34% of Americans Have No Retirement Savings

[mickeyd]

Which is worse 34% of all, or 25% of some or 22% of others? Any way you scope it there are way too many folks depending on SS (I guess) to get them thru the final third of their life. It's a sad situation that does not appear to me to be getting any better.

Why should I care? If those guys are all broke at 70 or 80, who do you suppose they (or the gumment) will come after to pick up the tab?

Among Baby Boomers, aged 46 to 64, 25% have no retirement savings, and among Matures, those aged 65 and over, 22% have no retirement savings.
Of the Baby Boomers and Matures who have retirement savings, 13% of them have the money invested in stocks and mutual funds, a greater proportion than Gen Xers, who are between the ages of 34 and 45.

34% of Americans Have No Retirement Savings - Financial Planning

 

[ziggy29]

I'm sure many of them are going to be in big trouble, but it doesn't say anything about how many of these 34% will have pensions which, with SS, should meet just about all of their income needs if not more. These people aren't in a "desperate" situation despite having no retirement savings. Those with significantly less SS/pension income than they will need, on the other hand, well, "Welcome to WalMart!"

 

[youbet]

Certainly not a situation I'd aspire to, but lots of folks posted on a recent thread that $20k/yr would support a frugal retirement, even in the expensive NE. Working until FRA would typically yield that much SS, so there ya go.......

I do believe there will be many boomers living on real bare bones retirement incomes and that ought to make for some interesting politics going forward.

 

[haha]

Certainly not a situation I'd aspire to, but lots of folks posted on a recent thread that $20k/yr would support a frugal retirement, even in the expensive NE. Working until FRA would typically yield that much SS, so there ya go.......

I do believe there will be many boomers living on real bare bones retirement incomes and that ought to make for some interesting politics going forward.

That is going to be one frugal retirement. I spend more than that on rent for a small apartment, medical, and electricty.

Leaves quite a few categories that I would not consider to be frills uncovered. Like food for example, or dental visits, or...

It is my opinion, often expressed, that there is a lot of fantasy going around. Kind of like everyone on Match.com
is lean and lithe, makes all kinds of money, is looking for a deep loving relationship, and would rather please you, their new date, more than anything else in the world.

Ha

 

[meierlde]

Do we have any historical records of what the statistics look like for past generations? These numbers are published outside of historical context which would help explain how things looked.
Of course there are several rules to avoid this fate.
1 Eschew Children they cost 250 to 350k each.
2 Live far below your means, buy a starter house and stay there, do only minimal upgrades.
3 When selecting a career look for one that pays well and is stable. Until recently I would have said work for the government, but its not so sure now.

 

[W2R]

Certainly not a situation I'd aspire to, but lots of folks posted on a recent thread that $20k/yr would support a frugal retirement, even in the expensive NE. Working until FRA would typically yield that much SS, so there ya go.......

I do believe there will be many boomers living on real bare bones retirement incomes and that ought to make for some interesting politics going forward.

I see your point, and agree. I noticed a quote on the SS website (see below) that suggests that the typical SS benefit amount is a little lower than that, but their numbers must include those who claim at 62 as well as at FRA so comparing their estimate and yours would be "apples and oranges".

Anyway, I am nerdy enough to be interested in typical SS payment amounts so I thought I'd post this too. From Press Office: Social Security Is Important to Women

In 2008, the average annual Social Security income received by women 65 years and older was $11,377, compared to $14,822 for men.

A woman 65 years and older with only $11,377/year of SS had better have either a pension or retirement savings, or she is going to have to live on a lot less than I find comfortable.

 

[youbet]

That is going to be one frugal retirement. I spend more than that on rent for a small apartment, medical, and electricty.

Leaves quite a few categories that I would not consider to be frills uncovered. Like food for example, or dental visits, or...

It is my opinion, often expressed, that there is a lot of fantasy going around. Kind of like everyone on Match.com
is lean and lithe, makes all kinds of money, is looking for a deep loving relationship, and would rather please you, their new date, more than anything else in the world.

Ha

I was on the "NO" side of the "Can one live in the NE on $20k/yr" debate. So, I agree with you. But there were lots of thoughtful, apparently informed posts from folks who felt $20k would do it..........

If we're going to have lots of folks living on SS only (no pension, no significant savings), I hope they're right.

 

[youbet]

A woman 65 years and older with only $11,377/year of SS had better have either a pension or retirement savings, or she is going to have to live on a lot less than I find comfortable.

That's a good point. I was thinking of someone who worked from youth until FRA and therefore would get some decent SS dollars. Anyone, woman or man, who is out of the labor force for many years and winds up with $10k - $12k or so SS is going to be in a big hurt.

My 86 yo MIL's only income is about $14k/yr SS (survivor benefit from deceased FIL) and she currently has near zero savings. But she lives in a paid-for condo bought with the money from selling her home in another city. Having exhausted her other savings during her first 15 yrs of retirement, we've arranged a reverse mortgage on the condo which supplements the SS. And she has me, Mr. Big Hearted Softy, a card carrying member of the sandwich generation.......

 

[W2R]

That's a good point. I was thinking of someone who worked from youth until FRA and therefore would get some decent SS dollars. Anyone, woman or man, who is out of the labor force for many years and winds up with $10k - $12k or so SS is going to be in a big hurt.

In 2008, the average annual Social Security income received by women 65 years and older was $11,377, compared to $14,822 for men.

That's true! Also, though it isn't quite as extreme a case, one could just as easily have said, "A man 65 years and older with only $14,822/year of SS had better have either a pension or retirement savings, or he is going to have to live on a lot less than I find comfortable."

$14,822/year is only $1235/month (better than the $948 check that the typical woman on SS gets, but still pretty gruesome). And then Medicare Part B has to be subtracted from that, I guess. Living on that would require some serious budgeting and LBYM.

My 86 yo MIL's only income is about $14k/yr SS (survivor benefit from deceased FIL) and she currently has near zero savings. But she lives in a paid-for condo bought with the money from selling her home in another city. Having exhausted her other savings during her first 15 yrs of retirement, we've arranged a reverse mortgage on the condo which supplements the SS. And she has me, Mr. Big Hearted Softy, a card carrying member of the sandwich generation.......

Good thing your MIL has the reverse mortgage, and it is especially good that she has you to fall back on if she has money problems. You are indeed a saint. I can't even imagine paying condo fees, taxes, insurance, and so on out of such a small check.

 

[youbet]

.


Good thing your MIL has the reverse mortgage, and it is especially good that she has you to fall back on if she has money problems. You are indeed a saint. I can't even imagine paying condo fees, taxes, insurance, and so on out of such a small check.

I'm not a saint, that's for sure. But I think I do have a sense of justice. MIL led a hard life. Raised 4 kids. Husband died young. Worked for 20 or so yrs after the youngest was out of the house. Has always been frugal and has always held family to be #1.

Her SS checks cover condo fees, taxes, insurance, groceries, clothes, etc. The reverse mortgage covers unplanned big-bill items the last of which was $2k of dental work. I cover keeping her car going, dinners out, gifts for her to give to the grand kids and great grand kids and that sort of thing. It's all working OK. I really don't think I could sleep at night if I knew she was suffering at this stage of life.

 

[antmary]

Youbet,
You are very modest! You are a rare gem to take such good care of your MIL!

 

[swampwiz]

That's true! Also, though it isn't quite as extreme a case, one could just as easily have said, "A man 65 years and older with only $14,822/year of SS had better have either a pension or retirement savings, or he is going to have to live on a lot less than I find comfortable."

$14,822/year is only $1235/month (better than the $948 check that the typical woman on SS gets, but still pretty gruesome). And then Medicare Part B has to be subtracted from that, I guess. Living on that would require some serious budgeting and LBYM.

But with the new health care program, wouldn't that person be below 133% of income, and hence eligible for free Medicaid insurance? And don't a lot of older folks give up driving, using the plethora of government financed "senior vans" to take them to the grocery or doctor? I had an eccentric aunt that probably lived on $500/mo (in todays $'s), so I'm sure others could do the same.

 

[Katsmeow]

My mom is 86 and gets SS that is about $16,500 a year. She did work throughout her adult life (unusual in her time). She gets about $5300 a year from required IRA distributions and a couple of tiny pensions. So, just under $22k a year.

She does not spend it all. Her house has been paid for since the early 1960s. My parents bought a starter home in the late 1940s and she still lives in it (she is a widow now).

She spends a little bit of money now for someone to mow and take care of her yard.

She still drives but her car is almost 20 years old and is still very low mileage on it. She only drives to things that are nearby.

She doesn't have (or want) cable TV. She doesn't have internet. She doesn't have a dishwasher (her counters aren't the right size for a dishwasher to fit). She doesn't have a cell phone. She doesn't spend money on any hobbies. Her hobbies are doing some work in her yard and watching broadcast TV and reading the paper. She has a close relationship with a sister who lives nearby. She eats out extremely rarely (a few times a year maybe). She rarely travels (when she comes to see us a couple of hundred miles away, DH goes and gets her and then takes her home).

Her house is small (maybe 1500 SF) so her utilities bills are tiny. Probably her biggest expense is medical particularly prescriptions and the medicare prescription benefit was very, very helpful for her.

The other major expense is when she occasionally needs a major house repair or maintenance. A few years ago she had new windows put in. She did something very daring then. She put it on 0% interest at Sears. She had never used a credit card before (well, one time my dad used a credit card to pay for a hotel room, but only once). She did use some of her savings to pay for that.

 

[obgyn65]

+1

Youbet,
You are very modest! You are a rare gem to take such good care of your MIL!

 

[wishing4it]

I got an email from my sister this week. Last year she left CA dumping her house in a short sale and moved to Texas. She and her DH live in a trialer park now and their only income is SS. She told me that she has so many medical bills (she's 65 now but retired at 62, has had 4 or 5 back surgerys, and 2 different cancers) that her husband went out and got a Payday loan to consolidate them! Now, the payments are so high, they will surely lose the car they used as colateral.

She blames the president because she didn't get a cost of living raise this year from SS and of course, and in her opinion, his new healthcare bill is to blame for her medical bills.

She had good paying jobs up until she retired and saved nothing.

But here's the clincher... since moving only a year ago, she has been back to Ca to visit her daughter at least 4 times that I know of!! Things are only going to get worse for her. How is it that someone can blame others for all their troubles and not see their role in their own fate?

 

[rescueme]

How is it that someone can blame others for all their troubles and not see their role in their own fate?

It's much easier that way...

 

[pb4uski]

Do we have any historical records of what the statistics look like for past generations? These numbers are published outside of historical context which would help explain how things looked.
Of course there are several rules to avoid this fate.
1 Eschew Children they cost 250 to 350k each.
2 Live far below your means, buy a starter house and stay there, do only minimal upgrades.
3 When selecting a career look for one that pays well and is stable. Until recently I would have said work for the government, but its not so sure now.

While I agree in principle, taken to an extreme this doesn't sound like "living" to me!! While I LBYM, one still needs to LIVE. Taken to an extreme this reminds me of a great uncle who scrimped and saved his entire career, retired and dropped dead a few months later.

I certainly have saved and look forward to retirement but I have tried to balance living in the present with preparing for the future (and I have two children, a reasonable home - not a starter home - but have been blessed with a good career which pays well).

 

[Rustic23]

Katsmeow,
Except for the extra income you describe my late mother perfectly. She lived on SS only. One of my brothers went buy and had a cup of coffee with her every morning. I picked up any large expenses, new roof, fence and such. When we were stationed in Europe and Hawaii, we had her out to both places. What I am getting at was she lived OK, not as well, maybe, as she would have liked, but she was happy. Her kids made sure she did not have to look for a spot under a bridge and that her health was being looked after.

(rant)
IMHO, that's what kids are for, not government. Most Americans are going to be OK, maybe not as OK as they would like, but OK. The rest are going to look for government to bail them out.

(this was not to say you proposed in anyway gov. take care of anyone)

 

[youbet]

She spends a little bit of money now for someone to mow and take care of her yard.

She still drives but her car is almost 20 years old and is still very low mileage on it. She only drives to things that are nearby.

She doesn't have (or want) cable TV. She doesn't have internet. She doesn't have a dishwasher (her counters aren't the right size for a dishwasher to fit). She doesn't have a cell phone. She doesn't spend money on any hobbies. Her hobbies are doing some work in her yard and watching broadcast TV and reading the paper. She has a close relationship with a sister who lives nearby. She eats out extremely rarely (a few times a year maybe). She rarely travels (when she comes to see us a couple of hundred miles away, DH goes and gets her and then takes her home).

utilities bills are tiny.

You obviously keep a close eye on your mom since you're very familiar with her expenses and activities and that's a good thing. But the message I get from your description of your mom's life style, and from being involved in my MIL's (who has even less than your mom) support, is that SS alone doesn't provide a level of day-to-day living that DW or I would find acceptable. The years we worked to make sure we'd have significant income beyond SS look like an excellent investment!

Getting back to OP's post....... There does seem to be some anecdotal evidence being expressed that with some savings (equity in a house, a car, a little money) a person could get by on SS if a very frugal lifestyle is followed and if no resource consuming events come to pass. But I think retirement is not going to be a happy time for lots of folks given the data in post #1..

 

[youbet]

IMHO, that's what kids are for, not government.

I frequently question whether DW and I are aggressive and thorough enough in seeking out gov't programs for MIL. We have a pretty good understanding of Medicare and her supplemental policy despite not being on Medicare ourselves yet. We have her signed up for discounted license plates, property tax and "doughnut hole" help. But that's about it. Between her reverse mortgage and my checkbook, the rest of her needs beyond what SS will cover are taken care of with private money. And I'm comfortable with that. But I do admit to some curiosity as to what might be there if we really, really dug hard.

 

[wishing4it]

As far as other gov't programs,,,, in my part of the country, there is an energy assistance program that low inocome people can appy for that helps pay the heating bills. I don't really know the detailed qualifications but you might look into it.

 

[Cattusbabe]

My mom is 86 and gets SS that is about $16,500 a year. She did work throughout her adult life (unusual in her time). She gets about $5300 a year from required IRA distributions and a couple of tiny pensions. So, just under $22k a year.

She does not spend it all. Her house has been paid for since the early 1960s. My parents bought a starter home in the late 1940s and she still lives in it (she is a widow now).

She spends a little bit of money now for someone to mow and take care of her yard.

She still drives but her car is almost 20 years old and is still very low mileage on it. She only drives to things that are nearby.

She doesn't have (or want) cable TV. She doesn't have internet. She doesn't have a dishwasher (her counters aren't the right size for a dishwasher to fit). She doesn't have a cell phone. She doesn't spend money on any hobbies. Her hobbies are doing some work in her yard and watching broadcast TV and reading the paper. She has a close relationship with a sister who lives nearby. She eats out extremely rarely (a few times a year maybe). She rarely travels (when she comes to see us a couple of hundred miles away, DH goes and gets her and then takes her home).

Her house is small (maybe 1500 SF) so her utilities bills are tiny. Probably her biggest expense is medical particularly prescriptions and the medicare prescription benefit was very, very helpful for her.

The other major expense is when she occasionally needs a major house repair or maintenance. A few years ago she had new windows put in. She did something very daring then. She put it on 0% interest at Sears. She had never used a credit card before (well, one time my dad used a credit card to pay for a hotel room, but only once). She did use some of her savings to pay for that.

In other words your mom is managing just fine on $22k a year. Lots of people do.

Folks this board tends to skew middle class to upper middle class. Most workers don't live that way. Further not everyone lives in a suburban split level with cable, a dishwasher and all of the other toys that Madison Ave thinks you need to have a decent life. Lots of people live on much less and manage. I am thinking of all of the low wage earners I have worked with over the years. The nurse aid and the janitor usually retires with little savings so SS will make up a large part of what they will live on. They never had much to begin with so they are not supporting expensive life styles.

Not every wage earner lives independently. I have two brothers who work but are mentally retarded will depend of SS when retire. They live with my parents and will live with a sibling after my parents die. We have put money aside for them but on paper they have no savings.
Getting back to those low wage earners. A lot live with relatives to pool resources.

It would be nice if articles like the one posted by the Op would get into the demographics of the people they are talking about. Poor people don't have saving and never will. They manage during their productive years and will manage during their retirement. There are supports both formal and informal that articles like the one posted seem never to take into account.
It is those informal support that people like us have no clue about because we are pretty much independent. However poorer folks depend on them to make it.

I think articles like these are directed at the haves to scare them.

 

[pb4uski]

A lot depends on the standard of living one desires (or desires for loved ones).

My grandmother (who died a few years ago at 98) lived on SS and had a very lower middle class lifestyle and easily made ends meet. It did help that she lived in a senior apartment complex where rent was based on ability to pay (partially subsidized), but she was amazingly frugal. Sometimes to a fault like wearing the rattiest old clothes while she had drawers and closets full of new clothes she had received as gifts but wouldn't wear (most of which ended up with goodwill after she passed, tags and all).

I agree it wouldn't be easy to live only on SS, but it all depends on your expectations - as a previous poster indicated, those who frequent this forum tend to be more well to do and have higher expectations than those who are less fortunate (either by circumstances or as a result of their own decisions).

 

[Katsmeow]

. But the message I get from your description of your mom's life style, and from being involved in my MIL's (who has even less than your mom) support, is that SS alone doesn't provide a level of day-to-day living that DW or I would find acceptable. The years we worked to make sure we'd have significant income beyond SS look like an excellent investment!

She doesn't feel deprived or feel her lifestyle is unacceptable. The thing is that many of the things that she doesn't have that we feel are necessities -- cell phone, internet, dishwasher -- are things that weren't around during most of her life and when they came about she wasn't all that eager to get them. Some of this is personal taste of course.

My other mother (I'm adopted so talking about my biological mother here) is very similar and also frugal. She is a bit more "modern" and so does have internet for example and uses the computer (she's 81 or so). But still she has a modest lifestyle.

I could see my kids thinking 30 years from now that I don't spend any money on X, Y, and Z which are the expensive new things but for me they are things I never had so I won't miss them.

 

[youbet]

I could see my kids thinking 30 years from now that I don't spend any money on X, Y, and Z which are the expensive new things but for me they are things I never had so I won't miss them.

Sounds like you should be FIRE'd then. Sorry, I can't remember if you are or not. You've got the financial end covered.

While DW and I grew up poor (walked to school in the snow 10 miles uphill both ways, etc. etc.) and certainly are keen experts on cheap living, we'd be unhappy on a SS only income. We've been FIRE'd almost 5 years and there really aren't enough "don't care" items in the budget to cut and get back to a SS only spending level without causing some discomfort. We have no regrets that we worked a little longer to have a little more now. Of course, I understand some folks have jobs that are hell and leaving those jobs, even to live very, very frugally, would still be better than working.

I'm glad your mom is enjoying life and is content with her situation. That's so important and I know you'd be part of a solution if something came up where help was needed. Good for her and good for you.