At Work

Comparing averages; say what?

Comparing the average pay of men and women and concluding there is discrimination today is as accurate as comparing the average Social Security benefit with the benefit collected by a new beneficiary and concluding today’s benefits are too high. 


Categories: At Work, Social Security

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4 replies »

  1. Why not compare the benefits of today’s retirees to new retirees and make adjustments. I retired from the USAF pay grade E-7 in 1995, after 20 years of service with COLAS my retirement check is $1736 per month. A person who served 20 years after me and retires today at the same pay grade E-7, with the same 20 years of service gets $2,199 per month. That is part of the problem with ALL the retirement programs today, because most years current retirement benefits get the same COLA as the current workers, but it is on a smaller amount so it grows slower. Retirement formulas need to be adjusted to reflect this and it will help balance many of the shortages.

    Many will say this is unfair, but why should new retirees get $5,556 more per year for the same years of service. That is an additional $111,120 over 20 years, or $194,460 over 35 years, not counting COLA increases.

    Many people I know when they find out I served in the military 20 years and get a retirement check until I die, say that is not fair. But then I ask, why didn’t you serve and take advantage of the military benefits? Or, when I tell them I am subject to recall to active duty up until age 60. Most of them tell me they never even considered military service, because they wanted more control of their life.

    I remember in 1975, a boss of mine when I first enlisted telling me the low pay we received would be offset if we served 20 years or more with a retirement check. Still only about 20% of those serving in the military stay long enough to receive a retirement check. Military pay has improved quite a bit since I was on active duty and something will have to be done with the retirement system, because the leaders know it cannot be sustained.

    With 10,000 per month, 4 million per year baby boomers retiring every year for the next 20 years, 80 million, something will have to be done to adjust Social Security payments. Monthly payments from SS will increase $13,410,000 per month, 5.3 billion per year. That is 3.2 trillion dollars over 20 years. These numbers are averages and do not include wage formula increases or COLA increases. Where is this money going to come from?


    • I think you miss the point; pensions balance pay and service and over time their benefit formulas may change as well improving benefits for future retirees.

      In addition, the goal is not the same dollar pension but similar replacement ratios. Obviously, a pension calculated in 1990 will be smaller than one in 2016 simply based on changes in pay, but the initial replacement percentage may be the same.

      Except for public employee and federal pensions COLAs are rare. I have been retired six years and my pension has not changed a penny. However, the person doing my old job makes considerably more than I did six years ago and will get a larger pension.


    • First, thank you for your service. I joined the NJANG in 1981 in the hopes of earning a $200 month pension after 20 years. Since I had no pension at the time, $200 a month was better then nothing and at the time I joined I was making less than $200 a week. I later found a civilian job with a pension which has since been taken away from the new hires. I ended up quitting the Air Guard because I was losing money taking time off from my civilian job to do my weekends. I never consider COLA in retirement. To be truthful in 1981 I did not even know it existed or what it was. However I have always known that the day I retired my income would be fixed and tried to save accordingly. I also knew that my wages in 2021 would be much higher than in 1981. I always assumed that my pension would be equal in buying power relative to that $200 on the day I retired even with outrageous inflation of the 1980’s but I did not expected my pension to remain equal in buying power for the length of my retirement.

      I never looked at the pensions values for retirees for the same job or in your case the same rank and you made me think. You have a valid point but I do not think that there was ever a promise to keep raising your pension. Which brings me to Social Security and why do people think that they are entitled to COLA since SS was never meant as a pension in the first place?

      I also know how the politicians bought votes and cause an unrealistic expectations and have created additional problems.

      My issue now is that they do not change my pension or government rules before I retire in the next few years. I do not have enough working years to adjust for any changes to what was promised to me over 35 years ago.


      • Keep in mind that what you have accumulated as a pension cannot be reduced, but what you will accrue in the future can so if you are projecting a future benefit based on the plan as it is, that could prove wrong.

        My previous employer had a consultant convince it that pensions were too generous (they weren’t but that’s another story) and as a result effective the following January a new formula with less accrual was put in place. That meant people had one pension up to that date and another after. When combined the total was less than would have been the case under the old plan.

        Some people lost several thousand dollars a year from what they had expected. Many people retired early just before the new plan went into effect while others found they had to work several years longer than planned because of the lower benefit.

        The shock was that for many years a tool was provided to employees just so they could project their future retirement income which as a result of this change proved greatly overstated.


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