43% of Americans at risk of not having enough retirement $

[mickeyd]

It seems to me that most folks that post here do not, have not ever, had this difficulty. Is it only a case of us taking a lifetime of saving/investing and LBYM that have positioned us so well now that we ponder a comfortable ER or are already ERd comfortably?

Once reasonably assured of a comfortable retirement, Americans are now watching private pensions collapse and public pensions come under pressure. And even those like Strozniak, whose retirement security was once all but guaranteed, are now finding they have to fend for themselves.

There is mounting research that most Americans are ill-prepared to cope with the task of creating a nest egg to rely on when they’re too old to continue working. They're also woefully unaware of the risks they face in retirement investing. And they're falling further behind in providing for their long-term financial security.

~~~~~~
“What a lot of people do with their 401(k) — because they still treat it like a company-sponsored plan — they don’t treat it like their own money," he said. "They put it under the pillow and really don’t think about it.”


http://www.msnbc.msn.com/id/13322751/

 

[Spanky]

Once reasonably assured of a comfortable retirement, Americans are now watching private pensions collapse and public pensions come under pressure. And even those like Strozniak, whose retirement security was once all but guaranteed, are now finding they have to fend for themselves.

The message is to save for yourself and do not rely on someone else. It's about time to scrutilize the generous pensions by the government. Should the government continue to fund them? I think the risk of the public pensions going away is slim, slim, slim.

 

[Mwsinron]

I would have thought it was higher.

 

[Corporateburnout]

I would have thought it was higher.

I'll be suprised if it isn't. There are a big portion of Americans in their fifties that don't have a clue of how much income they need in retirement. I personally know a few. They are counting mainly on SS to fund their retirement (if they are able to retire that is).

 

[Outtahere]

The other night dh was watching a game show and the prize was $150,000, he commented that he could live out his retirement on that amount. I gave him that "are you freaking nuts" look and he gave me back the "that's not enough?" look. Thankfully I'm the one handling the money in our house or I'd be working forever.

 

[JohnEyles]

There are a big portion of Americans in their fifties that don't have a clue of how much income they need in retirement. I personally know a few. They are counting mainly on SS to fund their retirement (if they are able to retire that is).

I've been following this stuff a lot recently, and yesterday I was talking to a guy
who loves visiting Thailand and thinking about the people retiring there, and
boom ... I had this epiphany: there is going to be this HUGE diaspora of baby
boomers, with insufficient retirement savings, to places like Thailand.

 

[youbet]

This is all so much crap. All Americans will have retirement money. Some of them will be disappointed at the level of ammenities it provides. But, after wealth is transferred from the ants to the grasshoppers, all will survive.

 

[Nords]

I had this epiphany: there is going to be this HUGE diaspora of baby boomers, with insufficient retirement savings, to places like Thailand.

Judging from the reception we got on our last trip, there already is...

 

[Corporateburnout]

This is all so much crap. All Americans will have retirement money. Some of them will be disappointed at the level of ammenities it provides. But, after wealth is transferred from the ants to the grasshoppers, all will survive.

I would not doubt that all will survive but after working 40 years or so I certainly hope to have a comfortable retirement. It's a ashame that we have the lowest rate of savings amongst all industrialized nations.

 

[Martha]

I had this epiphany: there is going to be this HUGE diaspora of baby
boomers, with insufficient retirement savings, to places like Thailand.

I just don't see it. Most people don't even want to move from their home state, much less want to move to a foreign country.

 

[audreyh1]

I would not doubt that all will survive but after working 40 years or so I certainly hope to have a comfortable retirement. It's a ashame that we have the lowest rate of savings amongst all industrialized nations.

Well - that's a double edged sword. The countries with the high savings rates tend to have much lower economic growth due to much lower consumer spending. Those of us US citizens who are the exception and DID save money to invest have been well rewarded because of this country's economic growth.

I am always grateful to those who are out there spending like mad. (and hopefully they'll just keep working!)

Audrey

 

[Mwsinron]

I guess who really knows. It varies per what couple or person needs to live. I know people who live fine on just SS. That would be below means for me and my wife. If push came to shove I suppose we would manage to live off just SS when the time came. Guess need makes you appreciate a different kind of horizon.

 

[youbet]

I am always grateful to those who are out there spending like mad. (and hopefully they'll just keep working!)

You and me both Audrey! As long as the spenders can at least survive in retirement, we savers will be better off because of them.

 

[LoveNumbers]

youbet, I agree with you. Our friends are mostly in the late 30 and early 40 age group. Two of them recently each inherited over a half million $ from family member. A couple of others are also expecting to receive substantial amount when the time comes.

However, people we meet in the this age group in general don't believe SS will be there when they retire. For the ones that don't think a big wingfall is coming their way, when asked about their retirement finances and etc, their typical answer would be "how do I know I will live that long. Maybe I will die tomorrow." It seems they know they need to do something but feel powerless and decide not to face it.

Jenni

 

[mickeyd]

Those of us US citizens who are the exception and DID save money to invest have been well rewarded because of this country's economic growth.

This is often a lost point Audrey, at age 20 or 30 it is somehow very difficult for most US citizens to project into the future (40-50 years) and see the obvious-~if you do not delay consumption today, and save as much as you can for tomorrow, how will you live a comfortable life down the road?

Hoping for a fat inheritance is one way. Winning the state lottery is another way. Being a regular winner at Las Vegas casinos is yet another. These are all ways that about 1% of our population will achieve long term financial success. If you feel comfortable in planning to be in this elite group, good luck.

But you had better have a darn good back-up plan handy also just in case you fall into the 99% group.

 

[jazz4cash]

Thanks.......good article, but...........

I think this is the usual hype. I agree with those that believe the actual percentage is much higher. How could the 43% figure possibly correlate to the following quote from the article:

More than half of workers 55 and older have saved less than $50,000 toward retirement....................?

It seems to me that "more than half" would be at risk!

One problem I see is that they (the media) make it seem so hard to achieve generating a decent nest egg for a normal retirement that many people just give up and never try. The article goes on and on about all the choices and responsibilities, blah blah blah. Its true except how hard is it to put 10-15 % in an index fund and leave it alone? I know it not as easy as I make it sound, but folks I speak with miss out on the fact that even if you cannot save "enough", having something is better than having nothing.

 

[macdaddy]

I think that $50k stat only looks at liquid accounts, not at pensions, vacation homes/investment properties, inheritances, etc. Don't count on an inheritance until it's in your pocket - sure - but visit any middle class area in California, New York, Massachusetts, etc, and they are full of older people who will leave their kids $500,000+ (a 3/2 house) even if they haven't saved much liquid cash. Some people will have health issues and need to spend down to zero, but most of that money won't just vanish into thin air. Visit any school or Government work place and you will see a horde of folks who can retire in their late 50s, move to Florida, and cash 50k/year checks forever... some people are broke, but I don't think the situation is quite as bad as they say.

 

[dumpster56]

I think that $50k stat only looks at liquid accounts, not at pensions, vacation homes/investment properties, inheritances, etc. Don't count on an inheritance until it's in your pocket - sure - but visit any middle class area in California, New York, Massachusetts, etc, and they are full of older people who will leave their kids $500,000+ (a 3/2 house) even if they haven't saved much liquid cash. Some people will have health issues and need to spend down to zero, but most of that money won't just vanish into thin air. Visit any school or Government work place and you will see a horde of folks who can retire in their late 50s, move to Florida, and cash 50k/year checks forever... some people are broke, but I don't think the situation is quite as bad as they say.

No mine is 33K a year at 50. Medical bennies are included and yes we sold the house for 513 we owed 210 on it bought a brand new one in NC for a bit over 300 with all the bells and whistles for my wife and have a 300 dollar a month mortgage, gonna sub teach and work part time at the new trader joe's. Cannot wait to get out of my sisters house and be done with my contract on dec 22! Here in NJ.

 

[modlair]

I guess who really knows. It varies per what couple or person needs to live. I know people who live fine on just SS. That would be below means for me and my wife. If push came to shove I suppose we would manage to live off just SS when the time came. Guess need makes you appreciate a different kind of horizon.

The average recipient of SS as of 2004 was getting about $12K/yr.

 

[macdaddy]

No mine is 33K a year at 50. Medical bennies are included and yes we sold the house for 513 we owed 210 on it bought a brand new one in NC for a bit over 300 with all the bells and whistles for my wife and have a 300 dollar a month mortgage, gonna sub teach and work part time at the new trader joe's. Cannot wait to get out of my sisters house and be done with my contract on dec 22! Here in NJ.

Hey Newguy - I am a little bit familiar with your story, and I know you made the decision to retire early, in return for a reduced pension. But early retirement is not the norm. A teacher around my neck of the woods who teaches for 25 years (say from age 25 to 50) would retire with ~ 60% of final salary (~ 80k). There are a lot of very middle class teacher/teacher or police officer/teacher or municipal worker/teacher couples who are set to retire in their late 50s with 50k+ pensions each. These are people who don't have much saved up who, if you didn't take into account the pensions (and equity in their over priced little houses), would seem close to broke... I would be interested to see if the study took them into account.

 

[Craig]

macdaddy, good point. While the future of some of those pensions is iffy, an honest review of what Americans are up against would include taking the annual benefits of those pensions, multiplying by 25, and including that amount in their nest eggs.

Alas, for DW and me, no inheritances, no pensions. Just DCA, and LBYM. We're still very fortunate.

 

[getoutearly]

I think this is the usual hype. I agree with those that believe the actual percentage is much higher. How could the 43% figure possibly correlate to the following quote from the article:

More than half of workers 55 and older have saved less than $50,000 toward retirement....................?

It seems to me that "more than half" would be at risk!

One problem I see is that they (the media) make it seem so hard to achieve generating a decent nest egg for a normal retirement that many people just give up and never try. The article goes on and on about all the choices and responsibilities, blah blah blah. Its true except how hard is it to put 10-15 % in an index fund and leave it alone? I know it not as easy as I make it sound, but folks I speak with miss out on the fact that even if you cannot save "enough", having something is better than having nothing.

Agree, the %-age is higher. I find that there is a tendency for people like us (those posting on this site) to think that the majority of the country thinks, acts, behaves and saves like us. The majority is so far from that it is scary. They don't do ANY ONE OF THOSE THINGS like us. (Just watch the news and you can see what I mean - I don't watch it anymore).

Also, keep in mind that most of the media folks (reporters, news directors, etc.) are in the 43% + group (especially from the local media), so it makes them feel a bit better to report on it as if it is completely out of those people's control. I know; I have a couple of them as friends / neighbors.

Think about how many people live hand to mouth. I'm not saying their life is any less fulfilling or anything. Just that their perspective is completely different. Different expectations, perceptions... I actually heard a statistic that something like 65% of all people in the US over the age of 65 have less than $2500 in the bank. Now THAT is scary.

I am also amazed at the people that live in the same middle/upper-middle class neighborhood I do, who have virtually no clue of what it takes to retire, how a 401k works, or that it is completely in their own control whether they retire early. All they know is that Soc Sec is out there somewhere, they will need to buy a new car (wouldn't even think of buying a used car) in the next year or so- on credit of course, and that they will work until they are 65+ (they really have no idea how long they will need to work).

When I say something about not working any longer than I have to (~age 50), they look at me like I have 3 eyeballs.

Granted, some of these people really like what they do, have no real hobbies or interests, and would not have a clue how to manage their own finances (assuming they actually had some to manage) - or even how to find someone else to help them do it (I know - blasphemy, but better than pissing it all away).

And, I live in an a-typical suburban neighborhood, where everyone is not out to impress the Joneses with fancy cars, houses....

I talked to an ex-neighbor yesterday that tried his luck in a restaurant business and lost everything. Sold the house to use the funds in the business. Recently declared bankruptcy. He thought that was the best thing since sliced bread. Wiped out about $80k of Credit card debt. He was real proud of that move. Said he was now working about 18 hours a week. In the same sentence, he said he really didn't need to work any more than that, but that he really does need the money right now.

Wife still makes a good salary, but they lost all their retirement savings in the restaurant..... I had respect for the fact that he went for it with the business, until I heard him boasting about his bankruptcy savvy. Said it took him about an hour to file (not sure how much of an exaggeration that was, but well worth it to him...)

Anyway, am I rambling?