Most Americans Can't Retire...

[Big_Hitter]

of course most people can't afford to retire - not really a news flash


there will and might already be an entire generation that's destitute at SSNRA


the rest of us will pay for this through tax-funded relief efforts

 

[harley]

recently our Board of Education has added a new requirement for high school graduation. Students who enter 9th grade in 2011-2012 and beyond must successfully complete a 1-credit course in Economics and Personal Finance.

From the state course description:

"Students learn how to navigate the financial decisions they must face and to make informed decisions related to career exploration, budgeting, banking, credit, insurance, spending, taxes, saving, investing, buying/leasing a vehicle, living independently, and inheritance. Development of financial literacy skills and an understanding of economic principles provide the basis for responsible citizenship and career success. In addition to developing personal finance skills, students also study basic occupational skills and concepts in preparation for entry-level employment in the field of finance. The course incorporates all economic and financial literacy objectives included in the Code of Virginia §22.1-200-03B. This semester course is a graduation requirement beginning with the class of 2015."

I'm curious to see what the actual curriculum teaches. I've been reading all the posts about the kids needing basic financial education and I've been thinking that teaching it wrong might be worse than not teaching it at all. Some of it is just basic math, so should be safe. I wonder if they'll teach the kids how to determine if getting loans for, say, a 4 year art history degree at an expensive private college is a worthwhile investment? Or if they'll just keep pushing a college degree at all costs. I don't have much faith in the education system, I guess.

 

[daylatedollarshort]

I thought we were not impacted much by advertising over the years but the more I read about sustainable living and true happiness the more I realize we were sucked into a lot of it - we just may have been a bit more impervious that some of our peers.

The first thing I did when we decided to downshift was replace most of the disposable products in the house with something washable / rechargeable or otherwise resuseable. Another thing I realized is that on the entertainment front most of the really fun things we do locally are free or very low cost through the library, civic and social clubs, parks, beaches, public gardens, art and science museums, the local planetarium, bike trails, tide pools, nonprofit and public supported cultural activities, gold panning rivers and meetups - all activities without huge advertising budgets so we had to seek them out compared to passive events with in your face advertising everywhere like restaurants, plays and concerts.

 

[JoeWras]

Wow! You all just shook out a memory!

Back in 5th grade, we were learning percents. I don't know why I remember this, but it is now plain as day. Mrs. V., our most excellent math teacher was at the helm. Here's how it went:

Kid 1: "Mom and dad showed me my savings book. I think I understand it now. Thanks Mrs. V.! I'm going to put all my money in savings!"

Kid2 (me, little Joe): "I have savings bonds. I looked on the back and there's this neat chart of percents. I think mine is better than yours, Kid 1. All my money is going into savings bonds. Nah, nah, nah, nah."

Mrs. V.: "Kids! You don't want to do that! Never put all your money one place. And besides, you want to INVEST in the stock market. That's more interesting. Next month we'll start graphing it for fun."

Honestly, I remember this as plain as day. We did start graphing the DOW, and it was depressing as heck. We hadn't learned negative numbers yet, but it was obvious what was happening. Savings bonds looked much better to me.

Here's a case where a great teacher went off script and gave us some life lessons. Sure, the market was entering a huge bear period (70s), but that lesson somehow stuck in the back of my head. We need more teachers with this kind of life experience and freedom.

Mrs. V. was an aunt of one of our students. She was a bit older and must have had more life experience. Her advice was one of the many little nudges in teaching that change lives.

 

[W2R]

What a wonderful memory, Joe! She sounds like a terrific teacher.

 

[athena53]

One variety of financial literacy courses is constructed as a simulation of real life. Choose your profession. Choose how to pay for education. Develop a budget after graduation given typical rent in your area, what type of car you choose to buy, the cost of repaying any student loans, typical entry-level salaries for your chosen profession... Oh, yeah- and taxes. I used to watch my son play SimCity and loved how it clearly showed the implications of tradeoffs. Tax too little? Not enough services or infrastructure and people move out. Tax too much? People move to cheaper areas. Personal finances are like that, too, and you need something more than a textbook to realize it.

 

[JoeWras]

What a wonderful memory, Joe! She sounds like a terrific teacher.

Yes, and also a big part of why I went into numbers (engineering) as a career. She helped push me along faster than I wanted to go.

This whole thing also shakes out something else about literacy.

Each time we went to the bank with mom and dad and had our passbook stamped, we could see the interest accruing, right there in ribbon ink black. Today, it is probably on a PDF online that's never looked at.

Similarly, when I got Savings Bonds as gifts, I'd examine the back. There was that neat little chart on there. Nothing like that today. All this on-line stuff is not as tangible and I think may be leading to a bit of illiteracy, if not at least laissez-faire attitude.

 

[Live Free]

It's also a bit of a generational thing I think. For the most part I think our parents guide us on a path to financial literacy. They are usually the ones that help you figure out how to open your first savings account, write a check, finance your first auto loan, etc. My parents generation (they are in their 70s) have pensions (generous federal pensions!). When they started work, 401Ks and IRAs were not the norm for funding retirement. So when I first started working, my parents I think assumed that I would get a company pension and this just wasn't something talked about or learned about at home.

I think younger generations may be learning about self-funding their retirement because their own parents are living that experience. Well, that's the theory any way.

 

[brewer12345]

Financial literacy is something that has always seemed sorely neglected to me. I recently started volunteering with Junior Achievers. Last week I did the first of 5 weekly sessions with 26 2nd graders at a nearby elementary school following a curriculum/lesson plan JA provided. The kids absolutely eat this stuff up. If it continues to go as well as the first lesson did, I will be doing this for a long time.

 

[Live Free]

I'm curious to see what the actual curriculum teaches. I've been reading all the posts about the kids needing basic financial education and I've been thinking that teaching it wrong might be worse than not teaching it at all. Some of it is just basic math, so should be safe. I wonder if they'll teach the kids how to determine if getting loans for, say, a 4 year art history degree at an expensive private college is a worthwhile investment? Or if they'll just keep pushing a college degree at all costs. I don't have much faith in the education system, I guess.

Well, my kid will take it next year - so I'll report back.

I did look up what "competencies" the curriculum attempts to cover and there was this:

"Demonstrate knowledge that many factors affect income. Demonstration should include
- examining the market value of a worker’s skills and knowledge
- identifying the impact of human capital on production costs
- explaining the relationship between a person’s own human capital and the resulting income potential
- describing how changes in supply and demand for goods and services affect income."

So perhaps they do address that art history degree.

Actually I thought the list of what they will teach was pretty good.

CTE Resource Center - Verso - Economics and Personal Finance SOL Correlation by Task

 

[steelyman]

That's excellent, brewer12345!

Can early retirees audit?

 

[M Paquette]

Financial literacy is dangerous!

There are entire industries founded on the lack of financial literacy of their customers. An outbreak of financial literacy would endanger these industries, their shareholders, and even the jobs of all their employees!

Our fight against job-killing financial literacy is ongoing. It threatens to force employers to preemptively lay off employees or decide not to hire new employees. It is a danger to job growth, and a hazard to our economy.

Help stamp out financial literacy today!

This message sponsored by the Variable Universal Life Annuity Sales Association of America in conjunction with Dewey, Cheatham, and Howe Full Service Brokerage.

 

[Mulligan]

I once saw a man like that, although I don't think he needed the money or the insurance. I think he was simply in denial and thought that his cancer was beatable.

My dad doesn't need the money, but he would work until the day he died if his body would have allowed it. In fact up until recently he worked for free with my brother at his shop. Some people are just wired that way. When he was sitting in the pews as a youngster, he must have really paid attention to that "Protestant work ethic" sermon.


Sent from my iPad using Tapatalk

 

[audreyh1]

Financial literacy is something that has always seemed sorely neglected to me. I recently started volunteering with Junior Achievers. Last week I did the first of 5 weekly sessions with 26 2nd graders at a nearby elementary school following a curriculum/lesson plan JA provided. The kids absolutely eat this stuff up. If it continues to go as well as the first lesson did, I will be doing this for a long time.

Awesome! What a great contribution!

 

[HFWR]

Financial literacy is dangerous!

There are entire industries founded on the lack of financial literacy of their customers. An outbreak of financial literacy would endanger these industries, their shareholders, and even the jobs of all their employees!

Our fight against job-killing financial literacy is ongoing. It threatens to force employers to preemptively lay off employees or decide not to hire new employees. It is a danger to job growth, and a hazard to our economy.

Help stamp out financial literacy today!

This message sponsored by the Variable Universal Life Annuity Sales Association of America in conjunction with Dewey, Cheatham, and Howe Full Service Brokerage.

We're more likely to be struck by ReWahoo's asteroid...


Sent from my iCouch using Early Retirement Forum

 

[purplesky]

I know there are threads about this and it has been discussed a lot. But in looking at this latest report, well, I guess I never really absorbed how bad it is going to be for a lot of our fellow Americans.

45% of all working households have no retirement plans at all and half of those are headed by someone 45 to 65 years old! That is a hard situation to fix.

From the report:

"Account ownership rates are closely correlated with income and wealth. Nearly 40 million working-age households (45 percent) do not own any retirement account assets, whether in an employer-sponsored 401(k) type plan or an IRA. Half of these households with no retirement savings are headed by someone between age 45 and 65, and may have too few year to catch up.

The average working household has virtually no retirement savings. When all households are included— not just households with retirement accounts—the median retirement account balance is $2,500 for all working-age households and $14,500 for near-retirement households. Furthermore, 62 percent of working households age 55-64 have retirement savings less than one times their annual income, which is far below what they will need to maintain their standard of living in retirement."

Link to report: http://www.nirsonline.org/storage/nirs/documents/RSC%202015/final_rsc_2015.pdf

I know that many on here will say that it is their own fault for not saving for retirement. But I have to agree with this report that public policy must change to make it easier for Americans to save.

Given that half of workers that could contribute to a retirement plan DON"T contribute, I wonder if we have to go to something mandatory - like SS contributions. I don't have all the answers, but this is so sad.

Low wages and the cost of healthcare will make it impossible for millions of working Americans to accumulate enough savings to retire.

The math won't work.


The current public policy is that taxpayers subsidize low wage workers with food stamps.
The future public policy will have Taxpayers also subsidizing their retirement.

 

[REWahoo]

Financial literacy is something that has always seemed sorely neglected to me. I recently started volunteering with Junior Achievers. Last week I did the first of 5 weekly sessions with 26 2nd graders at a nearby elementary school following a curriculum/lesson plan JA provided. The kids absolutely eat this stuff up. If it continues to go as well as the first lesson did, I will be doing this for a long time.

I was a JA volunteer for a few years back when I had a j-o-b. Being in the classroom with those kids (and not having to worry about discipline) was a great experience. Especially when you saw the lightbulb come on for some of them.

 

[brewer12345]

I was a JA volunteer for a few years back when I had a j-o-b. Being in the classroom with those kids (and not having to worry about discipline) was a great experience. Especially when you saw the lightbulb come on for some of them.

Funnily enough, the first thing they wanted to ask me about when I got there was counterfeiting. Since we have both one of the US mints and a Fed Bank branch in town and I have worked at one of them, I was able to field the questions, but it was pretty funny.

 

[Options]

That is a better problem than in the past where traditional pension plans were ineligible to be rolled over and many were forgotten about. I have 2 small pensions from companies I left 25 and 30 years ago and can easily see why some folks don't keep in touch with old employers so they can collect future pensions.

...

The fat lady just sang on public pensions:

California public workers may be at risk of losing promised pensions - LA Times

From the article:

The agency's most significant setback came in Stockton's bankruptcy case. The judge approved the city's recovery plan, including maintaining employees' pensions, but ruled that Stockton could have legally chosen to cut workers' retirements.

In his written opinion, U.S. Bankruptcy Court Judge Christopher M. Klein blasted CalPERS as "a bully" for weighing in on the proceeding to insist — wrongly — that the city had no choice but to pay workers their promised pensions.

Karol Denniston, a public finance lawyer at Squire Patton Boggs, said Klein's ruling was "critical for every municipality in California."

"Next time we see a Chapter 9 bankruptcy filing," she said, "pensions will be up for negotiation just like every other creditor."

Coming to a pension near you. As goes California, so goes the nation.

 

[GTFan]

I don't think anyone should be surprised by that, because a lot of governments have promised way more than they're actually contributing to pensions. The stock market has probably bailed some of them out recently but all you have to do is look at Detroit to see where a lot of them are headed.

http://time.com/money/3582218/retirement-detroit-pension-savers-warning/

 

[W2R]

I don't think anyone should be surprised by that, because a lot of governments have promised way more than they're actually contributing to pensions.

Well maybe I shouldn't be surprised by that, but I am not ashamed to admit that I am. Actually to me this more than surprising; to me this is shocking. I'm also shocked and disgusted at what has already happened to private pensions in the past couple of decades. We can adjust and life goes on - - but we don't have to like it, of course, and I sure don't. Would it sound too curmudgeonly if I pointed out that the world is going to h*ll in a handbasket?

 

[haha]

The current public policy is that taxpayers subsidize low wage workers with food stamps.
The future public policy will have Taxpayers also subsidizing their retirement.

Future? See ACA

 

[robertf57]

Low wages and the cost of healthcare will make it impossible for millions of working Americans to accumulate enough savings to retire.

The math won't work.


The current public policy is that taxpayers subsidize low wage workers with food stamps.
The future public policy will have Taxpayers also subsidizing their retirement.

Of course this isn't the future. Just look up social security bend points to see this is actually past present AND future.....

 

[purplesky]

Future? See ACA

With or without the ACA, the American taxpayer will continue to subsidize millions of low wage workers who work for corporations that make billions in profits.

Nothing wrong with big profits. But we do have a retirement crisis and we are all going to help pay for it.

401ks are great for higher income earners but the math isn't going to work for middle to low income earners.

So this report shouldn't surprise anyone.

 

[purplesky]

Of course this isn't the future. Just look up social security bend points to see this is actually past present AND future.....

Its probably going to take more than just social security to fix this mess.