Yet another discussion of "have Americans saved enough"...

[LARS]

The Big Picture discusses article in Barrons about how 27% of all workers have saved less than $1,000. And yes the statistic is not adjusted for age, but 54% of the workforce is over 40 so it ain't looking good...


The Big Picture » Blog Archive » Delusions of Retirement Adequacy

 

[LOL!]

Yawn.

It's the same as it ever was. Probably 40% or more of retirees can live off of their SS benefits, so they don't need to save anything. That's also how it works in Europe. No one is worried about saving anything in Europe because they know the government will take care of them.

Just think of all the freedom that allows them: No worrying about the future. No need to save a dime. Just spend it all now.

So this "You Gotta Save" attitude is only for the wealthy. Once you remove the folks who do not need to save from the denominator, things actually look very rosy ... just like it always has.

 

[traineeinvestor]

Yawn.

It's the same as it ever was. Probably 40% or more of retirees can live off of their SS benefits, so they don't need to save anything. That's also how it works in Europe. No one is worried about saving anything in Europe because they know the government will take care of them.

Just think of all the freedom that allows them: No worrying about the future. No need to save a dime. Just spend it all now.

So this "You Gotta Save" attitude is only for the wealthy. Once you remove the folks who do not need to save from the denominator, things actually look very rosy ... just like it always has.

Yep....right up to the point where the demograhic and fiscal reality that such systems are unsustainable forces governments to allow/make the value of such taxpayer funded entitlements erode in real terms (which is happening already).

No thanks. I have no intention of relying on an unsustainable system to fund my retirement.

 

[LOL!]

No thanks. I have no intention of relying on an unsustainable system to fund my retirement.

No one here is because we are all wealthy here. In case you didn't notice this is the Early Retirement forum, not the work-until-you-begin-SS-benefits-and-live-in-a-trailer forum.

 

[bbbamI]

 

[youbet]

Google "van dweller" and you'll find lots of sites, blogs and forums on the subject of living in a van on the cheap. With the issue of access to quality health care apparently now solved for these folks, it might be a viable alternative to my expensive suburban lifestyle. A few more crappy investment decisions and tax increases and it's "youbet and his '89 conversion van." Can I park in your driveway for a few weeks?

Look here: VanDwellers : "Live in your Van 2" If you have a yahoo ID, admission is immediate. Otherwise, you'll get the idea from the home page.

 

[pilgrim]

My wife and I have retired from our work but have both found "fun" part-time jobs that keep us involved "as much as we want to be." Two years ago we purchased a new 25' Airstream that we haul around the country all spring, summer and fall - EVERY night we sleep in our own bed with our own pillows and blankets and we eat our own food every meal. That makes traveling so much more fun. We've spent a lifetime traveling in Europe and my working career was spent traveling and sleeping in a different motel every night. We've both tired of motels/hotels and restaurant meals. We love eating our own food! We stop where we want, un-hook and have our vehicle for seeing the sites in the area. We love going to museums and historical homes but then we love sleeping in our own bed every night! For us, it works perfectly!

It's better to keep your mouth shut and thought a fool
Than to open it and remove all doubt!

 

[REWahoo]

. We love going to museums and historical homes but then we love sleeping in our own bed every night! For us, it works perfectly!

<In my best John Wayne voice> Hello there, Pilgrim. Welcome to the forum.

Looks to me like your post would fit nicely in this thread: http://www.early-retirement.org/forums/f29/why-i-think-rving-sucks-49120.html

 

[bbbamI]

A few more crappy investment decisions and tax increases and it's "youbet and his '89 conversion van." Can I park in your driveway for a few weeks?

Well now, I imagine if it gets that bad and happens to you, it will happen to me too. So, save me a space, would ya? I'd be proud to be your neighbor.

 

[clifp]

No one here is because we are all wealthy here. In case you didn't notice this is the Early Retirement forum, not the work-until-you-begin-SS-benefits-and-live-in-a-trailer forum.

I am in LOL camp this is a Yawn article. I wish one of the bloggers would do something useful, like analyze which type of catfood is the most nutritious for all those not saving for retirement.

 

[LOL!]

Rather than cat food analysis, I would like to see a review of the lunch-time freebies at the various grocery stores: Does Costco have better samples? Or is WholeFoods the place to be? Which day is best for noshing on your favorite Italian antipasto?

 

[donheff]

Rather than cat food analysis, I would like to see a review of the lunch-time freebies at the various grocery stores: Does Costco have better samples? Or is WholeFoods the place to be? Which day is best for noshing on your favorite Italian antipasto?

That one hits home. I can certainly afford to pay for my own food but I can't resist chowing down on those Costco buffets. When I stop at the deli counter at my local Harris Teeter, I end up downing a whole lunch worth of ham and cheese samples. And HT's tapenade and fresh bread samples, um, um, um.

 

[W2R]

I choose not to "spend" my allotted calories on grocery store freebies. There are too many great restaurants left to try here in New Orleans.

As for the discussion of "have Americans saved enough", I have only one real data point: myself. I am doing just fine in retirement, so there.

 

[bbbamI]

As for the discussion of "have Americans saved enough", I have only one real data point: myself. I am doing just fine in retirement, so there.

......

 

[seabourne]

having visited my grandparents and discussed their finances with my Dad a few weeks ago (part of a conversation about retirement communities, long-term care, insurance, wills, etc for both sides of the family) I'm less convinced that the $1m invested number that I've generally used as a ballpark is as necessary for most people. My grandparents have ~$450k, but own 2 houses - one in AZ for winter, one in upstate NY for summer, are both getting SS, and sold a strip mall, financing the purchase for the buyer, so they get some income stream. They live on about $20-25k a year, and are pretty happy with their lifestyle. Now, they get SS and medicare, and don't do much, but in some ways it's a comfort that I'm not worried about them falling off a financial cliff.

For myself, I still think that $1m is a pretty good ballpark for FIRE, but seeing people happy on less is some comfort.

 

[LARS]

having visited my grandparents and discussed their finances with my Dad a few weeks ago (part of a conversation about retirement communities, long-term care, insurance, wills, etc for both sides of the family) I'm less convinced that the $1m invested number that I've generally used as a ballpark is as necessary for most people. My grandparents have ~$450k, but own 2 houses - one in AZ for winter, one in upstate NY for summer, are both getting SS, and sold a strip mall, financing the purchase for the buyer, so they get some income stream. They live on about $20-25k a year, and are pretty happy with their lifestyle. Now, they get SS and medicare, and don't do much, but in some ways it's a comfort that I'm not worried about them falling off a financial cliff.

For myself, I still think that $1m is a pretty good ballpark for FIRE, but seeing people happy on less is some comfort.

Where you'll find your analysis changes very quickly is if one, or both, need long term care.

This is not a comment one way or the other on your $1 million target: only that the expense picture can ramp up very quickly if you are unlucky in the health department. I know first hand from my parents' experiences. So to be prudent, you need to understand the potential impact of the "long term care" wildcard. Unless, of course, you are okay with whatever care the state provides once your assests are depleted...

 

[stoutboy]

Yawn.

It's the same as it ever was. Probably 40% or more of retirees can live off of their SS benefits, so they don't need to save anything. That's also how it works in Europe. No one is worried about saving anything in Europe because they know the government will take care of them.

Just think of all the freedom that allows them: No worrying about the future. No need to save a dime. Just spend it all now.

So this "You Gotta Save" attitude is only for the wealthy. Once you remove the folks who do not need to save from the denominator, things actually look very rosy ... just like it always has.

Yep....right up to the point where the demograhic and fiscal reality that such systems are unsustainable forces governments to allow/make the value of such taxpayer funded entitlements erode in real terms (which is happening already).

No thanks. I have no intention of relying on an unsustainable system to fund my retirement.

you're both woefully misinformed about Europe. They have a great social safety net AND they save. A good deal more than Americans, maybe not as much as Asians. It's pretty much only in the US where you see people chant "LBYM" like it's some kind of mantra. In the rest of the world, that's the norm. No maxed out credit cards, no home buying with zero money down. The mistake most Americans make is that they look on social security as their primary source of retirement income. It was never meant to be that, but only a supplement. Social Security is in no danger of going under; that's just another right wing canard. I think we should settle the question once and for all--eliminate the payroll tax cap and raise the retirement age two years. Bingo, problem solved.

 

[youbet]

Social Security is in no danger of going under; that's just another right wing canard.

You seem eager to bring controversial political issues to the discussion. That's too bad. Lots of folks of many political outlooks feel that SS inputs and outputs should be brought into balance.

 

[stoutboy]

You seem eager to bring controversial political issues to the discussion. That's too bad. Lots of folks of many political outlooks feel that SS inputs and outputs should be brought into balance.

There's nothing fundamentally wrong with our SS system. I'm not bringing politics into the discussion at all, but merely pointing out a fact. Take a look at the origins of the attacks on SS. Where are they coming from?

Social Security is not in danger, but could we make it even healthier? Absolutely. We also need to adjust it for the fact that Americans are living longer. I think the solution is simple, albeit politically unpopular: eliminate the payroll tax cap and raise the retirement age.

 

[clifp]

I'm less convinced that the $1m invested number that I've generally used as a ballpark is as necessary for most people. My grandparents have ~$450k, but own 2 houses - one in AZ for winter, one in upstate NY for summer, are both getting SS, and sold a strip mall, financing the purchase for the buyer, so they get some income stream. They live on about $20-25k a year, and are pretty happy with their lifestyle. Now, they get SS and medicare, and don't do much, but in some ways it's a comfort that I'm not worried about them falling off a financial cliff.

For myself, I still think that $1m is a pretty good ballpark for FIRE, but seeing people happy on less is some comfort.

You are correct and the statistics support this. Slightly less than 2% of the US population has $1 million in invest able assets. Yet 13% of the population is over 65% and seniors are among are most affluent populations following only 50 years old. (I am simplifying a bit here millionaire tend be older, not all 65+ year olds are retired etc..). In another thread I suggest for a regular retiree somebody over 62, that social security provides about 20K/couple and $500K (like grandparents have) should generate another 20K. Throw in a paid off house, medicare, and lower taxes and 40K is more than adequate for a retiree.

However for an EARLY retiree you do need a $1 million IMO. Although that also can be reduced if you have other assets like a paid off house, a modest pension, rental properties, or even cheap medical insurance, oh and of course a LBYM personality.

 

[stoutboy]

Yes you are. Read your own post. You talk about the fear of SS going under as a "right wing canard" then YOU suggest that it needs additional revenue and a higher retirement age to keep from going under........

I wrote the post, I know what it contains. A previous poster claimed that SS is 'unsustainable'; I pointed out that it is not. The origin of the current fearmongering in our society regarding social security is certainly political in nature, and it comes entirely from the right. That's just a fact.

SS is not insolvent, and is in no danger of becoming insolvent. That said, if people still wish to believe that SS is in trouble, the fix is a simple one, and I pointed out how to do so.

 

[stoutboy]

I think it's probably true Americans don't save enough. Every study I've seen has us at near bottom in terms of savings rates. The propensity to live beyond our means is a key reason why our country is in its current economic state.

I do wish people had more incentive to save. Why the 16.5K limit on 401k contributions? Why not 25K? Why not allow the catch-up from age 45? Why not raise IRA limits to 10K from the current 5K? I wish our legislators would increase our savings incentives. Maybe I'm missing the downside. Would the government really stand to lose so much tax revenue?

 

[LOL!]

Most people do NOT need to save more than $16,500 plus $5,000 a year towards retirement. The main reason is that they are not that wealthy to begin with, so it would be overkill to save more. Let's say you could shelter 20% of your pre-tax earned income. That $21,500 would cover someone with a $107.5K salary. That's plenty, don't you think?

 

[stoutboy]

You may be right. But I think most people can't save that amount for approximately half of their working lives (20s and 30s). They probably could, however, once in their 40s. So it would be nice if the limits were higher. I'm in a pretty fortunate spot where I could/would save a lot more in retirement accounts if I only could.

 

[LOL!]

Taxable accounts are rather tax efficient if you know how to use them, so there is nothing preventing anyone from saving.