The "Retirement Crisis" is worse than we thought

[REWahoo]

Perhaps and Admin could change it?

Yep. Send a PM to one of the mods requesting a new name.

 

[Music Lover]

Yep. Send a PM to one of the mods requesting a new name.

Suggestion:

"The poster formally known as lucky sperm club"??

 

[sengsational]

Presuming Growth Environment

It seems as though all posts (that aren't about our brethren to the north) presumes that "investing is good". Over long periods, it has, of course, been good. But what if you were taught or otherwise have come to think that you might put that money somewhere and when it comes out, through all of those crazy rules, and all of those years of compounded inflation, it won't even buy as much as if you'd simply enjoy the utility of the money straight from your paycheck.

 

[REWahoo]

Suggestion:

"The poster formally known as lucky sperm club"??

Or maybe "LSC."

 

[NW-Bound]

Yes, the (negative) savings rate is well documented and quite sad. I seem to recall in an article I read recently that it was actually positive about 10 years ago during the last housing crisis. People were scared (and perhaps got out of a lousy upside down mortgage by just walking away) and actually saved more than they spent!!!

But the bad times ended, good times came back, and we are back to negative savings...

I read either the same article or a similar one. The public has extremely short memory. They are back to bigger homes and gas guzzlers already.

The flip side is that the Jones' spending will drive up corporate earnings, then the stock price for investors to benefit. I shall not complain.

 

[Music Lover]

It seems as though all posts (that aren't about our brethren to the north) presumes that "investing is good". Over long periods, it has, of course, been good. But what if you were taught or otherwise have come to think that you might put that money somewhere and when it comes out, through all of those crazy rules, and all of those years of compounded inflation, it won't even buy as much as if you'd simply enjoy the utility of the money straight from your paycheck.

I know a few people who have little or no savings as they are relying on a govt. COLA pension for retirement. 60% or 70% is easily doable for many people if the mortgage is paid off, so they've chosen to enjoy their money now instead of later.

 

[Walt34]

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 guess part of it also comes from what the people who surround you do. I had a niece who at the time worked for Ameriprise (hey, it happens in the best of families) who was astonished that we had paid off our house in 14 years by paying extra on the principal. She had never, in her whole life, (then about 40 years) heard of anyone doing that. Her mother was terrible with money and was always up to her eyeballs in debt.

It is a hard truth that we humans are largely the product of our own decisions. But when I encounter articles about people not preparing for retirement, it would be hypocritical to find fault since I was just like them for so long. All I can do is hope that those folks get what they need, whether it's inspiration, a bit of good luck, a kick in the butt or a helping hand, to put themselves in a better spot.

I have to admit I was much like you and didn't give retirement much thought until my divorce from the first wife. At that point I realized that here I am, halfway through what was normally a 25-year career (now it is 20 years) and in 1984 my net worth is about $7,000, and at the time the normal pension was 50% of the last three years of pay. Long story but things turned out much better than that.

I also have to think about how much of it is due to simply being lucky. While my parents were far from wealthy, they did instill in me the values of frugality and work, and I was born into an area that was (and remains) one of the wealthier areas of the country whose population could afford to pay public servants like myself a fair living with a good pension. And a semester at the heavily subsidized community college was at the time I attended downright cheap. Around 1970 or so I remember Mom writing a check for $235 for a 17-hour course load. According to the bls.gov inflation calculator that is now equivalent to $1,470.80. So I had access to opportunities that people living elsewhere simply didn't have simply because of the time and location where I was born.

I was virtually immune from layoffs. At one time in the mid 1970's the County Council was talking about laying off employees, but the next sentence was "police and fire/rescue services are exempt". Whew.

I never got so sick or injured that I couldn't work. That is huge if it happens to you or someone you know.

I'm pretty sure things would have turned out differently if I'd been born in Bangladesh....

I have to admit that if it weren't for a nearly fully-funded DB COLA'd pension plan and subsidized health insurance it is quite likely that at 66 I and DW would still be working out of necessity. Or at least not living nearly as comfortably as we are.

 

[RobLJ]

The War of 1812 isn't emphasized much in the American History curriculum, mostly because we got our ass kicked by the Brits.

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.

 

[NW-Bound]

The main reason I posted that news article was to point out what I highlighted at the end...

I did notice that. But there is more to it than the percentage of retirees in the population. Perhaps the retirees with money have all gone south to Florida?

Sumter County in Florida has 53% of its population over the age of 65. It's the oldest county in the US. Being curious, I looked and saw that it was not at all an affluent county, nothing like spots around Tampa and St. Augustine. But then, income statistics can be misleading too. These geezers do not need as high an income as workers do in order to live comfortably. They are also on Medicare, so the money to pay for medical services is not raised internally. Their income may be low, but they could be doing fine.

 

[audreyh1]

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.

I really think there are a lot of people who struggle with making enough money to meet basic expenses - no room to cut and save. I wasn't talking about the folks living high on the hog who can reduce expenses.

 

[brucethebroker]

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.

I agree.

 

[brucethebroker]

The War of 1812 isn't emphasized much in the American History curriculum, mostly because we got our ass kicked by the Brits.

Until they ran into Gen. Jackson in New Orleans.........

 

[Danmar]

The War of 1812 isn't emphasized much in the American History curriculum, mostly because we got our ass kicked by the Brits.

I think most historians call it a draw. But it sure seems like a huge lost opportunity for the US not to have scooped up Canada. It was really there for the taking. Only a few thousand British regulars, local militias, and most importantly, native allies. In the end, it was the native "Indians" that ended up losing the most.

 

[garyt]

That burning, however, was in direct response to the US burning of the Port of Dover and, less directly, of the government buildings in York. So we can blame it on the Canadians, maybe?

It's funny, but all the Canadians I know think Canadians marched into the US and burnt down the White House. When I tell them it was the British who came in from Canada they don't believe it.

 

[garyt]

I'm pretty sure it's already means tested.

in the sense that it's taxed higher up the tax brackets? I'm talking about you have a certain number of assets so "we" deem you don't need it period.

 

[exnavynuke]

I'm pretty sure it's already means tested.

Currently, the only reduction in SS based on "means testing" is prior to FRA. At FRA, you can earn a million dollars a month and still get your full SS payment. Some discussions over the years have been to reduce or eliminate SS completely for people who "don't need it" based on means testing. I wouldn't be surprised to see such an option being seriously considered in my lifetime.

I know a few people who have little or no savings as they are relying on a govt. COLA pension for retirement. 60% or 70% is easily doable for many people if the mortgage is paid off, so they've chosen to enjoy their money now instead of later.

When I was in my 20's, I "didn't need to save" because I was going to retire from the Navy with full retirement benefits (including medical/dental for life), get a good paying job for the next 20 years, and be set to retire in my late 50's. It was a great plan. I'd be pulling in $27-30k/year before going to work and earning a nice salary at the same time for ~20 years. That would have given me plenty of room to save more than enough to fund a comfortable retirement. I probably still would have decided to retire early as the retirement check alone would have covered all my required expenses and then some.

Then I got a medical discharge and that dream of a retirement check disappeared. Thankfully I get disability from the VA so that makes up some of that lost retirement check, though not nearly all of it. Finding out that military retirement wasn't going to be an option was my "kick in the butt" to start planning to take care of myself financially.

 

[2017ish]

Until they ran into Gen. Jackson in New Orleans.........

Yeah, but the the Treaty of Ghent ending the war had been signed two weeks before the battle began....

 

[imoldernu]

From a broader perspective... a philosophical look at keeping the retirement dream for future generations,

CESJ.org

Not for the faint of heart, but a look at binary economics, capital homesteading, and Louis Kelso's profit sharing.

Not for us, but our kids and their kids.

A "Just Third Way"...

 

[Midpack]

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.

I really think there are a lot of people who struggle with making enough money to meet basic expenses - no room to cut and save. I wasn't talking about the folks living high on the hog who can reduce expenses.

I was not talking about folks living high on the hog, no I thought I was agreeing with you in my earlier post FWIW.

Certainly there are many who struggle financially through little or no fault of their own.

But I've known a lot of people of various means who simply made stupid choices, people I worked with for 18 years. I saw the cars they drove every day, I heard about their lavish vacations, I saw many of their homes, and I heard about the steady stream of toys they bought all the time. Some of them were mid and upper level folks in the org who constantly complained they 'weren't making enough to live.' Yet there were others at the same salary levels and less in the same organization, who made ends meet and steadily accumulated in their 401k's year after year. I was the GM, so I knew everyone's salary and their 401k balances.

 

[NW-Bound]

...But I've known a lot of people of various means who simply made stupid choices, people I worked with for 18 years. I saw the cars they drove every day, I heard about their lavish vacations, I saw many of their homes, and I heard about the steady stream of toys they bought all the time. Some of them were mid and upper level folks in the org who constantly complained they 'weren't making enough to live.' Yet there were others at the same salary levels and less in the same organization, who made ends meet and steadily accumulated in their 401k's year after year. I was the GM, so I knew everyone's salary and their 401k balances.

We will just have to pitch in and share our 401k/IRA with the ones whose retirement funds are, ahem, undersized. To do nothing is being mean and not compassionate.

 

[audreyh1]

I was not talking about folks living high on the hog, no I thought I was agreeing with you in my earlier post FWIW.

Certainly there are many who struggle financially through little or no fault of their own.

But I've known a lot of people of various means who simply made stupid choices, people I worked with for 18 years. I saw the cars they drove every day, I heard about their lavish vacations, I saw many of their homes, and I heard about the steady stream of toys they bought all the time. Some of them were mid and upper level folks in the org who constantly complained they 'weren't making enough to live.' Yet there were others at the same salary levels and less in the same organization, who made ends meet and steadily accumulated in their 401k's year after year. I was the GM, so I knew everyone's salary and their 401k balances.

I didn't think you were agreeing with me because you immediately mentioned your co-workers who clearly could save but didn't.

I just think when a study like this covers a huge part of the workforce, we know there is a significant % of the population that barely gets by economically, so saving is out of the question as funds will go to more immediate needs. So I'm not surprised when such a survey shows low participation.

 

[LOL!]

I learned yesterday from two people that they didn't want to start a retirement account because they didn't want to lock up their money so early in their life. "Oh, I couldn't get at it if I needed to."

They did not know that if they contributed to a Roth IRA that the contributions could be withdrawn without penalty and without taxes at any time. That's an advantage of a Roth IRA over a 401(k).

 

[Chuckanut]

It's funny, but all the Canadians I know think Canadians marched into the US and burnt down the White House. When I tell them it was the British who came in from Canada they don't believe it.

I remember seeing a Canadian movie about a family that was split over getting the British out of Canada. For a while they thought to get American help, but that ended badly for the Canadians. In the end, the family united to get out from the the influence of both saying "First the Americans, then the British".

And, to continue being off topic, a Canadian fellow associated with a local consulate once told me that the only country Canada feared might invade them was the USA. Quite simply, the USA, the world's super power, would never allow another country to invade and conquer Canada. Thus, the USA is the only real threat, small as that might be.

Back on topic, most people I know will have to work to at least 66 or 67 and many will need the to work to 70 before retiring. If I ran SS I would post notices on-line and in public places saying "SS was never meant to give you a comfy retirement, you will need to start saving money. The best time was years ago, the next best time is today."

 

[mystang52]

I learned yesterday from two people that they didn't want to start a retirement account because they didn't want to lock up their money so early in their life. "Oh, I couldn't get at it if I needed to."

They did not know that if they contributed to a Roth IRA that the contributions could be withdrawn without penalty and without taxes at any time. That's an advantage of a Roth IRA over a 401(k).

These people don't appreciate that not easily getting to the retirement account is precisely the point of saving for retirement early. There are some very good humorous commercials, aimed at younger workers, on this from feedthepig.org.
As an aside, I love the discussion about War of 1812. I'm headed to the library to get a book on it!

 

[braumeister]

I think most historians call it a draw. But it sure seems like a huge lost opportunity for the US not to have scooped up Canada. It was really there for the taking. Only a few thousand British regulars, local militias, and most importantly, native allies. In the end, it was the native "Indians" that ended up losing the most.

I blame it on the US being so much smaller then.
Surely one Texas Ranger could have done the trick, if we had only had one.