Least Prepared Older Americans

[97guns]

 

[Texas Proud]

I think one of the problems with this is what is the definition of savings account.... I have been a member of a credit union for going on 40 years soon... but I have maybe $100 to $200 in there for many decades...


That is the only savings account that I have.... all other money is either in my checking or 'invested'.... I do not have a MM account (well, except for my IRA brokerage which I am forced to have)....


So I would fall in not having $1,000 in a savings account...

 

[DrRoy]

I got through just fine but it sure helped that I stayed continuously employed in good jobs, had health insurance, etc. What happened to my investments was scary but I hung on and they recovered.

DW and I recognize that being able to RE last year was aided by good fortune. We never had a big financial hit along the way, although I was on layoff notice in 1993, which was quite laden with anxiety until I landed a new position. On the other hand, I have also always saved between 12 and 22% of my income, and invested it well. That is just as important in the RE equation.

For many Americans the best and ONLY way that they can save is through home ownership, if you don’t save and compound that with no home ownership then your gonna be in really bad shape financially in your golden years

It is true that this is the most common way for many people to accumulate some wealth. However, I do not see that it turns into a lot of income for them. My house is paid off but is only 7% of my NW and the income that I might get from it is minimal. It is mainly nice not to have the drain of the payment.

 

[RetireBy90]

For many Americans the best and ONLY way that they can save is through home ownership, if you don’t save and compound that with no home ownership then your gonna be in really bad shape financially in your golden years

IMHO this just aint so. Most and I'm thinking 95% of Americans can save if only put aside a $20 when they get paid. It may not add up to sufficient savings to fund a retirement but you can save. There are a few that can't live on less than the paychecks but the vast majority can. Most can also improve the marketability by gaining skills or education. I earned my BS degree in 96 at the age of 40 after years of night school. I left for work at 5:45AM each morning and 2 days a week when I had class I didn't get home till around 11PM.

This is your life, you can choose to just watch or you can make decisions that can change the path. One son of mine is working retail at the cash register. He has some issues so he isn't going to retire with millions in his IRA. However, for most, retail at the cash register or doing fries at Wendy's isn't a career. It is a job. Again, not 100% but most can get a job that requires a skill work hard and move up when opportunities happen, gain more skills and earn more and save more.

 

[athena53]

So I would fall in not having $1,000 in a savings account...

Yep... see the other thread on statistics. I haven't had anything that would resemble a savings account for 30 years. Money market accounts at a brokerage, checking- sure. No passbook savings, no online savings, no CDs.

As for real estate- part of what brought on the financial crisis was that the Powers that Be decided that a bigger % of Americans should be able to own their own homes. That was followed by looser mortgage underwriting standards, "creative" mortgages such as Option ARMs where the payments exploded a few years later, and a huge % of the population being underwater in their mortgages as their neighbors put their houses on the market at distress-sale prices. Of the 4 houses I've owned, two produced huge capital gains when I sold, two were barely break-even and I suspect my current one will also be barely break-even. Not great odds.

 

[youbet]

I left for work at 5:45AM each morning and 2 days a week when I had class I didn't get home till around 11PM.

Was it uphill both ways?

 

[Denverite]

I am also pretty pissed at all the ones who spend, spend, spend... and then have little savings which doesn't last, and then cry 'poor me' , 'you are so lucky' etc...

It bugs me a lot as I have a sibling who blew a $50K inheritance, and then told me she had to move into supported living and needs money.....
So I support her to the tune of $4K/yr, all the while I see if she had not blown the $50K, I wouldn't need to support her for the first 15 years

+1 The "you are so lucky" phrase is particularly irritating for those of us who saved diligently during the working years. There is a victimization element to that argument that I think frequently is used to cover the fact that people who say it simply bought things they could not really afford.

How much would they have now if they had foregone that consumption and saved/invested the money instead?

They should listen to Mr. Earl, the investor who has never made more than $20K per year but now has a net worth of roughly $500,000 through consistent investing:

https://www.getrichslowly.org/parking-lot-attendant-worth-half-a-million-bucks/

 

[UnrealizedPotential]

Mr. Earl's story is amazing. He took advantage of the opportunities in front of him. He didn't complain, he didn't say poor me, he just put his head down and worked for it. He saved and invested in the stock market. Certainly not the only way to get ahead, but it's one of the ways.


One of the things I like about Mr. Earl's story is he didn't make excuses. Others around him were willing to give him advice and he was willing to listen to that advice and act on it. Instead of looking at what he couldn't do , he looked at what he could do and then did it.

 

[FI_RElater]

Was it uphill both ways?

I can believe it, in my first year at university I had many days out by 6 am and not back until midnight/12:30 as I was taking a full load (with labs, which take longer time) and working...
(...and I didn’t even mention the snow )

 

[Amethyst]

We'd come pretty close. Emergency funds are in the checking account. If savings accounts paid more, that would likely change.

.


So I would fall in not having $1,000 in a savings account...

 

[Amethyst]

You are lucky. You have the ability to defer gratification. (We aren't supposed to say "willpower" any more, so I won't say it). This ability does not seem to be evenly distributed across the population.

+1 The "you are so lucky" phrase is particularly irritating for those of us who saved diligently during the working years. There is a victimization element to that argument that I think frequently is used to cover the fact that people who say it simply bought things they could not really afford.

How much would they have now if they had foregone that consumption and saved/invested the money instead?

They should listen to Mr. Earl, the investor who has never made more than $20K per year but now has a net worth of roughly $500,000 through consistent investing:

https://www.getrichslowly.org/parking-lot-attendant-worth-half-a-million-bucks/

 

[Major Tom]

The "you are so lucky" phrase is particularly irritating for those of us who saved diligently during the working years. There is a victimization element to that argument that I think frequently is used to cover the fact that people who say it simply bought things they could not really afford.

I'm of a similar mindset to Amethyst on this one. A few people have told me that I was lucky to be able to stop working when I did. I do feel lucky - lucky that I had parents who taught me how to save, and who set an example in that area, lucky that the art of delayed gratification has always come naturally to me, and lucky that I had the wherewithal to grasp some good opportunities (both in work and investing) when they came my way. I'm pretty sure that I passed on some potentially excellent opportunities but, luckily, (there's that "luck" word again), you only need to take advantage of a few good ones to tip the balance in your favor.

 

[PawPrint53]

I'm of a similar mindset to Amethyst on this one. A few people have told me that I was lucky to be able to stop working when I did. I do feel lucky - lucky that I had parents who taught me how to save, and who set an example in that area, lucky that the art of delayed gratification has always come naturally to me, and lucky that I had the wherewithal to grasp some good opportunities (both in work and investing) when they came my way. I'm pretty sure that I passed on some potentially excellent opportunities but, luckily, (there's that "luck" word again), you only need to take advantage of a few good ones to tip the balance in your favor.

While your parents set an example and taught you how to save, you had the willingness to take that example/lesson and apply it. My children had that same example, yet rolled their eyes at me when I mentioned anything about saving money. One of the three, now in his mid 40s, went through a layoff in his early 30s and realized he'd accumulated $15k of consumer debt with no way to pay it back. He told me he wished he would have listened. He's in great shape now, but the other two, 34 and 39, are struggling.

 

[ImThinkin2019]

IMHO this just aint so. Most and I'm thinking 95% of Americans can save if only put aside a $20 when they get paid. It may not add up to sufficient savings to fund a retirement but you can save. There are a few that can't live on less than the paychecks but the vast majority can. Most can also improve the marketability by gaining skills or education. I earned my BS degree in 96 at the age of 40 after years of night school. I left for work at 5:45AM each morning and 2 days a week when I had class I didn't get home till around 11PM.

This is your life, you can choose to just watch or you can make decisions that can change the path. One son of mine is working retail at the cash register. He has some issues so he isn't going to retire with millions in his IRA. However, for most, retail at the cash register or doing fries at Wendy's isn't a career. It is a job. Again, not 100% but most can get a job that requires a skill work hard and move up when opportunities happen, gain more skills and earn more and save more.

I recall a friend of mine from high school who started work before I went to university. One day we sat at his kitchen table while he sorted out the money from his paycheck. It went into piles - this pile for the car, this pile for gas, this pile for rent, etc. Then this and only this pile for spending on stuff. (At that point stuff included beer and cigarettes....)

To this day he has always had a skilled blue collar job. So never super high pay. But I bet the discipline he developed as a young man caused him to make one pile his 401K.

He was taught about money by his parents. Developed debt and credit card aversion at an early age. Got his pleasure from simple things, like having a garden, cutting wood, etc.

It would be interesting to see where he is financially now. We've lost touch over the years. I'd bet he's fine...

PS One risk - if your friend likes beer and gardening, and works second shift, be prepared for a tipsy phone call about 1 AM, with something like "I just picked some carrots and they are delicious." Speaking from experience here - the listener not the doer.

 

[Texas Proud]

We'd come pretty close. Emergency funds are in the checking account. If savings accounts paid more, that would likely change.

I agree with you... I have way more money in my checking than I should... but it is not worth moving money more often than I do...


But if MM accounts got back up to 4% I would think about it... I keep about $5K more than I need so that would be $200 a year...

 

[Dtail]

Was it uphill both ways?

Comon be nice.....
Some of my friends stated I wish I could make your monies (not knowing exactly how much that is, but...) and I used to think but never said that you aren't working 65 hours a week in a high stress job.
Many people work very hard, but some also fall into money too.

 

[RetireBy90]

without shoes

Just saying most have a path to better retirement but either don't see it, don't take it or may even get pushed to the side by sickness or layoff or other obstacle. If you find one that needs a hand up, give it. But those that choose not to take the path, well I'd rather not give my savings to them. Too many other places my savings can do more good.

 

[Amethyst]

No worries. Nowadays, people just post that stuff to FB. When I look at the time-stamp on people's posts, there are some funny ones that go up around 2 a.m., their time.

PS One risk - if your friend likes beer and gardening, and works second shift, be prepared for a tipsy phone call about 1 AM, with something like "I just picked some carrots and they are delicious." .

 

[morriss003]

In my opinion, one of the more pernicious myths is that you cannot possibly save for retirement unless you have a 401k/403b. Wrong, wrong, wrong. Although it may be easier with a 401k, you can always just save and invest money out of your take home pay. And an IRA is always available.

When I was in the Navy, I had no 401k, but I still saved my money. Since then, I've had 401k plans, but never, ever a match. The problem for these people is saving at all, not lack of a tax advantaged plan or an employer match.

Good for you, but most people don't do that. That's why Social Security has to be mandatory and has to invest in treasuries. It seems to me that the two most important expenses other than food are housing and medical. If universal health care in strengthened then that might take care of one big expense. The other is housing. My expectation is that we will see more rent control in cities and more people wiseing up and moving to locations that have cheaper rent. I did that in 1972, moving from California ($125 a month) to New Mexico ($45).

 

[Helena]

.

It all boils down to a lack of self-discipline.

A baby boomer friend recently declared bankruptcy because he squandered his money and piled up debt by living beyond his means. The problem is, he continues to blame others when in reality he is the only one to blame. He keeps wondering when he will get another credit card. I have shared with him how I handle my credit card [pay it off every month] but I can tell he is not listening. He has never listened to my financial advice. If he does get quick access to more credit, I predict he will soon be over his head in debt again.

 

[pdxgal]

This is your life, you can choose to just watch or you can make decisions that can change the path. ....not 100% but most can get a job that requires a skill work hard and move up when opportunities happen, gain more skills and earn more and save more.

Yeah, in theory.....but it can be harder if you're female or a racial minority. Institutional (and generalized) sexism and racism exist and have real economic impact.

My sister is an MD and after being laid off 14 years ago was passed over for a new job because of her gender, even though she was more experienced and better qualified than the person hired. The reason: "We hired Mr. X because he's got a family and is a breadwinner." Seriously! It took her another year to find a job. That's a year of income and compounded savings she lost due to gender discrimination. (If only she'd recorded the phone conversation she would've had a slam-dunk lawsuit!) Then there are women like Lily Ledbetter (who filed a lawsuit that led to landmark pay equality legislation), who for years got paid much less than her male counterparts for the same work. Even if she'd saved as much as the men, she would've had less for retirement.

The burden of caregiving also falls harder on women, and that can also affect their ability to earn and save money.

OTOH, I do see people making poor financial decisions. In the early 2000s a friend used her house as an ATM. When I pointed out it was likely costing her money in the long run, she just didn't get it. "But my monthly payment is less!" I tried to explain, but to no avail.

So I'm also conflicted on this issue. Yes, many people make poor financial decisions, for various reasons. But other people are hindered in their ability to have enough for retirement due to factors beyond their control. It's complicated.

 

[Music Lover]

It is true that this is the most common way for many people to accumulate some wealth. However, I do not see that it turns into a lot of income for them. My house is paid off but is only 7% of my NW and the income that I might get from it is minimal. It is mainly nice not to have the drain of the payment.

One of my recently friends told me that him and his wife plan to live in their paid off house for another 6 to 8 years, then sell it and move to an apartment and start spending the proceeds. He has a govt. pension and she has retirement savings that currently cover all their expenses. $300,000 over and above monthly expenses can fund a lot of trips and activities if spent wisely.

I also know others who saved very little but have pensions that cover monthly expenses and a paid off house that can provide a substantial windfall when sold.