These stories always make me feel a little better LOL
It makes me worry: With so many people unprepared, the government is likely to step in and provide at least minimal funding for these people. That's likely to translate to higher taxes or decreased Social Security payments for those of us who've prepared.
I'm a Mr. Money Mustache follower from time to time (I don't post there, but Mrs. Pete does under the same user name
You're correct, and while I think a bunch of people over there are complete jerks and I'd probably dislike them in real life, they don't whine about making sacrifices in the name of financial stability.
Workers should start saving for retirement from day one of their job, when most people don't have kids and mortgages. When budgeting money, the first thing you pay is yourself, even if it's only $5. You need to take that out first and put into your retirement vehicle of choice and then whatever is left is what you can pay for a mortgage, car, food, ect. Savings shouldn't be leftovers and that's why many have less that 1k for retirement.
Bingo! You begin with the concept that saving is a necessity, and you do it from the very beginning of your professional life. Someone is living well on less than you -- so copy that lifestyle.
You begin with the assumption that you must live on, say, 90% of your take-home pay. When you buy a house, a car, when you plan your children's activities, etc., you do it all assuming that you have only 90% of your take-home pay. This means that you can't go out to eat as often, that you keep your old car an extra year, that you say no to going to the movies on a regular basis, or whatever else works. You never, ever go into debt. It takes planning ahead, but it means you're prepared for retirement AND it means that when the heating oil goes up at the same time your kids all get sick AND the hot water heater goes out, you have money upon which to fall back.
Yes, some people genuinely don't earn enough money, but MOST of the people I know who cry poverty live in nicer houses than I do, spend more on clothes and SmartPhones, etc.
Yep, most 21 year old kids don't have a lot of foresight. 68 is SO FAR AWAY - its unimaginable. And you don't make that much money - and you have so many needs (a car, an apartment, nice clothes, Cabo....)
And then you are a little older and you get married - you realize all those needs you had a few years ago were childish - but your new needs - they are a big deal - a house, furniture, respectable cars......
And then you have kids - and the needs of the house and the furniture plus the diapers, safe cars, daycare, hockey fees.
And then you realize they need to go to college - and well, retirement will have to wait - but by now you realize that 68 is not so far away after all and you start to get nervous.
And they leave home - but now, you don't have time on your side.
But for the few that do - well, I put away a mere 3% of my piddly small income from my first job when I was 21. I got a match on 1/2 of that. That job lasted five years, and when I quit, I moved that money to an IRA - its $78k now.
Yes, I think this is exactly how it happens: No one plans not to save . . . but why not live in the nicer apartment -- you can save later . . . and then you want the new furniture instead of that old hand-me-down sofa -- you can save later . . . and then kids are expensive -- you can save later. And later never comes.
If I've got 500 and i'm putting 5 bucks away that's great but when health care goes up, food cost go up, car insurance goes up but all I still have is 500 bucks. Please tell me where the "leftovers" are?
Let's say you earn $500/week . . . when you're young and just beginning your career, you determine you're going to put away 10%. So you live on $450/week. $5 is ridiculously small. After a year you've saved $600, and after five years you've saved $3000, and it's all subject to the magic of compound interest, so it really grows.
At some point in the future, if your costs go up -- and they always will -- several possibilities exist:
- You're probably not stuck at the same $500 salary at which you began, so hopefully you are able to "keep up with" the increased costs. I understand, however, that doesn't always happen. My salary's been frozen for six years, yet I've continued to save. And I'm a teacher, so I'm not exactly rolling in the dough.
- You cut back. If food is going up, you decrease your intake of soft drinks and junk food. You search out cheaper places to buy food.
- If it's a one-time thing, you dig into your savings; however, if it's a matter of month-to-month living, this isn't an answer.
However, if you've saved nothing and are willing to cut back on nothing, then -- when hard times come -- you are well and truly screwed.
Think back to your younger years.... wasn't there ONE COFFEE a week, one NEW PAIR OF SHOES, one COCKTAIL per week you could have skipped to save that $5 for retirement??? I can say, for myself, that there sure was.... even during my LEANEST years... but at 23 or 25 or even 30 it is hard to be that disciplined.
Yes, those are the kind of things that make the difference between "I can't save anything!" and "With planning, I can do this, even on a low salary."
No, but DW and I did. We have never made 6 figures combined, but always managed to put 15% a year for the past 35 years into retirement.
But, at least with tax deferred retirement plans like 401k's and traditional IRA's we discovered the most of the money we put into retirement was money we would have paid in taxes if we had not had that as a writeoff.
So, if I can't have that money today, at least I will be able to use in when I retire. Far better than uncle sam getting it.
You don't have to watch too many shows with Suze Orman or Gail Vaz Oxlade and see them examine people's finances to see there is almost always money there to be saved.
Yes, I could say the same thing. We
together crossed the six-figure salary mark only in the last 2-3 years. We paid off a mortgage and saved 100% of our kids' college educations while we were earning
significantly less.
I love shows like the ones you described. We haven't seen one yet where the experts looked at someone's budget and said, "Yeah, you don't have any wiggle room." In fact, they choose average couples, and they always find places to save.
it would be interesting to see a study on how current retirees are doing with what they put away-if it's being spent at a more rapid rate than they anticipated. as someone whose health insurance consumes over 50% of their pension, and deals with the same cost of living increases working americans everywhere experience I can say that what I anticipated when I worked as my post retirement income to expense ratio in no way matches my reality.
I'd like to see a study like that. A comparison of how a person who's saved X amount and who lives in a lost cost of living area is doing in retirement VS. how a person with XX amount in a higher cost of living is doing.
No you actually made my point. If 64% of americans are finding it hard to save for retirement. That points to the fact that some thing in the system is skewed.
Actually, I think it means that all too many people are determined to have what they want RIGHT THIS MINUTE, even if it's not in their best long-term interest. I think it means that advertising works well. I think it means that most Americans ignore the things they know full well they should do.
It's like losing weight: Everyone knows exactly how to do it, but not everyone has the discipline to make the choices -- some big, some small -- that are necessary day to day to make it happen.
) And over there its easy to feel like a slacker - those guys are frugal savers all figuring out how to retire early when they only make $60k a year.
When I think of all the money I wasted over the years it's a bit sickening. 
