Study: 43% won't have enough in retirement

[dex]

http://money.cnn.com/2006/06/06/retirement/risk_index/index.htm


http://www.bc.edu/centers/crr/index.shtml
When you do a search for The Center for Retirement Research you find there are other such organizations. I haven't had a chance to look into the site. Maybe the center should contact some of the people on this board.

http://www.bls.gov/cex/csxann04.pdf
This is an interesting study on spending.

 

[Cut-Throat]

Good! - They'll work. Continue to pay into Social Security. I think that program is solvent, with no need for any modifications.

Hopefully the next president will concentrate on real issues.

 

[Spanky]

Most workers don't save for retirement outside of their 401(k)s.

Part of the reason is that society does not encourage savings. For example, Harvard and many Ivy League colleges have admission policy that is finanical blind. That is, they will admit students regardless of financial status and will provide aid based solely on needs. If you do not have any savings and your household income is less than $60K, you will not have to pay at all. Even if your income is above $100K, you will still be eligible for finanical aid. It's amazing that over 70% of the students at Harvard are receiving an average aid of $32K per year. That indicates most household do not have substantial savings since the college requires a parent contribution of 6% from assets. If you have an asset (excluding primary residence, retirement funds) of $500K, your contribution from asset is $30K per year and additional amount from your after-tax income. The expense (tuition, books, room and board, fee) is about $46K. Let's suppose that you have no income. Your financial aid will only be $16K - which is far from the average of $32K.

 

[Cut-Throat]

Part of the reason is that society does not encourage savings.

After 9/11, with sales slumping. Bush told America to go 'Shopping'.

hard as this is to believe, it was the most intelligent thing he said in his presidency.

 

[Nords]

After 9/11, with sales slumping. Bush told America to go 'Shopping'.
hard as this is to believe, it was the most intelligent thing he said in his presidency.

Not much of an achievement. Remember how impressed his dad was by the checkout bar-code scanner when he bought socks?

 

[cute fuzzy bunny]

I remember that.

Not surprising for a guy who hadnt been in a store in 20 years, and whose credit cards were in a vault in the white house for quite a while...

 

[dex]

Not much of an achievement. Remember how impressed his dad was by the checkout bar-code scanner when he bought socks?

This was not reported properly by the media. Bush Sr. was impressed that the bar code was mutilated but the bar code reader could still read it properly. Something, apx 17 years later we take for granted.

 

[Alex]

Of course they won't have enough!! the estimate is based on:

the organization assumed a base target of 73 percent of one's pre-retirement income for all households. In other words, a household with $100,000 in annual income before retirement should be able to generate $73,000 from all sources, including savings, Social Security and pensions. Targets, however, vary according to marital status, gender and income.

I will be FIRE'd and living large on about 30% of my pre-retirement income!!! So I guess it depends on what you expect. I thinks its just more fear mongering designed to sell advice.....

 

[samclem]

I will be FIRE'd and living large on about 30% of my pre-retirement income!!! So I guess it depends on what you expect. I thinks its just more fear mongering designed to sell advice.....

Right, but a large number of folks are spending everything they make each month, and couldn't/don't think they could live on 73%, much less 30% of that. Still, I think expectations and spending will moderate as they age, and 73% of present earnings is likely high.

 

[virginia]

I don't think spending will moderate as they age. Look at baby boomers still spending everything they make. Many of them aren't ready for retirement and feel entitled to everything.
Also - I don't think most people could live on 30% of what they make. Well, maybe they COULD, but can't - I think most people are overcommitted on the big expenses, namely cars and everything that goes with them. It's the big expenses that get people IMO - not all of the coffees as every money guru claims.

 

[haha]

...most people are overcommitted on the big expenses, namely cars and everything that goes with them. It's the big expenses that get people IMO - not all of the coffees as every money guru claims.

So true. The gurus say this because it is happy talk. We all would like to think that by making our coffee at home we can save lots of money and retire to a yacht. In reality, most people are pretty well committed financially with little left for savings. And in many cases there isn't much that can be done about it.

Some brag about their cheap 1992 Honda or whatever, but old cars are not as safe, let alone not as nice. More than we might like to admit, you get what you pay for.

Some “cheap living” is not necessarily cheap if actuarially adjusted.

Ha

 

[farmerEd]

I suspect 43% of the people working don't have enough while they are working either...

 

[unclemick]

12 - 33% from 1993 - 2005, 100 to 110% 2005 and 2006 due to Katrina and remodeling. Expect to crank it down ala Bernicke method in future years although may continue  variable 5% of portfolio if it starts to be too much fun.

Cheap in the LA swamp, getting settled in the burbs(MO) - may change again in a couple years if it gets boring.

Bon Temps Rolliere - and of course -' agile, mobile and hosile'.

heh heh heh heh

 

[cute fuzzy bunny]

This was not reported properly by the media. Bush Sr. was impressed that the bar code was mutilated but the bar code reader could still read it properly. Something, apx 17 years later we take for granted.

And he wasnt under oath!

 

[Cut-Throat]

I suspect 43% of the people working don't have enough while they are working either...

I agree. And this number will be growing as more of the middle class downsizes.

 

[Sarah in SC]

Some brag about their cheap1992 Honda or whatever, but old cars are not as safe, let alone not as nice. More than we might like to admit, you get what you pay for.

Huh?  My 1996 and 1997 Saturns have airbags and cost $2k and $3k.  Why aren't they safe?  And the 1976 Argosy motorhome with the new brake job seems okay to us...what am I missing?  I don't mind them not being "nice", I guess. 
Sarah

 

[Cut-Throat]

Huh? My 1996 and 1997 Saturns have airbags and cost $2k and $3k. Why aren't they safe? And the 1976 Argosy motorhome with the new brake job seems okay to us...what am I missing? I don't mind them not being "nice", I guess.
Sarah

There are two different posters using 'Ha's' Moniker. One of them is Jekyll and one of them is Hyde. 8)

 

[Alex]

I don't think spending will moderate as they age. Look at baby boomers still spending everything they make. Many of them aren't ready for retirement and feel entitled to everything.
Also - I don't think most people could live on 30% of what they make. Well, maybe they COULD, but can't - I think most people are overcommitted on the big expenses, namely cars and everything that goes with them. It's the big expenses that get people IMO - not all of the coffees as every money guru claims.

I agreee with you about the cars. My neighbor drives a brand new Porsche Cayenne SUV that costs around 70K and a two yr old H-1 Hummer. He bought both new. His house has not been painted in 8 years and the last time he cut his lawn the entire neighborhood went into cardiac arrest due to being so surprised! this guy LOVES his friggin cars! Now, to be fair, I drive some nice cars too, but I buy them 3 years old and I keep them for at least 10 years.

 

[Delawaredave]

The 43% number is interesting - and lower than I expected.

I suspect the overall averages are "propped up" by early baby-boomers that are 55-65 now that have "good old days" financial circumstances:
- Defined benefit pensions
- Savings mentality
- Inheritances from depression-era parents

The general public "behind them" is the opposite:
- No pensions
- No saving mentality
- No generational wealth transfer

It will be interesting to see how this all evolves. I read a book "The Upcoming Generational Storm" - which suggests some really scary dynamics over the next 20 years.

 

[73ss454]

The 43% number is interesting - and lower than I expected.

I suspect the overall averages are "propped up" by early baby-boomers that are 55-65 now that have "good old days" financial circumstances:
    - Defined benefit pensions
    - Savings mentality
    - Inheritances from depression-era parents

The general public "behind them" is the opposite:
    - No pensions
    - No saving mentality
    - No generational wealth transfer

It will be interesting to see how this all evolves.   I read a book "The Upcoming Generational Storm" - which suggests some really scary dynamics over the next 20 years.

I'm 57 with no pension and no inheritances.

The "general public" behind me IMHO will have the greatest generational wealth transfer ever. I think that we as Boomers have 50 to 100 % or more than our parents. At least in my case.

 

[Rich_by_the_Bay]

In the late 70s my mom and dad went to a cocktail party. Someone they new casually told them they could retire if they had $15,000 saved and a paid-for house. My mom was a teacher with a small pension, age 55. Dad was a salesman with, well, nothing, age 60.

They retired and their CDs were earning 18-20% for a while. They were getting by just fine. When interest rates dropped, SS kicked in, and they did OK for a few more years.

The inevitable happened, and they ran out of money. My brother and I, after having been asked for advice which was repeated ignored, partially supported them til they died. Our support, given with love and without hesitation, surely had an unspoken dollop of "told you so." Their estate was trivial, mostly modest home equity reduced by unpaid bills, fees, etc. Fortunately, their last few years were secure and comfortable, if not luxurious.

I don't think that history's "greatest transfer of wealth ever" was meant quite like that. Hoping to reverse the trend for my kids and grandkids.

 

[rs0460a]

I suspect the overall averages are "propped up" by early baby-boomers that are 55-65 now that have "good old days" financial circumstances:
    - Defined benefit pensions
    - Savings mentality
    - Inheritances from depression-era parents

Being (DW/me) 58 years of age, we can confirm that point #2 is correct, in our case.  Points #1 & 3 are not.  Regardless of that, point #2 is going to allow us to retire next May (age 59).  It may not be "ER" (according to most folks on this board), but it's certainly earlier than I expected when I started working "last century"...

- Ron

 

[lazygood4nothinbum]

I'm 57 with no pension and no inheritances.

The "general public" behind me IMHO will have the greatest generational wealth transfer ever.  I think that we as Boomers have 50 to 100 % or more than our parents.  At least in my case.

cnn money http://tinyurl.com/juevj shows generational transfer at $45 trillion between 1998 & 2052

thanx mom

 

[Nords]

Their estate was trivial, mostly modest home equity reduced by unpaid bills, fees, etc. Fortunately, their last few years were secure and comfortable, if not luxurious.
I don't think that history's "greatest transfer of wealth ever" was meant quite like that. Hoping to reverse the trend for my kids and grandkids.

If they'd had an inheritance to pass on, would you have needed it or even wanted it?

With people living longer across all generations, by the time the elders are ready to pass on an inheritance it's quite possible that the second generation won't need it. And who wants to kill the motivation of the third generation by dumping a ton of cash on their unready heads?

We tell our kid that her inheritance will be in the form of her parents not having to move in with her. When she's 90 years old.

By then the third & fourth generations won't need, want, or be ready for our portfolio either. So I guess the best approach would be for us to spend as much of it as we can...

shows generational transfer at $45 trillion between 1998 & 2052

Kinda puts that national debt into perspective, doesn't it?

But at that scale of numbers I also find it hard to believe that the inheritance tax won't come back with a vengeance.

 

[Delawaredave]

I'm 57 with no pension and no inheritances.

The "general public" behind me IMHO will have the greatest generational wealth transfer ever.  I think that we as Boomers have 50 to 100 % or more than our parents.  At least in my case.

I am at end of baby boomers (48) - and I agree most boomers have substantially more total wealth than our parents.

However nearly all of the "children of boomers" that I know do not / will not have the jobs / wherewithal to "match their parents" in wealth generation - they will be poorer.

Maybe inheritances will offset that.   I just think these "intergenerational wealth" reports exaggerate the effect.

There will be some very interesting "demographic effects" over next decade - I don't think anyone really knows (certainly not me....)