Most Americans have less than $1000 in savings?

[dunkelblau]

It's been a long time since I had a "savings account".

I'd use the Fed's Survey of Consumer Finances to get a snapshot of assets.
FRB: Survey of Consumer Finances

According to the Federal Reserve's 2013 SCF chartbook (PDF in your link) charts 435-437 say that about half of all families have retirement accounts and while the average account value is 200K (for those who have accounts), the median value is 59K. Scroll a few pages down and you see that for just the 55-64 age group these numbers are 60%, 285K, and 103K. I'm surprised by how little the median value increases between the 10-year age bands.

 

[Sasset]

I amazes me people don't at least save enough in their 401k to get the match or buy the latest gadget when they get a raise or bonus.

I am so glad I learned about saving and LBYM from my Depression Era parents

 

[bclover]

I see so many articles on Americans not saving, but then articles about millennial's saving more because of 2008, etc. Today Bank of America told me that the average monthly savings of people aged 25-32 was about 450 a month. I never know what to think and I honestly don't have a clue how other people my age are doing financially. I just lurk around these boards and try to stay motivated and learn as much as I can.


Sent from my iPhone using Tapatalk

LOL, Georgia, I think fear sells and if they can continue to scare the wits out of people about their future....
How would the Suzy Ormans and Dave Ramseys of the world sell their books if they weren't screaming at us day and night about how doomed we are.

Now my pool of people who I know well enough to know their financial background situation is small but pretty much they work, they save, they try and enjoy life.

I have one son who is 24 who is great with money, my youngest son is a freaking wreak. He learns money management kicking and screaming. same house, same parents. I in no way feel like he is "doomed".

 

[papadad111]

I'm surprised by how little the median value increases between the 10-year age bands.

I suspect this is a function of other savings vehicles that the older band may have had access to, ergo DC and DB pensions.

The 401k is relatively new. It did not gain traction until the late 1980s. Figure it's been 25 years. I would expect the 40-50 and 50-60 to look fairly similar. The upper savings limits are largely the same aside a few catch up provisions.

 

[Georgialivin]

Georgialivin - don't worry about what other people may or not be doing. What's important is what your goals are, and whether you're doing what you need to in order to achieve those goals. Everything else, as they say, is just noise.

I agree with you on that. However, it's hard not to be curious when finance is a bit of a hobby/interest of mine. If anything it makes me question it more when every article contradicts the other. I guess my thoughts are that there isn't much of a "trend" and there are just a bunch of individuals and every single one handles things a bit differently.


Sent from my iPhone using Tapatalk

 

[braumeister]

I'm sure If we didn't offer a 401k they would have nothing.

"30% of retirees are fully dependent on SS."

Alas, I too know a number of those folks. You're right of course, but they also have very low spending lifestyles, by necessity. Even many years ago when I was in my 20s and 30s, I knew quite a lot of people who had never been out of the county they were born in.

So I don't feel it necessary to feel sorry for them; they are living the life they always expected and they don't feel sorry for themselves.

 

[purplesky]

I agree with you on that. However, it's hard not to be curious when finance is a bit of a hobby/interest of mine. If anything it makes me question it more when every article contradicts the other. I guess my thoughts are that there isn't much of a "trend" and there are just a bunch of individuals and every single one handles things a bit differently.


Sent from my iPhone using Tapatalk

Actually there is a very obvious trend in this "Giganomics" economy. Its called lower wages. "The race to the bottom".

Wages have been flat for decades and they are now actually falling again for middle-class earners.

So the low savings rate for the average American should not be a surprise if you have your eyes open.

The sad trend is still that millennials are renters or they are still living in mom and dads basement.

It appears that this low wage economy is just acceptable now as corporate America parks trillions of dollars offshore to evade taxation.

Thats trillions of dollars not being reinvested in the American workforce.

 

[ERD50]

Actually there is a very obvious trend in this "Giganomics" economy. Its called lower wages. "The race to the bottom". ...

If you take a world view, I don't think you will see any 'race to the bottom'. Many people in 3rd world countries are doing better by making products for 1st world countries.

Wages have been flat for decades and they are now actually falling again for middle-class earners.

So the low savings rate for the average American should not be a surprise if you have your eyes open.

And raising wages/savings for the people who need it most. My heart goes out for someone in deep poverty, that can now afford basic care for their family, over someone in the 1st world, who is moaning because they can't afford their premium cable channels.

The sad trend is still that millennials are renters or they are still living in mom and dads basement.

Maybe you should meet the millennials I know, who went to school, gained a degree in an in-demand field, and are doing well.

It appears that this low wage economy is just acceptable now as corporate America parks trillions of dollars offshore to evade taxation.

Maybe the tax laws need to change?

Thats trillions of dollars not being reinvested in the American workforce.

Investors look for ROI. Maybe we need to change if we want to attract investment dollars? Who wants to invest in anyone with an 'entitlement' attitude?

-ERD50

 

[48Fire]

My wife just read me this with a big "wow". No surprise to me or others here. I said, they must have married the wrong guy. She said yeah, thanks hun!

 

[Fermion]

Georgialivin - don't worry about what other people may or not be doing. What's important is what your goals are, and whether you're doing what you need to in order to achieve those goals. Everything else, as they say, is just noise.

It isn't just noise. Unfortunately, the poor planning for retirement of other people can lead to governments diverting resources away from your retirement to fund the poor planners. It happens, has happened already in some areas.

 

[Georgialivin]

I don't think people are just moaning about not being able to afford premium channels. I agree that the middle class is slowly dying, mainly because of corporate greed. And they do need better laws to keep them from tax evasion, but change is hard to come by when we hardly live in a democracy anymore. Instead, elitist simply use their money and mold laws to help themselves.


Sent from my iPhone using Tapatalk

 

[Georgialivin]

Too off topic? Maybe so. I just go back to what I said before, I know individuals. I have friends that are doing well out of college- in demand- etc. I also know the opposite, friends that can't afford their health insurance, can't afford to get hurt, can't miss work because their benefits are pitiful. One wrong move is all it takes. So I just wonder how much of it is circumstance, but I do feel you can help yourself also. I realize I am conflicting with my own thoughts here, but unfortunately for you all- I do tend to ramble.




Sent from my iPhone using Tapatalk

 

[Georgialivin]

I guess my question is, if you remove these factors (yes these giant life factors) I wonder how much people my age strive to save. Do they care about saving at all? First article says yes, second says no. So again, it just makes me curious


Sent from my iPhone using Tapatalk

 

[purplesky]

If you take a world view, I don't think you will see any 'race to the bottom'. Many people in 3rd world countries are doing better by making products for 1st world countries.



And raising wages/savings for the people who need it most. My heart goes out for someone in deep poverty, that can now afford basic care for their family, over someone in the 1st world, who is moaning because they can't afford their premium cable channels.





Maybe you should meet the millennials I know, who went to school, gained a degree in an in-demand field, and are doing well.




Maybe the tax laws need to change?



Investors look for ROI. Maybe we need to change if we want to attract investment dollars? Who wants to invest in anyone with an 'entitlement' attitude?

-ERD50

Obviously I am talking about millennials in America. Not 10 year olds making soccer balls or a Chinese factory worker making an iPhone or a teenager making nike shoes.

Income inequality in America is now a real problem. Its Not about cable or buying a cell phone. That argument is dead and no longer relevant.

Good for you! You know some millennials that are making bank. Unfortunately more college grad millennials are not even making a living wage and they live in mom and dad's basement between their shifts at Starbucks and Target.

So its ok for corporate America and wealthy individuals to have an "entitlement attitude" when it comes to offshore tax-havens, but God forbid an American worker expects a living wage from corporations that make billions in profits and have trillions offshore evading taxes. See, it goes both ways with the "entitlement attitude".

 

[ERD50]

Obviously I am talking about millennials in America. ...

Yes, that was obvious to me.

Good for you! You know some millennials that are making bank. Unfortunately more college grad millennials are not even making a living wage and they live in mom and dad's basement between their shifts at Starbucks and Target.

And did the millennials you are talking about pursue an in-demand degree? If not, what should they expect? I should just buy their 'product', even if I don't need/want it? I bet you don't do that either.

So its ok for corporate America and wealthy individuals to have an "entitlement attitude" when it comes to offshore tax-havens, but God forbid an American worker expects a living wage from corporations that make billions in profits and have trillions offshore evading taxes. See, it goes both ways with the "entitlement attitude".

No, it doesn't go both ways. If other countries offer a better tax plan, you can bet they are going to pursue it. Are you going to tell me you don't take the tax deductions and credits that you are allowed? That's what I mean by fixing the tax code - make it competitive. That has nothing to do with 'entitlement', it's just playing by the rules.

Corporations don't 'expect a living wage' - they have to earn it. Plenty of companies go out of business when their product is not in demand at a price that they can profit from. It should be the same with workers - either have a skill set that someone wants to pay for, or adapt. It's pretty simple.

-ERD50

 

[Al in Ohio]

You hit the nail on the head purple sky. Unfortunately things have to get drastically worse (beyond going back anytime in the same generation) for some people to finally get it. Some just don't wanna know what they don't wanna hear.


Sent from my iPad using Early Retirement Forum

 

[daylatedollarshort]

Corporations don't 'expect a living wage' - they have to earn it. Plenty of companies go out of business when their product is not in demand at a price that they can profit from. It should be the same with workers - either have a skill set that someone wants to pay for, or adapt. It's pretty simple.

-ERD50

That is one school of thought. I just ordered an old book by John Kenneth Gailbraith, written in 1967, called the New Industrial State, which I think would differ from your views:

"According to Galbraith, the American economy consists of two quite different economic systems: "the entrepreneurial economy" of over eleven million enterprises, largely controlled by owners and working in a competitive system to "maximize profits" which will go to these owners; and a mega-economy (which he calls "the industrial economy") of a few hundred super-corporations, which dominate the whole economy and all aspects of our lives and are making the future in which the whole world must live. "

Galbraith's New Book on Industrial State Has Startling Impact - A book review by Professor Carroll Quigley

Related Chart:

These 10 Corporations Control Almost Everything You Buy:
http://www.businessinsider.com/these-10-corporations-control-almost-everything-you-buy-2012-4

 

[purplesky]

Yes, that was obvious to me.



And did the millennials you are talking about pursue an in-demand degree? If not, what should they expect? I should just buy their 'product', even if I don't need/want it? I bet you don't do that either.




No, it doesn't go both ways. If other countries offer a better tax plan, you can bet they are going to pursue it. Are you going to tell me you don't take the tax deductions and credits that you are allowed? That's what I mean by fixing the tax code - make it competitive. That has nothing to do with 'entitlement', it's just playing by the rules.

Corporations don't 'expect a living wage' - they have to earn it. Plenty of companies go out of business when their product is not in demand at a price that they can profit from. It should be the same with workers - either have a skill set that someone wants to pay for, or adapt. It's pretty simple.

-ERD50

But the American taxpayer invests $$$ trillions in corporate welfare, so how is that earning it? Are American corporations just entitled to receive trillions in American tax dollars and then ultimately just evade taxes because they feel the current U.S. tax laws are not fair? Poor corporations.:face palm:

They sure didn't have a problem taking American tax dollars to produce profit? Not to mention they don't pay back their losses to taxpayers.

So corporate America enjoys the benefits of America but they don't have to pay for them.

Now thats a sweet deal.

 

[Winemaker]

As long as we do not enforce current immigration laws, and correct the ILLEGAL undocumented workers problem (25 million and growing), the lower income worker will never get ahead. Labor, just like widgets, are controlled by supply and demand.

Too many of our young folk go to college, get into debt up to their eyeballs and study to become archaeologists, social workers, musicians, or even teachers (like my daughter). While they are noble professions and play a great role in society, there just aren't enough jobs in those professions to allow salaries to rise. If 25% of the teachers disappeared in a puff of smoke tonight, it would not take very long to fill those positions.

Disclaimer: My daughter did graduate from a private college in 4 yrs. and had part time job through out college and was not in debt when she graduated. Also, I don't want her to go up in a puff of smoke either. And I am for LEGAL immigration.

 

[rayinpenn]

IMHO Saving money isn't about evil corporations or immigration it is about LBYM and thinking long term. I call it brown bagging your life and the constant battle against SHINY RED PICKUP SYNDROME. Oh I've got it but the Mrs helped me see the light years ago. Now I'm sure you can probably write this list better then I.

1. Buy a new shiny red pickup or buy a three year old ugly green Toyota (I called her Betsy - god she was reliable)
2. Buy a budget stretching big house or a modest affordable cape cod (the upstairs was unfinished when we bought her)
3. Call the plumber, painter or lawn guy (god I love my used John Deere and the Mrs is an awesome painter) I love tools
4. Basic cable or the sports package I must admit no HBO but I am a geek for mountain men and the assorted Alaska shows..
5. Shop with coupons and look for sales (I never have the same cup of coffee week to week)
6. State College or private university. SUNY for me, State College for the daughter.
7. Ten thousand thermoses filled with cream of mushroom and a sandwich or eating out.
8. Some new toys with the bonus, tax return, inheritance, OT ....or some dividend stocks or ETFs.
9. Friday night pizza in or dinner and drinks out. (Did I ever tell you about the first time I spent more hen $20 on Chinese food.. The Mrs made a scene)
10 save first and spend the rest or spend and maybe save something
11 new heels or new shoes.. I actually met someone who didn't realize you can shine your shoes... "My husband will be happy because now I don't have to buy new ones..." Sweet Moses!
12. Not take advantage of a 401k match... Never leave money on the table...ever.
13. KEEP A BALANCE ON YOUR CREDIT CARDS .. oh brother don't get me started. The average person who carries a balance carries $15k - yikes that's what $ 3k in interest a year. Kill the debt and just save the interest for 30 years put it into ETFs and bam you'll have a big pile.

Obviously our list won't work for everyone - particularly if you have a very low salary. However I can't tell you how many people I've met that are clueless when it comes to spending/saving money. But for many people follow the above list and retirement will be as easy as not going to work.

Ps I still like cream of mushroom...


Sent from my iPad using Early Retirement Forum.

 

[athena53]

IMHO Saving money isn't about evil corporations or immigration it is about LBYM and thinking long term. I call it brown bagging your life and the constant battle against SHINY RED PICKUP SYNDROME. Oh I've got it but the Mrs helped me see the light years ago. Now I'm sure you can probably write this list better than I.

1. Buy a new shiny red pickup or buy a three year old ugly green Toyota (I called her Betsy - god she was reliable)
2. Buy a budget stretching big house or a modest affordable cape cod (the upstairs was unfinished when we bought her).
<snip>

You married well! I learned about LBYM from my own parents, who saved enough to put 5 of us through college. When they had a house with a formal living room and dining room built, it was at least 4 years before Mom bought furniture because she wanted the good stuff and her payment method was "90 days, same as cash". When we had the extended family over for holiday dinners, they put up a large card table and folding chairs in the dining room. They still have that furniture 40 years later and it looks just fine.

Now I watch HGTV and I see people walking through houses complaining that the white kitchen appliances will HAVE to be replaced with stainless steel, and they really want a place with hardwood floors throughout and no carpeting. I just laugh. We have a house on a beautiful lake site and I hate the kitchen wallpaper. As soon as it gets cool and there's less to do outdoors, I'm taking it down. No rush.

 

[rayinpenn]

Now I watch HGTV and I see people walking through houses complaining that the white kitchen appliances will HAVE to be replaced with stainless steel, and they really want a place with hardwood floors throughout and no carpeting.

I laugh at the snooty people as well. They go into a perfectly nice kitchen and "I wanted granite" or "this is a total gut job I hate those light, dark or whatever cabinets..."

Bought that cape cod and we needed bedroom furniture; I found a lovely set from a nice lady moving to Florida in the buy lines (think paper craigslist). 25 years later it is still upstairs... The old stove had a pilot light...The wife never complained probably why we celebrated 25 years together this past week...


Sent from my iPad using Early Retirement Forum.

 

[ERD50]

IMHO Saving money isn't about evil corporations or immigration it is about LBYM and thinking long term. ...

Yes, the earlier exchange with purplesky was getting deep into an area that will get the thread shut down, so I'll bow out now from that.

I laugh at the snooty people as well. They go into a perfectly nice kitchen and "I wanted granite" or "this is a total gut job I hate those light, dark or whatever cabinets..." ...

What's wrong with people wanting a certain look, as long as they can afford it?

I'd bet that our granite counters actually cost less than having formica put in. We have lots of angles and edges and separate pieces to deal with in our layout. A peninsula with rounded edges, a rounded cabinet profile to match on one piece. There would have been a lot of labor to do that in formica and have it look nice. With granite, the computer cuts and shapes anything you need. Very little labor, and none if it was highly skilled either. Rip out, align and glue down the pieces, some middling skills to fill the two joints and silicone the backsplash.

It was formica after a remodel I did - but my FIL did the formica with us - it was a BIG job, and he had all the tools and experience. Then I did the edge trimming later, which wasn't cheap and very labor intensive (getting wood edging around all the curves we had). Hiring someone to do all that would have been big $$$.

edit/add: Wait a minute - you were the guy talking about funding a $40,000 wedding, yet granite ( a lifetime investment versus a one day party) is 'snooty'? To each their own, but I don't think that would register with most people.

-ERD50

 

[Bestwifeever]

I am looking past the dining room furniture we have owned for 40+ years, bought second hand back then for $70, with seats recaned by yours truly, twice, into my two-year-old dream kitchen that brings me such happiness with those snooty countertops that are in heavy use every single day we are home. I must be schizophrenic....

But on topic--today we have $783 in our savings account. It will go below that as it will join our checking account balance to pay a credit card with $6k in travel costs, but it will go back up the next week when pension and SS are deposited. It's eclipsed by our money market fund balance at Vanguard; the survey in the OP asked only Internet posters if they have more than $1k in a bank savings account, so today we would be in the No column.

 

[rayinpenn]

What's wrong with people wanting a certain look, as long as they can afford it?

Absolutely nothing.. But they have a budget for the new house - I wonder how many have an extra $20k or more for kitchen gut job?

edit/add: Wait a minute - you were the guy talking about funding a $40,000 wedding, yet granite ( a lifetime investment versus a one day party) is 'snooty'? To each their own, but I don't think that would register with most people.

-ERD50

Yup I did say $40k (just a number at this point daughter isn't engaged) but I also said I'd rather put they put the money into a house. I deplore big wasteful weddings...

I have also see them come into a home and make a big deal about wall colors.. Every time we've bought a fresh coat of paint was the first order of the day. Paint, brushes and rollers all pretty cheap.



Sent from my iPad using Early Retirement Forum.