Millions Unprepared For Retirement

[LateToFIRE]

I'm thankful we have the SS system. At least these people are forced to put aside something for their retirement. Otherwise, they would end up on some sort of welfare program. At least with SS most people have to put something in to get something out.


(Yes, I understand there are children and spouses who collect SS and who never contributed. That's why I said most.)

I agree. Sadly, the vast majority of people seem to need some sort of forced savings or they'll never manage to save at all.

I quite agree. Vast majority will simply not be able or willing to save, shifting the burden of their care onto govt and/or the next generation of their families - and the latter is a big part of the equation in perpetuating generational poverty.

On another note, I must admit to being startled by how much of a difference SS makes in my own retirement planning. If you'd asked me about it several years ago, I'd have said I wasn't incorporating SS in my retirement plan, and I would have had no idea what it was going to amount to. You would have gotten a lot griping from me about all the money confiscated from my paycheck and how the income ceiling for deduction keeps going up each year and how much I'd paid in over the years, money I was never going to see again.

Now, given that I've been paying into SS at the max salary deduction for +30 years, between my benefit and spousal benefit, our combined will be nearly $80K at FRA. THAT is real money. That is like adding a $2M govt-backed bond to my portfolio. Sure, there's a chance the benefit gets cut, but I'm betting not by a lot. I'm impressed.

 

[pb4uski]

... Seriously, I know a really cheap fellow, that lives on SS , he does have some money saved, but getting him to spend it is like pulling teeth..

I think we may have a friend in common!

 

[hopefullyoneday]

They need to teach about life in at least high school. Teach about investing and saving for retirement. The 3 legged stool is good to have. I don't have any kids but when my friends have them i suggest to them when they are born to put money away in a investment for them every year.

 

[Major Tom]

On another note, I must admit to being startled by how much of a difference SS makes in my own retirement planning.

Same here. I didn't include SS in my planning. Actually, I didn't do a whole lot of planning while I was working; I just saved as much as I reasonably could. I didn't take SS into account when trying to figure out if I could afford to stop working. SS will be the icing on top of the cake, and seeing that I've had a fairly frugal retirement, that icing is going to be really sweet!

 

[aaronc879]

They need to teach about life in at least high school. Teach about investing and saving for retirement. The 3 legged stool is good to have. I don't have any kids but when my friends have them i suggest to them to put when they are born to put money away in a investment for them every year.

My local high school does at least require a half credit class on personal finance. It's only half a school year long class so that's not much but better than nothing. I wasn't required to take any class like that in high school. I took Accounting as an elective but most people didn't.

 

[Music Lover]

They need to teach about life in at least high school.

Teaching people to be self-sufficient is contrary to the public school agenda.

 

[LateToFIRE]

Teaching people to be self-sufficient is contrary to the public [-]school [/-]agenda.

Fixed that for yah. I mean imagine what would happen to GDP if people stopped spending and started saving all their discretionary income

 

[Gumby]

MODERATOR NOTE:
Let's leave "agendas" out of the discussion so the thread can remain open. Thanks.

 

[TheWizard]

Good luck surviving on $15k a year.


Sucks to be them.

You makes you bed and you sleeps in it.
*shurg*

 

[Timeisprecious]

This is a little bit of clickbait. If we consider "workers" to be those between 20 and 64 years old, there are 194.8 million of them in the US. Of that group, 45.9 million (or 24%) are 29 or younger, and 69.2 million (or 36%) are 34 or younger.* I would expect that group to have little to nothing in retirement savings or, indeed, savings of any kind). I know I am not up to the standards of the illustrious members of this board, but when I graduated from law school I was 33 and had no retirement savings. (Yes, the young wife and I saved in our 20s, but we used all the money we saved to pay for graduate school and law school, respectively, and a down payment on a house.)

*https://www.statista.com/statistics...ation of the,and around 11.47 million females.

+1, except I didn't go to law school - I completed a Ph.D. program in industrial/organizational psychology.

 

[Timeisprecious]

There was an article I read that Gen-Z is not interested in saving so they will be spending now and not later.

Americans in general are spenders so that is why they don’t have the funds in retirement. One of the reason people are poor is because of kids.

No doubt about it. I think most of us in this forum can agree that this is probably the biggest problem when someone isn't financially ready for retirement.

 

[Timeisprecious]

You makes you bed and you sleeps in it.
*shurg*

Yep!

 

[zippy2020]

While I regularly see these stats showing that many people are unprepared for retirement, I see few stories of people that have completely run out of money. I’m curious what flat broke looks like in retirement. Taxpayer-funded programs? Charitable donations? Family support? Homeless?

I read recently in our local paper that the fastest growing group of homeless is...the elderly. I would guess this is especially true for those who rented most or all of their lives - my parents fall into the latter category. No pensions, little or no savings, no home. Family took care of them (separately; they were divorced long ago), but today they could easily have fallen into the homeless category.

My father retired early due to Parkinson's disease, back when they could do nothing for you. His SSDI check was $480/mo. He actually could have gotten more on welfare, but was too proud to apply for it.

 

[athena53]

Americans in general are spenders so that is why they don’t have the funds in retirement. One of the reason people are poor is because of kids.

Well, maybe. I had only one and I guess I was stingy with him! Well, I did put him through NY Military Academy and through college with no loans- but there was only one trip to Disney World, no cruises, no traveling sports leagues, no car as soon as he got a license. It all adds up.

 

[COcheesehead]

How about people that had enough money, retired and then…
2020 Bear market
2022 Bear market
2023 TBD, but not look’n so good.
I hope everyone who had “enough” prepared for poopy things to happen, because they will.

 

[zippy2020]

How about people that had enough money, retired and then…
2020 Bear market
2022 Bear market
2023 TBD, but not look’n so good.
I hope everyone who had “enough” prepared for poopy things to happen, because they will.

+1. We retired on schedule on Dec 31, 2009. Except for the multi-millionaires we knew, we were the ONLY ones in our middle-class group of family/friends who was able to retire early.

Not a single one of the other Boomers were able to retire for at least another 5 years, and most worked for 7-9 yrs more - if they could! A few had to forcibly retire, due to health reasons or inability to find another job, and are still living 'close to the bone'.

 

[Fermion]

I agree on SS being actually really nice. At 67 it is almost $60,000 for us in today's dollars but still undecided if we will take it at 67 or earlier. Only 53/54 now. Still, we live on less than 60k now easy (once house is finished).

 

[jollystomper]

How about people that had enough money, retired and then…
2020 Bear market
2022 Bear market
2023 TBD, but not look’n so good.
I hope everyone who had “enough” prepared for poopy things to happen, because they will.

This one reason I waited to retire until 2018, pension + investment income + cash would allow us to not be forced to touch our investments for at least 5 years, to avoid forced selling in a bear market.

Even with those incidents above we still have more thanin 2018. We still have enough cash to avoid touching investments for another years, when I am 70 and plan to take SS.

 

[Badger]

How about people that had enough money, retired and then…
2020 Bear market
2022 Bear market
2023 TBD, but not look’n so good.
I hope everyone who had “enough” prepared for poopy things to happen, because they will.

It seems obvious to me that if those people had enough money to retire but were affected by Bear markets then they really didn't plan well and were so frustrated at work so they "jumped the gun" to retire. We see this too often on here when people find that they didn't save enough and had to go back to work. I am only referring to Bear markets and not other issues like catastrophic illnesses.
Nothing like living on the edge with less than optimum diversified retirement investments.

Cheers!

 

[pb4uski]

There was an article I read that Gen-Z is not interested in saving so they will be spending now and not later.

Americans in general are spenders so that is why they don’t have the funds in retirement. One of the reason people are poor is because of kids.

While not Gen Z, my kids and nieces and nephews are Gen Y, aka Millennials and are better at saving than us Boomers from my observation.

 

[pb4uski]

It seems obvious to me that if those people had enough money to retire but were affected by Bear markets then they really didn't plan well and were so frustrated at work so they "jumped the gun" to retire. We see this too often on here when people find that they didn't save enough and had to go back to work. I am only referring to Bear markets and not other issues like catastrophic illnesses.

Nothing like living on the edge with less than optimum diversified retirement investments.



Cheers!

+1. If a bear market craters their retirement plans then they most likely had an underfunded plan.

 

[HawkOwl]

+1. If a bear market craters their retirement plans then they most likely had an underfunded plan.

+1

Of course then the critics would say they had “over saved” and wasted precious years of life working. Sometimes you can’t win.

 

[athena53]

+1. If a bear market craters their retirement plans then they most likely had an underfunded plan.

I agree. You read the sad stories about people who "lost all their retirement savings" in a bear market and I suspect it boils down to withdrawals that were unsustainable in a bear market and they had to keep selling investments at distress-sale prices to raise money. I'm sure not happy with my results the last couple of years but I still have more than I started with 9 years ago.

I remember a post on a Board I'm no longer on, probably 15 years ago, from someone who said they'd be all set for retirement if they had $1 million: invest it at 8%, withdraw $80K/year and they'd be rolling in money. (Yes, I DID point out that there are no stable investments returning 8% and that the value of $80K/year will erode with inflation.)

 

[Car-Guy]

+1. If a bear market craters their retirement plans then they most likely had an underfunded plan.

Agree. And this is why I think it's a real risk retiring if you are depending on stock market returns. Seems to me, a lot of folks accept that risk.

 

[Andre1969]

How about people that had enough money, retired and then…
2020 Bear market
2022 Bear market
2023 TBD, but not look’n so good.
I hope everyone who had “enough” prepared for poopy things to happen, because they will.

I know it's different when you're retired, have to live off of the money, and have no wage income, but for me at least, the 2020 Covid crash ended up being a non-issue. I had hit a new peak, invested asset-wise, on 2/19/20. By 3/23, I was down about 35%, but by 3/31 I was only down around 21%. By the end of May, the loss was only around 9%. I was "made whole" sometime in November, and finished the year up around 13%.

And then 2021 gave me rise of around 18%, on top of that.

BUT, 2022 was a different story. I was feeling on top of the world, around the end of 2021, but then the inflation numbers came in, and I realized I wasn't as well off as I'd thought. 2022 knocked me down about 20.5%, plus the toll of inflation on top of that. For 2023, I'm probably up around 10%, but again, there's that pesky inflation.

Looking back at my spreadsheet, I sort of liken the 2020 Covid crash to the Great Recession. Yeah, it was bad, but the bounce-back was so fast, that it showed up as a mere blip. This 2022-23 period is making me think of more like 2000-2002, where I had three down years in a row.

I also tend to think of June 2014-November 2016 as a bad time, but mostly because it was pretty flat for me. However, I think part of that was I was getting impatient. It only took me about 8 months to get from the $800K to $900K mark (end of 2013), and $1M seemed so close. By the end of June 2014, I was around $970K, but then things stalled out. I was around $988K at the end of the year, but about $15K of that was a pension buyout that I rolled into my IRA at the end of the year. I broke $1M sometime in February of 2015, but at that point it seemed a bit anti-climatic.

Still, looking back on that period, I saw roughly a 7.5% gain, so perhaps it wasn't as miserable as I remember it.

Anyway, I have a feeling that anyone who retired at the end of 2019 would still be okay right now, but there would definitely have been some white-knuckle moments along the way.