Great Opinion piece on the coming Retirement Crisis.....

[Planogirl]

I feel blessed because we have a sturdy pension that still appears to be strong (and may it stay that way). I know that pensions are sliding into extinction though and 401K's are struggling to break even much less make money. It's a shame.

 

[BikeFan]

Also, we live in a consumer culture. We are hounded on every side to spend, whereas saving is something that isn't rewarded today. So many of my friends complain that they "don't make enough to save", yet they live in nicer houses than I do, eat out more, buy more clothes, etc. Most of my friends (and their kids) have a SmartPhone, take expensive vacations, etc. I know one couple who's flat-out said, "Nope, we're not saving for retirement or our daugther's education. We'd rather cruise 3-4 times a year. We'll just deal with whatever comes later." It's tough to include tomorrow's needs in today's budget, and I think most people just aren't doing it.

This is the truth - I've known a number of people in that situation. They claim they "can't afford to save" but live in huge homes, buy new cars every 2-3 years, etc. I even had a co-worker tell me that, and then her family had an in-ground swimming pool installed for ~$50K! Too many Americans would rather just live for today, and pretend tomorrow will never come. I'm driving a 15 year old economy car and expect to have close to a million saved for retirement, but it appears that sort of behavior is rare.

 

[Ginny Favers]

No company match, but that doesn't mean you can't save. I'm a SAHM and have an IRA.

I'm not saying that moving jobs constantly (like many do these days) makes it impossible to save, it makes it harder to save. There are so many things to think about when leaving a job and starting a new one, only a part of it being retirement, that if you are doing it every 2 to 3 years, like my husband and I do, it's not as easy as if you were working at a job for 30 or 40 years and consistently saving and getting a company match.

 

[Colleen27]

This is the truth - I've known a number of people in that situation. They claim they "can't afford to save" but live in huge homes, buy new cars every 2-3 years, etc. I even had a co-worker tell me that, and then her family had an in-ground swimming pool installed for ~$50K! Too many Americans would rather just live for today, and pretend tomorrow will never come. I'm driving a 15 year old economy car and expect to have close to a million saved for retirement, but it appears that sort of behavior is rare.

I think this is very much a perception dictated by our own socio-economic position. I know a lot of people who say they can't afford to save, and I believe them. They're trying to make ends meet on 30-40K/year while health insurance, food, and energy prices go up while pay is frozen and hours/overtime cut, and they're driving 10 year old cars just to get by. There's just nothing leftover to save for that demographic and I think the people who write the articles and discuss the issues tend to forget just how many Americans spend the bulk of their working years in a legitimately paycheck-to-paycheck income bracket.

 

[Zhoen]

A guaranteed rate of return? I'd like one of those!!! (other than zero.)

Honestly, I think about this a lot... My parents are definitely in the 75% and continuing to make choices that scare me. My husband and I are thinking that we'll end up getting a MIL-suite on our next house, because we have a child who may need guardianship all of her life (maybe not, hope springs eternal!!!) but we are realistic that one of both of my parents may end up living there for a long time. All of my grandparents lived into their 70s, 3 into their 80s, I have a great aunt and great uncle who are in their late 80's (and self-sufficient, believe it or not!) and my great-grandmother lived to 99...

I think we're going to see a return to the more traditional multi-generation homes, I don't see another way. Not everyone can afford to live in a retirement community, graduating to assisted living, graduating to full-care and hospice.. it's too expensive, and the government can't afford it either...

As much as I don't look forward to the sandwich years, I'm already there in a lot of ways, so honestly I'm just hoping we can afford a separate suite for them, not just "a room."

So we are trying to save for our retirement, plan for elder care, raise two children with a third in college, and plan for a special needs trust for the sick one... I'd love to believe social security will really pay out the money they say they will, but it doesn't seem very likely. It's sad that despite all that, when the market is having a good day, I'm doing better on retirement than the 75%

No, it's not sad... it's terrifying...

 

[BubMunkeyBles]

I'm glad we don't have to worry about it as much. We have about $20,000 in TSP and my DH will get his military pension. Our biggest debate is whether he should stay an extra 10 years to get a bigger pension check (we're leaning towards staying).

I'm glad that both sets of our parents have planned well. My Dad has always gotten a good match rate working for the state of Florida and has put in a ton for retirement and his parents have just always lived really modestly. They own their land and house and have money socked aside. They're only in their 50s so they still have time to save too.

 

[2TxAgs]

Only 25% of Americans have more than 30k saved for retirement. And yet, 52% of us believe we will live comfortably in retirement. There's some disconnect!

 

[bettymae1121]

And it's only going to get worse. How many laid off people in the last 4 years had to stop saving for retirement, and probably raided the 401k just to keep their heads above water? How many of them took huge paycuts when they did find work again? How many of them declined to contribute to their new job's 401k plan in order to recover from being jobless for upteen months? The last four years did more than just wipe out half the value of our 401k's, it prevented a lot of people from saving anything at all, and spending down what little they might have had.

My best friend quit her teaching job in FL to move back to IL to be closer to family just before the economy blew up. She's a grade school teacher and never thought it would be hard to find a job in IL. She's coming up on being unemployed for 4 years now. I don't think she was vested in her FL pension (if she was it's only worth peanuts since she was there only a few years) and she has barely been able to get by all this time on subbing and living with her mother. She's pushing 40 and the only things she has to her name is about $1k in the bank and a 10 year old car. Assuming she plans to retire in her mid 60's like most people, she's looking at only another 25+/- years to save a million or two for retirement, and she still wants to buy a house have kids someday, which also takes money. (FWIW, I've tried to talk her into taking a non-teaching job just to get insurance and a paycheck but she's passionate about teaching and doesn't want to do anything else).

Compared to her DH and I are sitting pretty . We have about $100k in our 401k's (I'm 36 DH is 41) and we're putting in 12% a year currently with plans to ramp that up a bit in the next few years. And the calculators say that still may not be enough...

 

[HHSTigerFan]

Only 25% of Americans have more than 30k saved for retirement. And yet, 52% of us believe we will live comfortably in retirement. There's some disconnect!

We are both 44 years old, have $12K in a Roth.. but also will have two state pensions thru the state of Illinois that will pay us 75% of our income, plus a rental property thats paid off.. Something will give with our state pensions, whether its a decreased percentage or we have to work a few years longer, but we still feel comfortable with where we are at..

 

[budbeerlady]

I think its a daunting task to save enough for retirement. When I run the numbers there is NO way we will have enough if we live to 85, something is better than nothing and we are in the top 25% of this story. I figure Social Security will be long gone for Dh and I, & many people will be in a real pickle!

Is there a fix? I dont know. I dont want the government messing with my 401K or taking any more of my cash to cover people who didnt save anything. And really what can be done?

 

[leahjade]

It is now more than 30 years since the 401(k)/Individual Retirement Account model appeared on the scene. This do-it-yourself pension system has failed

It hasn't failed - people just have FAILED to invest enough or any at all! Too many people expect the government to take care of them in their old age. Start having money taken off your paycheck for a 401K when you are young even if it's a small amount. If it's taken off as soon as you start working, you don't even miss it.

 

[bdcp]

We are both 44 years old, have $12K in a Roth.. but also will have two state pensions thru the state of Illinois that will pay us 75% of our income, plus a rental property thats paid off.. Something will give with our state pensions, whether its a decreased percentage or we have to work a few years longer, but we still feel comfortable with where we are at..

DH and I are 52 and 55 and have quite a bit in our 401Ks (over 750K). Mine is all in one that I put 9% of my income into and is partially matched. And I was a SAHM for 14 years. DH has a variety that he has rolled out of companies he has left and has diversified as well as his current employer who does partial matching. We also use a Financial Planner. I can't tell you the number of people I know that refuse to use a CFP because they don't want to pay anyone 1-1.5% of their balance a year. Really? Our return is a lot more than that fee and our CFP has directed us into some investments that have done very well. The more we make, the more he makes. We're also putting money into a couple of funds that are protected-guaranteed floor based, on what we invest and keep in for a certain number of years.

DH also is a retired US Navy reserve Captain so we'll start drawing a pension when he turns 60 based on those years. I'll have a very small pension as I'm a US Gov employee under FERS so the majority of my retirement is my thrift savings plan. DH also has one very small pension from a company he worked for 20 years ago. Our retirement planning has never included SS as we're not sure it will even be there. SS was meant to be a temporary safety net, not a pension plan. SS should have been privatized. I could do a lot better with it than the gov has.

I had heard that closer to 50% of people have NOTHING in retirement funds.

 

[crisi]

I worry more about our children. So many of their generation have no work ethic and are leaving school without trade skills and without any real ambition for college -- my kids are going to end up supporting them. Our kids will earn much more money than we ever did, but they'll have no pension plans and they're sure to be screwed over by Social Security. They really are going to have it rough.

I think that we should all read lots of Dickens to our children. Add in some Thomas Hardy when they get a little older. Maybe some John Steinbeck. Our past is our future.

 

[chicagodisneyfan]

That article should freak a lot of people out!!

I do not understand people who have never saved - didn't anyone teach them about compound interest?

My husband started his 401k at age 19 (when he was making $6.50 an hour)! And if he retires at age 65 (he is 39) the planner expects him to have $140,000 a year (which may not be much in 25 years).

But apparently we are doing better than the majority of Americans.

 

[disney1990]

60 years old and just laid off 2 weeks ago. I don't know where I am going to find somebody to hire me. I have money saved for retirement, more than that $30K, but I definitely am not ready emotionally or finally to retire.

 

[Ginny Favers]

Start having money taken off your paycheck for a 401K when you are young even if it's a small amount.

I agree, but if so many people won't do that for health insurance, which is designed to protect you if something happens now, they won't do it for retirement. People would rather assume the risk and then complain to the government when they get smacked for their own short-sightedness.

 

[ICF]

Start having money taken off your paycheck for a 401K when you are young even if it's a small amount. If it's taken off as soon as you start working, you don't even miss it.

Exactly...even if it only equals $10 / wk. If your company matches @ 50% you've save about $750 that year, which is better than nothing.

 

[Friendly Frog]

I think that most members on this site are better educated and more financially sound the the national average. They have had decent paying jobs, and opportunity for savings without taking food off the table.

I think we may need to remember that many have never had a job with a pension plan or a 401K that matched even a penny. Many earned wages that just barely got them by ( and did not take any assistance from the government) Saving 5% might take food off the table and may did save, but unfortunately not in something that earned them any real return. Many used only CD's that lost them money in the long run.


Today's 50-60 year old faced up to 13% interest rates to get into a first home making saving early difficult. No real understanding of investments, and some with investments or plans that tanked. Those who mostly invested in CDs thinking their money was at least safe were loosing money most years due to inflation and now those CD rates are almost earning negative numbers.

Then to top it all off they are, or soon will be, at an age that no one will hire them. Many trade people are getting to the point they can not do the work that they once did. If they do find work, most likely it is a position that does not come with health insurance. Any idea how much private, non business related health insurance costs for a 55 year old with medical conditions? ( If they can get it.)

Sadly many who made good money never saved what they should have, but that does not mean that we should loose site of the large number of lower-middle class families (couples or singles) who tried to be responsible and started saving early and still will not have enough to survive. This is especially true if they were hit with any major medical issues or unemployment for any length of time.

In the past most employers offered some sort of pension plan. Now days they barely offer medical insurance to the working. ( But they do offer much better CEO bonus plans.) If you have a pension plan, ask yourself if you would be funded if you lost it, or never had it? ( or at possibly half the pay you made during your lifetime.)

Personally I would like to see a little less money going to foreign aid and a little more being saved for the future of the US economy/population. ( and do we really need to pay for office rent for life for every X-President?) I don't mean to sound heartless to to other nations, but I don't want to see seniors begging for food here. For many it will not be because of negligence on their part that will have to do that.

Everyone needed to have saved for this day, including our own government. The citizens who paid a lifetime into the system should not have it pulled out from under them. Do you think that all goverment pensions should be pulled to?

The US must find a way to continue to fund social security and medicare programs. It is more important now than ever. If they do not, the streets of the United States in 10-15 years could look worse than it ever did in the great depression. Only most of these people will not have the ability to work.

.

 

[eliza61]

Add to that, an article today said almost 37% of americans are living paycheck to paycheck. That's a full 1/3 of our working population. So if you're living paycheck to paycheck there is a good bet your not participating in a retirement plan (not 100% so I know there are exceptions).

It's going to be a very interesting scenerio because as I always say, "these people are not going anywhere".

Thanks for the article OP

 

[eliza61]

That article should freak a lot of people out!!

I do not understand people who have never saved - didn't anyone teach them about compound interest?

My husband started his 401k at age 19 (when he was making $6.50 an hour)! And if he retires at age 65 (he is 39) the planner expects him to have $140,000 a year (which may not be much in 25 years).

But apparently we are doing better than the majority of Americans.

Actually not really.

Now I'm in my 50's when I was growing up the mantra was get a good job with a pension. So when dh and I first got married we didn't save much for retirement. Now not saying I regret what we did and we were never ones to live way beyond our means but I really didn't start contributing to my 401K until my late 30's.

Now factor into what MrsPete alluded to.... unexpected things.

Sadly my dh was diagnosed with cancer this year, luckily we had safe guards in place (disability insurance) to protect his income but the fact of the matter is, it maybe he won't be working until he's 63. Now both our jobs still offer pensions and dh is also pretty luck in that he'll have enough time on his job in 2 years to get the full pension if he retires but some times I think that was more due to luck than any great skill on our part.

There are so many factors that influence some ones ability to weather tough financial times.