Florida or, more recently, the Southwest).

Property taxes are a potential wildcard which is one reason why increases are often capped--which isn't popular with the "they should just move out" crowd.

How do you just ignore housing, though? Housing is probably the single most important expense and the most likely not to track national inflation. That's most of what people "on a fixed income" are at risk from.

>Are the rest of us on variable incomes which we can scale up and down at will?

Are you on an income which is, by law, tied to changes in the Consumer Price Index? That's how Social Security works. From the 2016 benefit letters:

"The law does not permit an increase in benefits when there is no increase in the cost of living. So your benefit will stay the same in 2016. There was no increase in the cost of living during the past year based on the Consumer Price Index (CPI) published by the Department of Labor."

So maybe "pegged", as in "pegged to an index", would have been a better idiom, but we're probably stuck with "fixed".

When discussing income, there are two measures, "nominal" (the number of dollars) and "real" (the amount of buying power, which is the number of dollars adjusted for inflation).

Social security is fixed real income. Annuities are fixed nominal income.

Yeah... When someone says fixed income, I assume they mean a fixed income. Ie a pension or an annuity that does not adjust with the cost of living.

Yes? When you're young and in the workforce you can get a raise, get a higher paying job, learn new skills, etc.

If you're retired and possibly chronically ill you have little opportunity to do such things.

It's even worse: seniors are on RISK FREE (or nearly so) incomes, often grealty tax shielded. The rest of us are on much more precarious footing. Though we way earn more, we also often have rising financial obligations during childbearing years.

Yes, a 25 year old has far more mobility than a 90 year old.

A 90 year old has lived through and benefited from a period of amazing upwards mobility. Their financial position now is most likely unrecognisable from that of their youth - even if they don't seem that well-off. But a 25 year old has virtually no mobility to look forwards to, household incomes have been stagnant since the 1970s and social mobility (which is, let's face it, closely tied) has similarly flatlined.

Abundant cheap housing and the GI bill were a pretty sweet deal - despite the hardships that it took to get there.

Not always. The 25 year old may have to be stuck in a high priced city to get a job that pays off their massive student loans. A 90 year can live away from the jobs.

Some elderly people are so mobile that they migrate with the seasons. I don't know many working-age people who can afford to spend summer in Ontario and winter in Arizona.

https://en.wikipedia.org/wiki/Snowbird_(person)

Hugely popular with retirees. My parents own a condo in Sarasota Florida which has tons of retirees. I believe the last estimate I heard was that the population can grow up to 10x during the winter months.

I'm talking about economic mobility.

Also older folks are much more likely to have wealth to live off of than young people. But we don't like to talk about wealth in America really, only income.

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