Most Americans Can't Retire...

[ExFlyBoy5]

I guess not, since so much is spent on advertising! A couple of days ago I got a FaceBook feed post that was basically an ad for a new shade of Coach bag- a weird neon-y yellow-green. There were 45 comments and ordinariiy I ignore those posts but I'm disgusted at how the quality of Coach bags has deteriorated and at their moving production from NY to China, so I posted a comment to that effect. The other 45 comments were about the bag "Like".."Need"..."Love this color"..."Want"... And that's where the dollars that should be saved for retirement are going.

As for the graph- yeah, I'm one of those points. Planned to retire at 65 (one year before FRA), decided I was fed up and retired at 61. Glad I could do it. Maybe it's because I own only 3 Coach bags and the newest was bought 11 years ago.

I am seeing more and more of this from my "friends" on Facebook. They will like or comment on some sort of commercial product...basically endorsing whatever stupid product they like. I really used to enjoy FB to keep up with folks I normally wouldn't but lately it's as though it's nothing but ads, ads, ads and ads that try to look like "news stories" or just some stupid "Top 10 Things That You Probably Don't Care About" page that is only trying to generate click-throughs.

 

[audreyh1]

I guess not, since so much is spent on advertising! A couple of days ago I got a FaceBook feed post that was basically an ad for a new shade of Coach bag- a weird neon-y yellow-green. There were 45 comments and ordinariiy I ignore those posts but I'm disgusted at how the quality of Coach bags has deteriorated and at their moving production from NY to China, so I posted a comment to that effect. The other 45 comments were about the bag "Like".."Need"..."Love this color"..."Want"... And that's where the dollars that should be saved for retirement are going.

As for the graph- yeah, I'm one of those points. Planned to retire at 65 (one year before FRA), decided I was fed up and retired at 61. Glad I could do it. Maybe it's because I own only 3 Coach bags and the newest was bought 11 years ago.

I always wondered if the huge advertising budgets is like SPAM or phishing - a huge amount of effort targeted at that 2% or 5% that fall for the deal.

 

[audreyh1]

I am seeing more and more of this from my "friends" on Facebook. They will like or comment on some sort of commercial product...basically endorsing whatever stupid product they like. I really used to enjoy FB to keep up with folks I normally wouldn't but lately it's as though it's nothing but ads, ads, ads and ads that try to look like "news stories" or just some stupid "Top 10 Things That You Probably Don't Care About" page that is only trying to generate click-throughs.

I have a lot of Facebook "friends" who are actually neighbors - it pays to keep neighbors friendly. I'm usually shocked with what pages they "like".

Walmart - so and so "likes" Walmart, wow. OK hopefully I didn't just offend anyone here.

But even my real friends on Facebook fall for sharing a lot of silly crap designed to generate click throughs, or rumors that are not true and easily disproven.

What I really hate are the "share if you agree" or "like this if you xxxx", and many folks do just that. Many FB folks will share something on their page simply because they were asked to.

We prevent FB friends from posting on our page for the simple reason that we see how much crap is posted to other people's pages by friends who feel compelled to share.

 

[Alan]

The UK, who face a similar problem with traditional workplace pensions disappearing, are now requiring employers to auto enroll employees in 401k type plans. Too early to know if it will work but they are hoping that it will be too much effort for many folks to go to the bother on opting out, since it seems to be too much effort for them to opt in.


https://www.towerswatson.com/~/medi...lts/2012/07/UK-DC-Webcast-Auto-Enrollment.pdf

How do employees opt out of auto-enrollment?
Employees can opt out any time — but not before they have been made an active member of the plan. The U.K. government hopes to employ inertia in favor of pension saving. To prevent coercion, opt-out notices must be obtained from the plan — but can be obtained from the employer if the rules of the occupational pension plan expressly delegate administrative functions to the employer.

 

[Gumby]

From a pretty young age, I figured out that life was all about a cascading series of choices. True, your choices are constrained by circumstance, but at least part of that constraining circumstance is the choices you have made in the past. Each time you choose a path, you necessarily forego the chance to make the future choices that lie down the other path. Over time, your range of available action becomes narrower and narrower, until at a certain point you arrive at a place where you have no further options.

For that reason, the young wife and I have tried to make choices -- in education, jobs and purchases -- that limit our future options as little as possible. As one example, we could have bought a much larger house than we did, but the money saved by not stretching to spend the very last penny of our income has enabled us to have more and better options about how we live and when we'll retire. For another example, the young wife worked hard when she was a new teacher to take additional courses and become certified in additional subject areas, so that she could increase her job security, as well have more and better choice of teaching assignments.

 

[Mulligan]

My dad would have worked full time till death , if he was still able. Some chose to as a purpose for life , Grandfather was of the same mindset.

My dad is near 80 and in just the past year his body told him he can't work anymore. It has broken his spirit quite a bit. I know he probably doesn't think much of me retiring in my mid 40s , five years ago and basically doing nothing. He probably is thinking as long as I am not digging into his wallet, he isn't going to say anything.


Sent from my iPad using Tapatalk

 

[mathjak107]

it is rarely that final financial event that causes someone financiial failure . it is the choices ,paths and decisions that lead up to it that cause the financial suicide.

 

[GTFan]

The UK, who face a similar problem with traditional workplace pensions disappearing, are now requiring employers to auto enroll employees in 401k type plans. Too early to know if it will work but they are hoping that it will be too much effort for many folks to go to the bother on opting out, since it seems to be too much effort for them to opt in.

The thing I wonder about with 401k's is how many of them will be orphaned (i.e. forgotten) by the young that may have put in a few $K in each while they went from job to job. These will have substantial balances after 30 years but will the young remember where they were? Or is this even an issue? My 20-year old son has a few $K from a retail job he left last year, default invested in a lifecycle fund at T. Rowe Price. I guess the answer is to get him to set up a rollover IRA at Vanguard etc. and consolidate all his little 401k's there over time but how many people will do that, really?

 

[mathjak107]

actually if you look at the other thread with the charts from jp morgan most folks who didn't think they could retire did indeed retire and retired early too for whatever reasons.

.http://www.early-retirement.org/for...the-mill-jp-morgan-2015-ret-report-76371.html

 

[Alan]

The thing I wonder about with 401k's is how many of them will be orphaned (i.e. forgotten) by the young that may have put in a few $K in each while they went from job to job. These will have substantial balances after 30 years but will the young remember where they were? Or is this even an issue? My 20-year old son has a few $K from a retail job he left last year, default invested in a lifecycle fund at T. Rowe Price. I guess the answer is to get him to set up a rollover IRA at Vanguard etc. and consolidate all his little 401k's there over time but how many people will do that, really?

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. With DC plans then when you leave a company you get the paperwork, and/or interview with HR as you leave and it is very easy at that point to roll over your DC plan to an IRA.

 

[daylatedollarshort]

I just finished reading a great book on brain function, Incognito. The author argues that between genetics, diet, environmental toxins, and a host of other factors there isn't a lot of brain CPU power leftover for free will to fit in, if it does at all. Historically, humans have been programmed to look for short term rewards - shelter from the storm or a rabbit for tonight's dinner. Advertisers get this and exploit it - balloon mortgages, buy now pay later plans, instant credit, loss leaders, and a million other tactics.

 

[GTFan]

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. With DC plans then when you leave a company you get the paperwork, and/or interview with HR as you leave and it is very easy at that point to roll over your DC plan to an IRA.

Well yeah, assuming that they actually look at the paperwork and figure out how to do the rollovers. That's the issue methinks.

I think a lot of the younger workers just cash out the 401k.

 

[haha]

Mosty Americans Can't Retire?

How can this be said when the evidence shows that most Americans do retire? They are retiring at a slightly older age than a few years back, but when it is said that they cannot retire, I suspect that fits with someone's socialist agenda.

As a statement intended to describe reality, it is flat out false.

Ha

 

[NW-Bound]

Yes, people do retire, but they do not have the same income as when they were still working.

Neither do I. If I insisted on having the same income as when I worked, I would still be working.

However, I still spend about the same as I did, and perhaps even more. Saved when I worked, in order to spend it now. That's how it works.

As mentioned before...there's SS for the ones that paid into it. Many live off the grid and get paid under the table. We all make our own choices. I saved up my marshmallows. I don't feel guilty and in most cases you make your own bed.

I just want to mention that SSI (for people who do not qualify for SS) and SS for people who work low-wage jobs all their life may not differ that much. I remember talking to some older folks who get just a bit more than $1K/month from SS, while I read on the Web that some people get more than $700 from SSI.

Yes, people may work off the grid, but when they reach retirement age they get back on the grid.

 

[growing_older]

Americans do retire and I know among my family members, those with just about nothing find a way to live on that. They stay home. They live cheaply or move in with adult children. They get by.

What I have noticed among people I work with is that 401k is more expensive that it should be, so many look for advice and learn "get the free money. At least put in up to the match" What they take away from this is more like "as long as you save the 3% or 4% to get the match you will be fine" which is not true at all.

 

[MooreBonds]

The thing I wonder about with 401k's is how many of them will be orphaned (i.e. forgotten) by the young that may have put in a few $K in each while they went from job to job. These will have substantial balances after 30 years but will the young remember where they were? Or is this even an issue? My 20-year old son has a few $K from a retail job he left last year, default invested in a lifecycle fund at T. Rowe Price. I guess the answer is to get him to set up a rollover IRA at Vanguard etc. and consolidate all his little 401k's there over time but how many people will do that, really?

I also was thinking this before I read your comment. And another problem when this happens - each of those 'accounts' will have maybe just $5k or so. Each of those $5k account balances will be added up to come to an "average" 401k account balance in a future study, and feed further alarmist headlines of "The average 401k balance has just $10,000! No way anyone can retire with just $10,000!".

 

[athena53]

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.

Some of us are money-grubbers and never forget. I have one $10K/year pension coming in from a company that was sold in 2006 (I stayed on with the acquiring company but the DB plan was terminated) and made sure when I left that I knew where the pension people were. After I retired last year I contacted the Prudential, where I'd worked at a sub until 1995 and found that yes, I was entitled to a pension. It's $1K/month if I wait till 65, which I plan to do. I can't imagine leaving any savings behind at a previous employer. It's my money and if I'm not there neither is my money.

One more comment on FaceBook: I am VERY careful about which pages I "Like" because I can see that when sponsored (i.e. paid) posts show up in my feed, they tell me which of my contacts likes Chico's, Wal-Mart, etc. Sorry, but I'm not going to shill for businesses for free. Even creepier: an acquaintance died 2 years ago and her family kept her FB page open and they sometimes post things on her birthday and tell her they miss her, etc. Occasionally I get sponsored ads headed by "(Name of deceased friend) likes Wal-Mart."

 

[ChicagoGal]

What I have noticed among people I work with is that 401k is more expensive that it should be, so many look for advice and learn "get the free money. At least put in up to the match" What they take away from this is more like "as long as you save the 3% or 4% to get the match you will be fine" which is not true at all.

+1 That's actually the message I took away when 401ks were rolling into the workplace. I was definitely late to the game when it came to putting more than the 5% requirement for a match into my own 401k, because I didn't do the math myself to figure out future projections. I felt pretty darned smug, in fact, that I was saving for retirement. And I consider myself pretty smart and a number-oriented person!

What saved my behind was spending the last 20 years at a company with a fairly decent old fashioned defined benefit pension, so that in combination with the 401k and other savings (where about 30% of my income is now going), will allow me to retire in the next 4-5 years. Later than I'd like, but well ahead of "normal".

 

[harley]

I won't read the report because they will glean numbers that will support their hypothesis.


It's pretty tough to go out and NOT spend money when there is NOTHING but a constant barrage of advertisements telling you to GO BUY THIS NOW!!! KEEP UP WITH THE JONES'!!!" It starts younger and younger and never stops. When the message is always to SPEND, SPEND, SPEND...then there will be no savings. We are seeing that now.

That is why I consider the TV remote, and now the DVR, the most important retirement tools out there. I've never watched ads. Now I just fast forward through them. But in the old(er) days I would switch to another show when the commercials came on. So I have been relatively unaffected by the advertising industry. I must admit, though, it did piss DW and DD off royally. But it was worth it in the long run.

 

[PhrugalPhan]

That's actually the message I took away when 401ks were rolling into the workplace. I was definitely late to the game when it came to putting more than the 5% requirement for a match into my own 401k, because I didn't do the math myself to figure out future projections. I felt pretty darned smug, in fact, that I was saving for retirement. And I consider myself pretty smart and a number-oriented person!

I wouldn't feel too bad about starting slow in the 401k's. I did that too, but my pay was low, I was paying off college loans, and I was paying extra to my mortgage. Given all that I am happy I even saved enough to get a match. After the college loans were off the books, I put more towards the mortgage and retirement. In the past 4 years with the mortgage put to bed, well...

 

[Andre1969]

I wouldn't feel too bad about starting slow in the 401k's. I did that too, but my pay was low, I was paying off college loans, and I was paying extra to my mortgage. Given all that I am happy I even saved enough to get a match. After the college loans were off the books, I put more towards the mortgage and retirement. In the past 4 years with the mortgage put to bed, well...

Same here...I didn't even start investing in my 401k at work until the last two weeks of 1997, at the age of 27. At that point, I had only been a full time employee, and eligible to invest in the 401k, since February 1994. At the time, our company match was only 1%. So, in the grand scheme of things, maybe I didn't miss out on much.

And, like you, my pay wasn't all that high back then either, so I wouldn't have been able to max it out. I don't think I started hitting the federal limit with my 401k until 2005

 

[athena53]

My dad is near 80 and in just the past year his body told him he can't work anymore. It has broken his spirit quite a bit.

A woman in our church said her husband kept dragging himself to work every morning when he had terminal cancer even though he felt awful (and probably wasn't very productive) because they needed the income and the health insurance. No matter how much you love your work, you can't assume you can continue it indefinitely.

 

[NW-Bound]

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.

 

[Live Free]

I agree that financial literacy is overall pretty low in the US. And I also agree with the poster that said it is confusing by design to keep the services of FAs, tax specialists, and brokers in business as well as to give various special interests their payday with the various tax incentives, loopholes, etc.

It wasn't that long ago that I finally started paying attention to my own retirement and I was well into my 40s. Oh I have always, since Day 1 of working post-college, contributed to a 401K "at least up the match" and up until 2008 was invested mostly in stock funds. But that was certainly just a happy accident. My own financial illiteracy has cost me a lot. Most of the funds I was invested in were actively managed, had high ERs, were duplicative, not broadly diversified across asset classes, etc. I sold my stock funds at rock bottom - doing exactly the opposite of what you should do in times of crisis. I really think that I represent a huge number of people that never embraced learning about investing, and quite frankly, find it intimidating. I would get my 401K quarterly statements, glance at them, and toss them in the shred bin. The various percentages, ERs, graphs, blah, blah, just made my eyes glaze over. When I finally decided to get my crap together and figure out what I was invested in and how to forge a retirement plan moving forward, what I came to realize is that it can be stupidly simple to get a good plan in place - but you have to first learn a CRAP LOAD of industry jargon and terms to figure that out. Oh, once you become familiar with all the terms (equities, expense ratios, PEs, short term, intermediate, long term bonds, value stocks, roths, tiras, asset allocation, roth conversions, annuities, CDs, RMDs, etc, etc. etc.) and all the rules (contribution limits, withdraw ages, tax consequeces) you are well on your way. But I maintain that some folks just LIKE investing and following their money and reading about what is going on in the markets and the world of finance. But I think most people don't. It's kind of like math homework to me. Not fun. Just a necessary evil.

My point, I guess, is that yes, education of the masses is needed. And we could maybe simplify it some as well.

I'm in the great state of Virginia, where 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."

Also, you can believe I have already been teaching my kids about LBYM and investing early.

 

[harley]

I'm in the great [-]state[/-] Commonwealth of Virginia

Must not be a native.