Average retirement savings

[fortwildernessishome]

i suspect there are a good number of dis board participants that are in the same boat retirement savings wise. it only takes reading threads on the dis budget board to realize that many of the vacations people post about are not paid for with disposable income but done either with credit cards they consider the monthly payments for years on end as a normal budget item, or paid for with 'vacation savings' which are significant chunks of money they set aside each month at the expense of shortchanging funding emergency savings, retirement and other vital expenses (when someone is posting of their concern on how they will pay for a less than $1000 emergency household expense and then shares that their normal monthly budget includes several hundreds of dollars earmarked as 'vacations' it's evident that people have different priorities with their spending that may end up biting them in the butt come retirement).

Totally agree! I remember one poster, who was very upset about the shut downs in March and April, repeatedly posted about needing to work to feed her family! She has since posted about a trip to Florida with a second one coming up!

Honestly, if your worried about feeding your family after one missed paycheck, then go to Florida 3-4 months later........well.....makes you stratch your head!

whoops meant to quote a previous poster!!

 

[Turn the Page]

Double post. Weird.

 

[JoeA]

I agree. I've read the threads that you are referring to and there are some real head-scratchers! My overarching point in saying DISBoarders was essentially, exit your own circle and see what some people in America are dealing with on a daily basis. The struggle to pay rent and buy food trumps any thought of planning for the future. I did volunteer tax prep for a few seasons and many of my clients were homeless. People who qualify for the EITC are not concerned with backdoor Roth conversions. They don't even understand how retirement vehicles work, because they have never been educated on basic financial literacy.



Agreed - the national average is even lower than the numbers in post #1.

I've had this conversation with many over the years (bolded part of your post). When I was in HS (about 100 years ago) we had a lesson on how to balance a check book (I think it was home ec or something). I doubt seriously if they even teach that now. Schools should spend time teaching kids "finance 101". And parents, if able, should also include kids in part of the financial discussions.

I know this is a gross generalization, but how many kids today have no clue? They just think you take out a credit card and BAM! New iPhone 12 Max and Playstation whatever shows up courtesy of some dude in an Amazon van.

 

[lanejudy]

Question: Do Americans have mandatory contributions to the government pension plan (social security I think you call it) deducted from their paycheques?

Yes, Social Security tax is withheld from most Americans' paychecks (along with the Medicare tax, combined known as FICA). However, Social Security is not intended to be a sole means of support during retirement years; I wouldn't call it a "pension."

OP's question pertains to additional personal savings for retirement, of which there are several different options both employer-sponsored or private: Individual Retirement Accounts (traditional or Roth), 401K or 403b or similar, company-offered pensions (very rare nowadays), personal investments or savings, etc.

 

[teller80]

Agreed - the national average is even lower than the numbers in post #1.

Where is the best source for this? I'd like to look at the numbers and see where they got them from and what it includes, and does it break it down further. Thank you!

 

[Praying Colonel]

Where is the best source for this? I'd like to look at the numbers and see where they got them from and what it includes, and does it break it down further. Thank you!

https://smartasset.com/retirement/average-retirement-savings-are-you-normal

 

[tvguy]

Well, we're not THAT cheap.

We drive a Ford Flex and Ranger respectively rather than a Suburban and F250. We get a grocery delivery and make most of our meals in the room rather than eating out every meal while at Disney World. We spend about $400 per child for Christmas rather than $2000 like a lot of our peers seem to do. We buy used skis rather than brand new. We very rarely eat out as a family and DH and I have dinner out maybe once a month tops, this year has been much less of course. We don't all have the latest iPhone with unlimited data.

Just different strokes and all that.

LOL Skiing......at least here....is a rich person's sport. $110+ a day per person for lift tickets.

 

[TLSnell1981]

Question: Do Americans have mandatory contributions to the government pension plan (social security I think you call it) deducted from their paycheques?

The contributions are mandatory and SS is considered a supplement..NOT a retirement plan. If both spouses receive benefits and one dies the surviving spouse may keep the higher of the two amounts. If only one receives a check and the other spouse dies the benefit is reduced. If you die before you collect...money stays in the fund unless you have a disabled child or children under 18 years of age. A spouse may received payments as long as they haven't remarried AFTER they reach retirement.

 

[disneychrista]

This statement will show the discrepancy of what people such as this board thinks vs. normal average American workers.

That is why it was part of the “I’m lucky.” I KNOW the average worker is not getting annual raises. I didn’t at my previous employer. Since I’m still in my early years with this “government” job I’m still getting step increases. Once that goes away my increases won’t be much. But even putting away that $250 a year is better than nothing.

 

[TLSnell1981]

That is why it was part of the “I’m lucky.” I KNOW the average worker is not getting annual raises. I didn’t at my previous employer. Since I’m still in my early years with this “government” job I’m still getting step increases. Once that goes away my increases won’t be much. But even putting away that $250 a year is better than nothing.

It takes pennies to make dollars. Something is always better than nothing.

 

[Turn the Page]

LOL Skiing......at least here....is a rich person's sport. $110+ a day per person for lift tickets.

Our local resort is 10 minutes from our front door and the bargain season pass is $270 for one day or two half days a week all winter long. It's certainly not cheap but averaged out over the course of the winter it could be worse.

 

[mjkacmom]

I've had this conversation with many over the years (bolded part of your post). When I was in HS (about 100 years ago) we had a lesson on how to balance a check book (I think it was home ec or something). I doubt seriously if they even teach that now. Schools should spend time teaching kids "finance 101". And parents, if able, should also include kids in part of the financial discussions.

I know this is a gross generalization, but how many kids today have no clue? They just think you take out a credit card and BAM! New iPhone 12 Max and Playstation whatever shows up courtesy of some dude in an Amazon van.

Financial literacy is a mandatory class in my state. Kids really don’t need to learn how to balance a checkbook, almost everything is online, I don’t even balance a checkbook anymore.

 

[neverlandsky]

*Lack of raises and pensions.
*Wages not keeping up with inflation.
*Cost of Living, not too many safe LCOL places anymore.
*Increased medical costs.
*Taxes (Federal, State, Property, & Transportation)
*Fees attached to everything now days (HOA, data usage, local taxes, processing, school, AP exams, banking, yes even retirement savings, etc.)
*Lifestyle creep - wants becoming needs (internet, a smartphone capable of running work apps/emails, schools being digital, etc.)

With Covid a lot of people are taking this time and reevaluating their lives. Multi-generation homes are increasing as well due to last stage of life care being $5K-$10K per month.

 

[QueenIsabella]

Our local resort is 10 minutes from our front door and the bargain season pass is $270 for one day or two half days a week all winter long. It's certainly not cheap but averaged out over the course of the winter it could be worse.

We did even better. When we lived in New Hampshire (and before that, upstate NY), DH would volunteer as a ski patroller. Although he was unpaid, the position included free ski passes, free rentals, and free lessons for the entire family. Every Sunday, he would take the kids--I don't ski, but I would either go with, when we had little ones, or do a mid-day run (resort was 10 minutes away), to pick up any tired/bored kids. By the time we left NH, my oldest was a ski instructor and #2 was a lift attendant, both paid positions. Kid #3 was too young for paid work, but she would pitch in--sweeping off the deck, checking lift tickets--and they would "pay" her in chicken fingers and hot cocoa. Because my kids really benefitted, I insisted that they pitch in to help when and where they could. If the ski patrol was running drills--taking someone down the mountain, lift evacuation, etc.--it would be my kids!

As to the original question--I believe that anyone can save a little money, if they put their minds to it. It just has to be a priority. I graduated college with more loans than anyone else I knew, but still managed to put 3% in a 401k. There are several factors at work--from people preferring to consume (who doesn't?), to not understanding the value of compounding, to not giving much thought to the future. These are not strictly issues with the poor or middle class--how many people that appear to be rich are just living high?

As to what age you should start Social Security--there are many factors that go into this. If you're 62 and desperate, being told to wait until you're 70 isn't helpful. Similarly, waiting until 70 only makes sense if you have a reasonable belief that you'll live a long time--when you die, the payments stop, period. It might make more sense to take SS at 62 and bank it (assuming you have the means to support yourself), rather than waiting. I don't think there's one good answer for everyone.

The other thing that's not mentioned is pensions. I know they're rarer than they once were, but some people still have them. Whether a pension system is solvent can be an issue.

 

[disneydentist]

Income and Poverty in the United States: 2019 (census.gov)

Highlights: household income has ben increasing (though 2019) while those living in poverty has been decreasing. Median household income in 2019 was 68,703.

Are Your Retirement Savings Ahead of the Curve? | 401ks | US News

Highlight: according to Vanguard the average 401K balance at age 65+ is 216720. So it fits with the numbers presented by the OP.

Now, you have to figure in social security and any other income but these numbers make it look like the average American is woefully short of having sufficient retirement savings based a multiple (6-8x) of annual income.

Watching the ticker on CNBC will make you think the economy is doing well. It's not, the market is. An ABC News piece yesterday showed families driving, literally, Lexuses and Range Rovers ling up for miles to get free food for Thanksgiving. That ought to tell us something about savings in America in 2020.

 

[Turn the Page]

We did even better. When we lived in New Hampshire (and before that, upstate NY), DH would volunteer as a ski patroller. Although he was unpaid, the position included free ski passes, free rentals, and free lessons for the entire family. Every Sunday, he would take the kids--I don't ski, but I would either go with, when we had little ones, or do a mid-day run (resort was 10 minutes away), to pick up any tired/bored kids. By the time we left NH, my oldest was a ski instructor and #2 was a lift attendant, both paid positions. Kid #3 was too young for paid work, but she would pitch in--sweeping off the deck, checking lift tickets--and they would "pay" her in chicken fingers and hot cocoa. Because my kids really benefitted, I insisted that they pitch in to help when and where they could. If the ski patrol was running drills--taking someone down the mountain, lift evacuation, etc.--it would be my kids!

As to the original question--I believe that anyone can save a little money, if they put their minds to it. It just has to be a priority. I graduated college with more loans than anyone else I knew, but still managed to put 3% in a 401k. There are several factors at work--from people preferring to consume (who doesn't?), to not understanding the value of compounding, to not giving much thought to the future. These are not strictly issues with the poor or middle class--how many people that appear to be rich are just living high?

As to what age you should start Social Security--there are many factors that go into this. If you're 62 and desperate, being told to wait until you're 70 isn't helpful. Similarly, waiting until 70 only makes sense if you have a reasonable belief that you'll live a long time--when you die, the payments stop, period. It might make more sense to take SS at 62 and bank it (assuming you have the means to support yourself), rather than waiting. I don't think there's one good answer for everyone.

The other thing that's not mentioned is pensions. I know they're rarer than they once were, but some people still have them. Whether a pension system is solvent can be an issue.

I actually started working there part time last year so skiing isn't free but lift tickets are now $3 for the whole family. It's a pretty sweet deal.

 

[AlohaNow]

Watching the ticker on CNBC will make you think the economy is doing well. It's not, the market is. An ABC News piece yesterday showed families driving, literally, Lexuses and Range Rovers ling up for miles to get free food for Thanksgiving. That ought to tell us something about savings in America in 2020.

DH does local food distribution through his Rotary Club and can confirm the types of vehicles coming through the line. Of course, not all, but some higher end. Then again, there is no income verification, the food is just free for whoever wishes to wait in the line.

 

[teller80]

Are Your Retirement Savings Ahead of the Curve? | 401ks | US News

Highlight: according to Vanguard the average 401K balance at age 65+ is 216720. So it fits with the numbers presented by the OP.

To me, Vanguard seems to suggest the average 401k balance is per person, what do you read it as?

 

[lanejudy]

To me, Vanguard seems to suggest the average 401k balance is per person, what do you read it as?

I would expect 401Ks to be considered individual, not per-household. I've never heard of a joint 401K; yes you can name a beneficiary, but it is owned by a single individual.

 

[rigs32]

I'm early 40s. I have a fair bit more put away than average and I'm able to contribute 6% to a 403b and I now max my IRA and Roth contributions ($6k each per year). My mortgage will be paid off in the next year or two and my student loans are either done or I have one more payment. There's been an issue with my payment calculation for Public Service Loan Forgiveness, which is why it's not clear.

I made some conscious choices to get to this point. I'm a lawyer, but I work for the government. I also live in a low cost of living area where salaries for my position are somewhat standardized statewide. I live quite well in my area, but I would be struggling in NYC. Most people who do my job in NYC have wealthy spouses that pay the family bills.

I could make more cash now by going into private practice, but I would lose my generous PTO, good health insurance, and most importantly, my pension. I am vested in the pension, but need 4ish more years to hit the magical 20 years that seriously bumps up your benefit. 14ish more years and I can retire at 57 with a full pension. If I leave after 20 years, I have to wait until 62 or 63 to collect. I would rather wait til 57 and then work if I want to.

I know many people who left for private practice because their family decided more money now was the preferred choice, mainly because they wanted a large home in a particular suburb for their kids. I don't have kids, so I can live in a townhouse in the city and not worry about school district or a yard or the cost of activities and/or daycare. I have a very large park half a block from my house with all sorts of art installations if I want to be outside.