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Old 02-21-2011, 01:08 AM   #21
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You may be a modern day Rip Van Winkle.

The limit for the past few years for 401(k)s has been $16,500 if under 50 and $22,000 if at least age 50 on December 31st.
I have been retired since 2004, so I have not needed to worry about the limits.
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Old 02-21-2011, 02:44 AM   #22
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After a disasterous divorce at age 50 (leaving me essentially penniless), I saved more than my goal of 33% of net after maxing out my TSP (=401K) plus over-50 catch-up. I did this only from ages 51-61 until retirement. That was a lot to save, but it was for a limited time and I needed to gain control of my situation as fast as possible.

It wasn't so bad once I got used to it.

I think that for people who are not starting over after 50, saving 12% ought to be reasonable (?) I haven't run the numbers for such long term savings.
Interesting my saving were done over basically 15 years also. I had a small IRA in my first couple of years out of school. But once I joined Intel I maxed out my 401K, which was generally restricted to 12.5% of my salary, only my last couple of years I hit the maximum allowed contributions. What I find astonishing is that my current IRA balance is $634,000 almost exactly the figure listed in the article that less than 8% of families have. The last contribution was made in 2000 and clearly the last decade was not a great one for my generally heavy equity exposure. Considering that this figure contains no employer matching funds, I just have to scratch my head and wonder what the hell my fellow boomers have been doing?
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Old 02-21-2011, 08:23 AM   #23
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I think 85% of your NET take home pay after taxes, SS, and retirement savings is a good number. It's just that that little details are left out.
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Old 02-21-2011, 12:58 PM   #24
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[QUOTE=teejayevans;1039456]I think 85% of your NET take home pay after taxes, SS, and retirement savings is a good number. It's just that that little details are left out.
TJ[/QUOTE

thx for answer abouve for these who doesnt get the big picture. This is a short article who are trying to describe average Joe problems.

Agree 85 % wasn't best way to describe the problem but I understood what they meant.
This isnt a problem only for US its a western sociaty problem.

Pension founds are insuffient worldwide...

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Sorry this was from a iPhone with no spellsheck possible
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Old 02-21-2011, 01:21 PM   #25
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Yeaa and I also was on a big party tonight, witch could make an impact on my writing. Nahhhh beer is good
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Old 02-22-2011, 07:42 PM   #26
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I find studies like this are not useful to me.

It seems designed to reach the conclusion it wanted. Target retirement expenses were set at 85% of pre-retirement income. If the retiree was saving 15% or more that amounts to no change in spending. No effort made to adjust for lifestyle. Amounts outside the 401k don't appear to be considered. So, IRAs, pension and taxable savings are all invisible. How many people with a current 401k have their entire retirement savings in that one account? Even if they stayed with the same employer their entire career and that employer was an early adopter of 401k plans, people at retirement age today would have started work before 401k plans existed so looking at 401k balances only is guaranteed to underestimate retirement assets.

It's fun to read and fun to think I am so much better prepared than these people, but I don't think it's solid enough information to make any kind of policy decisions.
+1

It has always been true that many Americans approaching age 60 don't have much going for them other than Social Security. I haven't seen any good studies, that include all of the obvious variables, that say this is any worse than it used to be.
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Old 02-22-2011, 07:51 PM   #27
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Anyone actually think that these articles are written to get people to put more into mutual funds managed by providers of 401(k) plans to generate more fees? As others have pointed out, the article would have far less impact if it mentioned non-401(k) savings (taxable, Roths, regular IRAs, etc....) Unfortunately, that data isn't readily-available to mutual fund companies that manage 401(k) plans, so they conveniently leave it out - including any disclaimer.
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Old 02-23-2011, 05:37 AM   #28
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As most have said, don't like the 85%, believe this was written to sell mutual funds, etc.

As for the stats - I do believe that most people don't think that far ahead....I had a conversation with a friend of mine - he's retiring from a Fed Gov't job - been here in Germany for 20+ years - has a house, lots of nice toys (cars, motorcycle, etc).....I said you must have quite a bit sitting in a bank account...he said no, not really - just the TSP stuff - huh?? He might have been lying to me, but I don't think so. wow.

Talked to another friend of mine - he's a pilot - Captain for a cargo airline (no people-just cargo) - he's been doing this for over 20 years - his wife is a teacher - I asked them if they could retire early - she looked at me and said, no, they have to work 10 more years....huh? But then she proceeded to tell me how they had built this gorgeous house on the lake, they had all kinds of toys (snowmobiles, two boats, ski-doos, etc).....I scratched my head....OK.

These are professionals who've made lifestyle choices and will be working for a long time. But then I have to remember, not everyone wants to retire early...in fact, I will probably do something, just not full-time, for most of my life. If it earns money, then great. However, I have a choice - I sense these people don't have that choice - or they've opted for the short-term choices over a long-term one.....the people here at this board who profess and do retire early are not in the norm. As for the rest of the population, they will probably work longer to meet their economic needs/desires.
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Old 02-23-2011, 08:31 AM   #29
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I just have to scratch my head and wonder what the hell my fellow boomers have been doing?
Partying like it's 19991929?

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Old 02-23-2011, 08:36 AM   #30
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...I just have to scratch my head and wonder what the hell my fellow boomers have been doing?
If these numbers are correct, I'll be the richest guy under the bridge...
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Old 02-23-2011, 09:02 AM   #31
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Article:Boomers Find 401(k) Plans Fall Short - MarketWatch

From Article:

"The median household headed by a person aged 60 to 62 with a 401(k) account has less than one-quarter of what is needed in that account to maintain its standard of living in retirement, according to data compiled by the Federal Reserve and analyzed by the Center for Retirement Research at Boston College for The Wall Street Journal. Even counting Social Security and any pensions or other savings, most 401(k) participants appear to have insufficient savings. Data from other sources also show big gaps between savings and what people need, and the financial crisis has made things worse"

Interresting article about alot of ppl struggling to make it to retirement. this doesnt look good, and also this about Vanguard,

"Vanguard Group, one of the biggest providers of 401 (k) plans, has changed its advice on how much people should save. Vanguard long advised people to put 9% to 12% of their salaries—including the employer contribution—in their 401(k) plans. The current median amount that people contribute is 9%, counting the employer contribution, Vanguard says.
Recently, Vanguard has begun urging people to contribute 12% to 15%, including the employer contribution, because of the stock market's weak returns and uncertainty about the future of Social Security and Medicare"

I know a am saving about 30 %- 40 % of my net salary, what is or was your saving goals to reach ER.
Take it from a very recent ERee....your combined pre- and post-tax savings, no matter the investment vehicle is key. You'd be amazed at how your portfolio can withstand market downturns (which will always occur so get diversifed and then get over it) if you sock away a significant portion of your income every year without fail. In my case that meant living on essentially one salary in a two income family. That also meant fewer trips abroad and a more modest lifestyle in our 30's and 40's (but by no means austere), with the upside now of a very comfortable ER in my mid-fifties. If you're saving 30-40% of your net salary in a well allocated and fully diversified manner.... and that rate of savings remains steady (not easy, I know) then congratulations.....you're on the right track for ER.
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Old 02-23-2011, 09:46 AM   #32
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As is usual with these sensationalist/alarmist articles, unless they also look at personal savings and investment outside of retirement plans -- or pensioner status of the individual -- these statistics are worthless.
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Old 02-23-2011, 10:21 AM   #33
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Of course, it isn't all bad news...

Fidelity: Average 401k balances reach 10-year high - Yahoo! Finance
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Old 02-23-2011, 10:45 AM   #34
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I just have to scratch my head and wonder what the hell my fellow boomers have been doing?
First they followed the advice of the talking heads and thought short term about investments, and did not follow Boogle. From the peak in 2007 the market is down about 15% and that was an all time peak. Likley people thought they could beat the market, and that it (the market) would rise enough to make them rich (likley because they thought the late 1990s were coming back). How many went all cash?
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Old 02-23-2011, 03:40 PM   #35
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Talked to another friend of mine - he's a pilot - Captain for a cargo airline (no people-just cargo) - he's been doing this for over 20 years - his wife is a teacher - I asked them if they could retire early - she looked at me and said, no, they have to work 10 more years....huh? But then she proceeded to tell me how they had built this gorgeous house on the lake, they had all kinds of toys (snowmobiles, two boats, ski-doos, etc).....I scratched my head....OK.
To a certain extent that it is me. I was always more of a spend it now type. I viewed it as I would spend now and have the toys and enjoy them when young. Later, I won't have as much as if I hadn't had the toys and lifestyle (I wasn't stupid I did know this) but I also figured I would live more modestly during retirement and that by then I would have or would have had those things and lifestyle and wouldn't want them.

And that is sort of how it worked out. Add in having 3 kids fairly late and in life and that was another expense. We're fortunate that DH was always going to receive a pension. In his case, we elected for him to take a 7 figure lump sum on retirement. We also had some money in 401(k)s. All of that will fund the modest retirement we're interested in. I've traveled a lot, eaten at a lot of nice restaurants, had to wear nice clothes for work and had a lot of toys. And most of that I no longer care much about it. Some of it, I do.

But if we had saved more in our 401(k)s (and outside them) we could have more and could have twice the income we will have in retirement or could have retired earlier. But we aren't sorry for the choices we made. DH retired at 62 and I am ESR at 56.
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Old 02-25-2011, 07:21 PM   #36
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Anyone actually think that these articles are written to get people to put more into mutual funds managed by providers of 401(k) plans to generate more fees? As others have pointed out, the article would have far less impact if it mentioned non-401(k) savings (taxable, Roths, regular IRAs, etc....) Unfortunately, that data isn't readily-available to mutual fund companies that manage 401(k) plans, so they conveniently leave it out - including any disclaimer.
Yes, absolutely. This way they can sell you a bigger annuity.
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Old 02-26-2011, 07:49 PM   #37
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To a certain extent that it is me. I was always more of a spend it now type. I viewed it as I would spend now and have the toys and enjoy them when young. Later, I won't have as much as if I hadn't had the toys and lifestyle (I wasn't stupid I did know this) but I also figured I would live more modestly during retirement and that by then I would have or would have had those things and lifestyle and wouldn't want them.

And that is sort of how it worked out. Add in having 3 kids fairly late and in life and that was another expense. We're fortunate that DH was always going to receive a pension. In his case, we elected for him to take a 7 figure lump sum on retirement. We also had some money in 401(k)s. All of that will fund the modest retirement we're interested in. I've traveled a lot, eaten at a lot of nice restaurants, had to wear nice clothes for work and had a lot of toys. And most of that I no longer care much about it. Some of it, I do.

But if we had saved more in our 401(k)s (and outside them) we could have more and could have twice the income we will have in retirement or could have retired earlier. But we aren't sorry for the choices we made. DH retired at 62 and I am ESR at 56.
Sounds like your "plan" worked out in the end. Unfortunately, some people can't stop with their spending once they get at taste of the "good life." Other times, life itself doesn't cooperate very nicely (job loss, illness, divorce, spouse dies, etc...)

While I'm all for enjoying your money when you're young (or at least doing the "adventuresome" things that young people want to do), you don't need to spend a lot of money to pursue them. You need some money, of course, but what you really need is time. Most people in their late-20s or 30s are focused on establishing their careers, climbing the corporate ladder, getting married, raising kids and similar life experiences. It's not easy to get off the treadmill, and even if you do, it's definitely not easy to get back on (unless you start your own business).
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