The Retirement saving shortfall tidal wave

[aja8888]

uhhh...not quite. Maybe the lower end MB's. An S will still run you about $1400 a month. As a rule of thumb, you take the advertised price: "...for only $499 a month...!" and double it.

That's been my experience; my most recent E class lease is $929 a month; advertised at $599

Thanks for the correction, I just threw a guess out there based on the ads on TV.

 

[pb4uski]

....But some some of you guys are really "tough" love. I live in rural MN where there is not a lot of money. A lot of farmers are "rich on paper" but have cash flow problems. I know many people who are "working poor". Mainly young men who didn't really want city life but don't have high value skills. They might work for a local livestock or crop farmer, or at a local body shop,or even at the Menards in town. They marry local girls and have families and are chronically short of money.

These people buy their beer at the store and drink it at home.If they buy coffee it would be a .89 cup at Super America. Their kids wear family hand me downs. Mom doesn't go near a nail salon. I know these people, I've been in their homes and they are not full of stuff.

The kids b-day parties are cake and ice cream for the family, they might go to the local Pizza Ranch on Tuesday nite when kids eat free for a special occasion..their TV is the local UHF which is free. Are people supposed to have no fun in their lives or spend any money on something they think would be fun.

Throwing these people under the bus with someone who has a 175 dollar cable bill, seems a bit unfeeling and kind of smug.

I don't think anyone would throw the people that you describe under the bus for foolish spending even though they are not living below their means... the mystery is why.

You can have a lot of fun in life for things that don't cost much. We did a lot of fishing when I was a kid and had a lot of fun.... kids didn't need a fishing license, we got poles for birthdays or Christmas or hand-me-downs, we dug our own worms in the garden, a pack of hooks and a bobber or two would last us a summer, you get the idea.

You say they didn't want city life... I guess their choice was stay where they were comfortable and accept that they might live in poverty or move outside their comfort zone (be it city or a different part of the country where jobs were more plentiful) for the possibility of prosperity. No matter how you cut it a choice that they made that unfortunately didn't work out for them. If rural MN is anything like rural VT they probably have some carpentry or electrical or plumbing skills that would fetch a good living in other parts of the country if they were willing to move and take some training to get licensed.

 

[Walt34]

That and the BILLIONS of dollars that are spent on psychological warfare to get you to part with your money what is often a false need.

Exactly. One of the more enlightening classes I took in college was one in marketing. The object is to "create value" in the eyes of the customer by any means possible, via packaging, mood lighting, scent, and getting the customer to look at it. A lot of very smart people have spent their entire careers thinking of ways to get people to buy stuff they didn't know they needed.

Everyone knows why the milk and eggs are always at the back of the store - just stand and watch for five minutes (retirees have time to do this) and you'll see that a lot of buying is done on impulse.

More recently books like "Predictably Irrational", Your Money & Your Brain", and "Thinking, Fast and Slow" describe well why most people can't save money. With the exception of the malformed INTJ (I'm one so I can say that) most people simply cannot plan that far ahead. Their brains aren't built for it.

 

[JoeWras]

Or you could *lease* an Acura. Been there, done that.

And yet the wife's favorite car, from back when we both drove, was her much-beloved Hyundai Sonata w/ white leather interior. We took a dealer 'demo' model w/ maybe 5,000 miles on it. Solid car for many years and miles.

Now we have just the one, and it's a very used Scion XB which we affectionately refer to as 'salsa roja' - cost me $4200 and we'll sell it for at least $3k (I hope) when we move back out of country. My next car will be all electric!

And I will notice you just as much as the S-class.

 

[Keim]

First, I will completely agree - Living below your means is necessary and saving is mandatory in the new economy. Now what I really feel.


I am amazed how different the workers are (even my Kids and other relatives) then when I started out. They do not want to move to where the work is, but want to stay close to friends and family. They do not want anything getting in the way of there work/life balance. When my boss would say, here is your airplane ticket to SE Asia for tomorrow, I would say YES SIR.. Kids now will say, sorry, but my wife birthday is next week. I have lived all over the world going were the work and the money is. When I needed a new skill, I learn it. These kid, will not take the time, to move, to spend 6 months to learn a new skill, leave there wife for 6-9 months to do a job. You get paid well for these jobs, and get rewarded over the years.


The new generations want the good paying jobs, without the sacrifices that me other others had to do. My feeling is that they can stay home, have a good work / life balance - do not have work interfere with the lives and go work every day at the $15 an hour job and complain about they have no opportunities.


There are lots of opportunities, they are just not will to grab them and do the job.

My Dad was like that. Anything the company wanted got priority in his life.

I'm the opposite.

I attribute the difference to the change in loyalty companies have for their staff. My Dad could reasonably expect (and in fact achieved) a career with his company, including a plumb retirement. Pretty sweet golden handcuffs.

I get none of that. One company career? Right... Pension? Ha! The good news is I also have no hand cuffs. I'm a great employee, but family life comes first. They're a helluva lot more loyal than the company.

 

[travelover]

I don't know the answers but I feel really virtuous after reading this discussion.

 

[ivinsfan]

I don't think anyone would throw the people that you describe under the bus for foolish spending even though they are not living below their means... the mystery is why.

You can have a lot of fun in life for things that don't cost much. We did a lot of fishing when I was a kid and had a lot of fun.... kids didn't need a fishing license, we got poles for birthdays or Christmas or hand-me-downs, we dug our own worms in the garden, a pack of hooks and a bobber or two would last us a summer, you get the idea.

You say they didn't want city life... I guess their choice was stay where they were comfortable and accept that they might live in poverty or move outside their comfort zone (be it city or a different part of the country where jobs were more plentiful) for the possibility of prosperity. No matter how you cut it a choice that they made that unfortunately didn't work out for them. If rural MN is anything like rural VT they probably have some carpentry or electrical or plumbing skills that would fetch a good living in other parts of the country if they were willing to move and take some training to get licensed.

Many of the families have been living here for a hundred or more years, our church is having a 160th anniver this summer and some families trace back to the founders. I think the real issue is when they were 18-20 they didn't think they would live with a shortage of money, I wouldn't classify it a poverty , every penny is spoken for but they don't go without. They are not miserable by any means. When I say chronic shortage of money I mean discretionary income and retirement savings.

However, they don't seen to have the same standard of living as their parents did, with the same type of jobs and expenses. Basically they need to work as long as they can and keep a tight lid on their expenses. And yes, many of them could go to a different area and make more money but they are very place bound. They are wonderful caring people for the most part and would give you the shirt off their back.

 

[RobbieB]

I read a study a while back that stated that 80% of people are born, live and die in a 100 mile radius. Only 20% have "wanderlust" and followed the old slogan "go west young man"

All of my friends back in Michigan are yup, still back in Michigan.

 

[aja8888]

I read a study a while back that stated that 80% of people are born, live and die in a 100 mile radius. Only 20% have "wanderlust" and followed the old slogan "go west young man"

All of my friends back in Michigan are yup, still back in Michigan.

I went West!

All of my friends and family are still in Connecticut, even though the industrial job base is totally gone from the area where they all live. We (myself and most of them) all worked for decades in the manufacturing plants along the Naugatuck River and now those factories are empty or have been knocked down and the land used for shopping malls or low rent, subsidized apartments. Sad.

In Waterbury, CT, which at one time was known as the Brass Center of the World, the largest employer now is the city.

 

[DrRoy]

So that's wonderful that you have saved up and are so close to ER, now if we knew you income, we'd have some idea of where you sit on the scale of savings.

If you make 250K a year, you can save, still has some money for extras and do fine.

If you make 50K or less suddenly that % doesn't seem so doable..even if you practice LBYM..

I'm not asking for your income level I'm just saying you didn't give us the whole picture. if you make 500K a year and save 30% some here would say you spend too much money

I'm proportionally between the two.

 

[ExFlyBoy5]

The average car loan is now over $30k. That boggles my mind.

US borrowers are paying more and for longer on their auto loans

While at a stop light today, noticed what looked to be a late 20-something next to me in a very expensive Mercedes (S-class, the kind that still have the hood ornament, which got my attention).

How is this possible? I'd never be retired if I decided to do that, even if I got promoted fast in my tech job. It would have killed all my savings.

Do you know the driver or owner of the car? Don't make assumptions because of the driver's age...you just don't know the circumstances.

Of course, that's no fun here when so many folks are better than everyone else...

Sent via mobile device. Please excuse any grammatical errors.

 

[LuckyDog]

Life is full of choices.

Many, BUT NOT ALL, of the people that have no retirement savings are in that position because of life choices. They are in no way bad people. But, failure on the part of some, to get education, relocate if necessary, work in a well paying and in demand field, put people at a big disadvantage.

Life is full of choices.

Many make good money, but do not save. Their indulgence in Starbucks, cable TV, expensive cellphones, cigarettes, lottery tickets, casinos, recreational drugs, too much house, buying on credit etc. make it so that there is nothing to save.

People in large part, make the bed that they sleep in...

 

[DrRoy]

I read a study a while back that stated that 80% of people are born, live and die in a 100 mile radius. Only 20% have "wanderlust" and followed the old slogan "go west young man"

All of my friends back in Michigan are yup, still back in Michigan.

However, unless you are Native American, you are by definition descended from someone who came a long way to get here. The same applies to non Aboriginals in Australia. Of course, some in both places did not come by choice.

 

[purplesky]

The latte phenomena - the $4 cup of joe, $30 nail job...

http://www.nirsonline.org/storage/n...ings Crisis/retirementsavingscrisis_final.pdf

The average working household has virtually no retirement savings. When all households are included— not just households with retirement accounts—the median retirement account balance is $3,000 for all working-age households and $12,000 for near-retirement households. Two-thirds of working households age 55-64 with at least one earner have retirement savings less than one times their annual income, which is far below what they will need to maintain their standard of living in retirement.

It some pretty scary statistics. Oh course I can't help but wondering why? Was income so low saving was and is simply impossible? Is it a question of poor priorities? The study suggest you need at least 8 times your income at retirement. I guess that too would be dependent on how much of your income you save.

In my own case we utilized the timex phenomena
1. We've always saved first then live on the rest
2. We avoided the $4 latte - I just can't do it.
3. We clip coupons and our big deal was pizza and a movie at home.
5. We made thrift a part of our lives...
You probably can guess the rest ...maintained drove cars until they were tired...etc.,

People generally don't talk about money much - other then to complain. I have observed a couple of things that seem to be prevalent in many friends and colleagues.
Spending windfalls whether it is from an inheritance, bonus, tax return, real estate sale...
The zoom zoom factor - buying too much car or truck ... Do you know what a well appointed f150 costs? I couldn't believe it.
Toys and some of the worse ones have a motor on the back - ( I must admit I have a yen to buy a 2 person kayak for the son and I to fish from)

Is it discipline? How terrible it is out there? Is it a cultural thing ...to much tv?
Your thoughts if you care to contribute?



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It's all about steady income through a steady working career. People are cashing out their 401ks in this giganomics economy and they are getting killed with tax and penalties.

People have to survive with that 401k money to make it to their next job.

If you are in the 100k plus income range you can max out a 401k and a Roth without much effort and be glad to lower your tax bill.


If you make 30k to 50k in annual income large 401k contributions are a burden and not happening unless you live at home with your parents.
Throw in student loan debt payments and high rent and a few emergencies like a huge car repair or medical bills and you are stuck in a middle-class debt trap. Credit card debt.

You can buy a bag of Starbucks at Costco and make that last but Costco isn't going to be a good idea if you are always broke and paycheck to paycheck.

Just imagine this retirement savings crisis when the millennial generation gets close to age 60. The majority of the millennial generation will have nothing saved and still be renting and paying student loan payments that almost equal a house payment.

You think its bad now. Yikes.

 

[Hamlet]

These kid, will not take the time, to move, to spend 6 months to learn a new skill, leave there wife for 6-9 months to do a job. You get paid well for these jobs, and get rewarded over the years.

I suspect that the disconnect is here. Given my experiences with Corporate America, I think they would be foolish to believe this without something in writing. Next year, the boss is likely to be a new guy you just met with no understanding of the business or your past accomplishments.

I think the best strategy is to learn a valuable skill and always be willing to jump ship for more money now with an eye towards how the new job will give you skills that will earn you the job after that. Everyone is a contractor these days, whether they think they are or not.

I think the next best strategy is to learn enough skills and save enough money that you are comfortable telling the company "no" when they start trying to eat you alive.

 

[travelover]

.........All of my friends back in Michigan are yup, still back in Michigan.

I'm still in Michigan but I'm trying to leave. Do I get any brownie points?

 

[JoeWras]

Do you know the driver or owner of the car? Don't make assumptions because of the driver's age...you just don't know the circumstances.

Of course, that's no fun here when so many folks are better than everyone else...

Sent via mobile device. Please excuse any grammatical errors.

Of course not. I don't know them. I was admittedly using this experience as a kind of straw man argument.

The person in the S-class may have driving Dad's car to the hospital because he was ill, for all I know. Or that 20-something may have been a trust kid. Or maybe they made a $100M sale and got rewarded. All possible.

The straw man point is that many, many people buy or lease cars way beyond their means.

BTW, back when I lived in the bad old big city, the bad kids used to cruise around looking for parked Mercedes. The kids somehow got wire cutters and would pull up on the hood ornament (it was spring loaded) and cut the spring. So, most Mercedes were missing their ornament. It was always a surprise to see one driving around intact. I have no idea if this is today's design, I just know that most Mercedes don't have the ornament anymore. So when I see one, I notice it!

 

[jazz4cash]

I see a lot of parents that give their kids so much "stuff" it endangers their own retirement and enables an entitlement gene in their children. Drive by the local high school of the the next county over and the cars driven by students are brand new luxury brands much nicer than our cars or the ones driven by the teachers.

 

[nash031]

I see a lot of parents that give their kids so much "stuff" it endangers their own retirement and enables an entitlement gene in their children. Drive by the local high school of the the next county over and the cars driven by students are brand new luxury brands much nicer than our cars or the ones driven by the teachers.

As a future parent (four months or so to go!), the best advice I think we've gotten from a friend was, "Provide for all of her needs; purposefully do not provide for all of her wants."

 

[audreyh1]

This subject comes up often. I think part of it is human brains are generally programmed for short term thinking. There are many INTJs with higher than average long term planning and strategic thinking skills here and the other ER forums, compared to the 2% supposedly in the general population.

I think it's definitely a cultural thing. Several other cultures are big on savings, but in the USA we been programmed to be mindless consumers from very early ages. It takes an effort and some guts to back away, see through the programming and choose not to be that.

 

[bclover]

Wait, there's a national institute of retirement??

 

[bclover]

I see a lot of parents that give their kids so much "stuff" it endangers their own retirement and enables an entitlement gene in their children. Drive by the local high school of the the next county over and the cars driven by students are brand new luxury brands much nicer than our cars or the ones driven by the teachers.

but how can we know that?? lol seriously though, how can you possibly know how they paid for the cars?

I hear this "argument' all the time. seems like everyone "knows"kids riding around in lexus and Mercedes (except our own) yet camrys, civics and corrollas continue to be the highest sellers.

My kid has driven my ride many a day, does that automatically mean they are endangering their own retirement?

I really hate these reports. lol

 

[Shanky]

I think the INTJ's need to tone down their "J".

I find this to be a very informative and useful forum, but the "Judgement" gets too heavy too often.

I expect to be Judged for this comment....


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[braumeister]

I think the INTJ's need to tone down their "J".

I'm trying hard to stay off everyone's lawn.

 

[Keim]

I'm trying hard to stay off everyone's lawn.

Come sit on mine. We can trade homebrews, and enjoy watching the others.