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

[disney1990]

People are either savers or they are not. People that save, will save no matter how little money they make. They will save that nickle they find on the sidewalk, they will save their change at the end of the week, they will save a dollar a week, if that is all they can afford. But, they will save something.

I was a single Mom, with a car payment and a house payment and I still managed to save -- it was something that was drilled into me from childhood.

 

[Colleen27]

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.

That's my feeling too. My grandfathers both lost significant pensions when the businesses they worked for went under, well after they retired. My mom's state pension is secure (so far) but a couple of her cousins are city of Detroit retirees who will soon be loosing the majority of their retirement income. And making up that income in their late 60s isn't happening. They're just going to have to adjust their standard of living down to what social security alone will pay for.

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.

You have an exceptionally high household income, though - more than twice the national median already and you're still fairly early in your careers. I'd be surprised if any of the <$1000 folks had six-figure incomes. I'd guess most are in the half of the American population with median incomes below 50K.

 

[lauradis]

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.

Those police and fire put away on avg atleast 10 -15 percent of their income into retirement for 25 years to retire at 50 -55

And most of the fireman I know put in 12 percent plus have extra retirement accts that they dump 200 extra on avg a month into. That doesn't include spouses 401k or Ira.

Retirement doesn't happen over night its a long road trip that must be planned and re-planned with lots of dedication to the end results.

 

[supergoofy]

I take these articles with a grain of salt. 1,000 people called and they don't count your house or your pension as income.

Well what happens when I retire and live in an rv full time and rent out my house as an income property? That is income yet they don't count it.

Also if you invest in real estate its not savings until its making money. So for me it would need to be paid off.

 

[AZMermaid]

You have an exceptionally high household income, though - more than twice the national median already and you're still fairly early in your careers. I'd be surprised if any of the <$1000 folks had six-figure incomes. I'd guess most are in the half of the American population with median incomes below 50K.

That is true. I only make $38K as a 7th year teacher (and $150 a week in pocket after my pension is taken out and childcare costs) so it doesn't feel exceptionally high, but you are right, we are fortunate and my husband did a good job of saving before we met and had kids in our late 20's.

 

[crisi]

That is true. I only make $38K as a 7th year teacher (and $150 a week in pocket after my pension is taken out and childcare costs) so it doesn't feel exceptionally high, but you are right, we are fortunate and my husband did a good job of saving before we met and had kids in our late 20's.

Two professional incomes (even if one of them is on the payscale of teaching) makes a huge difference for most people - over one income when it comes to things like being able to save for retirement and college - if you are frugal (its also easy to fall into the 'we make lots of money, lets buy a bigger house, newer cars, private schools for the kids, etc' trap).

Being a SAHM is wonderful (I'm enjoying staying home and homeschooling more than I thought I would) and important, but once you get through the daycare years (when it sometimes is little better than a wash or even a loss), its an expensive choice - and it often shows up in things like the ability to save for retirement.

 

[undertheradar]

Those police and fire put away on avg atleast 10 -15 percent of their income into retirement for 25 years to retire at 50 -55

And most of the fireman I know put in 12 percent plus have extra retirement accts that they dump 200 extra on avg a month into. That doesn't include spouses 401k or Ira.

Retirement doesn't happen over night its a long road trip that must be planned and re-planned with lots of dedication to the end results.

Don't forget to factor in the contracted overtime that those emergency services workers get. There were numerous emergency services workers being paid well over $150k per year with overtime. As for the pensions, look up California County employee pensions. You will find many receiving pensions that exceed $200k per year! People wonder why the public wants to end government pensions, the State of California is a leading example of pensions gone bad.

 

[Viva Las Disney]

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

This is why I prefer having a 401k, at least with a 401k it's my money, it's real, and I'm not dependent on anyone else keeping a promise they will pay in 30 years. I've read articles recently that estimated the unfunded portion on state pensions alone is $2-4 Trillion (with a T)!

It's not limited to public pensions either, my parents had a friend who worked all his life at a steal plant with the promise of a pretty substantial pension, the plant went bankrupt a few years before he was supposed to retire and the pension fund was more or less gone. Rather than receiving the $50-60,000 a year pension he was promised he ended up getting a 1 time payout, fortunately it was still enough to pay off his house and debt but he ended up living on SS.

I can't even imagine how devastating it would be to work 30 to 40 years, all the while looking forward to a comfortable retirement, and then finding out the money isn't there.

 

[crisi]

This is why I prefer having a 401k, at least with a 401k it's my money, it's real, and I'm not dependent on anyone else keeping a promise they will pay in 30 years. I've read articles recently that estimated the unfunded portion on state pensions alone is $2-4 Trillion (with a T)!

It's not limited to public pensions either, my parents had a friend who worked all his life at a steal plant with the promise of a pretty substantial pension, the plant went bankrupt a few years before he was supposed to retire and the pension fund was more or less gone. Rather than receiving the $50-60,000 a year pension he was promised he ended up getting a 1 time payout, fortunately it was still enough to pay off his house and debt but he ended up living on SS.

I can't even imagine how devastating it would be to work 30 to 40 years, all the while looking forward to a comfortable retirement, and then finding out the money isn't there.

I wouldn't turn down a pension, but I'd save my own money as well. The issue is that a lot of public jobs pay less - and often the justification for that included the sweet pension deals - often including medical as someone upthread talked about. So that is less in your paycheck, which means saving on your own for retirement has a burden.

But if someone were to pay me my non-pension salary - or even come close, and put a pension on top of it, I wouldn't say no......

 

[Gumbo4x4]

Two professional incomes (even if one of them is on the payscale of teaching) makes a huge difference for most people - over one income when it comes to things like being able to save for retirement and college - if you are frugal (its also easy to fall into the 'we make lots of money, lets buy a bigger house, newer cars, private schools for the kids, etc' trap).

Being a SAHM is wonderful (I'm enjoying staying home and homeschooling more than I thought I would) and important, but once you get through the daycare years (when it sometimes is little better than a wash or even a loss), its an expensive choice - and it often shows up in things like the ability to save for retirement.

This is us. My wife left her corporate gig to work part time for the school so she'd have more time with the kids. My salary has advanced quite a bit, but it took 7 years before my increases caught up to her decrease. Adjusted for inflation, we're still not there. My wife used to make 70-80% of my salary. In 2013, she made 24% of my salary. Needless to say, we don't save like we used to. The fact that we're paying quadruple for health insurance compare to 10 years ago and no longer getting by with simple co-pays doesn't help either

 

[eliza61]

I wouldn't turn down a pension, but I'd save my own money as well. The issue is that a lot of public jobs pay less - and often the justification for that included the sweet pension deals - often including medical as someone upthread talked about. So that is less in your paycheck, which means saving on your own for retirement has a burden.

But if someone were to pay me my non-pension salary - or even come close, and put a pension on top of it, I wouldn't say no......

Also the issue is a lot of these pension funds were raided by politicians to plug holes in other areas. That's the problem in NJ. The teachers and state workers pension were fully funded up until the 90's, in fact most of them were 125% or more funded. Then a wonderful elected official changed the rules allowing them to "borrow" the money to fill in shortages elsewhere. Now people are mad at the teachers? Really? IMO that's like taking my money out of the bank, borrowing it and then getting pissed because I have the nerve to want it back.

Now I don't know anyone who lost a pension. My dad and my sister both retired as NYC cops. Unless the world starts spinning backwards, their pensions are pretty set. Both retired after 20 years on the force then were still young enough to start 2nd careers. when my dad died, he was collecting a military pension, a nyc pension and a pension from the school district (the last was small). He earned every last one of them. My sister is a retired detective and now is doing her first love, interior design and hardscaping.

I know quite a few folks who lost 1/3 of their 401K in the last crash, a few like myself have recovered but those who had retired or left soon after did not.

It can go either way. I've got a great pension and once again I'm with a company that if it goes under, there will be bigger issues. Now they cut that benefit in 2012 for new employees. so the "youngsters" have to use the 401K

Ironically we have very low participation with the under 35 crowd. I don't think they are dumb or as many here believe too selfish to delay gratification.

I have 3 grad students/young adults. If you asked them (and I did) none of them are saving for retiring. they have money saved but one young lady like you wants to become a sahm in 2 years, another young lady lives with her fiancee who's in law school. all her money is going to saving for a house. The last young man is a newlywed who is quitting in 2015 to take a peace corp job in Africa with his wife, so all their cash is going to paying off school debt. I truthfully think they all are smart intelligent kids


Now me, I stopped contributing last year. mainly because my dh died at 55 after 30 years of saving and not enjoying his money. So LOL, I may regret it when I'm 85 and eating ramien noodles but I've been using my disposable money travelling alot with my sons
This year we're doing disney, greece and vegas. Next year, we're going to try and hit all the national parks in the country.

I sure Suze Orman would disagree.

 

[pryncess527]

Ironically we have very low participation with the under 35 crowd. I don't think they are dumb or as many here believe too selfish to delay gratification.

I have 3 grad students/young adults. If you asked them (and I did) none of them are saving for retiring. they have money saved but one young lady like you wants to become a sahm in 2 years, another young lady lives with her fiancee who's in law school. all her money is going to saving for a house. The last young man is a newlywed who is quitting in 2015 to take a peace corp job in Africa with his wife, so all their cash is going to paying off school debt. I truthfully think they all are smart intelligent kids

I don't think they are dumb or selfish, but I also tend to think if the under 35 crowd really understood the power of compound interest, they might make a different choice. I opened my Roth IRA at 18 because someone took the time to explain to me how much benefit I'd gain from that head start. I've never been able to fully fund my Roth, and admittedly don't put as much in it yearly now as I'd like to due to household expenses -- but I will forever be grateful that someone helped me understand the impact of starting early, I'd be much further behind otherwise. Just diverting a small amount of money from your other goals when you are young can make a HUGE difference later.

 

[eliza61]

I don't think they are dumb or selfish, but I also tend to think if the under 35 crowd really understood the power of compound interest, they might make a different choice. I opened my Roth IRA at 18 because someone took the time to explain to me how much benefit I'd gain from that head start. I've never been able to fully fund my Roth, and admittedly don't put as much in it yearly now as I'd like to due to household expenses -- but I will forever be grateful that someone helped me understand the impact of starting early, I'd be much further behind otherwise. Just diverting a small amount of money from your other goals when you are young can make a HUGE difference later.

LOL, they understand. Look, my job matches dollar for dollar the first 6% in your 401K AND for every year that you put in the full 6% the company gives you an additional 3% bonus on 4/15.

If the idea of 9% free money isn't moving them, compound interest especially with interest rates so low isn't going to sway anyone.

I think when you're young saying "tie up your money for 50+ years" for some "magical" endpoint that they feel they may or may not get to is a hard sell especially when they have so many goals between 28 and 68.

Not right or wrong, just understandable. Now we didn't have roths or any type of ira when I was newly married. My dh and I wanted a house so we saved for that to the exclusion of all else. Would any thing have changed my mind? who knows? like I said, I never would have thought gas would have been 3.50 a gallon.
Heck, would we have made the sacrifices we did had we known some one was going to come down with a terminal illness? who knows.

LOL, I can't figure out where I want to be when I'm 70 and I'm a heck of a lot closer to it than a 30 year old.

 

[trinchick]

I don't think they are dumb or selfish, but I also tend to think if the under 35 crowd really understood the power of compound interest, they might make a different choice. I opened my Roth IRA at 18 because someone took the time to explain to me how much benefit I'd gain from that head start. I've never been able to fully fund my Roth, and admittedly don't put as much in it yearly now as I'd like to due to household expenses -- but I will forever be grateful that someone helped me understand the impact of starting early, I'd be much further behind otherwise. Just diverting a small amount of money from your other goals when you are young can make a HUGE difference later.

When I graduated from college I stumbled upon a book called Get a Financial Life and it had a variety of eye-opening charts that showed the difference between saving early/often vs getting a later start. The figures were staggering and inspired me to start saving right away. I was a saver by nature (a pp made a good point about a lot of this just being personality), but the information in the book really inspired me to think about saving for RETIREMENT specifically - even at age 21 - and not just saving in general.

 

[alymae1010]

If the idea of 9% free money isn't moving them, compound interest especially with interest rates so low isn't going to sway anyone.

If 9% free money and compounding returns won't sway, I don't know what would. I'm not sure where interest rates come in. It's not like you invest retirement money into a local bank savings account that earns .97%. I know my husband was hitting 20% returns on his 401k investments last year.

 

[crisi]

People are motivated by different things - I have a friend whose Dad died young - convinced he'd drop dead of a heart attack, he didn't save because "why bother." Now he is going on 50 and healthy as a horse and saying "oh......"

People have immediate goals....pay down student loans, buy a house - it isn't necessarily all martini bars for people.

People have different priorities - like having their kids when they are younger and then staying home with them - those of us who waited to have kids were maybe better positions to contribute to retirement for those years, but a lot of us faced fertility challenges - and some of us will be 60 when our kids graduate from high school.

 

[Colleen27]

This is us. My wife left her corporate gig to work part time for the school so she'd have more time with the kids. My salary has advanced quite a bit, but it took 7 years before my increases caught up to her decrease. Adjusted for inflation, we're still not there. My wife used to make 70-80% of my salary. In 2013, she made 24% of my salary. Needless to say, we don't save like we used to. The fact that we're paying quadruple for health insurance compare to 10 years ago and no longer getting by with simple co-pays doesn't help either

Us too. I was making about the same salary as DH when I left the workforce to be home with the kids and move to a better school district. DH made up about half the loss over the first 5 years I was home and then lost that much and more to the housing meltdown (he's in construction). Our 2009 income was less than half our 2000 income, and while his business has rebounded some and I've picked up some odds-and-ends income from home we're still not back to where we were 15 years ago income wise. And of course in that time gas and health insurance have both doubled so the money isn't going nearly as far either.

 

[tvguy]

Internet searches show your numbers are reversed.

My parents ages are reversed?

No, numbers are correct. Mom passed away last year and I found the closing papers and their tax returns. Also found a couple of checks for 25 cents my dad wrote to pay parking tickets.

2 years ago this house sold for $9,000.
http://stockton-north.news10.net/news/community/83388-northern-californias-cheapest-house-sells-9000

 

[Viva Las Disney]

I don't think they are dumb or selfish, but I also tend to think if the under 35 crowd really understood the power of compound interest, they might make a different choice.

I think finance in general is an area our schools should focus more attention on.

Hopefully it's better now but when I got out of HS and went to college I didn't have a clue how compound interest worked. Not only was I not saving but I racked up nearly $10,000 in credit card debt by the time I turned 21, I was almost 30 when I finally paid that off.

When I started saving it was because my work offered a 401k seminar and we were shown historical charts showing how saved money doubles every 7 years on average. The example given was putting $5,000 in savings at 30 years old would be worth around $160,000 35 years later at retirement. I signed up that day (about 10 years ago) and have been saving 10% ever since, my goal is to have a minimum of $1.5 million saved when I retire. Even if I never put another penny into my 401k I'll have over a half million at retirement simply from the money I've already saved continuing to compound. That's not a lot when factoring in inflation but it's still a very comforting feeling.

 

[tvguy]

Location is huge difference to in housing costs.
My wife's grandfather lived in this town, Albion, Illinois.

Here is a nice started house in a nice neighborhood for under $30k

http://www.zillow.com/homedetails/475-E-Walnut-St-Albion-IL-62806/119387900_zpid/