Most Americans unprepared for retirement

[Helen]

I vote for 401k's and SS for everyone with no other pension system. Folks should work where they want based on current compensation and their own current career preferences and not because they already have many years invested in "the pension."

It would be nice if the Government opened up the TSP to everyone. I can't imagine the cost would be that high. As it stands now, many employees are paying such high fees that it is barely worth the tax break. Others have no access to a 401k/457 type plan.

 

[Mulligan]

I am thrilled to have a DB pension, even though it is not indexed. It is one leg of our retirement plan-the other two legs being personal savings and SS.

Best decision I made was to not accept my employers offer to migrate from the DB plan to the new DC plan in 2000. I remained in the now closed DB for another 10 years.

You gotta love those 3 legged retirement stools as they are getting harder to find. I have a leg (pension) and a stub (savings), so I sure hope that one leg holds up!

 

[photoguy]

The average monthly SS retirement check in March, 2012 was $1232.

For a couple that's about 30k and I think that's about what wife and I can expect based on our statements. While it's not a lot of money, one could live quite well on that amount (assuming housing is paid for). We've been tracking our expenses and if you exclude housing and healthcare, we are definitely under 30k / year.

I HOPE it is not bad.

For several reasons, we are not in as good financial shape as we could be at this age.

In order to avoid disaster, I do have to eliminate all debt before we get there, though.

For us dealing with mortgage debt is the primary obstacle to ER (we live in a very high cost of living area).

 

[Walt34]

This is the 800 lb whatever in the room, that nobody wants to admit.
These government COLA pensions.....who agreed to it? Not the tax payer...but the crooked, union bullied, politician...to get re-elected. These pensions are bankrupting the local systems.. What would it cost to purchase this benefit in the open market? Do private firms offer this? Why not? Major issue in the next 10-20 yrs....how to fund these rich pension obligations made by corrked politicians.

In our case that plan had been in place since about the mid '60's and there was no union at the time. The union came much later, after years of either no raises or 2% raises in times of double-digit inflation while private industry types were getting double-digit annual raises.

So what is happening now is that the local government that I worked for back-loaded the expenses and is now paying the piper. Frankly, I think that's fair.

And some private companies did offer DB pensions at the time and again these were changed after the inflation of the '70's-'80's and it became apparent how much they would cost. And government changed too, albeit more slowly.

So this too shall pass.

 

[audreyh1]

Hey! I like rice and beans! (Of course, yummy sausage makes the dish!)

Actually, I suspect they will be taking the "2 big macs for $3" coupons to the clown house because so many don't have a clue how to cook economically - never mind nutritionally.

Ooooo, burn! But I think you nailed it about using Micky D's.

 

[mystang52]

OK, most are unprepared for retirement, yet folks still keep retiring somehow just like they always have. How is that possible? (That's a rhetorical question, but fill free to answer.)

I and my wife have always had respectable incomes which in turn meant we have had a nice lifestyle and could afford to save more.
Lower-paid workers no doubt could not have saved as much, but also probably had a different lifestyle. Their retirement savings lower the average, but they might enjoy their retirement just as much as higher wage-earners, based on their pre-retirement lifestlye.
My father fit this description. He never made a lot of money, had a modest retirement lifestyle, and was 100% happy in his retirement.

 

[JP.mpls]

Growing_older,
I had a similar experience. 15 years in a DB plan were converted into $25K into a 401K account in 2005. I could have kept the DB plan if I was 50 or older at the time, but I was a few years younger than that. I would have 23 years in that plan right now if this didn't happen. I have work buddies retiring early with 25-30 years in this plan. They are getting $2K/month pensions, or $250-300K buyouts.

JP

 

[Surewhitey]

Mom is living the same and w*rks 5-10 hrs to keep busy. She saves her $600/mo SS for a rainy day.

 

[grasshopper]

Ms G and I paid ourselves first. We used every tax advantage benefit available that made sense. Even if an employer defined benefits plan wasn't right for us, we would take 15% and auto invest in a VG fund. When we paid off our home early, we just auto-invested the same amount into VG.

Worked for us.

 

[EvrClrx311]

It's so easy in theory...

From the day you start working, live on only 80% of your take home pay and put the other 20% into retirement (if you start at your first job you'll likely never notice the difference). Don't touch it unless you're terminally ill and even then you'll see examples where this isn't smart.

Then you'll have more money than you know what to do with by age 60

...but, in practice people fail horribly at this.

 

[EvrClrx311]

...but my generation almost never works at the same employer for long enought to make it matter.

Steel

Very true... I just turned 30 and when I talk jobs with family/friends they are all shocked that I'm still working at the same company... that I started at just 7 years ago

"The best way to boost your salary is to move jobs"

"Make sure you're at least exploring other options"

 

[LRDave]

It's so easy in theory...

From the day you start working, live on only 80% of your take home pay and put the other 20% into retirement (if you start at your first job you'll likely never notice the difference). Don't touch it unless you're terminally ill and even then you'll see examples where this isn't smart.

Then you'll have more money than you know what to do with by age 60

...but, in practice people fail horribly at this.

Offspring (particularly teenagers....)

Unforeseen expenses related to your offspring can be that "punch in the mouth" that Mike Tyson was famously referring to - relative to the otherwise sane plan presented above.

 

[EvrClrx311]

Offspring (particularly teenagers....)

Unforeseen expenses related to your offspring can be that "punch in the mouth" that Mike Tyson was famously referring to - relative to the otherwise sane plan presented above.

It is always possible to plan ahead...

I have a 6 month old daughter that underwent open heart surgery 2 months ago and is still recovering in the hospital (coming up on 9 weeks and 3 operations)... fortunately, I was prepared with insurance.

I have yet to touch my 401(k).