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Old 09-11-2015, 01:05 PM   #41
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I think if you tell most people who are not already saving for retirement, at any income level, to start saving 10% to 15% it seems like an impossible amount. Most of us wouldn't like to cut our expenses by an additional 15% either. That would cut most of my travel budget.

People survive just fine on a median income. So people making the median plus 10% ought to be perfectly OK with saving 10% for retirement right? Doesn't seem like that is happening. Not enough income is the excuse, but no priority for retirement is the problem.

I told my kids to save 15% of gross pay as soon as they started working.
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Old 09-11-2015, 01:12 PM   #42
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Originally Posted by Animorph View Post
I think if you tell most people who are not already saving for retirement, at any income level, to start saving 10% to 15% it seems like an impossible amount. Most of us wouldn't like to cut our expenses by an additional 15% either. That would cut most of my travel budget.

People survive just fine on a median income. So people making the median plus 10% ought to be perfectly OK with saving 10% for retirement right? Doesn't seem like that is happening. Not enough income is the excuse, but no priority for retirement is the problem.

I told my kids to save 15% of gross pay as soon as they started working.
+1
I think you nailed it exactly.
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Old 09-11-2015, 01:20 PM   #43
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I told my kids to save 15% of gross pay as soon as they started working.
That's the key. I gave the same message to mine. That's why it makes so much sense to have a default 401k contribution that needs to be opted out, not it.

FWIW I think more young people are saving for retirement today vs the same age group a generation ago.
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Old 09-11-2015, 01:25 PM   #44
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It's sad to see the amount of financial illiteracy in this thread. I w*rked in the financial services industry, it's no different. Many folks had Series 7 licenses to sell securities, but couldn't manage their own finances.
Some of us FIRE'd, but I have friends that will never be able to retire. Sad when I hear stories of the stupid decesions they have made.
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Old 09-11-2015, 02:09 PM   #45
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She did not say, but. She indicated she was not putting that much in.


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Old 09-11-2015, 02:27 PM   #46
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Our oldest kiddo lives a pleasant life now as a college student on budget. I've suggested spending $1K more a month post graduation and banking the rest towards FI, and then being able to live a work optional life at an early age, similar to the advice in the video link below from Robert Shiller to his students:

The investing golden age may be over: Robert Shiller | Watch the video - Yahoo Finance
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Old 09-11-2015, 02:44 PM   #47
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I think part of the issue in "BOTH" directions is people have a perception of what things cost and what a "standard" lifestyle looks like and they are so drastically different. The person who makes $100k/yr can't afford a home because they can't find one that has a decent kitchen with stainless steal and granite and the person who makes $40k/yr is bragging they just bought a home with newer cabinets and laminate floors and the person making $20k is just happy they bought their fixer upper for $50k and almost has it paid off and dream of the great life will be when they don't have that $350/month mortgage payment...just think what they could buy with $350 extra each month.
*sigh* We're kinda in the $100K household gross income but can't buy a house category. It's a bit hard when move-in ready starter SF homes go for $600K minimum. Another problem is realtors tend to buy the fixers with cash and then flip them for double the price.
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Old 09-11-2015, 02:46 PM   #48
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What went wrong?
How did our society manage to give the current youthful generations the idea that saving and LBYM is not still right?

.
LBYM has been overridden by YOLO. That's how.

Got a guy on my street just bought a $250,000 boat, wife drives a nice new Mercedes. They keep these things until they get repo'd; I suspect he'll turn the boat in after the season so he'll have had a nice summer with it for what might amount to four payments.

He's on his third bankruptcy/foreclosure; doesn't look worried.

Thinking about RE? No problem! He doesn't have a job now and hasn't for all the time I've known him!

Maybe he's onto something.....the road to RE seems to have many avenues. I'm being snide of course.
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Old 09-12-2015, 08:21 AM   #49
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I believe the reasons below have contributed greatly to the problem. . . 3) Need for instant gratification
This seems like a universal human characteristic that has existed at all times and places, so I think the modern American phenomenon of inability to save for retirement must be attributable to other things unique to our present culture, economic system and/or government.
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Old 09-12-2015, 08:37 AM   #50
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This seems like a universal human characteristic that has existed at all times and places, so I think the modern American phenomenon of inability to save for retirement must be attributable to other things unique to our present culture, economic system and/or government.
I think its still that, but now add easy credit cards (no cash needed any longer) and how different shopping is today. You have access to see and buy a million things at your fingertips. Ie so if I never saw something I wouldn't know I "NEEDED" it right? you only had 3 TV channels and only so much ad space. I think when you watch TV today, its also very different.. when I watch older tv shows, they all live in a "normal" house and people are actually doing real jobs (folding laundry while they talk..etc).. however now if you turn on TV, every single person lives in an expensive house, with expensive items, with the fanciest cars, the best gadgets.. so all this has become "standard" expectations.. so if I don't have what is shown on TV, then I must not be middle class thus I'm poor.

Unfortunately I also think things like Super Walmarts where there is just an overload of everything in your face makes that "impulse" to buy NOW even stronger. Its not like you see something in a magazine and wonder about it and think well I wonder how big it really is or what quality it is or does it really do A/B/C.. maybe i'll order it, but they only take check so I need to wait till pay day.. its right there in the store in front of you.. and you can have it this second. you don't even have to have the money to buy it because you have a Credit card and you can pay for it when you get your next paycheck.

So what is different, our brains are on overload from marketing and we have easy access to credit and we have very limited impulse control.. made worst by the devices we use every day feeding that lack of impulse control.
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Old 09-12-2015, 10:18 AM   #51
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There aren't many studies that compare financial awareness and readiness among the generations, but I found two:

Wells Fargo https://www08.wellsfargomedia.com/do...udy-report.pdf
Transamerica https://www.transamericacenter.org/d...enerations.pdf

These studies are ongoing, so comparisons with previous years are also among the conclusions. I would say they seem to point to a different conclusion than the one voiced in this thread.

One is that 80% of employees with retirement plan options take advantage of them.
Quote:
Four out of five workers who are offered a 401(k) or similar plan participate in that plan. Participation rates are highest among Generation X (84 percent) and Baby Boomers (81 percent) with Millennials (71 percent) lagging behind them. Workers are contributing 8 percent (median) of their annual salary into their plans. Contribution rates are highest among Baby Boomers (10 percent median) with lower rates among Millennials (8 percent) and Generation X (7 percent).
Another conclusion is that Millennials are aware of the need to provide for their own retirement.
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Millennials understand that retirement for their generation will look different than for their parents and they expect to share more of the burden of retirement income themselves.
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Old 09-12-2015, 01:58 PM   #52
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I retired June 5th and one of my favorite work friends has decided to retire. When I heard, I called her at work and said "CONGRATULATIONS!!" She is single and said she just wants to sit at home and read books for 6 months and get over the stress. I told her that her new favorite day will be Monday. She said all the people who thought she was crazy for never wasting money and saving all she could would be envious. I'm so excited for her and look forward to hanging out some.

Both of us worked for a nonprofit and so never had huge salaries, but with planning, it's possible to make it work. It amazes me that folks with double my salary don't save and can't retire.


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Old 09-12-2015, 02:29 PM   #53
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I have a good friend that I went to HS with. Long, LONG story short, he owns his own auto shop. He does pretty well for himself but spends it much faster than he brings it in. Just today he posted pictures of his shiny, new RV and said something along the line of "I got a great deal and couldn't say no!!!" I asked him if he was just that bored (he also has a brand new pontoon and has no less than 5 "project cars") and he told me NO WAY...I AM SUPER BUSY! When I pressed him more, he just said, "Well, I deserve it and I got a great deal".

So many folks feel like they "deserve" material possessions and think that by "getting a great deal" makes him financially savvy. When they finally realize that when you SPEND money (no matter how much you 'saved'), that's not SAVING money?
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Old 09-12-2015, 02:33 PM   #54
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What I deserve is to spend the whole day at home with a good book and a pot of tea, wearing my robe. That's way less work than taking care of too many things.


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Old 09-12-2015, 03:56 PM   #55
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I retired June 5th and one of my favorite work friends has decided to retire. When I heard, I called her at work and said "CONGRATULATIONS!!" She is single and said she just wants to sit at home and read books for 6 months and get over the stress. I told her that her new favorite day will be Monday. She said all the people who thought she was crazy for never wasting money and saving all she could would be envious......
Congratulations to you and your friend for reaching your goal! It sometimes takes a lot of discipline to stick to a plan in the face of criticism/judgement from others.

I get a lot of grief from my coworkers because I bring my lunch every day; take staycations instead of traveling; don't buy new clothes and shoes and purses with every paycheck (I invest in new clothes and shoes once every 5 years); drive my cars for 15-17 years; don't buy the latest electronic gadget/toy every six months, and so on. According to them I am not "fun."

I take the money that would go to all those things and put it in my "freedom fund." When I walk away in a few years with no financial worries, I'm 100% sure that will be all the "fun" I need!

The first thing I will do - just like your friend - is sit and read anything I want for months on end. Heaven!
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Old 09-12-2015, 03:57 PM   #56
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What I deserve is to spend the whole day at home with a good book and a pot of tea, wearing my robe. That's way less work than taking care of too many things.

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Now that is a perfect day!
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What some think about their retirement.
Old 09-12-2015, 04:44 PM   #57
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What some think about their retirement.

Quote:
Originally Posted by Gumby View Post
This seems like a universal human characteristic that has existed at all times and places, so I think the modern American phenomenon of inability to save for retirement must be attributable to other things unique to our present culture, economic system and/or government.

My thinking aligns with Karen's post above. But I agree there are other forces at work both at the individual and macro level. Just heard on radio today that barely 70% of men and 58% of women of working age were actually working or actively looking for work. Men have been dropping since records were started in 1940s. Women are on the downslide too after peaking over 60% in recent times. So at a macro
level you have less people working (in their working years) than last generation, and stagnant adjusted for inflation family income for several decades and it does become harder to save in that regard also.


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Old 09-12-2015, 11:00 PM   #58
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I get a lot of grief from my coworkers because I bring my lunch every day; take staycations instead of traveling; don't buy new clothes and shoes and purses with every paycheck (I invest in new clothes and shoes once every 5 years); drive my cars for 15-17 years; don't buy the latest electronic gadget/toy every six months, and so on. According to them I am not "fun."
Lol, we have DB COLA pension but majority of my coworkers (a lot of whom are Chinese immigrants) are also tightwads who brownbag their lunches so this is pretty much par for course. One of my supervisors (definitely a MND) retired at 62, receives a comfortable pension and is finally enjoying his savings by going on $10-20K cruises and vacations 2-3 times a year.

I'm actually the one who has new electronic gadgets/toys every year. Not really big on clothes, purses, shoes, cars, etc, so tech and books are where my money goes.
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Old 09-16-2015, 08:40 AM   #59
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Yes, this is a common, long term observation. Most people really don't have a clue about retirement issues. I have resigned myself to basically ignoring them and ensuring I spread the "gospel" to people and relatives I think can benefit from my advice. Hard to suppress the smugness though.

Here's another question. Do you think low cost of living locations have more of these clueless people than Other areas? Probably not.
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Old 09-16-2015, 09:21 AM   #60
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Similar story - I had a co-worker who was convinced that he only had to save $1M by his early 30's and then could retire on the interest. He did, but guess what - that was in the early 1980's with sky-high interest rates. 5 years later, back to work.
This story confuses me a bit. In the early 1980's with sky high interest rates, one might think one could retire with $100,000 in the bank and live off the interest. But $1M saved would have been a fortune. With annual expenses of say $12,000 that million should have been more than enough for a lifetime if invested almost any responsible way.
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