What some think about their retirement.

[Rustic23]

I really did not know how to title this, but I found this interesting.

Today while checking out at the grocery store, I struck up a conversation with the clerk. She indicated that she was going to retire next month. I said that was great and as if her employer offered a good retirement plan.

She looked at me as if I had just dropped in from outer space. She said they have a 401K plan you can contribute to, but it's not much money. I ask her what the match was, and she said she didn't know.

She went on to say, that it was not much and you would think that if you worked for a company for 15 years you should be able to retire comfortably!

I said that I had heard that to retire comfortably, financial experts suggest you need to save 15% of your paycheck. She said, 'Who could live on that'.

I figured it was time to exit, so I didn't tell her that she would have to save a whole lot more than 15% if she was going to retire comfortably in 15 years.

As I said, no social redeeming grace here, I just thought it was a little insight in to how some or one 62 year old looks forward to retirement.

 

[Redbugdave]

Most people ARE from outer space and do not have a clue about retirement savings, IRA accounts, 401's, etc. I simply do not understand how people, (some highly educated), are so ignorant about saving, the idea of compounding interest, and what it takes to really retire. I understand with the older annuity plans that are going away very quickly, you don't need to know anything, really.

According to the article below from the Motley Fool, most people have around $100K. That's peanuts! It will be a rude awakening for the ones that realize they can't retire and there is no Retirement Fairy out there. I planned for more than two decades to retire and put away around 30 percent of my salary to do it. We lived below our means...and still do, but have loosened up some. It's a lifestyle, you know.

I have several doctor friends making big money, in their 60s and cannot even think of retiring. Money to them is like crack. They cannot fathom how an average guy can do it. We are human beings and supposed to be above the animals living in just the present. But, with most people that is not the case.

The Typical American Has This Much in Retirement Savings. How Do You Compare?

Sorry for the rant. I just smile when I see everybody slaving away and I no longer have to.

 

[Rustic23]

The thing that surprised me was that someone would think they should be entitled to a 'decent' retirement after only 15 years of work.

 

[Big_Hitter]

The thing that surprised me was that someone would think they should be entitled to a 'decent' retirement after only 15 years of work.

I've seen some corporate DB plans that accrue 2% of pay times years of service (depending on age at hire). That would provide a "decent" benefit. Of course it's used as a huge attraction tool.

 

[W2R]

Maybe she is married, and expecting her husband's retirement plus social security to cover everything? I sure hope so because otherwise she will need to win the lottery.

 

[Big_Hitter]

Maybe she is married, and expecting her husband's retirement plus social security to cover everything? I sure hope so because otherwise she will need to win the lottery.

well in all fairness it's a low COL area - when I lived in Houston I looked at property up there a few times - however, this is a great anecdotal example of financial illiteracy

 

[W2R]

well in all fairness it's a low COL area - when I lived in Houston I looked at property up there a few times - however, this is a great anecdotal example of financial illiteracy

You're absolutely right, although she still needs an income.

the median expected annual pay for a typical Cashier - Grocery Store in the United States is $28,444

Cashier - Grocery Store Salary | Salary.com

So, since she is in a low COL area, she might earn even less than that. At least she is used to living on a low income.

 

[Walt34]

One SIL is like that, the one I've referred to as "Spendarina". They have a good income but they're in their mid-50's and are still up to their eyeballs in debt, yet they're taking another trip to beach this weekend.

She talks of retiring to Sarasota, FL but I hope they have cheap trailer parks there.

They simply have no clue.

 

[Redbugdave]

There is another way...and that's working towards a disability. I have seen people go that route.

 

[ExFlyBoy5]

The scary thing about this is it's only going to get worse. As the generation of "new" 401K folks approach retirement, I am afraid many of them aren't going to have a pot to well, you know. I am seeing more and more folks that can't count on themselves for much of anything, and we as a society think that they will be able to save enough to fund their own retirement? Scary days ahead, I am afraid.

 

[ExFlyBoy5]

There is another way...and that's working towards a disability. I have seen people go that route.

Speaking of that, if you want to see how disability can "be worked" take a look at a documentary called "The Wonderful Whites of West Virginia". It is down right scary.

 

[braumeister]

I have several doctor friends making big money, in their 60s and cannot even think of retiring.

Alas, same here. I also know a couple of very successful restaurant owners who are still working hard in their 70s, despite having stopped enjoying it decades ago.

All these folks drive very nice cars (mostly high end Mercedes, and one a Bentley), live in very nice houses (at least McMansions, a couple in real mansions), send their kids to the top private schools, vacation in style, etc., etc. but despite being smart, they're not wise.

Planning for the future is such a useful skill, but it seems to be a scarce attribute in this country at this time.

 

[amyj05]

The scary thing about this is it's only going to get worse. As the generation of "new" 401K folks approach retirement, I am afraid many of them aren't going to have a pot to well, you know. I am seeing more and more folks that can't count on themselves for much of anything, and we as a society think that they will be able to save enough to fund their own retirement? Scary days ahead, I am afraid.

I agree 100%!

 

[Silver]

She talks of retiring to Sarasota, FL but I hope they have cheap trailer parks there.

There is nothing cheap in Sarasota, Fl. It's a pricey part of the state.

 

[Taxman59]

My eldest son once looked at the possibility of saving $100k by age 30, then never needing to save again since it would grow at 10% per year compounded until 65 when he could retire on his current salary. I pointed out that he may have unexpected costs over the next 40+ years and the market does not grow at 10% per year every year! He since has figured out that a more reasonable plan is to continue to save aggressively and possibly retire early or at least be in a position to retire early or eve take a sabbatical at some point in hi career. His friends are planning on living on their SSI and meager 401k when they turn 65. How sad is their retirement going to be!

 

[Walt34]

There is nothing cheap in Sarasota, Fl. It's a pricey part of the state.

That makes sense. She likes money, or at least acting like she has some. Evidently she's in for a disappointment.

 

[marko]

Planning for the future is such a useful skill, but it seems to be a scarce attribute in this country at this time.

The saddest part about this tale is that I'm not surprised.

With all the nonsense taught in schools today its frightening how few people can even balance a checkbook, let alone have any financial literacy.

The Romans called it "bread and circus"; keep the masses fed and entertained and you won't have to worry about a thing.

I once broached the subject with a niece suggesting she start saving and perhaps investing. "You mean, like on Wall St?.... NO WAY! I don't want to be one of those people! They're evil".

So, there's the state and future of our country. Imbeciles r us!

 

[frayne]

Personally I think our culture encourages, got to have it today, live for today or maybe next week or month but saving for retirement in thirty years down the road, not a chance.

It amazes me that once most people hit their mid-fifties they realize they are way behind the curve and will most likely not retire until they are seventy or older.

It's sad in a way but they made their choices.

 

[Walt34]

Planning for the future is such a useful skill, but it seems to be a scarce attribute in this country at this time.

I can't count the number of times that DW and I have looked at each other and said "Are we the only ones that get it?" after someone we know does something foolish with money. Aside from my two sisters, who I think are doing okay, almost the only others I know are on this board.

Couple that with the lack of financial literacy and I think the 401k folks are going to be in for a very rough time.

 

[hnzw_rui]

Most people ARE from outer space and do not have a clue about retirement savings, IRA accounts, 401's, etc. I simply do not understand how people, (some highly educated), are so ignorant about saving, the idea of compounding interest, and what it takes to really retire. I understand with the older annuity plans that are going away very quickly, you don't need to know anything, really.

Since we're the minority, I think that makes us the ones from outer space.

The thing that surprised me was that someone would think they should be entitled to a 'decent' retirement after only 15 years of work.

I've seen some corporate DB plans that accrue 2% of pay times years of service (depending on age at hire). That would provide a "decent" benefit. Of course it's used as a huge attraction tool.

2% is very generous if you're also getting SS. We get 2% but we don't have SS (govt). Still, if someone can't live on 85% of their pay, I can't imagine how they can think to maintain their current standard of living on just 30% (2% * 15 years) upon retirement. Most of my co-workers target around 30 years of service. That's 60% pension and by the time they retire, mortgage is paid off so it works out pretty well. We also get retiree medical.

Of course, at very low income SS probably replaces a higher percentage of salary so you'd only need a smaller monthly supplement from the 401k. Granted, at just 15 years of work, SS will be small, too.

 

[Rustic23]

Some research on line indicates employer offers a 6% match up to $18,000, which is almost 75% of a high end clerks salary, and a 'retiree discount of 10%' on purchases. The clerk indicated her husband was retired with a 'very small amount' each month.

My gut feeling is they will be OK, but will draw heavily on state and federal benefits for based on their income bracket.

 

[braumeister]

I once broached the subject with a niece suggesting she start saving and perhaps investing. "You mean, like on Wall St?.... NO WAY! I don't want to be one of those people! They're evil".

I'm sure you're relating that incident accurately, but it's still hard for me to wrap my mind around it.

My parents had a completely different mindset. Dad had only four years of primary education in a rural one-room schoolhouse. Mom had a high school education, but in an overcrowded, rundown school system. Yet they were both anxious to improve their lot, both for themselves and their kids. As soon as they were able, they started to dip their toes into the stock market. They got burned in the beginning by believing the "tips" they got, but quickly learned to do their own research and invest in safer vehicles. By the time my Mom died, she had enough left after several years of very expensive assisted living and memory care facilities to leave me over 200K.

What went wrong?
How did our society manage to give the current youthful generations the idea that saving and LBYM is not still right?

The last thing I want to do is turn this into a political argument, but I honestly wonder. I don't understand it.

 

[ejman]

I think there are many ways to skin the retirement cat. I personally know the case of one lady in her mid 60's who lives primarily on social security in a small but well appointed mobile home in SW Oregon. Drives a car that's about 8-9 years old but serviceable. Seems well fed and healthy. As far as I know she has a small amount of savings but doesn't touch it "just in case" I think she is reasonably happy, uses the library a lot, loves music, loves pets so she does regular house sitting for people travelling that need to have their pets cared for. Maybe not the lifestyle that regular posters here would like but frankly she seems a lot happier than many I run into.

 

[Amethyst]

Depends on the youngsters in question...some of the younger generation that I work with are quite savvy and aren't big spenders at all.

As for the OP's lady, maybe her 15 years were post-kid-raising years, and as W2R suggested, the dad's earnings and SS could be the real bedrock of their retirement. It just amazes me how many women I know who never had to seriously worry about their own retirement. Whether affluent or not, some guy was always in charge of that!

Amethyst

I
How did our society manage to give the current youthful generations the idea that saving and LBYM is not still right?

The last thing I want to do is turn this into a political argument, but I honestly wonder. I don't understand it.

 

[Redbugdave]

Don't forget...I think a lot of those people in the non-saving world depend on family resources, such as working in the family business or getting inheritances later on. Somehow, they manage since the wealth is passed down. I see a lot of that, too. A good example is the family farm.