Americans Don’t Save for Retirement Because They Don’t Earn Enough Money

[garyt]

K, when a 2 bedroom apartment is 1500-2000 2 casino workers with 2 kids are going to be lucky to eat. Also many apartments make people rent a bigger apartment based on number of kids and sex of kids. So no putting the kids in the bedroom and adults sleeping in the living room.

Not sure where you are but casino workers here make $18 an hour not bad. My wife and I never made $90K total in a year and we managed to save a million by 62.

 

[Koolau]

https://www.barrons.com/articles/why-americans-dont-save-for-retirement-51557061222

"But America’s retirement crisis wasn’t created because of character flaws or personal irresponsibility. Nor can it realistically be fixed by technocratic fixes.

The ugly, unspoken truth is that many people are just not earning enough money. They barely have enough to cover their daily expenses; they don’t have enough left over to be able to save. "

I try never to make blanket statements as there is always an exception. Still, I contend that most folks who do not save for retirement have not made a commitment to do so - nor followed it through if they have committed. It's true that "living the American Dream" is expensive, but there are ways to save. Folks have mentioned cell-phone plans. How about living with room mates for a couple of years - or finding a stable relationship, etc. It's NOT easy, but it is simple. Find a way to spend less than you make and save the difference. I did it when I made 25 cents an hour at age 9 and I still do it though I'm retired.

Honestly, I'm not trying to be critical (in the bad sense of that word.) I'm just saying that most of us can do what we really set out to do. If it means sacrifice, we make the sacrifice. If it means rooming with jerks, we do it. If it means hamburger helper instead of steak, we do it.

Agreed, there are the unemployed, under employed, unemployable. But the stats say now almost anyone can find employment. From there it's a matter of will power. Again, not easy, but simple. Of course, YMMV.

 

[pb4uski]

Not sure where you are but casino workers here make $18 an hour not bad. My wife and I never made $90K total in a year and we managed to save a million by 62.

Yeah... but you were lucky.

Just kidding, but that is what the ignorant might think... I think you just made your own luck and that is why you managed to save a million by 62 despite never making $90k in a year.

FWIW, my DS makes about $25k a year and still manages to save. He has a 2016 car that he bought used... nothing flashy but economical and reliable. He lives in a dump despite our best efforts to convince him to upgrade his living quarters... he shares a 2-bedroom apartment with another guy his age... he could afford a nicer place but doesn't care. Beyond that lives frugally.... I'm guessing that his total living expenses are less than $15k a year.

Slow and steady wins the race.

 

[Teacher Terry]

Gar, casino workers here make 8.25 if they don’t take their crappy HI which doesn’t meet ACA standards or 7.50 if they take it.

 

[razztazz]

A-MEN! A realistic understanding of how things actually work.

Rant On:

Maybe it's because we're all competing with every other worker in the world. There seems to be extreme pressure being placed on employers to lower salary overhead and focus on minimizing the impact of wages on the bottom line. This not only impacts wages, but also long-term benefits like 401Ks, Pensions and bonuses. .... etc etc

Rant off.

 

[HI Bill]

I am waiting for the next person to say "you are so lucky to retire early". NO, luck had nothing to do with it.

The accident of birth meant that you were born in a first world country. You likely had the opportunity to attend college. You were able to live in or easily move to a large town with a solid company who needed your skills. You were born with enough intelligence to obtain and retain your job as a prototype engineer, which many folks are not capable of being. Your health held out for the majority of your work life, allowing you to work that long. You happened to be born in a country with a 401(k) option, that didn't go through a several decades-long recession (like Japan) or hyperinflation (like Mexico).

Lots of luck going on here, IMHO. That said, your accomplishments aren't to be overlooked. I'd suggest reading the book "Guns, Germs, and Steel", if you think you are completely responsible for your position in life.

In my case, I was lucky enough to be born in America, to college-educated parents. I was lucky to be given education, including college. I was lucky to be born with above-average intelligence. I worked hard in college, and harder and more efficiently at my jobs. I was lucky to get my first job in the summer of '91, when almost no one was hiring (part luck, part degree, part work experience on the resume). I was lucky to have a friend who had a friend to was a partner at a company in Hawaii. I was lucky that when I interviewed with the the second time, they hired me (ok, part luck, part skill and past experience). I was lucky to work for an ESOP company for 17 years, even though I didn't know what one was when I started. I (we) have been fortunate with the US stock market's overall returns over the past couple of decades (not exactly luck, but really, we don't have much control over the market's performance). Our choice to invest is not luck.

 

[rk911]

1-stay in school and graduate at least with a HS diploma.
2-delay having children until after marriage.
3-stay married.
4-avoid debt like the plague.
5-live well beneath your means.
6-invest. invest. invest.
7-don’t depend on others or the govt for anything.

i have 3+ years of college (no degree)? wife had a BS that she never used. no kids but married 49-yrs last march. we were both mid-level civil servants, not paid a lot but we had a comfortable life. we each put in more than 35-yrs in those jobs.

i thought we were embarking on the life our parents had. i was brought up thinking that a 5% passbook was good enough. not my wife. in our 12th year of marriage her brother (now deceased) convinced my wife to start investing in mutual funds (unbeknownst to me). i was very surprised and nervous when that first statement arrived. after a year went by i saw the power of the market and the magic of compounding and i was sold! we invested regularly and steadily then and still do today.

we’ve had had no CC debt since year 2 of our marriage and eventually started buying cars for cash. we converted the 30-yr fixed to a 15-yr fixed and paid it off early.

we both retired at 55 with traditional pensions and a net worth in the low 7-figures. we live on our pensions and SS. the post-tax funds and the retirement accounts are gravy. we still live way, way beneath our means, enjoy life and want for nothing (well, maybe the body...specifically the knees...i had 30-yrs ago). RMD’s are coming soon and we’ll figure out what to do with them. we sure don’t need them.

we’re it not for my wife and her brother our story would likely have a very different ending. but i still believe the American Dream is within reach of most if only most would put a little effort into planning. i can only imagine how much better off we’d be if we had started investing right out of the gate.

 

[Cassius King]

Most people earn enough, it's just that lifestyle creep takes over. If they can afford it, they deserve it. Priorities are a big house over a big brokerage account.

I bet if people had to wear there net worth in investable assets on their forehead they would save a lot more. But outside this forum, people will judge your net worth or well being based on the visuals. The house, car, vacations, etc.

 

[Starsky]

That is a wide brush you are using... how did you get it through the door?

It entered small and just got bigger...

 

[rk911]

...But outside this forum, people will judge your net worth or well being based on the visuals. The house, car, vacations, etc.

agree completely. we live in a typical, average 3-BR suburban paid-for split level and drive 8-yr old snd 16-yr old jeeps. we do have a new-er motorhome in which we travel and we have been cash flowing the remodel of our hone for the past 20-yrs. we eat out every now and then but the most expensive place we go is Olive Garden.

a young fellow in IT I used to work with bought a house, truck, car for his mom, boat and threw huge parties every weekend. he was making good $ but he was leveraged to the hilt. like many he soon ran out of OPM (other people’s money) and began sinking. his solution? theft. he started stealing from us. he got greedy and got caught. went to jail. lost most everything and started over with a felony conviction. bad choices. i’m sure to his neighbors he was rich.

 

[Offgrid Organic Farmer]

Americans Don’t Save for Retirement Because They Don’t Earn Enough Money

... The ugly, unspoken truth is that many people are just not earning enough money. They barely have enough to cover their daily expenses; they don’t have enough left over to be able to save. "

It is not an issue of someone 'not earning enough money'.

It is a matter of someone refusing to control how much they spend.

 

[flintnational]

I am generalizing but I see three broad groups that are not saving enough.

1) Those that make enough but choose not to save.
2) Those that do not make enough and can't save. *
3) The truly needy that will need social safety nets.

*I don't agree with everything Dave Ramsey says but I think this is an issue he covers well. He routinely has low income folks call and he indicates they have an "income problem" and not a budgeting problem. He then challenges them to make plans to increase their income. "What is your mid to long range career plan? What training will you get during the next five years? What books will you read?"

I am certain there are folks in America that do not make enough. But, excluding the truly needy, I think most can improve their situation with training/education. And, I still believe the military is a good route for many that need a leg up. Years ago, the GI bill paid for my DD's and FIL's educations and it still pays for education today.

 

[joeea]

The accident of birth meant that you were born in a first world country. You likely had the opportunity to attend college. You were able to live in or easily move to a large town with a solid company who needed your skills. You were born with enough intelligence to obtain and retain your job as a prototype engineer, which many folks are not capable of being. Your health held out for the majority of your work life, allowing you to work that long. You happened to be born in a country with a 401(k) option, that didn't go through a several decades-long recession (like Japan) or hyperinflation (like Mexico).

Lots of luck going on here, IMHO. That said, your accomplishments aren't to be overlooked. I'd suggest reading the book "Guns, Germs, and Steel", if you think you are completely responsible for your position in life.

In my case, I was lucky enough to be born in America, to college-educated parents. I was lucky to be given education, including college. I was lucky to be born with above-average intelligence. I worked hard in college, and harder and more efficiently at my jobs. I was lucky to get my first job in the summer of '91, when almost no one was hiring (part luck, part degree, part work experience on the resume). I was lucky to have a friend who had a friend to was a partner at a company in Hawaii. I was lucky that when I interviewed with the the second time, they hired me (ok, part luck, part skill and past experience). I was lucky to work for an ESOP company for 17 years, even though I didn't know what one was when I started. I (we) have been fortunate with the US stock market's overall returns over the past couple of decades (not exactly luck, but really, we don't have much control over the market's performance). Our choice to invest is not luck.

Well said!

Those who really think "they are all lazy and stupid and spend money foolishly... I am successful solely because of my hard work and my intelligence and my frugal spending", should read this carefully.

I worked very hard to get where I am. In another time, in another place, in another economic environment, it wouldn't have mattered.

 

[Teacher Terry]

Joe, absolutely!

 

[razztazz]

Well said!

Those who really think "they are all lazy and stupid and spend money foolishly... I am successful solely because of my hard work and my intelligence and my frugal spending", should read this carefully.

I worked very hard to get where I am. In another time, in another place, in another economic environment, it wouldn't have mattered.

Even Warren Buffet says something about how he's been successful because his talent, discerning how to allocate capital, happens to be useful in the time and place he's been living. If he had been living in a time and a place where hunting and running fast were better, more important skills, he'd have probably been eating by a saber tooth tiger and not been very successful.

Even the term "invisible hand" so popular with did-it-my-selfers, especially the owning-demographic , directly acknowledges the existence of and subservience to, forces other than one's own abilities, that define outcomes.

 

[Offgrid Organic Farmer]

I am generalizing but I see three broad groups that are not saving enough.

1) Those that make enough but choose not to save.
2) Those that do not make enough and can't save. *
3) The truly needy that will need social safety nets.

I served 20 years on Active Duty in the US Navy. During my career, the entire time I was virtually surrounded by sailors who all insisted that none of us earned enough money to save.

It was pretty much a 100% consensus that servicemembers are underpaid and therefore can not save.

Yet as an E5 I bought a tri-plex property at one duty station. Then a Five-plex property at my next duty station. By the time that I retired [as an E6] we owned four apartment complexes.

 

[Luck_Club]

I bet if people had to wear there net worth in investable assets on their forehead they would save a lot more. But outside this forum, people will judge your net worth or well being based on the visuals. The house, car, vacations, etc.

Dude...So correct. I live in a big hat no cattle area. Everyone trying to one up one another with the latest gizmo. Had a friend facing foreclosure, sending his wife to scrub toilets, borrowing off of in-laws, taking in borders, etc while wearing the latest clothes, remodeling the house, buying expensive catered food for gatherings and spending $50 bucks at starbucks a week!

I was often referenced as being cheap and shabbily dressed. Meanwhile I was buying rentals, for which I was called crazy and an idiot, paying cash for cars and trying everything to minimize my realized income. Now the tables are turning and it is amazing the green envy of those who previously looked down their noses at us, while we enter the next phase of our lives while finally upping our lifestyle and doing the long neglected upgrades.

 

[brett]

Real wages have been falling in America for several years. Clearly not the only reason, but a contributor. I suspect that they will continue to fall, in real terms (after inflation).

https://www.forbes.com/sites/patric...wage-growth-is-actually-falling/#6f0e5d9a7284

 

[Mdlerth]

It's not what you know...

Are you saying that an entry-level union job paid significantly more than an entry-level college-graduate job?

Yep.

 

[SnowBound]

Well said!

Those who really think "they are all lazy and stupid and spend money foolishly... I am successful solely because of my hard work and my intelligence and my frugal spending", should read this carefully.

I worked very hard to get where I am. In another time, in another place, in another economic environment, it wouldn't have mattered.

I'm still mad to find out that my (actually DW's & Offspring's) stupid and lazy money sitting on its rear at Vanguard makes more money than I do. AND I work hard for a bunch of people wearing rose colored glasses saying just go this, and that, AND the other important thing Joe told you about in addition all your other job duties. Stupid money makes more than me, just not right....

 

[Gumby]

I'm still mad to find out that my (actually DW's & Offspring's) stupid and lazy money sitting on its rear at Vanguard makes more money than I do. AND I work hard for a bunch of people wearing rose colored glasses saying just go this, and that, AND the other important thing Joe told you about in addition all your other job duties. Stupid money makes more than me, just not right....

Welcome to the rentier class.

 

[jazz4cash]

Yep.

Yep for me too. My experience was exactly the same as yours starting out. The union jobs eventually took a 30% cut for new hires in the remaining jobs and they were still above the average pay scale for the region.

 

[RISP]

Yep.

Thanks for the clarification. I agree that this doesn't sound sustainable.

 

[cnocmmz]

The daily expense is a big thing.
On TV there was some news item of about 40% of milenials being supported by their parents.
They show 1 guy, sitting on the steps saying how he needs his parent support to pay all his expenses.
As he stares into his apple cell phone
He needs his $120/month unlimited texting/data/phone calls , yet somehow I survive on a $100/yr for phone calls/texting, and use a low cost internet (he could do it for free) for the times he needed internet.

Yeah, it is amazing indeed. Although it was a different world in the 60's when I was a youngster, it does seem much more difficult today with all the social media and instant communication. I always taught my kids, "it is not what you make, it is what you save!" I lived on a much lower salary than most in my military days, married a with 3 children and still managed to save above the average. Fugal, Fugal, Fugal!

 

[Badger]

Yeah, it is amazing indeed. Although it was a different world in the 60's when I was a youngster, it does seem much more difficult today with all the social media and instant communication. I always taught my kids, "it is not what you make, it is what you save!" I lived on a much lower salary than most in my military days, married a with 3 children and still managed to save above the average. Fugal, Fugal, Fugal!

This sounds so much like my father and the way we grew up as a military family in the 50s and 60s. His primary goal was to make sure my mother would be taken care of if he was to go first and the secondary goal was to make sure they were never a financial burden on us children. Both my parents sacrificed (older used car, mom had one good dress for any special occasion, we ate at home with dinners of spaghetti, beans night, meat loaf, etc, clean hand-me-down clothes for me, repair instead of replace,etc.) to make these happen. His favorite saying was "when you get your pay check pay yourself first." I guess it rubbed off and now my wife and I will be able to say the same.



Cheers!