When an old person says they’re on a fixed income

Aren’t we all ‘on a fixed income’ ..?!

I've always though this too. People making commissions or whatever have variable incomes. Isn't everyone else's fixed?!? It's become a poorly-worded euphemism for being on social security. If you google it, you'll get this definition .... Fixed income is a class of assets and securities that pay out a set level of cash flows to investors, typically in the form of fixed interest or dividends.

^ wrote:

Aren’t we all ‘on a fixed income’ ..?!

I saved my money wrote:

When an old person says they’re on a fixed income: does that mean they didn’t save any money for retirement so they’re living on social security alone? I don’t know how many times I’ve heard someone say this. Probably hundreds. Is it the equivalent of me saying “I can’t afford lunch this week cause I spent all my money on Vodka-Redbulls? I guess I don’t get why people advertise how poor they are.

Savings are not income.

Many times this refers to social security and required minimum distributions which are known, therefore fixed. It can also refer to the amount people have determined is the max they will spend in a year so use fixed in a budgetary sense.

I don't think I agree with that take

'fixed' income to me implies in this scenario:

a) I no longer earn a salary/paycheck/RSUs/options/etc

so, my $ comes from:

pension, SS, annuity [aka 'fixed']

This isn't hard. This doesn't imply the individual making this claim isn't also receiving rents, dividends, or occasionally making capital gains on sale of investments

it just means that they are trying to signal to you that they have a limited budget on account of not having an 'income' any longer. Yes, perhaps they are trying to suggest that you split the tab or pursue more budget friendly alterntives.

The wealthy people I know who are retired [fixed income!] have some pretty impressive toys yet are very budget conscious. Eg walmart shoppers, happy hour stuff, all about that senior discount /etc

It can also be a polite way of saying you don't want to do something. "Fixed income" could easily be $200K/year. It simply means that there are finite resources from that point forward and accelerating the 401K drawdown means you better not live longer

I also thought it literally meant that the person would not see a raise again. The assumption was that it referred to retired people and their pensions and social security income would not increase. While I was working it annoyed me because there was also an expectation that we should feel sorry for these poor people but many retired people are better off financially than workers in their 20's. While working, my income was often frozen for over 18 months at a time and I never got COLA's like fixed income people collecting social security received.

They might have social security plus a huge pension check each month. Would still be "fixed income", but doesn't guarantee poverty.

Pelosi and Schumer want fixed income for everyone, not just old persons. Rich people excluded, of course.

Has the poster here even graduated high school?

When you are working you have some control over how much you earn this year, next year and so on into the future. You can increase your income by working overtime, earning commissions or bonuses, getting good pay rises or promotions. Your income is not fixed, you have the ability to influence it. When you retire and go on to a pension it is fixed, you can't change it.

Savings can help, if you have a good pension and plenty of savings then the fact that your income is fixed is somewhat irrelevant - unless inflation runs riot. If you have a small, or no pension and little savings then a fixed income is a problem.

Generally the "fixed income" is likely someone on social security and a pension. This means that while they are getting minimal cost of living increases, they are not benefitting from the growing economy.

Ironically, this dynamic flips in recessions and depressions as fixed incomes become hugely beneficial.

Yeah, I put in some long hard years to secure my "fixed income" that is the envy of some of my more financially adventurous peers who rise and fall according to the pulse of markets and fickle portfolios.

I saved my money wrote:

When an old person says they’re on a fixed income: does that mean they didn’t save any money for retirement so they’re living on social security alone? I don’t know how many times I’ve heard someone say this. Probably hundreds. Is it the equivalent of me saying “I can’t afford lunch this week cause I spent all my money on Vodka-Redbulls? I guess I don’t get why people advertise how poor they are.

They're no longer working so they don't have the ability to pick up extra hours, extra work, as for a raise or get a second job. The pot of money they're drawing from isn't being added to by working.

They statement has nothing to do with being rich, poor, or in between. You could have $10 or $10 million in the bank and if you're not working, you might be on a "fixed income," i.e. drawing a finite amount from that account every month. In other words, when the money is gone, it's gone.

Edit: *ask* for a raise

The conventional wisdom on retirement is that you can draw 4% of your nest egg in your fist year of retirement and then draw that same amount each year, adjusted for inflation, and, if you do that, your retirement savings will almost definitely last 35 years (assuming a traditional asset mix).

So even those who are successful and have planned well for retirement may be on a fixed income, in that the amount is functionally set and will not change in any meaningful way on a regular basis.

So you could retire with say $5,000,000 and draw $200k/year from that and another $30k per year from social security, and, while you would be clearing almost $20k per month, you would be on a fixed income.

To your bigger point though, there is a connotation associated with the phrase that typically means that the party making the statement has not only a fixed, but also a limited, income.

You heard the concern of retired people being on a fixed income much more during times of high inflation (1970s/80s). As mentioned, retired people: (1) are no longer earning a salary, which employers (who can afford it) tend to adjust somewhat to address inflation, and (2) tend to have their savings invested in bonds and CDs ("fixed income investments"), rather than the stock market, commodities or real estate, which better respond to inflation. So as retiree's costs for goods, services and rent rise during inflationary times (dramatically in the 70s ands 80s), their fixed income did not.

Does fixed income also mean guaranteed income?

CrispyChicken wrote:

Does fixed income also mean guaranteed income?

Basically, YES. Though there have been cases of large corporations going bankrupt and the auditors then find the pension fund had been raided in one last attempt to avoid bankruptcy. Also governments do have the power to cut pensions and benefits but need to be careful as seniors are a large voting block.