36% of all Americans have less than $1,000 saved for retirement

[tvguy]

The news is a little better than the headline -- the 36% who said they have less than $1,000 saved were talking about retirement OTHER THAN defined benefit plans, so some of those, particularly the 25% in the 55+ group, may have pensions that weren't included.

Wish it showed the break down of the 55+ group that showed how many were private sector versus public sector workers. These days defined benefit retirement plans are far far more in the public sector. Although, at least in California, the vast majority of public sector workers are retired by 55 unless they are in police or fire services, those folks are usually retired by 50.

 

[powellrj]

The Baby Boomers largely have pensions.

In what world are you living in????? Most of the baby boomers in my area DO NOT have pensions. Sure, they may have had them a few years ago, but those pensions are long gone. The only people I know of now that have a pension are public sector workers.

 

[Colleen27]

Except we aren't talking about having saved $500k - we are talking about not having saved even $1000. For a very few people, that IS out of reach. But it isn't out of reach for 36% of Americans. 54% of which ADMIT they could find $20 a WEEK to save - or could reach that $1000 threshold in a mere year.

I think a lot of people see the "what you should save" number and throw in the towel without even getting started. When you're living on $40K/year and getting retirement advice that recommends $1MM in savings to maintain your standard of living in retirement, it is very easy to become overwhelmed and discouraged and figure you're never going to get there anyway. It seems to me that a lot of people are avoiding the entire issue because it is such a difficult mountain to climb.

In what world are you living in????? Most of the baby boomers in my area DO NOT have pensions. Sure, they may have had them a few years ago, but those pensions are long gone. The only people I know of now that have a pension are public sector workers.

And really no one should be counting entirely on their pensions anyway at this point. Private or public, there's a good chance that pension obligations will eventually be a burden that needs to be shed.

 

[crisi]

Agree with both your points Colleen. And I think college savings is the same "I'll never save $100k per kid, why bother."

But you sure won't do it if you don't save at all - and the money doesn't go poof if you don't hit the magic number. Even if you die before you can use it all - if you have people you care about in live - that money will be there for them. Which doesn't mean you should forgo every pleasure towards retirement....but does mean that you might want to moderate some pleasure now so you can visit your sister in Arizona once or twice or be able to afford to have your walk shoveled so you can stay in your home an extra few years.

 

[cel_disney]

In what world are you living in????? Most of the baby boomers in my area DO NOT have pensions. Sure, they may have had them a few years ago, but those pensions are long gone. The only people I know of now that have a pension are public sector workers.

I am 38, in the private sector, and have a pension in addition to my 401k. I consider it a plus up to my 401k and try to use that as my guide to my expected savings, but I expect to still have my pension even though I don't count it into my magic number for retirement needs.

My company did do away with pensions for employees joining after a certain date though so not everyone who works here has one, but any baby boomers that have been here for their entire career do!

 

[KennesawNemo]

I am 38, in the private sector, and have a pension in addition to my 401k. I consider it a plus up to my 401k and try to use that as my guide to my expected savings, but I expect to still have my pension even though I don't count it into my magic number for retirement needs.

My company did do away with pensions for employees joining after a certain date though so not everyone who works here has one, but any baby boomers that have been here for their entire career do!

I am 36 in a private sector and have a pension and a 401k. I look at my pension as my "traveling to Europe when I retire" money. My goal is to be able live a moderate life on my 401k and IRA alone. Pension would be my fun money.

 

[trinchick]

DH has a pension and works in the public sector. We still both max out our 401Ks (or equivalent) plus contribute the max to Roths for both of us every year. We pay extra on our 15-yr mortgage each month. We are by no means wealthy - DH is public sector; I work 4 days a week. Note that we still qualify for full contributions to Roth to give you an idea of our income.

In our case it's all about priorities. We save for retirement. We save for college. We travel (a lot but sensibly) and give our kids opportunities. We don't drive fancy cars. We don't exceed our grocery budget. We don't eat out more than 2x a month. We don't go crazy at Christmas or buy tons of stuff all year.

We have been fortunate to not have too many rainy days due to illness, layoffs, etc. but fortunately we could withstand them if they were to come.

 

[crisi]

My own experience with pensions - I'm 47 - the "old" end of GenX - my parents are both leading edge boomers.

I had one at my first job, which they disbanded and paid out as a lump sum - you had the option of putting the lump sum into your 401k. I did - but five years with a company when you are 21 - it was maybe $3k.

My father had one - he's a leading edge boomer. He quit that job and was supposed to get a pension from it when he retired. About ten years after he left, he got a lump sum payout (which wasn't much because it was present value for 30 years in the future at some ridiculous interest rate) - but those still working for that company still participated in the pension program. Unfortunately, the company couldn't afford to pay the pensions - my Dad's lump sum payout turned out to be the best of the outcomes.

My uncle had one - he is older than boomers by about five years - it dried up about five years ago long after he retired with a payout of pennies on the dollar from the federal pension guarantee fund - Sorry Charlie. He's around 80 now.

For my grandparents, pensions worked fine - although in both cases my grandmothers (pensionless) outlived my grandfathers and the survivor benefits were much less. For young SAHMs not doing their own retirement saving its important to realize that Social Security survivor benefits are similar - if you don't get in your quarters, and your own social security check is small, your survivor benefits will not be as large as your husband's (probably larger) check. For one of my grandmothers a small survivor pension and a small survivors social security check was poverty level.

My own experience leads me not to trust pensions - if you are treating it as retirement splurge money, thats probably the best way to look at it.

 

[undertheradar]

It is all relative to your personal cost of living. It is far more expensive to live in major metropolitan areas than in small town USA. With college financial aid ending somewhere around the $50k per year household income, many of us are helping our kids get through school without debt. Add to it the "market correction" that wiped out 60% of our 401k, and we are back under $200k towards retirement. Sorry, you only split a dollar 100 ways!

For anyone banking on a pension, time to face the reality that the odds are high it won't be there when you retire.

 

[JanaDee]

It is all relative to your personal cost of living. It is far more expensive to live in major metropolitan areas than in small town USA. With college financial aid ending somewhere around the $50k per year household income, many of us are helping our kids get through school without debt. Add to it the "market correction" that wiped out 60% of our 401k, and we are back under $200k towards retirement. Sorry, you only split a dollar 100 ways!

For anyone banking on a pension, time to face the reality that the odds are high it won't be there when you retire.

DH lost a good chunk of his 401K, too but has since made it back and then some.

 

[barkley]

Wish it showed the break down of the 55+ group that showed how many were private sector versus public sector workers. These days defined benefit retirement plans are far far more in the public sector. Although, at least in California, the vast majority of public sector workers are retired by 55 unless they are in police or fire services, those folks are usually retired by 50.

this is changing. many public sector employees b/c of the changes in California pension laws will be staying in their positions for many years to come.

one factor is how pensions are now determined (used to be able to sell back some accrued time during your last couple of years to bump up your earnings which resulted in a bumped up pension-no longer), another is being able to contract back (much more limited ability to do so), but the biggest factor has to do with health care. when I hired on w/a California county in the 80's, after 5 years you were vested so at 50 you could retire and keep health care at the same self contribution as an active employee. several years down the line they changed vesting w/ continued health care to 15 years, but now (as it's been for several years) health care ends upon retirement. so, unless a person waits until they are medicare eligible they will have to pay fully out of pocket for coverage.

many I worked with who planned to retire around age 60 (it was a rare exception to see someone in my division retire in their 50's) and had been putting money away for retirement found those contributions becoming smaller and smaller as their base incomes were significantly reduced due to wage reductions, unpaid furlough days and massive increases in employee share of healthcare costs. compounded with the same increased costs everyone else who lives there has seen in gas and bridge tolls, many are no longer able to set aside anything.

 

[AZMermaid]

Wow! We are 33 and 34 and have over $150K in our retirement accounts, not counting whatever is in my state pension (teacher). FWIW, our annual income is about $120K and we have two young children who each have college accounts with over $60K so far.

 

[ilovemk76]

I would disagree, retirement savings should never be tapped for a home purchase. Or a car. And even medical expenses in many instances.

But, DW and I are the first in our families to ever have a mortgage. My parents saved and paid $2,000 cash for their first home, which was about 3 months pay at the time.
My FIL was career air force, and always lived on base, so had 25 years to save up for his $12,000 house.

What year was it when houses cost 2k and salaries were 8k? How old we're uour parents?

 

[tvguy]

this is changing. many public sector employees b/c of the changes in California pension laws will be staying in their positions for many years to come.

one factor is how pensions are now determined (used to be able to sell back some accrued time during your last couple of years to bump up your earnings which resulted in a bumped up pension-no longer), another is being able to contract back (much more limited ability to do so), but the biggest factor has to do with health care. when I hired on w/a California county in the 80's, after 5 years you were vested so at 50 you could retire and keep health care at the same self contribution as an active employee. several years down the line they changed vesting w/ continued health care to 15 years, but now (as it's been for several years) health care ends upon retirement. so, unless a person waits until they are medicare eligible they will have to pay fully out of pocket for coverage.

many I worked with who planned to retire around age 60 (it was a rare exception to see someone in my division retire in their 50's) and had been putting money away for retirement found those contributions becoming smaller and smaller as their base incomes were significantly reduced due to wage reductions, unpaid furlough days and massive increases in employee share of healthcare costs. compounded with the same increased costs everyone else who lives there has seen in gas and bridge tolls, many are no longer able to set aside anything.

Yes it is changing for new hires, but those folks won't be retiring for 20 or 30 or more years.

 

[tvguy]

What year was it when houses cost 2k and salaries were 8k? How old we're uour parents?

1950. Dad was 40 and mom 27.

 

[havaneselover]

What year was it when houses cost 2k and salaries were 8k? How old we're uour parents?

Good question. My grandparents bought the house my dad grew up in for $19k in the late '40s. It was a tiny 3 bedroom house in a very small town in Northern Michigan. I really can't imagine what a $2k home bought in the 2nd half of the 20th century.

According to census, the average home price was $19.3k in 1963. Average income was $6,200. That's pretty consistent with the ratios we see today and paying cash would have been next to impossible for most as it is today.

 

[ilovemk76]

1950. Dad was 40 and mom 27.

Internet searches show your numbers are reversed.

 

[Nebraska_Disney]

It is possible to save for retirement and to also have a life while doing so. It does take a budget, it does take priorities, and it does take discipline. My wife is 37 and I am 41. We have over $500K in our retirement funds, which are a mix of our 401K's and Roth IRAs. We have a mortgage and that is our only debt (we owe $150K on a 2.75% note that ends in 12 years). We pay cash for everything, including vacations. We put between 25-30% of our pay into savings each year. We have 2 kids (12 and 9) and each has over $20K in college 529 plans. We both put ourselves through college by working and taking minimum loans which we paid off immediately (5 years) after school was done. We don't make a lot of money, but not living under a mountain of debt helps a great deal. We pay ourselves first every month, if you don't you will find some reason to spend the money. I started my first mutual fund when I was 14 and my wife started her first retirement savings plan at 20. Our goal is to retire between 55 and 60 and not depending on any social security in doing so.

 

[ceecee]

Then you read something like this and realize that WalMart had better open up a lot more stores to hire greeters at.

I was thinking the same thing! It's actually quite frightening, people want everything NOW and don't care much about debt, they get used to spending and all of a sudden the years have gone by and they have no reserves. We have been trying to get DD to always save, hopefully it will sink in when we don't make her do it. What ever happened to starter houses, beater cars, etc.??? Eating out was a treat and no one would ever pay that much for a cup of coffee.

 

[powellrj]

I was thinking the same thing! It's actually quite frightening, people want everything NOW and don't care much about debt, they get used to spending and all of a sudden the years have gone by and they have no reserves. We have been trying to get DD to always save, hopefully it will sink in when we don't make her do it. What ever happened to starter houses, beater cars, etc.??? Eating out was a treat and no one would ever pay that much for a cup of coffee.

I can't find crisi's post to quote, but our walmarts stopped using door greeters 4 or 5 years ago, so now not only will retired folks not get a pension, they can't get a job at walmart!