American workers are finding it harder to save for retirement !

[Alan]

You can still make it on one income but you won't "look" successful.

Single income guys also sacrifice their future to look successful. A colleague of mine in the next office who I've known for quite a number of years is a prime example. About 3 years ago we both re-located to the new world wide HQ in Houston - me from Louisiana and him from New Jersey. We are both the same age - early 50's - and DW and I took the opportunity to downsize to a 1400 sq ft apartment, but he super-sized to a 4,000 sq ft McMansion. (promotion = more money so got to have the trappings of success)

He is amazed that I plan to retire in 3 years because even though he would be eligible for ER from the company, he can't afford it. Last week we were talking about energy costs and I mentioned that I have kept track of utility bills for many years and in 2006 the total bill was right at a $1,000 - half what I paid in 1991. He couldn't believe it as he is used to summer bills of over $500/month for electricity alone. I also told him that we are now down to our last 2 electrical appliances that we bought when we first came to the USA on a 2 year contract in 1987. Our coffee maker finally popped its clogs and we had to splash out for a new one which cost less than $15. Owning electrical appliances that are approaching 20 years old is completely foreign to him.

 

[Goonie]

Back then, people didn't make a purchase unless they had the money in hand to pay for it. Today, we figure if we can afford the monthly payment, or defer payment for 6 months, then we can afford the purchase. Just think how often financing is used to sell a product today....you can drive this car off the lot for only $250 a month (oh yeah.....$250 a month for 60 months).

I have had a friend like that. However he DID own his mobile home....only because insurance bought it for him after a storm destroyed his old one....HOWEVER, he DID lose this one too....because of his financial "storm"

Anyway, he ALWAYS bought EVERYTHING on credit! ALWAYS had to have the latest/greatest stereo/TV/VCR, bought nearly every movie that came out on VHS/DVD. He didn't eat at home....ate out ALL the time....and only at the fancier joints. His credit was so bad he couldn't even get a car loan, so he always drove beater-junks.....and dumped money into their repair. He w*rked at an OLD, rundown factory (a.k.a. sweatshop) and made a very poor wage. He had graduated from Devry, but wouldn't look for a job that he could use his training and skill on....because it would be a hassle to even 'look'.

His company revamped production and he REFUSED to do any job other than the one he had been doing.....He was terminated!!! Instead of looking for another j*b, and leaving his pension alone until he hit retirement age, he took a lump-sum payout......and BLEW every red cent!!!

He lost his trailer, had to get rid of most of his investments toys, and had to move into public housing....the "projects".

He has NO savings, NO pension, NO credit....NO LIFE!!! He got himself declared mentally incompetent, so now the gov't.....YOU & ME.... gives him a miniscule monthly check and pays for his housing.

He declares that he "was done wrong" by everybody!!! He claims his dilemma was not HIS fault...that he was just "dumped on". IDIOT!!!!

 

[brewer12345]

Getting into some of the "good stuff" tonight, goonie?

 

[Spanky]

Or maybe this is too close to the truth to be funny.

Okay, I may be nuts. Since they contributed a lot to the economy (from spending) in the past, they deserve support from those who have profited from their extravagant spending. After all, consumer spending accounts for a significant portion of the GDP.

 

[Goonie]

Single income guys also sacrifice their future to look successful.

Been there...Done that!!! Several years ago i was running with some big dogs, and "had" to keep up appearances. New cars/trucks at LEAST every two years!!! Taylored suits/shirts, etc.

One day I looked into a mirror and saw my future.....UH-OH!!!! I ditched all that, and got a grip on reality! The only remnants that I had of THAT life was the car I traded back in October.....at 11 years old!!!

I started LBMM (WAY below), paid off debt, started saving/investing, and other GOOD things!!!

I may not "look" successful, but I'm going to be able to FIRE in just over 11 weeks!!! ("looks" sure can be deceiving!!! )

 

[Alan]

I may not "look" successful, but I'm going to be able to FIRE in just over 11 weeks!!! ("looks" sure can be deceiving!!! )

11 weeks 8) That sounds great.

I have 3 years to go, and having declared this to allow for decent succession planning, the way I "look" now means little to all those around me. (the 6 yr old Corolla, the 1,400 sq ft apartment etc). Most are simply jealous that I can RE at 55 and do all the things I want to do with no worries. I am fortunate that I get on really well with the vast majority of the folks I work with including my boss.

 

[Goonie]

11 weeks 8) That sounds great.

I have 3 years to go, and having declared this to allow for decent succession planning, the way I "look" now means little to all those around me. (the 6 yr old Corolla, the 1,400 sq ft apartment etc). Most are simply jealous that I can RE at 55 and do all the things I want to do with no worries. I am fortunate that I get on really well with the vast majority of the folks I work with including my boss.

The nice part of the 11 weeks is that time is spent training my replacement, and "wondering aimlessly" around our facility. We had our "holiday" party last night and all the big sh*ts shots were there 'glad-handing' and back-slapping. My boss'es boss was yacking at me for a while and asked what I was doing now that my trainee was doing my j*b. I stated very simply "Nothing! I sit in my comfy highback leather chair and read, listen to the radio, surf the 'net ocassionally, and generally just putz around and do nothing useful!......Oh, yeah, and train my shadow!" He said that was good, and that I deserved the rest for the remaider of my time there. I suggested that he inform my boss of that, and he said he already had....YEE-HAA!!!

 

[Helena]

Maybe, maybe not. I am the sole breadwinner for my family and we do not live extravagantly, but there is absolutely no way we would make it on one income of, say, $70k gross. We live in a middle class neighborhood (my neighbors range from the retired to a firefighter/union carpenter to a water plant foreman to a couple of actuaries) in a 2k sq ft. house, with a commuter car and a minivan. Pretty ho-hum stuff. But if you buy a house here you will be paying $350k and up, paying $5k or better in property taxes, etc. Ain't happening on one even fairly healthy 70k salary for a family of four, assuming you don't have some huge pile of capital to fall back on.

I have a 2k sq ft house in a nice middle class neightborhood
and pay $4000 in property taxes.... along with a car payment,
etc... and.. not only am I a single breadwinner who makes
less than 70K.... I have a disabled child !

It can be done.

 

[Delawaredave]

Its a whole book, but briefly they show that the basics (buying a home, family car, etc.) consume most of two incomes for most families, vs. much of one income back in the day. Today's families have relatively little discretionary income andthings get really bad if either earner is out of a job. Sending a second family into the labor force has made families less financially secure.

The bulk of all middle class families are now 2 income:

1. The lower middle class (two wage earners) did it out of necessity
2. The upper middle class (two professional types) did it to buy SUVs and McMansions

Unfortunately neither group above saves anything.

And since both groups above depend on 2 incomes - there's higher risks in that both have to keep working.

I can understand group #1 above - that's just unfortunate reality.

Group #2 on the other hand.....

 

[Alan]

The nice part of the 11 weeks is that time is spent training my replacement, and "wondering aimlessly" around our facility. We had our "holiday" party last night and all the big sh*ts shots were there 'glad-handing' and back-slapping. My boss'es boss was yacking at me for a while and asked what I was doing now that my trainee was doing my j*b. I stated very simply "Nothing! I sit in my comfy highback leather chair and read, listen to the radio, surf the 'net ocassionally, and generally just putz around and do nothing useful!......Oh, yeah, and train my shadow!" He said that was good, and that I deserved the rest for the remaider of my time there. I suggested that he inform my boss of that, and he said he already had....YEE-HAA!!!

I hope I have the same experience when I get down to my last 3 months

 

[2B]

The bulk of all middle class families are now 2 income:

1. The lower middle class (two wage earners) did it out of necessity
2. The upper middle class (two professional types) did it to buy SUVs and McMansions

Unfortunately neither group above saves anything.

And since both groups above depend on 2 incomes - there's higher risks in that both have to keep working.

I can understand group #1 above - that's just unfortunate reality.

Group #2 on the other hand.....

It's frequently repeated that as a culture we have grown our "necessities" to meet our maximum income potential. Women are now in the workforce enmasse so those dollars are there to be "spent." Our houses are larger. Upscale cars are readily available. How can you deprive yourself of the exotic vacations when you work so hard?

If your mindset isn't onto LBYM, you won't. You'll see something you want and go for it if you can make the payment or think you will be able to once the no payment period ends. It's human nature. The financial press feeds it because they are also afflicted with the same problems. The article is a big excuse for how "hard" it is to save for the future. I'm sure the author is also broke with no retirement savings.

 

[Spanky]

The bulk of all middle class families are now 2 income:

1. The lower middle class (two wage earners) did it out of necessity
2. The upper middle class (two professional types) did it to buy SUVs and McMansions

Unfortunately neither group above saves anything.

Both groups are qualified for college financial aids. The second group qualifies for less. After all, it's not so bad. :

 

[BarbaraAnne]

Both groups are qualified for college financial aids. The second group qualifies for less. After all, it's not so bad. :

You are so right! It is really unfair to pay list price for college because one does save and accumulate assets when others squander their income on junk and receive a free or subsidized ride!

Unfortunately, that's the way the game is played today...

 

[lowflyer]

The nice part of the 11 weeks is that time is spent training my replacement, and "wondering aimlessly" around our facility. We had our "holiday" party last night and all the big sh*ts shots were there 'glad-handing' and back-slapping. My boss'es boss was yacking at me for a while and asked what I was doing now that my trainee was doing my j*b. I stated very simply "Nothing! I sit in my comfy highback leather chair and read, listen to the radio, surf the 'net ocassionally, and generally just putz around and do nothing useful!......Oh, yeah, and train my shadow!" He said that was good, and that I deserved the rest for the remaider of my time there. I suggested that he inform my boss of that, and he said he already had....YEE-HAA!!!

Goonie: Enjoy your remaining time. Lots of hanging around, surfing the web, come in late, leave early, etc. It's a good time. I had the pleasure of doing that for three months a few years ago when I left my nice, comfy corporate-type job. Or should I say, they allowed me to leave. Either way, enjoy it.

 

[cute fuzzy bunny]

Or maybe this is too close to the truth to be funny.

Yeah, i'm quite sure that the minute i'm done dodging income taxes and start drawing down my Roth, the US will immediately switch to a consumption/national sales tax. Just to piss me off.

 

[Dog]

Just finished reading this book - Green with envy : why keeping up with the Joneses is keeping us in debt / Shira Boss. Lots of examples why families are in debt and not prepared for retirement. Many people feel intitled to new cars, big homes and fancy vacations. Neighbors and co-workers have nice stuff....so, I should too. I admit that it is a constant struggle for me. I would love to buy a new BMW 330i.....thankfully, I can easily talk myself out of buying one. I'm able to think past instant gratification.

 

[dusk_to_dawn]

I have a 2k sq ft house in a nice middle class neightborhood
and pay $4000 in property taxes.... along with a car payment,
etc... and.. not only am I a single breadwinner who makes
less than 70K.... I have a disabled child !

It can be done.

Ditto. Family of three living on less than $70K, 1850 sq ft house, two cars, middle class neighborhood, $800 in property taxes. Not only can it be done, a family living on less than $70K can live comfortably AND save 20% of their income.

 

[2B]

Yeah, i'm quite sure that the minute i'm done dodging income taxes and start drawing down my Roth, the US will immediately switch to a consumption/national sales tax. Just to piss me off.

I think the goal is to achieve "balance" so no matter what happens you can work to minimize the overall tax bite no matter what gets changed.

 

[cute fuzzy bunny]

True.

Interesting data: http://goofyblog.net/historic-household-income-vs-home-prices/

This confirms what I intuitively believed, that except for the very wealthy, home prices have risen far faster than wages.

Of course, the 'median home' today is a lot larger and contains a lot more technology and complexity than a home built in 1967.

 

[Nords]

This confirms what I intuitively believed, that except for the very wealthy, home prices have risen far faster than wages.
Of course, the 'median home' today is a lot larger and contains a lot more technology and complexity than a home built in 1967.

Must be them there hedonics CPI adjustments again...

 

[genghis]

and licking their genitals as well - apprently dogs do this to take away the taste of the dog food

Note to self - make "spam surprise" for dinner tonite for wife......

 

[cute fuzzy bunny]

Mmm...after many cat and dog food rejections, I was considering for many years the idea of coming out with a line of cat and dog butt flavored pet food. In fact, since the dogs seem particularly interested in the cats back ends, maybe only one flavor needed.

 

[ESRBob]

In Brewer's defense, I live in the same general area and cost of living (NY suburbs) is higher than many (but not all) parts of the country.

I think the trend to upscale our lifestyles is powerful and durable, and if you're going to ER its one of the beasts you need to wrestle with almost daily. Little things keep edging up from 'luxury/splurge' to 'norm' to 'necessity'. The latest one for us is choosing short term parking at the airport vs long-term. We've sort of hit on a formula that 3-day trips we splurge for short term (at an extra $10 a day) to save the extra 40 minutes or so of hoo-ha before and after our trip (when we're all in such great moods...). Longer trips the daily savings make the hoo-ha worthwhile. Still, a few years ago, the short term parking would have seemed like taking a limo, and now its becoming the norm. I suspect everyone has things like this they've got to constantly wrestle with. Maybe having a little extra slack in the budget is a good idea to allow for this lifestyle creep over the years ahead.

 

[Sarah in SC]

Mmmm, yes, lifestyle creep. Even possums like us have experienced this. There is some kind of reward you want for being on track for FIRE and doing it all "right". Ours has taken the form of vacations and a personal trainer, plus new bikes and a new kayak. These are ostensibly "healthy" things, but would never have entered our minds to purchase when we were becoming debt-free. Now that the house will be paid off in a few months, I am worried about that money slipping into lifestyle creep stuff.
Thanks for the book suggestion on Green with Envy, just requested it from the library. I read the 2 Income Trap, but since I don't have kids, I can't really comment, but I do see that just by having kids it would make it harder to deny them certain advantages that you could afford, just to save more money.
I do think the authors gloss over the reality of lifestyle creep and the relative necessity of certain trappings of typical middle class life: Ex. new cars, tv in every room, $$ cable, cell phones for kids, etc. These weren't necessities at one time, but are now.

Sarah

 

[Nords]

I do think the authors gloss over the reality of lifestyle creep and the relative necessity of certain trappings of typical middle class life: Ex. new cars, tv in every room, $$ cable, cell phones for kids, etc. These weren't necessities at one time, but are now.

While lifestyle creep is real, I think a big driver is the declining price of the consumer goods.

If TVs were still hand-wired and cost two months' income, there wouldn't be one in every room of the house. And when cell phones & access cards are given away in cereal boxes, perhaps everyone will finally have one.

"What once were vices now are habits"...