Retirement: A third have less than $1,000 put away

[Ready]

Just another reminder of how unprepared our country is for retirement. According to USA Today, 69% of the working population, and 66% of the retired population have less than $50K in savings.

While it does not address what percentage may have a DB plan, we can assume that over the next couple of decades the percentage with a DB plan will continue to diminish, leaving nothing but social security and government aid for people to live on.

It certainly builds a strong case for means testing down the road on social security, unless we come up with a better plan before we need to go there.

Retirement: A third have less than $1,000 put away

 

[Midpack]

I couldn't find where they identified what age groups were surveyed, it looks like it was just (all) "workers?" It wouldn't surprise me at all if younger workers had little or nothing saved for retirement, in which case the article doesn't really tell us much of anything about retiree preparedness. Many here may have had "less than $1,000" when starting their careers. Looks like more internet space filler, pretty typical for USAToday, mostly fluff to support [-]an attention[/-] a click grabbing headline.

Interestingly, the same source (EBRI) also reported:

• The percentage of workers confident about having enough money for a comfortable retirement, at record lows between 2009 and 2013, increased in 2014. Eighteen percent are now very confident (up from 13 percent in 2013), while 37 percent are somewhat confident. Twenty-four percent are not at all confident (statistically unchanged from 28 percent in 2013).
• Retiree confidence in having a financially secure retirement, which historically tends to exceed worker confidence levels, has also increased, with 28 percent very confident (up from 18 percent in 2013) and 17 percent not at all confident (statistically unchanged from 14 percent in 2013).

 

[ducky911]

This has been in the news for some time and to me it could be the new bubble. I wish they do a more in depth study on it.

?will it be time to put bars on the windows and locks on the garbage cans lids?

 

[misty57]

Just another reminder of how unprepared our country is for retirement. According to USA Today, 69% of the working population, and 66% of the retired population have less than $50K in savings.

While it does not address what percentage may have a DB plan, we can assume that over the next couple of decades the percentage with a DB plan will continue to diminish, leaving nothing but social security and government aid for people to live on.

It certainly builds a strong case for means testing down the road on social security, unless we come up with a better plan before we need to go there.

Retirement: A third have less than $1,000 put away

It's already being means tested as far as paying income taxes on it is concerned. How do you think it will be means tested further - based on your previous year's AGI or based on assets (very difficult to do seeing as asset values can rapidly change)?

For the last year or so, the statement that DH has received from SS has warned that his payments might be (and probably will be) as little as 70% of what he "should" be getting.

We are currently age 57, retired, and 16% of DH's gross pension goes to our portion of the cost of our health care premiums (the rest is subsidized by the company he retired from). We are treated in an HMO. The cost of our portion of the premiums increased by 10% in 2014. We have no dental or vision insurance so the cost of that comes straight out of our pockets. Decades ago we completely dialed out Social Security for retirement planning purposes; but that was back when retiree medical was covered by DH's company 100% and we thought we could count on Medicare at age 65. Now we feel as though we will need SS to cover the skyrocketing costs of health care.

I have very mixed feelings about means testing for SS.

 

[W2R]

Considering the barrage of advertising we are subjected to every time we look through our snail mail, turn on the TV, answer the phone, or check our e-mail, I am not surprised. It would be a tremendous failure for Madison Avenue's persuasive techniques if few bought all these bazillion un-needed consumer items and instead actually saved for retirement. The third that have less than $1000 put away for retirement probably represent quite a few good little consumers.

And then, as if that wasn't bad enough, most people don't even know how to budget and aren't taught a thing about personal finance in school. I wasn't either, but at least I had the advantage of having parents who taught me some of what I needed to know. Not everybody is that lucky.

 

[SJ1_]

.....
Interestingly, the same source (EBRI) also reported:

• The percentage of workers confident about having enough money for a comfortable retirement, at record lows between 2009 and 2013, increased in 2014. Eighteen percent are now very confident...

I would guess they have no clue how much they really need.

Years ago this guy who was in his 50's was telling me about the 401k plan we had and how great it was. Then he looked at me and said "I got $20,000 in it, and at some point the'll be no reason to come back here"

He was prob. making in the $40k range back then.

 

[daylatedollarshort]

Considering the barrage of advertising we are subjected to every time we look through our snail mail, turn on the TV, answer the phone, or check our e-mail, I am not surprised. It would be a tremendous failure for Madison Avenue's persuasive techniques if few bought all these bazillion un-needed consumer items and instead actually saved for retirement. The third that have less than $1000 put away for retirement probably represent quite a few good little consumers.

+1. Any ads for savings often promote investments with excessive fees and commissions.

One thing we realized when we decided to semi-ER, is how much less we could live on just by getting interested in sustainable living practices - smaller house, limiting single use products, being more energy efficient, making our own non-toxic cleaning products, reading paper and ebooks from the library, better MPG cars, less processed foods, less carry out, etc.

If we'd been aware of all these ideas years ago it we could have saved more money and knocked a decade or so off our full time working years. A lot of our second income was just going to pay for extra taxes and consumer products we bought because of a lack of time for DIY and comparison shopping,

This blog post has a good article on the 40 hours work week and consumer spending -

"Here in the West, a lifestyle of unnecessary spending has been deliberately cultivated and nurtured in the public by big business. Companies in all kinds of industries have a huge stake in the public’s penchant to be careless with their money. They will seek to encourage the public’s habit of casual or non-essential spending whenever they can......

The ultimate tool for corporations to sustain a culture of this sort is to develop the 40-hour workweek as the normal lifestyle. Under these working conditions people have to build a life in the evenings and on weekends. This arrangement makes us naturally more inclined to spend heavily on entertainment and conveniences because our free time is so scarce."

Your Lifestyle Has Already Been Designed

 

[jarts98]

When I clicked the link, the article opened, then a pop-up ad appeared about great cruise deals. Just what someone with $1k saved would need - an excuse to tap into the 401k for a cruise!

 

[Mulligan]

I imagine the people who have saved less than a $1000, are the ones not reading the article.


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[jarts98]

Probably.....just thought it was ironic.

 

[Ready]

I imagine the people who have saved less than a $1000, are the ones not reading the article.


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They don't have time - they are on a cruise!

 

[Mulligan]

Probably.....just thought it was ironic.

Jarts, they knew well off people like yourself would read the article, and then think, "I got way more than a $1000. I think I will celebrate by booking a trip!" ... I won't fall for the cruise link, but if it was a steal trip to Vegas, I may have succumbed.


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[Ready]

I think those pop ups are fairly random, or maybe tied to some cookies on your hard drive. In the ER forum I tend to get mostly ads for men's underwear. Pretty weird.

 

[W2R]

I think those pop ups are fairly random, or maybe tied to some cookies on your hard drive. In the ER forum I tend to get mostly ads for men's underwear. Pretty weird.

Talk about weird, I am getting an ad for a home refinance. And I am one of those with a paid off mortgage who never never ever wants another! Sorry, Madison Avenue, drum this into me all you want, but it ain' gonna happen in this lifetime.

Also I am getting a Fitbit ad. Men's underwear? Now that would be different and I might enjoy the beefcake, if I ever get that one.

 

[Walt34]

Talk about weird, I am getting an ad for a home refinance. And I am one of those with a paid off mortgage who never never ever wants another!

Not here either. A few years ago when DW closed a credit card because they started charging a fee we opened a new one at a local bank. After checking our credit the nice lady asked if we wanted to take out a mortgage. I just said "I know you have to ask, but no thanks".

 

[Exterous]

I read this report and two things struck me:
1) They are not counting any type of Defined Benefit plan like Pension or Annuity.

2) They are relying on people accurately saying how much they have in a snap phone call to a stranger

The reason defined benefits weren't included in the total is most people don't know how much those are worth, he says.

Yet we are trusting them to know how much their other plans are worth? I know there are some obvious differences in ease of calculation but its been my (admittedly anecdotal) experience that people don't have an accurate idea of their retirement account balances as a general rule and wouldn't be able to accurately provide that information to a survey

Its interesting to see the back and forth of reporting given that its very difficult to get an accurate idea about a person's wealth. Recently the WSJ ran an article about a study that shows the retirement picture may not be as bleak as we think it is:

The CPS measures the sources and amounts of income received by American households, including income from retirement plans. The Census Bureau's definition of income, however, includes only payments made on a regular, periodic basis. So monthly benefits paid from a defined benefit pension or an annuity are counted as income, while as-needed withdrawals from 401(k)s or IRAs are not.

The misperception about retirement income becomes clearer when other data are taken into account. For 2008, the CPS reported $5.6 billion in individual IRA income. Retirees themselves reported $111 billion in IRA income to the Internal Revenue Service. The CPS suggests that in 2008 households receiving Social Security benefits collected $222 billion in pensions or annuity income. But federal tax filings for 2008 show that these same households received $457 billion of pension or annuity income.

In combined terms, the Current Population Survey that ostensibly documents how poorly pensions and individual retirement plans provide retirement income ignores at least 60% of the income being delivered to retirees. Even that is not the whole story—because tax filings do not include distributions from Roth plans, since those distributions are not taxable.

http://online.wsj.com/news/articles/SB10001424052702304603704579329012635470796

Oh and for those who got pop-up ads - Chrome or Firefox + Adblock is a wonderful thing

 

[Gumby]

I imagine the people who have saved less than a $1000, are the ones not reading the article.


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I'll bet many of them can't read the article. According to this study, 14% of adults in the U.S. are functionally illiterate.

National Assessment of Adult Literacy (NAAL) - Demographics - Overall

Also consider that many people who can read are pathetically innumerate.

http://www.nytimes.com/2013/10/08/us/us-adults-fare-poorly-in-a-study-of-skills.html?hp&_r=0

Taken together, a finding that 36% of working age adults have less than $1000 saved is not surprising. Heck, these people are lucky to get and keep a job that will feed and shelter them from one paycheck to the next. If they can't read or do math, that is unlikely to change.

I know it's popular to point to poor discipline and spending priorities, but the simple truth is that a fairly substantial number of people never will be able to save anything.

 

[growing_older]

2) They are relying on people accurately saying how much they have in a snap phone call to a stranger

When a stranger cold calls me and asks about my financial accounts, I am unlikely to admit I have much saved.

 

[Chuckanut]

If most people new much math then state lotteries would have failed, Las Vegas would be a simple desert town, and credit cards charging interest over 8% would be unknown.

 

[Ready]

We know that a large percentage of Americans spend money on things they don't need, eat foods they know are bad for them, smoke cigarettes even though they know it causes cancer, fail to properly exercise when they know it will negatively impact their health, and on an on.

Knowing the behavior is bad for you doesn't seem to have much impact on their behavior.

 

[supernova72]

Just another reminder of how unprepared our country is for retirement. According to USA Today, 69% of the working population, and 66% of the retired population have less than $50K in savings.

While it does not address what percentage may have a DB plan, we can assume that over the next couple of decades the percentage with a DB plan will continue to diminish, leaving nothing but social security and government aid for people to live on.

It certainly builds a strong case for means testing down the road on social security, unless we come up with a better plan before we need to go there.

Retirement: A third have less than $1,000 put away

I recently read that the average 401K balance reached a new high of $110K at the end of 2013. So for about 30 seconds I felt good about me being higher than that. Then it hit me…don't use $110K as a benchmark because Americans have under saved! Eek!!

 

[Al in Ohio]

The Social Security Admin does in depth studies on theses percentages and I read the one published for 2013. The figures they give by age group indicated much higher net retirement savings than those quoted in this article. I've read quite a few other articles from non government sources on the subject also recently and these figures by USA today are far lower than any of those as well. I frankly find these too unrealistic to believe. If someone cold called me with that question I'd never give them a hint to my actual retirement worth. Plus the target group quantity was pretty small.

 

[ChiSaver]

57% of all statistics are made up.

 

[Theduckguru]

Just another reminder of how unprepared our country is for retirement. According to USA Today, 69% of the working population, and 66% of the retired population have less than $50K in savings.

While it does not address what percentage may have a DB plan, we can assume that over the next couple of decades the percentage with a DB plan will continue to diminish, leaving nothing but social security and government aid for people to live on.

It certainly builds a strong case for means testing down the road on social security, unless we come up with a better plan before we need to go there.

Retirement: A third have less than $1,000 put away

The US has had a trade deficiet for 50 years. Until the country corrects this, the American idea of a quality retirement is gone for the majority of the population.

 

[Moneygrubber]

I dont think means testing is required, maybe IQ testing. So many of my co workers have 2 ski mobiles, a boat, second home, third car, etc etc. I have none of that crap but millions socked away to retire at 53. Let them play with their toys...