Millions Unprepared For Retirement

[Fermion]

Simpler formulation: "Don't live rich until you are rich."

Corollary: Don't have a coronary trying to get rich before living your life richly

 

[jollystomper]

Not surprising. You can see the 2022 wage statistics here: https://www.ssa.gov/cgi-bin/netcomp.cgi?year=2022
The bottom 22% of workers made less than $15,000 annually in 2022 as recorded by their employers on Form W-2. Good luck building significant savings at that income.

This W2 data does not show the total income picture for an individual. For example, I fit into the "made less than $15K annually" for 2022, as I worked as an election judge and received a W2 income form.

What is more interesting is income provided by tax returns, such as on this page: https://www.irs.gov/statistics/soi-...tical-tables-by-size-of-adjusted-gross-income . This Excel table might be of particular interest: https://www.irs.gov/pub/irs-soi/20in16ag.xls . 202 is the latest year for which they have data. It shows the AGI for all returns broken down by taxpayer age and marital status. From my quick (and not extensive) calculations:

- 22% of all returns had an AGI < $15,000.
- of those returns, more than a third (35%) were from people aged 26 and younger.
- 78% of returns with AGI < $15,000 were single people. That is 17% of all returns.
- of those returns with AGI < $15,000 who were single, 43% were under age 26. That is

One has to consider the age dimension. In younger years the primary source of income is going to be W-2 or cash income like tips. Many of these workers are in their relatively early wage earning years, and that most should over time grow their total income.

 

[MarieIG]

This is a little bit of clickbait. If we consider "workers" to be those between 20 and 64 years old, there are 194.8 million of them in the US. Of that group, 45.9 million (or 24%) are 29 or younger, and 69.2 million (or 36%) are 34 or younger.* I would expect that group to have little to nothing in retirement savings or, indeed, savings of any kind). I know I am not up to the standards of the illustrious members of this board, but when I graduated from law school I was 33 and had no retirement savings. (Yes, the young wife and I saved in our 20s, but we used all the money we saved to pay for graduate school and law school, respectively, and a down payment on a house.)

. . .

Very similar here. We used our savings to pay for my education (and went down to practically zero) and then saved up for a (20%) downpayment - again bringing our savings down to practically zero.

Good luck surviving on $15k a year.


Sucks to be them.

I would not assume that about the lives of other people. If they are healthy and happy? My grandmother really enjoyed her retirement living on social security only. With regard to the "statistics" We have dual incomes, part-timers, young people living with parents or other family members, and the cash economy not to mention a number of benefits available for low income earners.

There is nothing that one can do about others. Some cannot afford to save. Others cannot delay the gratification.

True

Not disputing the notion that it's difficult to build savings from the bottom quartile, but also worth noting those stats do not capture income from the "cash" economy. Many at the bottom quartile paid in hard cold unreported untaxed CASH.

Yes.

We were in debt at age 30. Student loans, car payments, and we rented apartments while getting jobs. The tidal wave in the stock market got us where we are today. And of course, pouring every extra dollar we had into it. We bought our first house with a 9% interest rate mortgage.

Our initial mortgage was also a 9% rate. We did not have student loans due to saving tuition before I started graduate school. However, that also postponed my higher earning years so it was not without a certain cost/ offset but I don't regret it.

If you weren't a borrower, the ZIRP era was not a particularly good one. Maybe it is a character defect, but I have never bought on margin or otherwise borrowed money to invest. Nor have I sold short or traded options or futures.

My mortgage (my only loan - barring credit cards which are paid off immediately) was satisfied well before that time. I am not a fan of debt.

 

[pacergal]

I had forced savings via pension at my job at age 24, but it was inaccessible. Didn't really start saving until thirties-forties, like many here. School payments, young kids/childcare, 1st home at 8.5%, etc.

I do worry a bit about the younger generations.

 

[jimbee]

This W2 data does not show the total income picture for an individual. For example, I fit into the "made less than $15K annually" for 2022, as I worked as an election judge and received a W2 income form.

What is more interesting is income provided by tax returns, such as on this page: https://www.irs.gov/statistics/soi-...tical-tables-by-size-of-adjusted-gross-income . This Excel table might be of particular interest: https://www.irs.gov/pub/irs-soi/20in16ag.xls . 202 is the latest year for which they have data. It shows the AGI for all returns broken down by taxpayer age and marital status. From my quick (and not extensive) calculations:

- 22% of all returns had an AGI < $15,000.
- of those returns, more than a third (35%) were from people aged 26 and younger.
- 78% of returns with AGI < $15,000 were single people. That is 17% of all returns.
- of those returns with AGI < $15,000 who were single, 43% were under age 26. That is

One has to consider the age dimension. In younger years the primary source of income is going to be W-2 or cash income like tips. Many of these workers are in their relatively early wage earning years, and that most should over time grow their total income.

Thanks for the link, interesting data.

 

[aaronc879]

One has to consider the age dimension. In younger years the primary source of income is going to be W-2 or cash income like tips. Many of these workers are in their relatively early wage earning years, and that most should over time grow their total income.

Unless you have a college degree and a professional type job your income may not go up over time. I worked in blue collar manufacturing/warehouse work for most of my jobs and if you left one job you started over at the bottom pay for the next job unlike with most office career jobs. My highest ever pay was when I was 28/29. If I had the physical ability to go back to a factory job my 10 years experience wouldn't matter. I would start over at the starting pay rate for that company.

 

[jollystomper]

Unless you have a college degree and a professional type job your income may not go up over time. I worked in blue collar manufacturing/warehouse work for most of my jobs and if you left one job you started over at the bottom pay for the next job unlike with most office career jobs. My highest ever pay was when I was 28/29. If I had the physical ability to go back to a factory job my 10 years experience wouldn't matter. I would start over at the starting pay rate for that company.

Not necessarily. Go into the trades, which do not require a college degree, and your salary will increase over time as your skills increase.

Or, I should say, you have the opportunity to increase your pay as your skills increase.

 

[Fermion]

Heck, just sign up to be a UPS delivery person. We have had a discussion about the recent negotiations they have made for all in compensation packages worth around $170k.

College is so last decade

 

[NameTaken2]

"Millions Unprepared For Retirement" -some by choice(?)
This is a good read-
Provides perspective regarding a new mindset of living for today and not saving for a house or retirement.

https://www.cnbc.com/2023/10/23/sof...gen-z-millennials-personal-finance-goals.html

These non-savers are probably also goosing the economy by some degree.

 

[athena53]

I've seen retirement-related posts in FB saying it's not worth it to save for LTC because "the government takes all of it when you die". Of course I always point out that "the government" takes only whatever they need to reimburse the taxpayers for LTC expenses if you relied on Medicaid for LTC. My DF, as an example, died after 18 months on self-pay and of course none of his assets were touched after his death.

Sadly, I think that's the mentality of many people when it comes to LTC expenses.

 

[Car-Guy]

I've seen retirement-related posts in FB saying it's not worth it to save for LTC because "the government takes all of it when you die". Of course I always point out that "the government" takes only whatever they need to reimburse the taxpayers for LTC expenses if you relied on Medicaid for LTC. My DF, as an example, died after 18 months on self-pay and of course none of his assets were touched after his death.

Sadly, I think that's the mentality of many people when it comes to LTC expenses.

Now that's a scary thought. Relying on the government for my LTC.

 

[LateToFIRE]

I've seen retirement-related posts in FB saying it's not worth it to save for LTC because "the government takes all of it when you die". Of course I always point out that "the government" takes only whatever they need to reimburse the taxpayers for LTC expenses if you relied on Medicaid for LTC. My DF, as an example, died after 18 months on self-pay and of course none of his assets were touched after his death.

Sadly, I think that's the mentality of many people when it comes to LTC expenses.

Without question, this is the mentality. It's like everybody has a buddy who has a pal who knew a gal where the gubment took the house like it's some kind of ghost horror legend. Drives me nuts. The gubment took care of yur parent and all youz all can think about is the dang house.

 

[Turbo29]

Heck, just sign up to be a UPS delivery person. We have had a discussion about the recent negotiations they have made for all in compensation packages worth around $170k.

College is so last decade

I've known people who have worked at UPS.

Most of those who consider themselves "hard workers" would be chewed up and spit out by a job at UPS.

 

[aaronc879]

Heck, just sign up to be a UPS delivery person. We have had a discussion about the recent negotiations they have made for all in compensation packages worth around $170k.

College is so last decade

You have to work part time for years before getting a full time driving job then another 4 years wage progression to the advertised top pay rate. Then you have to work insanely hard, destroying your body just hoping you can make it until you are eligible for the pension. Not nearly as easy as people make it seem.

 

[aaronc879]

I've known people who have worked at UPS.

Most of those who consider themselves "hard workers" would be chewed up and spit out by a job at UPS.

I could barely handle doing one year on the belt for 20 hours a week when I was in the best shape of my life at age 20. No way I was doing that 7 more years to get a driver job then driving 50 hours a week for another 25+.

 

[braumeister]

You have to work part time for years before getting a full time driving job then another 4 years wage progression to the advertised top pay rate. Then you have to work insanely hard, destroying your body just hoping you can make it until you are eligible for the pension. Not nearly as easy as people make it seem.

I have a friend who retired from driving for UPS. He liked the company a lot, and thought he had a great job. But the other side of it was that he needed two knee replacements from all the up and down, in and out of the truck.

 

[Fermion]

Getting off topic as we always do but I wonder how many white collar workers die early due to cardiac events, blood clots in legs, etc. vs knee replacements by active blue collar workers.

 

[aaronc879]

Getting off topic as we always do but I wonder how many white collar workers die early due to cardiac events, blood clots in legs, etc. vs knee replacements by active blue collar workers.

I would guess more blue collar workers die from cardiac events from overwork than white collar die from cardiac events but that is just a guess.

 

[Turbo29]

I would guess more blue collar workers die from cardiac events from overwork than white collar die from cardiac events but that is just a guess.

Possibly not.

One of the earliest studies on heart disease showed that the drivers of double deck busses in the UK were more likely to have heart attacks than the conductors, who had to go up and down the stairs all day. (Of course it could be the stress of driving or just sitting on their rear all day; sitting for long times is now suspected to be not a good think health-wise.)
London Transport Workers Study

-----

The study compared the rates of coronary heart disease (CHD) between drivers and conductors of the London Transport Executive. The investigators formed the hypothesis: “Men in physically active jobs [conductors] have a lower incidence of coronary heart-disease in middle age men than have men in physically inactive jobs [drivers]. More important, the disease is not so severe in physically active workers, tending to present first in them as angina pectoris and other relatively benign forms, and to have a smaller early case-fatality and a lower early mortality-rate.”

 

[jazz4cash]

This over counts the people who have more than 1 job as it comes from employers, the employer only knows about the job they pay.



Some employers like to have a bunch of part-timers, so they are flexible with work, some of those employees knowing they can't make it on 25 hours per week, get a second job.

I wondered about that but considering the source I believe it uses SSN to count # of workers and not # of jobs.

 

[jazz4cash]

Where do you live? I have seen plenty of older homeless in most of the U.S. cities I have visited and/or lived in.

I was thinking of this also. I can’t say I’ve noticed many but definitely a few. Somewhere I read a surprising # have income from SS or disability, etc. It’s not always lack of income. So many have drug or mental health issues that contribute to their situation.

 

[jazz4cash]

I never maxed out 401k’s, IRA’s, etc. I think some young savers are discouraged if they can’t max out. I always saved 10-15% plus a match of ~4%. We went thru some really tough years but continuing to save at least 10% was motivating.

 

[HawkOwl]

I was thinking of this also. I can’t say I’ve noticed many but definitely a few. Somewhere I read a surprising # have income from SS or disability, etc. It’s not always lack of income. So many have drug or mental health issues that contribute to their situation.

It is not surprising that as the flower child generation advances into old age, the “elderly” exhibit more drug use (with all its effects) than in previous generations.

I also think that heavy substance use combined with life on the streets can make a middle aged individual look far older than they are.

 

[folivier]

My company for 27 years offered 1:1 match for 401K up to 6%. From my first day I always kept that % at around 12%. Free money up to 6%? My kind of deal. We also had a credit union that had low rates for loans and was paying IIRC 8-12% on deposits but had a $12,000 limit. I'd get a call once or twice a year from the CU saying I'd exceeded that amount and they were discontinuing my withdrawals. No! send me the check and continue taking out that amount. That was our play money and to pay off any debts. Unfortunately after the first buyout we lost our CU.
BTW I was one of the very few that was actually using our CU to save. Most other employees were just using the low % rate to borrow money.
And my job was physical, jumping off crewboats carrying toolbags and instruments up and down stairs. I was fortunate to retire at 55 before I blew out my knees.

 

[dknighd]

Millions are unprepared. Millions are prepared. And there are Millions in the middle.


Edit: I like to think I'm prepared, but the future is impossible to predict.