The "Retirement Crisis" is worse than we thought

[UnrealizedPotential]

My personal opinion is everyone will have to take responsibility for themselves and save for retirement. I know some don't make enough money and some people don't understand investing. I get that. I also get that if they don't save for retirement they will work until they die. Hard choice? Absolutely. But nobody said life was easy. It hasn't been for me , but I am still standing. We all have a choice. We may not like the choices we have, but if one does nothing they have still made one.

 

[Winemaker]

We don't have to worry about the others, they'll still be working.
More NYT propaganda:


https://www.nytimes.com/2017/03/03/...king-longer-may-benefit-your-health.html?_r=0

 

[karen1972]

My personal opinion is everyone will have to take responsibility for themselves and save for retirement. I know some don't make enough money and some people don't understand investing. I get that. I also get that if they don't save for retirement they will work until they die. Hard choice? Absolutely. But nobody said life was easy. It hasn't been for me , but I am still standing. We all have a choice. We may not like the choices we have, but if one does nothing they have still made one.

Actually I think this is why Disability is so on the rise. Too many people who can't work any longer into their 60s when doing the hard jobs. I mean you try standing for 8 hours a day when you have bad knees in your 60s and can't afford knee replacement. Health care and Savings is so intertwined. Before ACA, I would constantly hear people counting down the days until they could get on Medicare and get their knees fixed. If they could have afforded it before that, they could have worked more hours, earned more income, put more into SS, likely had some money to save, etc.

 

[Letj]

Well, I think luck is "Yuge". If it was mostly your own efforts that count I must be some kind of "super" guy as I have so much more than the average retired person. I don't believe this. It's mostly luck, not all but mostly.

Absolutely mostly luck for me too. Luck that I was born to frugal parents, luck that I was relatively intelligent and had the opportunity to go to school and luck that I had people who cared enough to make sure I went to school. My goodness, it's even luck that my brain is programmed to save and be future oriented; some people are just not wired this way.

 

[bclover]

I would feel confident definitively stating that somewhere between 0 and 100% of people are saving for retirement.

I bet I could be a professional analyst with that kind of precision.

 

[Teacher Terry]

People that work in the trades wear out their bodies. They also get laid-off a lot.

 

[Ed B]

In my circle of acquaintances there are several examples of both groups. Those who work hard but don't earn enough and those who earn plenty but spend plenty more.

I would prefer to think that "many people don't save for retirement because their chosen lifestyles consume all of what they make."

 

[CardsFan]

People that work in the trades wear out their bodies. They also get laid-off a lot.

Quite true. But they can still save and work to a retirement. I have a buddy who was a union painter. His wife is a Respiritory Therapist. He worked hard, learned to work smarter as he got older, worked side jobs as he could. He retired last year with a decent pension, and started SS. His DW will retire next month with SS and a modest 401k. They will have an equivalent lifestyle to someone here with 1.5 to 2 million in savings.

There are many ways to get to FIRE

 

[audreyh1]

Originally Posted by Amethyst View Post
I wonder how many people don't save for retirement because what they make barely covers their living expenses.

I would prefer to think that "many people don't save for retirement because their chosen lifestyles consume all of what they make."

Why would you "prefer" to think that. What about the rest who don't? Just because some spend all they make on whatever, doesn't mean there aren't plenty more who barely make enough to survive on, let alone save. I suppose I am baffled by what appears to be a dismissal of those living below the poverty line because of those who could save but don't.

Some of the low participation in 401K plans is simply going to be because plenty of US companies who offer 401K plans also have employees who are paid minimum wage, and/or are part time. It's easy to understand how these employees might find it difficult to have any money to set aside in 401Ks, especially if they have families, and are trying to invest in the future of their children.

 

[Fedup]

The government gives the really poor as in making $18000 poor 50c for every dollar they contribute to IRA. Up to $30,000 poor they get 20c for every dollar they contribute to IRA. I know because one of my kid's was in this poor category her first year of starting her business. Perhaps minimum wage poor with self employment tax on top.

 

[Chuckanut]

One reasons to reform SS and keep it robust is that it does require contributions. If through ignorance, bad luck or spendthrift habits somebody does not save 2¢ towards their retirement, at least they have SS and have contributed something to it.

 

[Sunset]

Actually I think this is why Disability is so on the rise. Too many people who can't work any longer into their 60s when doing the hard jobs. I mean you try standing for 8 hours a day when you have bad knees in your 60s and can't afford knee replacement. Health care and Savings is so intertwined. Before ACA, I would constantly hear people counting down the days until they could get on Medicare and get their knees fixed. If they could have afforded it before that, they could have worked more hours, earned more income, put more into SS, likely had some money to save, etc.

Disability is also great, as you don't have to save a dime, spend all your money on fun stuff, then when you realize the end of the line is coming up. Claim SS disability as it pays more than you would get from SS at age 50 -> 63.

 

[karen1972]

The government gives the really poor as in making $18000 poor 50c for every dollar they contribute to IRA. Up to $30,000 poor they get 20c for every dollar they contribute to IRA. I know because one of my kid's was in this poor category her first year of starting her business. Perhaps minimum wage poor with self employment tax on top.

Except my understanding is there is a major flaw in the Savers Credit in that you can't file the 1040 EZ form, you have to file the full 1040 so you can then attach Form 8880. I honestly believe 1000s if not tens of 1000s of people miss out on the savers credit due to that fact. I mean if you are already struggling to make it, paying to have taxes done is not in your budget and honestly you end up paying the tax man what you would be saving in taxes... and I know too many people too intimidated to file the full 1040 form.

 

[MRG]

Disability is also great, as you don't have to save a dime, spend all your money on fun stuff, then when you realize the end of the line is coming up. Claim SS disability as it pays more than you would get from SS at age 50 -> 63.

Except the part about being disabled and all that goes with it.

 

[exnavynuke]

The government gives the really poor as in making $18000 poor 50c for every dollar they contribute to IRA. Up to $30,000 poor they get 20c for every dollar they contribute to IRA. I know because one of my kid's was in this poor category her first year of starting her business. Perhaps minimum wage poor with self employment tax on top.

Single mother of 7 working as a cashier at a fast food restaurant with most of the kids child support in arrears (daddies never paid a dime). Her SS check will cover utilities and not much else most likely and she can't afford to pay her bills some months, much less contribute to an IRA. She's not going to "fall" into some new better paying career in her 40's. She's not smart enough to have been promoted to a management position in fast food after 20+ years at the same place, much less smart enough to figure out a way to a "real" career.

If all the "poor" people were there temporarily or all single without obligations etc, then maybe those contributions would mean something. How many 40 year old's working fast food or part time as a waiter/waitress do you think are aware of the government matching contributions to an IRA they don't have though? I'd be surprised if most people in such a situation knew what an IRA was honestly.

 

[Ed B]

Single mother of 7 working as a cashier at a fast food restaurant with most of the kids child support in arrears (daddies never paid a dime). Her SS check will cover utilities and not much else most likely and she can't afford to pay her bills some months, much less contribute to an IRA. She's not going to "fall" into some new better paying career in her 40's. She's not smart enough to have been promoted to a management position in fast food after 20+ years at the same place, much less smart enough to figure out a way to a "real" career.

If all the "poor" people were there temporarily or all single without obligations etc, then maybe those contributions would mean something. How many 40 year old's working fast food or part time as a waiter/waitress do you think are aware of the government matching contributions to an IRA they don't have though? I'd be surprised if most people in such a situation knew what an IRA was honestly.

All the above applies even to a single mother of 1. My youngest is very similar to this. She had learning disabilities and was able to barely squeeze by the standardized tests. She is not college material but of course we don't say that. We paid for a year of college so she could try.

Not many decent full time jobs for people like my daughter. She is a hard worker who stays employed and gets as many hours as she can. But many big employers who could provide careers at modest but better than min wage pay levels choose 95% part time crowd-sourcing employment strategies to keep payroll down. It is great for shareholder value but sucks for low skill level workers.

 

[Texas Proud]

Except my understanding is there is a major flaw in the Savers Credit in that you can't file the 1040 EZ form, you have to file the full 1040 so you can then attach Form 8880. I honestly believe 1000s if not tens of 1000s of people miss out on the savers credit due to that fact. I mean if you are already struggling to make it, paying to have taxes done is not in your budget and honestly you end up paying the tax man what you would be saving in taxes... and I know too many people too intimidated to file the full 1040 form.

You also cannot get it if you do not owe tax... so you have to have enough income to create a tax... so not for low income people.... I do not think 10s of thousands of people are missing out...

 

[Fedup]

Single mother of 7 working as a cashier at a fast food restaurant with most of the kids child support in arrears (daddies never paid a dime). Her SS check will cover utilities and not much else most likely and she can't afford to pay her bills some months, much less contribute to an IRA. She's not going to "fall" into some new better paying career in her 40's. She's not smart enough to have been promoted to a management position in fast food after 20+ years at the same place, much less smart enough to figure out a way to a "real" career.

If all the "poor" people were there temporarily or all single without obligations etc, then maybe those contributions would mean something. How many 40 year old's working fast food or part time as a waiter/waitress do you think are aware of the government matching contributions to an IRA they don't have though? I'd be surprised if most people in such a situation knew what an IRA was honestly.

I would assume people like you describe above would be permanently on welfare. I know in California they would be.

 

[Fedup]

Except my understanding is there is a major flaw in the Savers Credit in that you can't file the 1040 EZ form, you have to file the full 1040 so you can then attach Form 8880. I honestly believe 1000s if not tens of 1000s of people miss out on the savers credit due to that fact. I mean if you are already struggling to make it, paying to have taxes done is not in your budget and honestly you end up paying the tax man what you would be saving in taxes... and I know too many people too intimidated to file the full 1040 form.

Maybe. But I read it in some forum and told my kid about it.

 

[Fedup]

All the above applies even to a single mother of 1. My youngest is very similar to this. She had learning disabilities and was able to barely squeeze by the standardized tests. She is not college material but of course we don't say that. We paid for a year of college so she could try.

Not many decent full time jobs for people like my daughter. She is a hard worker who stays employed and gets as many hours as she can. But many big employers who could provide careers at modest but better than min wage pay levels choose 95% part time crowd-sourcing employment strategies to keep payroll down. It is great for shareholder value but sucks for low skill level workers.

When my daughter graduated with a college degree there was no job available either. I refused to support her and told her to find a job. She only managed to find one part time paying a bit above minimum wage. Even then she got laid off after 6 months. College degree didn't help either.

 

[exnavynuke]

I would assume people like you describe above would be permanently on welfare. I know in California they would be.

I'm not sure about California specifically, but there are provisions in federal law prohibiting using most forms of welfare for more than set periods of time. I believe most states have similar provisions limiting time on welfare programs as well.

 

[Texas Proud]

Single mother of 7 working as a cashier at a fast food restaurant with most of the kids child support in arrears (daddies never paid a dime). Her SS check will cover utilities and not much else most likely and she can't afford to pay her bills some months, much less contribute to an IRA. She's not going to "fall" into some new better paying career in her 40's. She's not smart enough to have been promoted to a management position in fast food after 20+ years at the same place, much less smart enough to figure out a way to a "real" career.

If all the "poor" people were there temporarily or all single without obligations etc, then maybe those contributions would mean something. How many 40 year old's working fast food or part time as a waiter/waitress do you think are aware of the government matching contributions to an IRA they don't have though? I'd be surprised if most people in such a situation knew what an IRA was honestly.

Since most of these poor people you refer to would be getting the earned income tax credit (which IS a refundable credit, so they get it even when they do not have any tax liability) I doubt that they would have a tax liability.... and as my other post says, if you do not have a tax liability you do not get the savers credit....

BTW, the EITC is more than the savers credit so I would bet your mother would rather get that than the savers credit...

 

[NW-Bound]

Single mother of 7 working as a cashier at a fast food restaurant with most of the kids child support in arrears (daddies never paid a dime)...

I'd be surprised if most people in such a situation knew what an IRA was honestly.

Oh boy! Single mother of 7 (7 as in seven!), sired by multiple men (daddies in plural), would definitely not know anything about IRA. She has to be taught a lot more basic things than what an IRA is.

I don't know anyone would know how to begin teaching her. Should society just take her children from her, so they will have a better future?

 

[Fedup]

Oh boy! Single mother of 7 (7 as in seven!), sired by multiple men (daddies in plural), would definitely not know anything about IRA. She has to be taught a lot more basic things than what an IRA is.

I don't know anyone would know how to begin teaching her. Should society just take her children from her, so they will have a better future?

I would think she would be on welfare too, it depends on how old the kids are.
One young lady in my art class, only has 2 kids and she is on welfare. In fact she is not allow to go anywhere except for the 3-4 hours to my art class. I had to buy art stuff for her.

 

[travelover]

.......... Should society just take her children from her, so they will have a better future?

Sure, look how well that worked out for Native American kids.