Least Prepared Older Americans

[Chuckanut]

Here is another article on how the current baby boomer generation is not prepared for retirement at what most consider the normal retirement ages in the mid-60's.

I am certain many in this group will find the problems similar to what we have seen in the lives of many people we know.

Of interest to me are the charts (while not as interesting as the personal stories, tell a more chilling tale, IMHO) including the ones showing participation in work place retirement plans - 46% of the people aged 50-59 did not participate in any plan. Is that because they choose not to or there is no plan? Also,the graph showing increasing debt for older people seems to indicate that LBYM is not very popular. Surprise.!

https://www.wsj.com/articles/a-gene...epared-in-decades-1529676033?mod=hp_lead_pos5

This cohort should be on the cusp of their golden years. Instead, their median incomes including Social Security and retirement-fund receipts haven’t risen in years, after having increased steadily from the 1950s.

As with many baby boomers, 56-year-old Kreg Wittmayer once thought he was doing things right for a solid retirement. In his 20s, he began saving in his 401(k). He cashed it out after a divorce at age 34. He built up the fund again, then cashed out five years later after losing his job, he says. “It was just too easy to get at.”

Tempted by a prolonged era of low interest rates, boomers piled on debt to cope with rising home, health-care and college costs. Interest-rate declines hurt their security blankets. Lower earnings on bonds prompted many insurance firms to increase premiums for the universal-life and long-term-care insurance many Americans bought to help pay expenses. Some public-sector workers are living with uncertainty as cash-strapped governments consider pension cuts.

Others have been diligent savers but lacked knowledge to manage their money. “You don’t have a lot of people to coach you how to invest,” says Parline Boswell, 63, of New York City. She saved $5,000 during several years as a housekeeper in the 1990s while raising three children.
In 1998, she went to a bank for investing advice and ended up with a money-market account, which earned minimal income until 2007. She had become a hospital phlebotomist and in a conversation with colleagues learned about tax-advantaged investing.

“We were allowed to pick our own stocks and I jumped on some high-risk ones,” he says. His 401(k) lost about half its value early in the 2000s and lost about half again in 2008, he says. “We didn’t plan it right and lost a few times.”
He and his wife, Connie, 56, withdrew about $25,000 from the account to buy a house last year when he was transferred to Houston from New York. The account is down to about $20,000, they say, and they haven’t been able to sell their New York home, so they have two mortgages.

Money tight, Ms. McCord says she is selling parts of a collection of Star Trek action figures, dolls, yo-yos, lunchboxes and a book autographed by actor Leonard Nimoy.
She also struggles with another higher cost for her age group: life-insurance premiums. The annual premium on a policy she has owned since 1994 more than tripled over the past two years, she says, to about $2,000 this year. “I just want to scream bloody murder,” she says. “It is hurting so bad.”
She wants the $100,000 policy to pay for her funeral, to extinguish debts and to “hopefully have a little for our grandkids” left over.

 

[Gumby]

Of interest to me are the charts (while not as interesting as the personal stories, tell a more chilling tale, IMHO) including the ones showing participation in work place retirement plans - 46% of the people aged 50-59 did not participate in any plan. Is that because they choose not to or there is no plan?

In my opinion, one of the more pernicious myths is that you cannot possibly save for retirement unless you have a 401k/403b. Wrong, wrong, wrong. Although it may be easier with a 401k, you can always just save and invest money out of your take home pay. And an IRA is always available.

When I was in the Navy, I had no 401k, but I still saved my money. Since then, I've had 401k plans, but never, ever a match. The problem for these people is saving at all, not lack of a tax advantaged plan or an employer match.

 

[Texas Proud]

Paywall...


It interesting these kind of articles come out... but then at times I read an article about how much money people have.... kinda the exact opposite of this one...


But, your question... Is that because they choose not to or there is no plan?... see the 'Savings money is stupid' thread...

 

[Walt34]

Many of my relatives are or will be in the position of being unable to work and have no money saved. Sad, but I have to wonder what they expected would happen.

 

[Sunset]

In my opinion, one of the more pernicious myths is that you cannot possibly save for retirement unless you have a 401k/403b. Wrong, wrong, wrong. Although it may be easier with a 401k, you can always just save and invest money out of your take home pay. And an IRA is always available.

When I was in the Navy, I had no 401k, but I still saved my money. Since then, I've had 401k plans, but never, ever a match. The problem for these people is saving at all, not lack of a tax advantaged plan or an employer match.

+1
I also saved into an IRA when I didn't have a 401K.
When I had 401K's available to me, sometimes they had no matching, but I still plowed what I could into them.

 

[Walt34]

Paywall...

From using the posted link, yes, but search on the article title and there is no paywall and you'll see the entire article. This doesn't happen every time but it worked for me this time.

 

[RetireBy90]

I read it this morning hard copy. Several interesting points. What will those in danger going to do. You all know the options, work longer or spend less, some of both, or get the money from others. Some will get a bequest from parents that are passing now days, some will probably move in with kids or rely on them for help.

Some made bad choices, (one has $90K in debt for kids education) some had bad things happen like sickness, and some didn’t save for retirement.

The question is what to do with the ones not willing or able to make it. Elected officials will not just let them fall through the cracks, nor should they. But with 45% of Americans getting some funding from govt already can the country afford it?

It really gets me pissed cause you know we will end up paying for a bailout. I’m not really heartless, but dang I’ve been saving for my retirement all these years, now I have to pay for the retirement of others?

 

[Chuckanut]

The question is what to do with the ones not willing or able to make it. Elected officials will not just let them fall through the cracks, nor should they. But with 45% of Americans getting some funding from govt already can the country afford it?

It really gets me pissed cause you know we will end up paying for a bailout. I’m not really heartless, but dang I’ve been saving for my retirement all these years, now I have to pay for the retirement of others?

One of the good things about Social Security is that it forces people to contribute something to a system that will help them financially in retirement. Without it, I suspect the money what was deducted for their SS contribution would probably been blown on who-knows-what also.

 

[brett]

I can well understand the stats. Lots of people have not fully recovered financially from the housing crisis and downturn in 2008/9. Retirement savings were depleted to pay living expenses. Some of those that did have DB's were terminated prior to reaching their prime contribution years.

Many who lost good jobs found new ones but at a much reduced level of compensation and benefits. Numerous firms have eliminated or reduced DC matching to offset the increasing costs of providing health care benefits to employees.

Medical care, prescription drugs, and education costs have all increased at a significantly higher rate than the cost of living.

It would not be a surprise to me to learn that those who were in their late 40's or 50's at the time of the recession are the least prepared for retirement. Events and possibly health care expenses overshadowed their financial lives.

 

[athena53]

It would not be a surprise to me to learn that those who were in their late 40's or 50's at the time of the recession are the least prepared for retirement. Events and possibly health care expenses overshadowed their financial lives.

It does vary. I was about to say that I got through just fine (was 55 in 2008) but it sure helped that I stayed continuously employed in good jobs, had health insurance, etc. What happened to my investments was scary but I hung on and they recovered. OTOH, a very good realtor I know (she was assigned to us in my corporate move and then DH and I used her again when we downsized) told me she went through a lot of her savings during the bad housing market. She said Medicare, when she was finally eligible, was a blessing. I guess I can't be too smug. It's partly luck. There are also people out there who gave up on finding new employment and filled for SS at 62.

But- just last night I was in the Chat Room section of a Widows/Widowers Board and two widows who were struggling mentioned what they were getting in SS. One said she was getting $1,350. The other said she was getting a bit less than that. Neither had other substantial income. Wow.

It's pretty straightforward to get info on what you and/or your spouse or surviving spouse stand to collect in SS based on your earnings record to date. I suspect neither of these ever did and just figured SS would be enough whenever they started to collect it. Very bad planning and I feel sorry for them.

 

[Walt34]

I suspect neither of these ever did and just figured SS would be enough whenever they started to collect it. Very bad planning and I feel sorry for them.

The standard of living can vary quite a bit depending on where one lives. A distant relative is ~88 and gets about $850/month in SS. But she lives in a wealthy area with lots of subsidized amenities. She lives in a nice subsidized apartment, I'm sure she gets SNAP, probably any other state or local benefit she's eligible for, is on Medicaid and even drives a beater car, but she's afraid to drive it any farther than she can afford to take a taxi back home. But hey, it's a set of wheels for now.

Looking at the inside of her apartment one would never guess that her income was that low. For a single person to live in, it's actually very nice.

 

[braumeister]

The standard of living can vary quite a bit depending on where one lives. A distant relative is ~88 and gets about $850/month in SS. But she lives in a wealthy area with lots of subsidized amenities. She lives in a nice subsidized apartment, I'm sure she gets SNAP, probably any other state or local benefit she's eligible for, is on Medicaid and even drives a beater car, but she's afraid to drive it any farther than she can afford to take a taxi back home. But hey, it's a set of wheels for now.

Looking at the inside of her apartment one would never guess that her income was that low. For a single person to live in, it's actually very nice.

It's wonderful that we still have that much of a safety net for many people.

 

[aja8888]

The standard of living can vary quite a bit depending on where one lives. A distant relative is ~88 and gets about $850/month in SS. But she lives in a wealthy area with lots of subsidized amenities. She lives in a nice subsidized apartment, I'm sure she gets SNAP, probably any other state or local benefit she's eligible for, is on Medicaid and even drives a beater car, but she's afraid to drive it any farther than she can afford to take a taxi back home. But hey, it's a set of wheels for now.

Looking at the inside of her apartment one would never guess that her income was that low. For a single person to live in, it's actually very nice.

You know, there is a huge amount of nice condition, free or almost free, furniture available almost everywhere these days. At 88 though, she is probably OK, as long as she has no big spending habits.

 

[Walt34]

You know, there is a huge amount of nice condition, free or almost free, furniture available almost everywhere these days. At 88 though, she is probably OK, as long as she has no big spending habits.

She's fine on the furniture front.

Her spending habits are what got her in that condition. Funny you mention furniture - she's been carting around an "antique" couch to every move for 50 years that no one is allowed to sit on because it is "so valuable". Yet everyone in the family agrees they would throw the ugly thing out if was in their house. When she passes I'll be surprised if an auctioneer can get more than $20 for it.

 

[Sunset]

......
The question is what to do with the ones not willing or able to make it. Elected officials will not just let them fall through the cracks, nor should they. But with 45% of Americans getting some funding from govt already can the country afford it?

It really gets me pissed cause you know we will end up paying for a bailout. I’m not really heartless, but dang I’ve been saving for my retirement all these years, now I have to pay for the retirement of others?

I am also pretty pissed at all the ones who spend, spend, spend... and then have little savings which doesn't last, and then cry 'poor me' , 'you are so lucky' etc...

It bugs me a lot as I have a sibling who blew a $50K inheritance, and then told me she had to move into supported living and needs money.....
So I support her to the tune of $4K/yr, all the while I see if she had not blown the $50K, I wouldn't need to support her for the first 15 years

 

[97guns]

For many Americans the best and ONLY way that they can save is through home ownership, if you don’t save and compound that with no home ownership then your gonna be in really bad shape financially in your golden years

 

[UnrealizedPotential]

For many Americans the best and ONLY way that they can save is through home ownership, if you don’t save and compound that with no home ownership then your gonna be in really bad shape financially in your golden years

They either need to sell the home to get to the equity or do a reverse mortgage. I guess there is a home equity loan one can do. Myself personally, I sold my place and don't regret it. But what if someone's situation is such that they don't qualify for a home equity loan ? What if doing a reverse mortgage doesn't make sense for them and they don't want to move?


There's a lot to consider. It really IMO doesn't do anyone any good to be sitting on equity with no good way of getting to it unless they sell the home and they don't want to do that because they don't want to move.


If one has other investments to live off of then it wouldn't matter as much. But if it is as you say, their only investment, I see a potential problem.

 

[97guns]

......... But if it is as you say, their only investment, I see a potential problem.

It’s not as I say, it’s as the statistics and this thread says, this thread is referring to Americans with little to no savings then a big Yes, if they don’t own a home i assume they have no investments, can’t really imagine a guy with a net worth of 10 or 25k to have some apple stock or a mutual fund for that matter, the guy is struggling to eat dinner tonight

 

[UnrealizedPotential]

It’s not as I say, it’s as the statistics and this thread says, this thread is referring to Americans with little to no savings then a big Yes, if they don’t own a home i assume they have no investments, can’t really imagine a guy with a net worth of 10 or 25k to have some apple stock or a mutual fund for that matter, the guy is struggling to eat dinner tonight

Sam Zell, a real estate Billionaire , yet was worried he would make payroll for his employees. Why? He had all of his money tied up in investments. I would hate to see someone with a bunch of equity in a home they can't get to struggling to survive on SS payments.


My issue with you is you seem to think that home ownership is the cure all for the dilemma older Americans are facing. I see it differently. I am not against home ownership. But it is a very illiquid investment and it's not easy getting to the money.

 

[Major Tom]

One of the good things about Social Security is that it forces people to contribute something to a system that will help them financially in retirement. Without it, I suspect the money what was deducted for their SS contribution would probably been blown on who-knows-what also.

+1. I'd be in favor of an increased SS tax if the benefits were increased also. Many folk will never, ever save. Some of it may well be due to simple shortsightedness and lack of good planning, but I think a lot of it is due to the way we are wired. I see it in some of my friends, and I know many others here do also. I really don't want to see my friends and fellow citizens suffer unnecessarily in their old age. Admittedly, there is only so much you can do for others if they are unwilling to help themselves, but I wouldn't be at all opposed to an increase in SS taxes and benefits. Besides, maybe my SS would go up too

 

[Conundrum]

I am also pretty pissed at all the ones who spend, spend, spend... and then have little savings which doesn't last, and then cry 'poor me' , 'you are so lucky' etc...

It bugs me a lot as I have a sibling who blew a $50K inheritance, and then told me she had to move into supported living and needs money.....
So I support her to the tune of $4K/yr, all the while I see if she had not blown the $50K, I wouldn't need to support her for the first 15 years

I am of the belief you will see means based social services more than ever as time goes by. Yes, it seems inevitable that you will be subsidizing those living well beyond their means in trophy homes and driving leased High end vehicles right now while you live modestly in a comfortable ranch home and drive a Camry or F150

OTOH, You have folks who have worked their brains out at two modest jobs for 40 years and just barely made it all the while living modestly. They have always given their best effort.

I have friends on both ends of the spectrum. I do feel conflicted on the whole matter for sure.

 

[97guns]

Sam Zell, a real estate Billionaire , yet was worried he would make payroll for his employees. Why? He had all of his money tied up in investments. I would hate to see someone with a bunch of equity in a home they can't get to struggling to survive on SS payments.


My issue with you is you seem to think that home ownership is the cure all for the dilemma older Americans are facing. I see it differently. I am not against home ownership. But it is a very illiquid investment and it's not easy getting to the money.

I may come off as RE being the be all end all because that’s the path I took but that is not my belief, I’ve used equities to gain capital, my father was a die hard dividend investor, I’ve seen many become wealthy through other investments and further more I have no issues with you or any other member here, it’s your perception

 

[97guns]

I may come off as RE being the be all end all because that’s the path I took but that is not my belief, I’ve used equities to gain capital, my father was a die hard dividend investor, I’ve seen many become wealthy through other investments and further more I have no issues with you or any other member here, it’s your perception

Maybe I should add “through real estate” to my signature line to further exemplify my belief of the be all end all

 

[Teacher Terry]

Sunset, I really can’t even fathom helping to support a sibling. Helping to connect them with services yes but money no.

 

[97guns]