I hate to say this but most will not save enough.

[dumpster56]

401 Ks other savings, but without pensions many americans will find out that living on SS or what is left of that in say 30 years is going to be slim. I believe that most older americans will never get the chance to really call it quits.

All 3 of my good friends all good jobs college grads are living pay check to pay check today. In fact they were saying they felt as if they never will be able to save enough to retire. they are happy for my situation but each guy is 50 with less than 100K in savings. 2 LOST pensions from other companies that went belly up after the stock market melt down. They have huge mortgages, bad commutes and high taxes. medical insurance is starting to even now cause a problem since two companies are now having them start to cover their dependents with very high deductables.

As one guy said over a beer last week I am doomed to work forever.

 

[Patrick]

Tell them about this forum.

 

[dumpster56]

Tell them about this forum.

Oh I did, they look at me with that odd what are you smokin look. They probably resent the fact that I have a pension. I get that from many.

Hey I read all kinds of things and quit frankly without my pension and good fortune of selling my house for a ridiculus profit I would NOT be able to do what I am doing now.

Maybe there will be a way for all to be able to pool their 401ks and be able to have a realistic monthly stipend. but the average 401k today of a 50 YO is only a bit over 60K!!

Not much time to add to that unless they work until 80.

And to hear we are living longer well sure BUT not healtheir. The guys who would have dropped dead of the heart attack are saved today with a stent only to have congestive heart failure in their late 60s and 70s and not able to work anyway!

 

[d]

living pay check to pay check ... huge mortgages

well it's no wonder they don't have much saved -- they've spent it instead. their choice!

 

[dumpster56]

well it's no wonder they don't have much saved -- they've spent it instead. their choice!

D

I agree they decided to spend, but that is what americans are told to do, and I am not saying it is right but I do believe there is a complete disconnect to understanding how much money is need to save to retire.

with 2 and 3 kids later in life yes many americans are having children later in life and have this idea that they need to pay for their college that its gonna be hard for these people.

 

[Rich_by_the_Bay]

If they have only $100K by age 50, it's virtually impossible to catch up if that means living their current lifestyle in retirement. With good health, serious saving starting tomorrow, major downsizing of house and working til 70 they may avoid poverty, but they are just a step away from the abyss if there is a major life problem before then.

Wonder who'll end up supporting these guys :.

 

[d]

at age 50 they've had plenty of time to consider their future needs, and apparently have chosen to put their priorities elsewhere ... and folks having children later in life should be even more aware of what's ahead. point is they've been short-sighted. doesn't mean i can't appreciate their dilemma, but if they're now aware of the problem and still aren't doing anything about it, my sympathy won't help them.

 

[runnerr]

I agree a person can invest or spend their money it is totally up to them. What I will have a problem with is in the future (and I can see it happening) is penalizing the ones who sacrifice to build a substantial nest egg. I for one actually lived below my means to save and invest so I could afford to retire when I was 55. I drove a 1985 Mazda until it was 18 years old I must say I used it as a winter beater the last 4 years but still ran it until the end.

What I am afraid of is receiving less from SS while the folks that lived for today and spent their future retirement savings get everything from SS. If it does happen and I am penalized because of the size of my portfolio I will definitely be upset.

Runnerr

 

[ferco]

Unless you've been living under a rock, have minimal intelligence, or are just so stubborn its hard to imagine or believe some of the stories you read or hear about of individuals in their 50's and sometimes 60's who haven't saved.
Granted, you may not have saved as much as you've liked, but to plead ignorance in this day and time is abysmal. I wonder if this is just an American phenomenon or is it international. We're in the richest most prosperous country in the world and you'd never believe it hearing some of the plights of individuals.
I wonder if sociologists can explain it. Maybe we have too much and haven't had to endure on our own soil many of the hardships others in other countries have.
A good example were the shopping malls over the holiday. We all are aware that year after year consumers over spend, go into debt and then bemoan their plight in January when the bills come due...I just don't understand it.

 

[Helena]

I listen to Dave Ramsey over local radio.
It is amazing how many people call in
to his program who make six figures
but have nothing to show for it except
tens of thousands in credit card and
other consumer debt.

 

[Trek]

We're in the richest most prosperous country in the world....

Not trying to be a jerk, but I dare you to find a reliable source to confirm this opinion.

 

[clifp]

Not trying to be a jerk, but I dare you to find a reliable source to confirm this opinion.

How about the World Bank's report on Estimating National Wealth: Methodology and Results Appendix A .
US per capita national wealth $402,000 (1998) rank #1 , #2 Switzerland $352,000. http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/1998/11/17/000009265_3981013134540/Rendered/PDF/multi_page.pdf

And that is on a per capita basis, if you estimate the total wealth of a country (i.e. total assets minus liabilities of a country and its people the US with 300 million wealthly people would blow anybody else out of the water.

 

[2B]

I hear about all the statistics and have seen widely divergent numbers on the actual assets of people. I haven't seen anything that says there isn't cause for concern but some reports of household wealth look better than others.

The best example are the US "negative savings rate" and "low 401k balances." I am pretty close to zero savings rate by their standards because my $20,000 contribution to my 401k isn't counted. My 401k balance is also pretty low because I'm in a relatively new job and my previous 401k was rolled over into an IRA. Financially, I'm fine

Total household wealth surveys look a bit better but when the value of housing is included it becomes suspect. If someone isn't willing to sell, that asset won't be used to fund retirement. That's where you end up with people like my in-laws that were many thousands in debt and sinking deeper while they lived in a $500K house. If it wasn't for their medical issues, they'd still be there. The did an excellent job of hiding their financial difficulties.

Bottom line -- most people "retire" when their health fails or they lose their job and can't replace it. People will then "make do" with what they have. If it's only SS, they'll be selling a McMansion pretty quickly.

 

[mmg2681]

It boggles my mind how people have not/are not saving.

I know of someone who is in their 40's, with not a penny to their name, a house that is about 4 times their income (a first time home: at the age of 40+), not a penny in their 401k.

OK...the home alone just boggles my mind.
This person will be over the age of 70 by the time the home is paid off. It is well over the amount they could afford, so paying it off early is non-existent.

People want things NOW. Instead of putting the $15 toward their mortgage a month, they'd rather get sattelite radio, and go to the bar for a few beers every night.

I just dont get it...

Me, I'd rather save now so I can be sipping Pina Colada's for retirement!

~M

 

[Texas Proud]

Me... read title...

Me think.. Well, duh...

 

[2B]

Me, I'd rather save now so I can be sipping Pina Colada's for retirement!

I'll use your comment to hijack the thread a bit. The biggest problem I see on this forum is the tendency to save and defer gratification at the expense of the here and now. As the "spenders" will someday regret their lack of saving will we "savers" also regret our way. I wonder how many of us worked or are still working (like me) to amass a stash far more than we really need for a life of leisure.

I have heard from many people how they are living in full early retirement on far less than my future SS check that I intend to be a small part of my retirement budget.

Let me confess my sins.....

I felt obligated to pay my children's college cost. No one paid mine so why did I think they would need me to do it?

My house is too big for me and DW. Total housing costs are fully half of our expenses. We could cut it in half and still have more room than we really need.

I have lusted just yesterday for a 61" 1080p DLP. I watch too much TV now and this would only make it more tempting plus it needs a big room in my too big house to view it properly.

I could go on but what's the point.....

 

[New Thinking]

If they have only $100K by age 50, it's virtually impossible to catch up if that means living their current lifestyle in retirement.

I don't necessarily agree with this. Obviously someone in this situation needs to save more, but it is not a "lost cause". But if they plan on retiring 66 (Full Retirement Age of SS), they can probably do it. The secret will be risk-pooling with others via maximizing SS and buying immediate annuities. Where people get scared and say they will work forever is when they read about the SWR of 4% and figure they need to save 25 times their desired first year of retirement income...The fact is that most people cannot afford to do a safe withdrawal rate and will only be able to afford to retire via risk pooling of longevity/investment risk. They will not have the luxury of leaving assets to heirs. By delaying SS to 70 and buying immediate annuities, most individuals will be able to retire at 66,67. Also, if they can put most savings into Roth via Roth 401(k) or conversion, they will need a smaller nest egg to retire as taxes on income (including SS income) will be tax-free. Bottom line is maximize SS, eliminate/reduce taxes and investment expenses, and pool longevity risk and most people can pull it off.

 

[REWahoo]

Let me confess my sins.....

I felt obligated to pay my children's college cost. No one paid mine so why did I think they would need me to do it?

My house is too big for me and DW. Total housing costs are fully half of our expenses. We could cut it in half and still have more room than we really need.

I have lusted just yesterday for a 61" 1080p DLP. I watch too much TV now and this would only make it more tempting plus it needs a big room in my too big house to view it properly.

I could go on but what's the point.....

Please turn in your FIRE Secret Decoder Ring and exit the building immediately!

 

[REWahoo]

The secret will be risk-pooling with others via maximizing SS and buying immediate annuities.

All you anti-annuitites out there please remember it is the Holiday Season when you reply.

 

[2B]

All you anti-annuitites out there please remember it is the Holiday Season when you reply.

It's hard to craft a reply in the "Holiday Spirit" without my FIRE decoder ring but I'll try.

Actually, I'm almost impressed with the age adjusted return that a VA will get on the Vanguard site. It only makes it necessary to live about 5 years past the IRS mortality table to break even versus buying and holding CDs. I'll need to run some more numbers when I feel like it.

I'm not sure whether that is a true reflection of the annuity companies cutting their profit margin or an assumption on their part that the historically low interest rates won't continue or that stocks will continue to do well. Since they use a balanced approach and not all in fixed income, they could then gain more income from their investments, keep profits up and pay closer to a self-annuity.

My big concerns with immediate annuities remain. (1) Your income stream is only as safe as the company providing it. A collapse in the stock market could kill your "safe" annuity from a currently highly rated company. (2) An annuity today is based on historically low interest rates. If the rates go up, your annuity won't like it would with CDs rolling over. (3) The principal is gone. If you later need the money for LT care or special expenses, it will have to be funded out of the annuity cash flow if that's where all of your money went.

 

[Corporateburnout]

I'll use your comment to hijack the thread a bit. The biggest problem I see on this forum is the tendency to save and defer gratification at the expense of the here and now. As the "spenders" will someday regret their lack of saving will we "savers" also regret our way. I wonder how many of us worked or are still working (like me) to amass a stash far more than we really need for a life of leisure.

I have heard from many people how they are living in full early retirement on far less than my future SS check that I intend to be a small part of my retirement budget.

Let me confess my sins.....

I felt obligated to pay my children's college cost. No one paid mine so why did I think they would need me to do it?

My house is too big for me and DW. Total housing costs are fully half of our expenses. We could cut it in half and still have more room than we really need.

I have lusted just yesterday for a 61" 1080p DLP. I watch too much TV now and this would only make it more tempting plus it needs a big room in my too big house to view it properly.

I could go on but what's the point.....

Hopefully a large number of people delaying gratification will not die of a heart attack or suffer a major illness that will prevent them from enjoying the big stash they've accumulated while pinching pennies.

I also paid 90% of my kids' tuition bills not because I had too but because I wanted to. I too live in a too big of a house. We take of couple of expensive vacations a year.

We did save 15% of our incomes when the kids were in school and now we increased our savings to 25%-30%. We should be able to retire with a decent nest egg but not as large as if we had saved 50% as some people on this board.

Bottom line is we are enjoying some luxuries while hoping to fund a decent retirement if we live long enough to enjoy it.

 

[rs0460a]

A simple comment -

You will always have those that spend "too much" (under save).
You will always have those that save "too much" (under spend).

Neither condition is "perfect", but neither is life. What's perfect for me will not be right for you.

BTW, (on another, but related subject) I'm annuitizing 20% of my retirement holdings, so I'm "splitting the difference". I invest in the same manner I play roulette (split the bet), and I've won more than lost with that strategy over the long term ...

- Ron

 

[jeff2006]

Lots of people I know will probably fit the following retirement profile: his and hers SS (about 40K total), a non-cola pension fragment or two (maybe 15K more, total), 200K-300K home equity, and whatever savings.

They will have an income from these assets of at least 60K per year, depending on how they work things. So, they will not be poor. Far from it. Around here (NC), you can live pretty well at this level.

OTOH, they will need to give up most of the following: the luxury house, the yard service, the county club, the German cars, the expensive clothes, and the exotic vacations. Unfortunately, they don't seem to recognize that they will probably need to give up these things . . . there's the rub.

 

[Spanky]

I also paid 90% of my kids' tuition bills not because I had too but because I wanted to.

Make sure that you are not paying the brand-name schools with costs of about $50K per year. You can always send them to a local community college then to a local state university. This is a big saving for the same education (but not name recognition). Actually your kids may receive a better education since these schools are focused on teaching as opposed to research by brand-name schools in search for fundings (or profits). A significant number of classes are taught by teaching assistants. Relationship between professors and students does not exist.

Obviously, if a brand-name school offers financial aid in significant amount, it might worth considering.

 

[2B]

OTOH, they will need to give up most of the following: the luxury house, the yard service, the county club, the German cars, the expensive clothes, and the exotic vacations. Unfortunately, they don't seem to recognize that they will probably need to give up these things . . . there's the rub.

Here you nail my in-laws. At 85 they were still paying club dues for a club they hadn't used in close to a decade but "they were a member." They are of the "successful people drive Cadillacs" generation so that's what they had. They didn't do vacations. They couldn't afford to.