Gen X has no retirement plan...

[youbet]

Kombat......

As I said in an earlier post, every generation has it's cross to bear...... There's seldom any sense to an "I had it tougher than you" discussion," so I won't go there.

While there are a few folks who are born into favorable socio-economic circumstances, don't complicate their lives with any extra burdens (read "children"), are smart and good looking and find life to be all fun and frolic, that isn't often the case. Typically life is a bit of a struggle. Less so for those of us living in the USA or Canada at this time compared to many other parts of the world or other times, but still a bit of a struggle, IMO.

My son and DIL are your age and also work in technical jobs. They have three children, the oldest afflicted with cerebral palsy which makes him the equilvalent of two or three kids in terms of expenses and parental effort required. They're in their own home and in the 7th year of paying down a 15 year 6% mortgage. They both contribute 10% to 401k's which receive some matching, but I don't know how much. At this time they have no investments outside of their 401k's, just a pretty good sized cash emergency fund and an account where they're saving for a new car. They recieve help in the form of time and a little $$$ from me and DIL's mom.

I'm amazed at how little complaining/worrying/fretting I hear from them! Maybe they just don't have time. I know they only average about four hours sleep. It's a busy life but they're doing what they wanted to do.

Despite the high housing costs, high taxes and irritating comments you're enduring, you guys need to try to live the life you want to lead. Understand, it's seldom easy and is going to involve a whole lot of hard work. Whether it's deciding where to live, what career path to follow, whether to have kids, hobby interests, etc., you're blessed with opportunities.

Sooooo, take a good look at the socio-economic environment you're in and the hand you've been dealt, decide how you want to play your cards, and live your life. Just understand it probably isn't going to be all fun and games!

[kombat]

Originally Posted by Milton

Conflicting information on the Gen-X saving/investing experience:

(1) Financial Post

(2) For Gen X, time to grow up and get a broker - Cracked Nest Egg - MSNBC.com

Thanks for the links, Milton, there's some interesting information there. I wonder, however, if the Financial Post article isn't being completely upfront. It says nothing about the amount people are saving, and only focuses on the percentage that have some sort of savings plan and comparing it to the Baby Boomers. However, given that fewer companies offer pensions these days, and offer "company matching investment programs" instead, I wonder if that's skewing the numbers.

Specifically, a Boomer at age 30 would have had a good start toward a company pension, and thus would have little need to start his/her own savings program. Yet a Gen-X-er, working for a company that doesn't offer a pension, might (wisely) choose to participate in the company's investment program. That would make them one of the 70% of youths the article claims have started "a savings program." However, unless they're investing very large amounts within this program, it will not produce nearly the same sustainable income as the pension plan it replaced (which is precisely why the companies have dropped pension plans in favour of these investment plans instead - it shifts more of the costs onto the employee).

The net result is that even those youths categorized as being among the 70% with a "savings plan" may not even be as far along financially as the 75% of Boomers who weren't saving at the same age (due to their expectation of a generous pension).

The second article, on the other hand, paints a much bleaker picture, and is more in line with my own observations and beliefs.

[Want2retire]

Originally Posted by kombat

Specifically, a Boomer at age 30 would have had a good start toward a company pension, and thus would have little need to start his/her own savings program. Yet a Gen-X-er, working for a company that doesn't offer a pension, might (wisely) choose to participate in the company's investment program.

I was born shortly after WWII, and so the year in which I turned age 30 was 1978. According to Wikipedia,

In 1978, Congress amended the Internal Revenue Code to add section 401(k). Work on developing the first plans began in 1979

and apparently IRA's were begun around that time as well. I thought that was an interesting historical tidbit. I didn't even know they existed until I was in my 40's, and contribution limits were very low.

[Fireup2025]

On a positive note...I was discussing retirement with a friend I have known since kindergarten...he works as a police officer - and he too...is planning on retiring between 50 and 55 (we are Gen-Xers by definition) and closing in on our 20 year high school reunion. We had a 15 min discussion regarding investments, deferred comp (both state workers) and LBYM tricks. Nice to know I am not the only one from po-dunk CA my age with the same attitude!

[Milton]

Originally Posted by youbet

(T)here are a few folks who are born into favorable socio-economic circumstances, don't complicate their lives with any extra burdens (read "children"), are smart and good looking and find life to be all fun and frolic

That's definitely the way to go!

[FinanceDude]

Originally Posted by youbet

While there are a few folks who are born into favorable socio-economic circumstances, don't complicate their lives with any extra burdens (read "children"), are smart and good looking and find life to be all fun and frolic, that isn't often the case. Typically life is a bit of a struggle. Less so for those of us living in the USA or Canada at this time compared to many other parts of the world or other times, but still a bit of a struggle, IMO.

Good points..........

[kombat]

Originally Posted by youbet

While there are a few folks who are born into favorable socio-economic circumstances, don't complicate their lives with any extra burdens (read "children"), are smart and good looking and find life to be all fun and frolic, that isn't often the case. Typically life is a bit of a struggle. Less so for those of us living in the USA or Canada at this time compared to many other parts of the world or other times, but still a bit of a struggle, IMO.

Right. But that certainly doesn't preclude a relative comparison of the degree of difficulty facing different demographics in various periods of history. I think my argument that Gen-X is having a "harder go of it" than the Boomers stands well-supported and valid.

[FinanceDude]

Gen X has a lot higher bills to pay on an inflation basis. Look at college tuition alone, WAY above the inflation rate.

I can't imagine a newly minted college degree person paying off student loans, buying $3.00 + a gallon gas, etc, all on $25,000 or so a year??

[youbet]

Originally Posted by kombat

Right. But that certainly doesn't preclude a relative comparison of the degree of difficulty facing different demographics in various periods of history. I think my argument that Gen-X is having a "harder go of it" than the Boomers stands well-supported and valid.

Good point kombat. I guess you're right, you are getting screwed big time.

[kombat]

Originally Posted by youbet

Good point kombat. I guess you're right, you are getting screwed big time.

Once again, your tone is masked by the unfortunate limitations of a text-based media, and I can't tell if you're being sincere or patronizing. Since it's Friday, and I want to start the weekend in a good mood, I'll choose to believe you're being sincere.

[kombat]

Originally Posted by FinanceDude

I can't imagine a newly minted college degree person paying off student loans, buying $3.00 + a gallon gas, etc, all on $25,000 or so a year??

Exactly my point, FinanceDude. Can any of the Boomers here provide some numbers regarding taxation in the 60's and 70's? What were the federal and provincial/state tax rates like, compared to today? Were there capital gains and dividend taxes, as we currently know them? What were property taxes like, as a proportion of the home's value (my annual property taxes are currently approximately 1.1% of my home's value - is that more or less than the 60's and 70's?)

[youbet]

Originally Posted by kombat

Once again, your tone is masked by the unfortunate limitations of a text-based media, and I can't tell if you're being sincere or patronizing. Since it's Friday, and I want to start the weekend in a good mood, I'll choose to believe you're being sincere.

Why wouldn't I be sincere?

After reviewing your past posts, I've come to realize your case is different than the similarly aged folks I know here. But they're only anecdotal examples and certainly shouldn't be generalized to cover your case and your circumstances, which seem horrific and intolerable.

It's truly a shame and you have my deepest sympathy.

[Hamlet]

I'm 35 years old. I agree with much of your sentiment, but I would like to point out a few things to cheer you up a little about our generation's lot in life.

The lifestyle that the Gen-Xers are struggling to maintain is miles ahead of what the norm was back when the Boomers were raising kids on blue collar salaries.

Most people did not live in 4 bedroom/ 2 bath houses with a two car garage for just them and their children. Children shared bedrooms. My MIL had to share her bedroom with her schizophrenic aunt. One of her uncles slept on the living room couch. The idillic blue-collar life everyone remembers was not universal. Look at most of the houses from the 50s. Most were something like 1200 sq ft, 3 bed/1 bath ramblers with no AC. Maybe they had a 1 car garage.

A single family car was the norm.
TV's were small and black and white.
People didn't have cable.
Eating out was rare.
Travel was rare.

The wife may have stayed home with the kids, but the amount of work required to feed and clothe a family, and maintain a home was dramatically higher. There were no microwaves or convienence meals. Cooking from scratch was more the norm.

If you've never read the Tightwad Gazette, you should. She makes a strong case that that idillic 50s lifestyle is still available to people, but they have to take the bad with the good.

You want to get by on one salary? Live in a real 50s size house. Have your children share bedrooms. Get by with one car that you drive for 10-15 years. Get your TV (and children's clothes, tools, books, etc) from rummage sales. Don't bother with cable. Cook from scratch.

Originally Posted by kombat

Fast-forward to the 90's. My generation graduates college and finds the following:

1) Taxes have skyrocketed, to pay for services that previously had been paid for with debt, to keep taxes artificially low. Boomers are getting older and falling ill, putting even more of a strain on the health-care system.
2) The national debt is through the roof. 25% of all taxes collected by the government are spent simply servicing the interest on the massive national debt, putting us taxpayers in the crippling position of only receiving 75% of the services we're paying for (on the other hand, our parents actually got more than 100% of the services they paid for, since it was largely funded by debt). So not only am I paying for my own services, I'm picking up the tab for my parents' services (with interest) from the 70's and 80's.
3) Housing prices have ballooned. Our parents are enjoying downsizing their housing, giving their savings yet another boost, on the backs of young families like mine who are just trying to find an affordable home.
4) Nobody is offering pensions. The percentage of companies offering lifetime pensions to new employees has plummeted, leaving us responsible for accumulating our own nest egg.

So in summary, we have no corporate pensions, are paying off our parents' debt, with mortgages twice the size of our parents' (for the same size house), with less money in our pockets (after taxes) to do it all with.

I'm a Gen-X-er, but I'm not apathetic. I'm downright mad.

[Milton]

Originally Posted by Hamlet

Most people did not live in 4 bedroom/ 2 bath houses with a two car garage for just them and their children. Children shared bedrooms. My MIL had to share her bedroom with her schizophrenic aunt. One of her uncles slept on the living room couch. The idillic blue-collar life everyone remembers was not universal. Look at most of the houses from the 50s. Most were something like 1200 sq ft, 3 bed/1 bath ramblers with no AC. Maybe they had a 1 car garage.

Well, Wally and The Beaver shared a bedroom, but it was a big one and had an en suite bathroom. And the Cleavers enjoyed a nice centrehall-plan house, complete with a den for Ward!

Originally Posted by Hamlet

[T]hat idillic 50s lifestyle is still available to people, but they have to take the bad with the good.

Well said.

[ziggy29]

Originally Posted by Hamlet

You want to get by on one salary? Live in a real 50s size house. Have your children share bedrooms. Get by with one car that you drive for 10-15 years. Get your TV (and children's clothes, tools, books, etc) from rummage sales. Don't bother with cable. Cook from scratch.

I mostly agree with this in terms of stealth "lifestyle creep." What was seen as "baseline acceptable" standard of living has certainly creeped up in the last 50 years.

The problem with this particular paragraph, though, is that taking the chance of "getting by on one salary" is much more risky than it used to be. Job security was so much greater two generations ago. There wasn't much chance of Ward coming home to tell June that his job was offshored to India or China and now they were screwed with no job-related income.

Getting by on one income, even where financially feasible in the present, is playing "Russian roulette" with your financial future a lot more than it used to be.

Plus, Ward didn't have to put 20-25% of his income into his own retirement savings because he probably had a great pension and a solvent Social Security system which, for people of his age, paid out a LOT more than they put in.

Still, if more people today who compared the ease of "getting by" fifty years ago to the same today, if many of them had the exact same standard of living, they'd probably have a lot of money left over to fund their own retirement, and possibly an early one at that.

We could have "afforded" 4x the house we actually bought last year. But I wanted no mortgage and much lower property taxes and utility bills, so we chose a 1940s home with less than 1200 square feet which we could buy with cash. It is only the two of us, after all. And not being held hostage to a j*b in order to pay the mortgage is part of a retirement plan. Not allof retirement planning is on the income side.

[Hamlet]

Well I never claimed our generation has a bump-free road, just that the road of the Boomers wasn't as perfect as the "Leave it to Beaver" lifestyle that is remembered.

Job security was a historical aberration that the Boomers benefited from, not the norm. The Great Depression left a lot of people out of jobs. So did the 70s recession. The job losses from offshoring have been bad, but nothing like that. The Boomers faced massive layoffs in the 80s as well.

From the end of World War II to the early 70s, there was some job security. Other than that, we are in the same place we always have been.

We have challenges ahead of us, but I bet our path will be easier than facing WWII or the Great Depression. If not, well, we'll suck it up and muddle through.

Originally Posted by ziggy29

I mostly agree with this in terms of stealth "lifestyle creep." What was seen as "baseline acceptable" standard of living has certainly creeped up in the last 50 years.

The problem with this particular paragraph, though, is that taking the chance of "getting by on one salary" is much more risky than it used to be. Job security was so much greater two generations ago. There wasn't much chance of Ward coming home to tell June that his job was offshored to India or China and now they were screwed with no job-related income.

Getting by on one income, even where financially feasible in the present, is playing "Russian roulette" with your financial future a lot more than it used to be.

Plus, Ward didn't have to put 20-25% of his income into his own retirement savings because he probably had a great pension and a solvent Social Security system which, for people of his age, paid out a LOT more than they put in.

[ziggy29]

Originally Posted by Hamlet

Job security was a historical aberration that the Boomers benefited from, not the norm. The Great Depression left a lot of people out of jobs. So did the 70s recession. The job losses from offshoring have been bad, but nothing like that. The Boomers faced massive layoffs in the 80s as well.

From the end of World War II to the early 70s, there was some job security. Other than that, we are in the same place we always have been.

I agree, but you have to remember that for much of Gen X, consider their first "experiences" relating to elderly life and with people living in their old age -- namely, their grandparents at first and more recently their parents.

Most likely those generations toiled primarily in a time when a "job for life" wasn't an oxymoron. And when almost everyone who worked in a job for 40 years had a nice, often inflation-adjusted pension waiting for them and a generous Social Security check (relative to the 2-3% tax rates many of them paid for much of their working lives). Oh, and early retiree medical plans, too.

So while I agree this was an aberration brought about by the U.S. manufacturing infrastructure being the "only game in town" for 2-3 decades after the war -- a time when American business faced no real foreign competition and could give its workers almost anything (it's no coincidence that unionism peaked in this timeframe) -- it is nevertheless what today's Xers probably remember growing up in and seeing their parents and grandparents receive. So it is their "benchmark" against which they compare their own prospects for a prosperous (or at least reasonably comfortable) retirement.

I'm not saying times were better then or now -- but the rules have changed a lot, and the earlier one understands the rules coming for their generation, the better off they will be. I was fortunate enough to save according to the GenX rules as early as 1988 (at age 22) when I was starting my first "real" job and put 12% of pay into my 401K as soon as I was eligible. I didn't want to "assume" a pension, retiree health benefits or even Social Security and Medicare would be there for me.