Retiring into Poverty

[OldShooter]

Wow....

A similar statistic I recall is that fewer than half of households make enough that they have to pay any income taxes. IIRC that is net of credits like the EIC, but it's still sobering.

 

[armor99]

Way off. If a single person has $30k annual salary their federal income tax would be $1,918 (https://www.dinkytown.net/java/1040-tax-calculator.html)... MN income tax rate is 5.35% of taxable income ahat level which would add another $1k... so less than $3k in total.

Difference is $2,271... so there is most of the source for $200/month of savings.... your miscalculation of income taxes.

DS earns about that but LBYM and easily saves $200/month. He drives a 2016 used car that he got a great deal on and when he had car payments they were about $210/month. He shares a 2-bedroom apt with a roommate... a bit of a dump IMO but it is very affordable. Not what I would want but he makes it work.

So I was curious.... did some poking around about that 42% earning minimum wage. Yeah... that is a bit mis-leading. That is for ALL workers. Including part time workers, and teenagers that still live at home. The number of households total income trying to make it on minimum way is MUCH lower than 42%...

https://howmuch.net/articles/how-much-americans-make-in-wages

 

[susswein]

I've been retired for 16 years, and over that period have never had taxable income over $20k per year. By your standards I retired into poverty. On the other hand, I travel internationally regularly, own 2 vehicles and 3 boats, and drink craft beer. I sure don't feel like I'm living in poverty!

 

[Oakster]

Bingo! The current "crisis" is always the problem. Not saving for the previous 20-40 years has nothing to do with it.

This ^^^^^

 

[Oakster]

Well, life is not fair. Nothing we can do about that.

Regarding "not saving enough" I am not judgemental on that. There are people on subsistence incomes, people who must support other family members (like parents) on their incomes, people with high medical expenses, ... Lots of reasons for that recent observation that 40% of Americans adults couldn't come up with $400 in an emergency. Then there are those who legitimately wasted their money, including sports stars, where I guess we could look down on them. But why? So we can feel superior? Man plans, and God laughs. Most of what DW and I have is probably more due to good luck than to wisdom, starting with being born to middle-class white families.

It doesnt take a lot of money each month to get a million dollars saved up for retirement if you start early. Even if you dont have a million, but half that, you will do pretty well in retirement with social security and your savings. I believe every person (sure there are a few exceptions) in America has the chance to set them selves up for their retirement and to overall be successful. That does not mean retire early, or retire rich etc, but with some thought and care, everyone can get there. Along the way, some have illnesses and tragedies that knock you off track etc but they are rare. I think it is an education issue. Like many problems, there is more of a focus on it right now and the younger generation appears to be wising up and saving early and often. The ones I meet in my workplace are anyway.

Some have a different view on things, and that is fine as well, but it is there choice. Maybe they will come out better in the long run, who knows. The problem comes when people make poor decisions most of their lives and it leaves them in a bad spot.

 

[OldShooter]

... I believe every person (sure there are a few exceptions) in America has the chance to set them selves up for their retirement and to overall be successful. That does not mean retire early, or retire rich etc, but with some thought and care, everyone can get there. Along the way, some have illnesses and tragedies that knock you off track etc but they are rare. ...

I guess that we'll just have to disagree on that. I think many people on this board have led fairly privileged lives and have not been exposed to the full range of Americans. Hence all the sentiment that failure in retirement is a personality fault. I believe that most of us are where we are primarily because of good luck, not exceptional skill, starting (as I said) with what Warren Buffett calls the "ovarian lottery." (https://www.cnbc.com/2018/05/04/warren-buffett-says-the-key-to-his-success-is-luck.html)

 

[aleabo]

I guess that we'll just have to disagree on that. I think many people on this board have led fairly privileged lives and have not been exposed to the full range of Americans. Hence all the sentiment that failure in retirement is a personality fault. I believe that most of us are where we are primarily because of good luck, not exceptional skill, starting (as I said) with what Warren Buffett calls the "ovarian lottery." (https://www.cnbc.com/2018/05/04/warren-buffett-says-the-key-to-his-success-is-luck.html)

Disagree. I came to US at age of 36, penniless, with bad English, no profession (suitable for US). For 3 years worked odd jobs on almost min wage and studied - worked at night- studied at day and vice versa. Borrow money to pay for education, even to buy computer.
Where do you see privileges?. So, If I was able to made myself in US, why person who born here, with native English, having US education cannot?

 

[aja8888]

Disagree. I came to US at age of 36, penniless, with bad English, no profession (suitable for US). For 3 years worked odd jobs on almost min wage and studied - worked at night- studied at day and vice versa. Borrow money to pay for education, even to buy computer.
Where do you see privileges?. So, If I was able to made myself in US, why person who born here, with native English, having US education cannot?

Nice work!

Several of us here made it without any privileged upbringing or family to guide or help.

 

[street]

Nice work!

Several of us here made it without any privileged upbringing or family to guide or help.

Yep, and I'm one of them. I never realized how poor we were till I got out on my own.

 

[aja8888]

[/B]

Yep, and I'm one of them. I never realized how poor we were till I got out on my own.

Same here.

 

[Nemo2]

Same here.

Before I sign up, (and recognizing that secret handshakes are out during Covid), do we get some kind of identifying codes?

 

[aja8888]

Before I sign up, (and recognizing that secret handshakes are out during Covid), do we get some kind of identifying codes?

You don't have the tattoo?

 

[srpuywa]

my wife and i both have military retirements, pretty sizable 401Ks/403Bs. When we start collecting SS we'll get around $4K (SS+Mil) each without touching our retirement investments. I think we'll be OK

 

[maestro]

+1

The article blaming this situation on the Covid recession is ridiculous. Probably a particular view being pushed for I can’t imagine what reason.

+1

 

[OldShooter]

Disagree. I came to US at age of 36, penniless, with bad English, no profession (suitable for US). For 3 years worked odd jobs on almost min wage and studied - worked at night- studied at day and vice versa. Borrow money to pay for education, even to buy computer.
Where do you see privileges?

Congratulations on your good luck, including the intelligence you were obviously born with, and on your hard work. And welcome! Anyone with even a rudimentary understanding of the demographics can see that the US needs a continuous flow of immigrants in order to prosper.

So, If I was able to made myself in US, why person who born here, with native English, having US education cannot?

Well, you're kind of making my point for me. "born here" -- is only a 5% probability. "native English" -- about 20% of the population does not speak English at home. "US education" -- about 20% of citizens over 25 do not have a high school diploma, mostly due to poverty and racism. So the people you identify really have already had quite a bit of luck.

Not to say that hard work is not important, but I will still argue that it is often overrated as a success factor. I think most of us here have both been lucky and have worked hard in various proportions.

 

[MarkiePippo]

My late wife ran a Frugal Board on the internet and use to argue with consumer expert Clark Howard. She was Dave Ramsey before Dave Ramsey. The board had tips like who to call for a plumber, whether a certain car seat was worth it, deals on diapers, local rummage sales, coupon tips and how to not spend money. She had 250 or so active members when she passed. My success financially is due in a large part to her. I worked full time and she stayed home with the kids. We live in a affluent area North of Atlanta in a paid for house with no dept. So having the right "partner in crime" is important. Side note to Chuckanut, use to do a little COBOL, loved it. Most people today do not realize that a lot of banks still have COBOL behind that fancy High Tech web site.

 

[armor99]

Congratulations on your good luck, including the intelligence you were obviously born with, and on your hard work. And welcome! Anyone with even a rudimentary understanding of the demographics can see that the US needs a continuous flow of immigrants in order to prosper.

Well, you're kind of making my point for me. "born here" -- is only a 5% probability. "native English" -- about 20% of the population does not speak English at home. "US education" -- about 20% of citizens over 25 do not have a high school diploma, mostly due to poverty and racism. So the people you identify really have already had quite a bit of luck.

Not to say that hard work is not important, but I will still argue that it is often overrated as a success factor. I think most of us here have both been lucky and have worked hard in various proportions.

I think into everyones life comes luck on occasion, both good, and bad. But my experience has been that the harder I worked, the luckier I seemed to get. I still believe a lot of it has to do with mindset and education. Fortune favors the bold, not the negative minded. As Dave Ramsey once put it. If Eeyore is your spirit animal, you are doing something wrong... [emoji3]

 

[razztazz]

Not to say that hard work is not important, but I will still argue that it is often overrated as a success factor. I think most of us here have both been lucky and have worked hard in various proportions.

Indeed! Certain behaviors correlate with certain outcomes. But in the end success is merely another case of survivorship bias.

 

[mckittri2000]

It's not how much you make, it's how much you spend. Our house and cars are paid off and we live on around 30K/year. We have IRAs, Bonds and cash that we dip into when needed (vacations, cars, health and home repairs). People make it out to be harder than it is. Live within your means and you can get ahead.

 

[tmm99]

Although there are many people in poverty because of unfortunate circumstances, there is also DNA involved in many cases as well IMO. Education does raise one's IQ (though only up to a point), but brains of some people are just not equipped for complex thoughts or reasoning... Nature over nurture. To crawl out of a deep cave, you need the right material...

 

[Sanbenito1]

Agree with the comments on people who are lucky enough to have been born with advantages (good parents, health, race, gender). Many of my friends and family are service workers, cannery workers, etc. They have worked hard all their lives, and stayed in their small towns to be near family. They are not big spenders, but never earned enough on these jobs to put 20% down on a house of their own. Rent is going up faster than their income but in their older years they don’t want to have to move away from friends and family to have cheaper rent, so they sacrifice in other ways (eg, don’t get that missing tooth replaced). It makes me angry that in such a wealthy nation the working class continue to struggle while the rich get richer...

 

[GenXguy]

It makes me angry that in such a wealthy nation the working class continue to struggle while the rich get richer...

That national debt is $27 TRILLION. I wouldn't call that wealthy when drowning in such massive debt.

 

[pdxgal]

Our local area is expensive, but the services seem like they would be really good for low income seniors. Assuming a retiree didn't have subsidized housing, a room here might rent for $1K a month, but then with all the other programs most other expenses would be covered by assistance programs or very low cost.

Reminds me of something I read in an English-language paper in Geneva, Switzerland. The writer was a retired secretary from England who lived off a very modest civil service pension. She chose to live in Geneva because she felt the benefits (great social services, healthcare, etc) were well worth the high COL. She wrote that though she had very little money left at the end of each month, she had everything she needed to enjoy a good life and was happy.

 

[OldShooter]

I think into everyones life comes luck on occasion, both good, and bad. But my experience has been that the harder I worked, the luckier I seemed to get. I still believe a lot of it has to do with mindset and education. Fortune favors the bold, not the negative minded. As Dave Ramsey once put it. If Eeyore is your spirit animal, you are doing something wrong... [emoji3]

Agreed.

Indeed! Certain behaviors correlate with certain outcomes. But in the end success is merely another case of survivorship bias.

Nicely said.

Maybe it would help if I gave an example of what I mean by "luck." I was launched on a successful engineering and management career because my Uncle Pat was an inveterate garage sale shopper. One day when I was in seventh grade Pat spotted an old wooden-cased shortwave radio receiver, brought it home and gave it to me. In the next three or four years I earned a General Class ham radio license and a commercial First Class Radiotelephone License and began working at the airport as an electronic technician. Fast forward, that launch carried me though undergraduate and graduate school employment. In grad school I ended up making friends with a Taiwanese guy named Sing and we played a lot of Gomoku sitting in the back row of our classes. One day he told me that he had been working as a tech for a local megacorp and that they were looking for second tech -- was I interested? So that launched the career. Sure, lots of hard work between seventh grade and the MSEE, but without Pat and Sing my life probably would have been very different and quite possibly not as good.

 

[pdxgal]

Disagree. I came to US at age of 36, penniless, with bad English, no profession (suitable for US)......
Where do you see privileges?.

Are you male? That's a privilege when it comes to earning power, among other things. Are you Caucasian or light-skinned (i.e. not a person of color)? That's also a privilege in many contexts.