Maybe old news but pretty sobering regardless !

[frayne]

In some ways I gotta feel for some of these folks !

The majority of Americans (75 percent) nearing retirement age had less than $30,000 in their retirement accounts in 2010. For the poorest Americans in the 50-to-64-age bracket, the average amount saved for retirement was $16,034.

America

 

[youbet]

Thus the need to expand existing entitlement programs and establish new entitlement programs to provide for folks as they RE to enjoy the good life all Americans deserve!

 

[teejayevans]

I agree with her that people need to save more...I disagree it was asking the impossible, for us to predict the future, somehow she thinks you need to be able to predict the future in order to invest and insists on my savings being "professionally" managed, thanks by no thanks, maybe she needs to do some research.
TJ

 

[Semiretired2008]

Here is a study done by Fidelity and it says the average is $71,500 at the end of December. I have seen others that have said over 100k. I guess it depends upon where they get their data from. I know that there is a Federal Reserve report called Flow of Funds that is supposed to be the baseline.

Retirement savings meager, and at 10-year high - Business - Personal finance - Your retirement - NBCNews.com

 

[frayne]

I agree with her that people need to save more...I disagree it was asking the impossible, for us to predict the future, somehow she thinks you need to be able to predict the future in order to invest and insists on my savings being "professionally" managed, thanks by no thanks, maybe she needs to do some research.
TJ

I agree with you that I disagree with her comment about having professionally managed accounts. But the truth of the matter, with the demise of the defined benefit traditional pension plans that is exactly what workers had, now days, some people (and evidently the majority) just don't have the inclination or in some cases the education to manage their 401K investments in a responsible way.

 

[MooreBonds]

The majority of Americans (75 percent) nearing retirement age had less than $30,000 in their retirement accounts in 2010. For the poorest Americans in the 50-to-64-age bracket, the average amount saved for retirement was $16,034.

America

Like any "study", it all depends on how selective you are w/ the data. Is this JUST 401(k) accounts? Is it 401(k) accounts per-person, or per-account? (i.e. if someone works @ 3 employers and has 3 accounts, is it aggregated on what each person has or what each account has?) Does this include IRA account balances? etc.

However, the great line in the article that made me laugh:

The "do-it-yourself" pension system — aka 401(k) plans — that replaced traditional pension packages 30 years ago mistakenly assumed that individuals without investment experience could "reap the same results as professional investors and money managers," she writes.

Is she fiscally aware enough to realize that a majority of "professional money managers" fail to beat the market averages over the long-run Maybe they HAVE reaped the same results as 'professional money managers'?

But something she said left me scratching my head:

In an interview with The Daily Ticker, she says individuals "were asked to do what they really couldn't do. Not because they're irresponsible, not because they didn't plan well, not because they didn't have enough financial literacy. That system asked humans to do what they just can't do — anticipate the future."

Anyone else confused by that? If she claims that individuals WERE responsible and that they DID have enough financial literacy...then what exactly was the cause of the alleged 'failure'? What part of them anticipating the future lead them to 'fail', and how does that jive with what she said earlier about the average person not being able to do reap the same results as the professional money managers?

 

[novaman]

Here is a study done by Fidelity and it says the average is $71,500 at the end of December. I have seen others that have said over 100k. I guess it depends upon where they get their data from. I know that there is a Federal Reserve report called Flow of Funds that is supposed to be the baseline.

Retirement savings meager, and at 10-year high - Business - Personal finance - Your retirement - NBCNews.com

No matter which numbers you choose to believe, the bottom line is that the vast majority of folks approaching retirement have not nearly saved enough. This is pretty sad.

 

[frayne]

No matter which numbers you choose to believe, the bottom line is that the vast majority of folks approaching retirement have not nearly saved enough. This is pretty sad.

Exactly the point.

 

[Forrest]

I don't believe the dollars quoted in most studies - I think most people under-report or knowingly give false information - to protect their identity. On the other hand, I think the numbers in the Fidelity study are truly representative of actual retirement balances.

 

[JOHNNIE36]

I know some couples who live pay check to pay check with their SS money. No other source for funds. I feel so sorry for them. In a couple cases, sickness played a part in reducing whatever savings they had.

 

[braumeister]

After going through all that data (rather poorly presented IMHO), I have to admit that we will probably not be seeing a huge influx of new members to the early retirement community.

 

[LOL!]

In the past couple of weeks four different people asked me in person for help on their retirement investing. The backgrounds and experiences of these folks were quite varied. A couple of them had professional degrees. One was the equivalent of an administrative assistant.

All had one thing in common: almost total ignorance about using mutual funds to plan ahead for retirement even though they all participated in 401(k) plans. They were risk averse and had picked money market funds for their primary investing vehicle or used high-fee advisors.

I think the vast majority of folks are just like these people. How would folks suggest that these people can be helped?

 

[Live And Learn]

I don't believe the dollars quoted in most studies - I think most people under-report or knowingly give false information - to protect their identity. On the other hand, I think the numbers in the Fidelity study are truly representative of actual retirement balances.

The Fidelity study is more accurate for those who have enough to have a Fidelity account.

 

[Purron]

I doubt many of them are INTJs

Just joking, but pointing out how the usual suspects around this site are not like most people.

 

[Katsmeow]

The person quoted in the article is hostile to 401ks and has a particular point of view that I think colors what she says.

Also, the article doesn't really say what the research is based on. One problem in some articles on retirement savings is that they tend to not aggregate funds held in multiple places. So the person who has a $10000 401k at a former employer or who has a small $5000 rollover IRA is deemed to have $10000 or $5000 in savings when they might also have another larger account elsewhere.

 

[traineeinvestor]

The person quoted in the article is hostile to 401ks and has a particular point of view that I think colors what she says.

Also, the article doesn't really say what the research is based on. One problem in some articles on retirement savings is that they tend to not aggregate funds held in multiple places. So the person who has a $10000 401k at a former employer or who has a small $5000 rollover IRA is deemed to have $10000 or $5000 in savings when they might also have another larger account elsewhere.

+1

If the point of the article is to show whether or not the "average" American in financially prepared for retirement, then the author should have looked at all assets - including the present value of defined benefit pension plans and SS, assets outside retirement accounts, home equity etc

If the point had been to draw attention to the difficulties some people have with (i) saving money and/or (ii) managing their assets, it could have been a lot better.

Some of the surprisingly civilised comments made for better reading than the article itself.

 

[LOL!]

To paraphrase a Frontline interview on retirement investing, would you let one of these people (the "average" unprepared folks) control your 401(k) and other assets and invest it as they see fit for your retirement?

 

[traineeinvestor]

To paraphrase a Frontline interview on retirement investing, would you let one of these people (the "average" unprepared folks) control your 401(k) and other assets and invest it as they see fit for your retirement?

No - and I wouldn't want [insert major financial institution of choice] to manage my money either.

 

[LOL!]

But you are asking folks to do just that for themselves.

Do you agree that they are not up for the task and/or are incapable of doing so?

 

[traineeinvestor]

But you are asking folks to do just that for themselves.

Do you agree that they are not up for the task and/or are incapable of doing so?

Sorry - I should have been more explicit. I would not want anyone else to actively manage my own money - I'd rather do it myself. There should be a default position for those who can't or won't do so - perhaps a low cost target date retirement account.

 

[traineeinvestor]

I doubt many of them are INTJs

Just joking, but pointing out how the usual suspects around this site are not like most people.

Although the sample size is not all that large, I have to wonder if there is not only correlation between being introverted and taking early retirement but causation? A simple desire to get away from all the stressful interaction with co-workers, clients etc sounds like a good motivation to me.

 

[LOL!]

@traineeinvestor

Sounds like a "mandate" to me for folks who fail to plan. Perhaps if one's savings rate and/or investment return fall below certain values, that one gets their DIY-self-managing privileges taken away.

Or perhaps, you need a license to run your own retirement money? Imagine waiting in line at the Department of Retirement Plans in order to take a test to get your license.

 

[Letj]

In some ways I gotta feel for some of these folks !

The majority of Americans (75 percent) nearing retirement age had less than $30,000 in their retirement accounts in 2010. For the poorest Americans in the 50-to-64-age bracket, the average amount saved for retirement was $16,034.

America

Who comes up with these numbers? I find this very hard to believe.

 

[FIRE'd@51]

In the past couple of weeks four different people asked me in person for help on their retirement investing. The backgrounds and experiences of these folks were quite varied. A couple of them had professional degrees. One was the equivalent of an administrative assistant.

All had one thing in common: almost total ignorance about using mutual funds to plan ahead for retirement even though they all participated in 401(k) plans. They were risk averse and had picked money market funds for their primary investing vehicle or used high-fee advisors.

I think the vast majority of folks are just like these people. How would folks suggest that these people can be helped?

Maybe all conributions to 401k's by both employees and employers should be mandated to initially be allocated by default into 60/40 equity/bond index funds, with the employee having the option to change the mix every quarter. That way you won't have uninformed and uninterested risk averse people initially putting all of their contributions into money market funds, and doing serious damage to themselves while, and if, they come up the learning curve. After all, a 60/40 mix is pretty close to how a defined benefit pension plan is invested.

 

[Mulligan]

I agree with you that I disagree with her comment about having professionally managed accounts. But the truth of the matter, with the demise of the defined benefit traditional pension plans that is exactly what workers had, now days, some people (and evidently the majority) just don't have the inclination or in some cases the education to manage their 401K investments in a responsible way.

In 1980 almost 40% of workers in the private workforce had a pension, now its under 15% and dropping. The pension was either a straight extra benefit or forced contributions with match were done on a mandatory basis. That alone provided a huge safety net even if a person didn't save a dime on their own. Now,that forced savings opportunity is essentially gone.
All of my friends will retire comfortably before age 55, and like me, none of our retirements would last very long on our saved money. Yes, about 14.5% a year was taken out each check, but what company provides that kind of match to go with it in a 401k, like we received in our jobs? I would guess very few. Im not knocking 401k and praising pensions,because more than likely they are on their last legs, anyways. However, for many people, money almost needs to be confiscated from them before they get their check and returned to them when they retire.
I am a realist to know without this $ confiscation from my check and matched contributed amount, I would certainly not be anywhere near the finish line, now.