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Old 02-23-2017, 08:42 AM   #21
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Since the data in OP is based on personal and business tax filings, it sounds more comprehensive than other reports I have been hearing about.
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Old 02-23-2017, 08:43 AM   #22
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I think part of the problem for low wage earners is that the "sales pitch" for 401K always discusses contribution amount higher than they might be able to afford. Maybe if the were encouraged to start with any amount, regardless how small, it might have a better success rate.
FWIW, here's my anecdote. As a manager at several of my j*bs, I pitched the contribute-whatever-you-can approach. This worked with a few of the low wage earners......and more than a few of those thanked me later when they hit some great savings threshold, be it $500 or in one case $100. ALL of the increased their deductions when they realized they didn't miss that deducted amount.
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Old 02-23-2017, 08:48 AM   #23
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I wonder how many people don't save for retirement because what they make barely covers their living expenses.
An alternative way to look at it is that their living expenses have grown to match what they make. This is nothing new. Some people do not have a grasp on the "saving" concept.

Regarding the savings studies, when 2 studies can be so widely different, how can anyone blindly believe any writer's summary of the data. I need to look at the raw data and make my own conclusion. Maybe that is just me.
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Old 02-23-2017, 08:51 AM   #24
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Originally Posted by target2019 View Post
Since the data in OP is based on personal and business tax filings, it sounds more comprehensive than other reports I have been hearing about.
I believe it only covers one type of retirement savings vehicle (401ks), so that seems like it's not very comprehensive regarding anything but 401k plans.
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Old 02-23-2017, 08:54 AM   #25
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As far as I know 100% participate. Survey of only one but the one person that impacts me.
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Old 02-23-2017, 08:59 AM   #26
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I wonder how many people don't save for retirement because what they make barely covers their living expenses.
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Of course.
That's what most of my former co-workers told me. It never seemed to occur to them to reduce their living expenses, and I never suggested it knowing what their response might be. Most couldn't imagine 'having less,' felt they were entitled to what they had, and more. Most of them made less than I did, yet they had nicer homes, cars and more/newer toys than DW and I. We make our choices, and live with the outcomes?

I had access to the contribution data on all our employees, about 2/3rds didn't participate in our 401k at all, and very few contributed 10% or more. And too many took out "loans" on their 401k's.
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Old 02-23-2017, 09:05 AM   #27
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Yeah, a lot of people live paycheck-to-paycheck. A lot of people carry significant debt, too, so the idea of putting money in a retirement account probably looks impractical to them.
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Old 02-23-2017, 09:18 AM   #28
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Here's some data from Fidelity thru my midicorp chemical company's internal website:

"1 in 6 people contributing to a 401(k) aren't saving enough to get their full company match."

And in the fine print, "Fidelity analysis of 772,000 participants contributing to 401(k) plans that offer an employer matching contribution as of March 31, 2015. "

That was from a campaign to get people to save more, but if you re-arrange the message to 5 in 6 are getting the full company match, it has a more hopeful ring to it. As the old accountant said, "what do you want the numbers to say?"
You can lead a horse to water, and all that...

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And this is why social security will never go away or be diminished, the tax rates for it will just keep climbing because too many people will have nothing else to retire on.
And that makes them count on SS even more and more. Why should they save anything?

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Yeah, a lot of people live paycheck-to-paycheck. A lot of people carry significant debt, too, so the idea of putting money in a retirement account probably looks impractical to them.
Many surely do.

I knew a couple of engineers at megacorp who lived paycheck-to-paycheck. One had the same pay grade I did. He even tried declaring bankruptcy to get out of credit card debts, spent money on a lawyer just to hear him say that it would not work because the judge would garnish a big chunk of his pay, leaving him with less to live on.

I left megacorp to be on my own at the age of 40, so no more 401k after that. I eventually retired at 55, while he still toiled away last I heard, probably till 70 if they let him.

PS. The banks love this guy. He volunteered that his credit card debts were more than $50K, way back then. At 21% APR, that's $875 per month in interest. And that was some time more than 20 years ago.

PPS. What is peculiar about this guy is that he has nothing to show for his spending. No big house, no fancy car, no vacation. Where does his money go? He eats and drinks out a lot, buys a lot of electronic toys, but those should not use up all his money. Maybe his wife's a big spender. Maybe somebody's on drugs. His spending habit would make an interesting study.
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Old 02-23-2017, 09:49 AM   #29
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I family member just got a new job and brought the retirement stuff over for me to look at. If nothing is done about 4% of the salary goes into a delayed compensation plan with a Target fund aimed at the year of retirement. I figure this is done because most people just blow it off figuring that SS will pay their way or they will inherit their Uncle's gold coin collection. (I won' repeat that story.)

I like the comment one woman made about her ex-husband's retirement plan. "He's a waiter." No, she did not mean he would get a job in retirement serving tables in a restaurant. She meant he was waiting for some relative to die and leave him enough money to retire.
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Old 02-23-2017, 09:51 AM   #30
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Why should many people even bother with saving in a 401(k) plan at all?

Where does that kind of thinking come from anyways?

There are many other ways to save for retirement for most people that don't lock up their money. There is quite a lot of confusion about what constitutes "saving for retirement" anyways.

...

And the first linked article does people no great favors. It does NOT EVEN MENTION IRAs and things like the Savers Credit.
This is an important point. My dad worked as a blue-collar laborer for 30+ years before he retired at 65, and he never had access to a 401(k) that entire time. He managed to save some modest amounts in IRAs over the years, but never put a dime into the stock market -- only CDs. Now he lives quite comfortably on just his SS income, supplemented by that small savings nest egg that he never touches unless absolutely necessary (for large medical bills, or a major house repair, etc). I think there are millions upon millions of "non 401(k)" people like my dad out there who are in reasonably good shape when it comes to retirement. They won't be living large, but they won't be starving. They'll be comfortable, and that's pretty much all they aspire to. (Of course, this assumes there aren't substantial cuts to SS coming down the road.)
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Old 02-23-2017, 09:56 AM   #31
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These studies always make me feel smart and lucky. Do feel a little sorry for all those people who haven't got a clue though. Not that sorry though. Keep 'em coming.
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Old 02-23-2017, 10:08 AM   #32
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I family member just got a new job and brought the retirement stuff over for me to look at. If nothing is done about 4% of the salary goes into a delayed compensation plan with a Target fund aimed at the year of retirement. I figure this is done because most people just blow it off figuring that SS will pay their way or they will inherit their Uncle's gold coin collection. (I won' repeat that story.)...
A while back, I read about a movement making retirement savings a default choice, meaning one has to opt out. I do not know if that was made into laws or not.

In several threads, I mentioned the Australian system, which is forced savings like federal and state systems are in the US, but uniformly applied to all workers, and portable from job to job. One can put in more if he likes because the money is his, not put in a common "lock box" like SS.
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Old 02-23-2017, 10:15 AM   #33
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Have not heard anybody making fun of Suze Orman recently. The financial illiterates need to be scolded and yelled at by some authority figures like her. We need more Suzes. The problem remains that the hotshot engineers I described earlier would not listen to Suze, because they thought they were smarter than her.
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Old 02-23-2017, 10:17 AM   #34
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These studies always make me feel smart and lucky. Do feel a little sorry for all those people who haven't got a clue though. Not that sorry though. Keep 'em coming.
I only feel sorry for the ones that want to save more but can't (who do exist). In my experience, most people "know" they should save and invest but choose not to or choose to do so at a pitifully small rate. When they get more income they spend it all and don't even consider doing what they know they should, often until it's too late for the savings to have much of an impact.
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Old 02-23-2017, 10:33 AM   #35
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EDIT: Numbers is hard.

Holy crap, that's insane if only 5% of the workforce is thinking ahead in life.

But that can't be the whole picture, right? There are some places that still offer pensions, and then there's the military with retirement.
Let's invade Canada, Mexico, and anywhere else we can get to without needing too much equipment. Then we'll need more men and women in uniform, and the US retirement situation won't be anywhere near as dire.

Ha
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Old 02-23-2017, 10:36 AM   #36
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I only feel sorry for the ones that want to save more but can't (who do exist). In my experience, most people "know" they should save and invest but choose not to or choose to do so at a pitifully small rate. When they get more income they spend it all and don't even consider doing what they know they should, often until it's too late for the savings to have much of an impact.
Agree. Brings the debate about luck and smarts back into focus, ie the posters on this site: lucky, smart, or a combo? These stories always paint a bleak picture, but somehow people muddle through?
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Old 02-23-2017, 10:38 AM   #37
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Let's invade Canada, Mexico, and anywhere else we can get to without needing too much equipment. Then we'll need more men and women in uniform, and the US retirement situation won't be anywhere near as dire.

Ha
Wouldn't need any more men to invade Canada. Couple hundred thousand troops could easily do it, at least initially.
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Old 02-23-2017, 10:41 AM   #38
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A while back, I read about a movement making retirement savings a default choice, meaning one has to opt out. I do not know if that was made into laws or not.
I don't think it is required by law but many companies have made contributing something from a new employee's paycheck to a 401k plan a default, forcing them to submit paperwork to opt out. My company enacted this 15 years ago, a 1% default contribution as part of the employment package. IIRC it did improve the percentage of 401k participation somewhat, but not significantly.
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Old 02-23-2017, 10:49 AM   #39
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The company 6% matching is what did it for me. In ~25 years my 401k was worth well over 1m.
You can also contribute far more to a 401k than you can to a Roth, you can borrow against it with no penalty, you are protected from claims etc.

So I don't agree with the comment about why should anyone contribute to a 401k. There are tons of reasons to do so even for those with limited income.

But the issue really isn't 401k vs. IRA or savings account or whatever. It's simply that many people want to live beyond their means. The vehicle isn't going to be used no matter what it is.
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Old 02-23-2017, 10:52 AM   #40
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Let's invade Canada, Mexico, and anywhere else we can get to without needing too much equipment. Then we'll need more men and women in uniform, and the US retirement situation won't be anywhere near as dire.

Ha
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Wouldn't need any more men to invade Canada. Couple hundred thousand troops could easily do it, at least initially.
In the most recent trip to Canada, I spent more time at museums in Ottawa, and the Halifax Citadel, and paid more attention to the exhibits, and actually read the narratives (a sure sign of getting older). It appears the Canadians still recollect about the American Invasion of Canada 200 years ago. It worried them so much that they built and rebuilt the Halifax Citadel a few times, each time reinforcing it and making it a better fortress, preparing for an invasion force that fortunately never came.

Or it may just be that Canada has not had many wars on its land, so there are only a few events that they can talk about, and it is not because they still hold a grudge.

I did not go through high school here to know if this invasion is taught in school. One day, I will remember to ask my children.
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