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- Thread starter Nittany Ned2
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yup and a 6% 401k contribution with a 3% match isnt going to cut it. The best thing that helps is, smoking, heart disease, diabetes etc. Cuts down on your life expectancy.
I think you only hear about people that have saved money for retirement. Just like you only hear from people that win money at the casinos.
As Warren says: "Be fearful when others are greedy, and greedy when others are fearful." He made billions by having patience to wait out a storm, and then acting like a fire sale was occurring. He closed his initial fund, Warren Buffet Associates in 1969, and did not buy anything until 1973 when he opened Berkshire Hathaway. He saw bargains waiting to be scooped up.
My wife enjoys black jack and slots at casino's. I like to tell people that my preferred form of gambling is a couple extra slices of bacon with breakfast...
I read the average 55 year old has saved $125,000 for retirement. They better build a lot more trailer parks for seniors to live in with that stat. I see many around me and people I know in that age group who spend ever nickel they make even if they make a good living. Somewhere our parents belief in saving has been completely ignored. I hope people aren't depending on the government to bail them out since I doubt they will be in much better shape financially than these people.This is going to be a train wreck soon.
I've been retired for about 5 years, and my wife has retired in the past month. We lived well within our means for the past 45 years, and we saved money whenever we could. My wife had a pretty good job and mine was decent. We drove cars that were economical, and we got out of debt as soon as possible. We worked pretty much on a cash basis. If you didn't have the money, you didn't buy it.
We adopted 2 children from Korea, so there were the basic expenses of raising a family. We had daycare expenses, as well as other associated expenses of raising a family. Our daughter is special needs, and still lives at home. We have lived in the same house for over 40 years, and there is a lot of sweat equity in it. Our taxes are relatively cheap. We could afford a decent vacation every year. Our savings went up when we got rid of the bankers and other leeches that suck money from you. We never had cable, for example or many of the services that people have convinced themselves they "need". Separate needs from wants. Save the rest.
I go to my high school class reunions. I don't see anybody that is particularly hurting in retirement. Many travel, most drive decent cars, and they all have decent homes. The finance Armageddon is going to be when the pension system fails. If there is a financial crisis, it will be when the government stops giving out Social Security checks. Financial reserves may not be enough to last for many, as SS is the main source of revenue for most retirees.
I tended not to worry about what others have saved, but to worry about what I had saved. Seems to have worked out so far.
We adopted 2 children from Korea, so there were the basic expenses of raising a family. We had daycare expenses, as well as other associated expenses of raising a family. Our daughter is special needs, and still lives at home. We have lived in the same house for over 40 years, and there is a lot of sweat equity in it. Our taxes are relatively cheap. We could afford a decent vacation every year. Our savings went up when we got rid of the bankers and other leeches that suck money from you. We never had cable, for example or many of the services that people have convinced themselves they "need". Separate needs from wants. Save the rest.
I go to my high school class reunions. I don't see anybody that is particularly hurting in retirement. Many travel, most drive decent cars, and they all have decent homes. The finance Armageddon is going to be when the pension system fails. If there is a financial crisis, it will be when the government stops giving out Social Security checks. Financial reserves may not be enough to last for many, as SS is the main source of revenue for most retirees.
I tended not to worry about what others have saved, but to worry about what I had saved. Seems to have worked out so far.
Hey, maybe those of us that saved will be ahead of the game then. Everything will be free for the masses who give in to their “I want it now!” Splurges and spend instead of save. But I think like an earlier post said, those that have will always be made to feel greedy, and those that have not will connive to take it from them. Equal opportunity or equal results? Those that preach equal opportunity really are only interested in equal results.
"Separate needs from wants. Save the rest."
That is it exactly. So many people buy things because they think they're supposed to or because they think they want it without thinking about whether they REALLY want it. I don't know how people can enjoy stuff while knowing they're going to be in debt down the road for buying it.
9% of a $100k salary over 30+ year career would be a pretty nice nest egg, especially when combined with SS.
You would think so.....
But it depends on SO many variables: single or married / # of kids / health of parents / health of self & spouse / rate of return on his 9% / inflation / will SS and Medicare still be around? / etc.
While many have done a great job of saving others haven't. We are in the middle due to job losses during peak earning years and disability, The income stream was lost for periods forcing savings to be used for living expenses. We are saving a large % of my wife's income but she will retire in six years and we will have to sell our house at that point, paid off I think as we accelerated the principle each month to do so. Those who live paycheck to paycheck now, who have massive credit card debt. and interest payments, as others have noted, amass wants over needs, haven't saved a dime.....what will happen then.
It's the grasshopper and the ant story. The grasshoppers will come to take what they need when they don't have it. Society will devolve and those seemingly living well will be targets eventually. I likely won't make it to that point in time but any upset right now could trigger it. It's closer then most think. Stop SS payments, welfare, etc. and watch it happen. People won't go hungry without trying to find food. This may sound apocalyptic yet the dominoes could easily fall this way. Be prepared.
It's the grasshopper and the ant story. The grasshoppers will come to take what they need when they don't have it. Society will devolve and those seemingly living well will be targets eventually. I likely won't make it to that point in time but any upset right now could trigger it. It's closer then most think. Stop SS payments, welfare, etc. and watch it happen. People won't go hungry without trying to find food. This may sound apocalyptic yet the dominoes could easily fall this way. Be prepared.
SS and Medicare will be around in some form. It might be means tested but probably not a problem if IRA and SS is all you've got.
This generation generally thinks that there is no need to save due to things like go fund me pages. Anyone in their family dies, they set up a go fund me; anyone in their family wants a new car, they set up a go fund me, etc.... The amount of kids who think their life will be spent living off their parents dime until their parents die and then get a hefty inheritance is crazy. The amount of kids I teach who think they have a career in pro sports, the music or clothing industry, or being a professional gamer is probably over 50% of my non AP Calculus kids. As mentioned before they spend for the now, IPhones, new Jordans, lease Mercedes or BMW's, but can't pay rent and I see them outside the apartment complex near me trying to keep the other tenants from stealing their belongings that are now piled up on the corner.
Kudos to you. You did it the right way. The key is to live within your means. But should Social Security fail then you'll be forced to worry about what others have saved because they'll come knocking at your door. You can count on it. Have a blessed day!
If I was a financial advisor (I'm not), my advice to people early in their careers who want to be able to retire comfortably at 62 would be "Don't have children."
I'm am being completely serious.
Good point. Don't get married either. Or if you do, have a pre-nup and don't co-mingle any finances.
9% contribution for 30 yrs at an 8% rate of return (adding $9000 per year to your ira/401k) yields $1.1 million . (https://www.americanfunds.com/)
So if you combine with SS maximum payment (which you would not be eligible for making $100,000) per month of $2788.
so if you take a 4% w/d from the IRA = $44,000 per year gives a combined income of around $77,000 per year
so if you need to replace 75-80% of you income in retirement, yes you are close. The problem is the 8% ror
Drop that to 7% and now it is $950,000
Drop that to 6% and now it is $786,000
kick it up to 9% and it is $1.7mm
IIRC the average ROR for a 401k investor is around 4% (most buy when they should sell and sell when they should be buying)
Conclusion? Save more.
It's going to be an interesting problem going forward.
The Millennial generation has a ton of student debt and is already putting off major life decisions (marriage, buying a house, etc). Many, quite literally, cannot adequately save for retirement and keep up with other bills/debt at the same time.
The Millennial generation has a ton of student debt and is already putting off major life decisions (marriage, buying a house, etc). Many, quite literally, cannot adequately save for retirement and keep up with other bills/debt at the same time.
Well stated. I'd add two things:
1) If at all possible, max out your 401k contribution (I think it's $18.5K/year now?)
2) If your 401k program has a "lifetime fund" (e.g. you tell it when you plan on retiring and they automatically shift your portfolio around to adjust risk), seriously consider doing that. Unless you are very knowledgeable and pay close attention to the market and your investments, this strategy is going to do much, much better over a 30 year period that you hand picking your fund distribution.
Just curious, if everyone saved more by NOT spending refusing to eat out, keep cars for 15 years, live BELOW their means, what would happen to the stocks you own? Go up or down?
Would the economy grow with everyone saving?
not to mention that his specific example ($100k avg over a working career) might only be achievable by 5-10% of the population
Don't worry, the solution to this problem is at hand. Bankrupt the government with tax cuts, then use the fiscal crisis as an excuse to abolish Social Security and Medicare. Old people die off pretty fast without food and medical care.
Yeah it will be a little inconvenient for a while being accosted by gangs of starving grannies every time you go to the Wawa, but we'll get used to it.
Yeah it will be a little inconvenient for a while being accosted by gangs of starving grannies every time you go to the Wawa, but we'll get used to it.
If people save, there are only a few things they can do with their money. I always looked at paying off debt first. When we bought our house, interest rates were about 8%. There was no place I could invest for a guaranteed 8% return for a set amount of years. That should be your alternate rate of return.
After that, you can invest in a lot of different venues. Real estate, stocks, bonds, antiques, gold, coins, etc. With increased demand, asset values should rise. Values only drop when you have more sellers than buyers. You have to chose your investments wisely.
I often question how much the pundits put into the amount of money you need in retirement. A lot of things change. The amount I need at 70 is different than when I was 45. You shouldn't have any debt. Taxes are lower. You don't drive as much. You eat out more often. You travel a bit more. Most people I talk to have saved a portion of their SS and haven't dipped too much into savings. I think if you get into realistic living costs, the retirement funding mania would die back.
After that, you can invest in a lot of different venues. Real estate, stocks, bonds, antiques, gold, coins, etc. With increased demand, asset values should rise. Values only drop when you have more sellers than buyers. You have to chose your investments wisely.
I often question how much the pundits put into the amount of money you need in retirement. A lot of things change. The amount I need at 70 is different than when I was 45. You shouldn't have any debt. Taxes are lower. You don't drive as much. You eat out more often. You travel a bit more. Most people I talk to have saved a portion of their SS and haven't dipped too much into savings. I think if you get into realistic living costs, the retirement funding mania would die back.
These are two things that could be saving them from debt. Combine incomes, one rent/mortgage. Get the tax break if mortgage.
Get them to stop buying $7 starbucks every day, $1000 electronics, reasonably priced clothes and stop eating out 5 times a week and thats money they could save.
Almost all of the 25 yr olds I see complaining about debt do the above items on the regular.
the biggest problem with any retirement plan is understanding the growth of a dollar.
Question: What would you rather have 7% guaranteed or average 8% over 5 years?
Certainly 8% is > 7%, right? but thats not how investing in the stock market works. Fund x averages 8% per year for 5 years, so should I invest in that one?
lets see , take $1000 invested in the fund that averages 8%
end of year 1 fund is up 25% $1250
end of year 2 fund is up 3 % $1287
end of year 3 fund is up 25% $1609
end of year 4 fund is up 5 % $1689
end of year 5 fund is down 18% $1385
so this fund averages 8% per year for 5 years and you have $1385
now take a 7% per year on $1000
end of year 1 fund is up 7% $1070
end of year 2 fund is up 7% $1144
end of year 3 fund is up 7% 1225
end of year 4 fund is up 7% $1310
end of year 5 fund is up 7% 1402
so 7% beats 8%!!
the sequence of returns whether growing the money or withdrawing the money, is the thing missed in most financial planing. And since we can never know the returns
its best to invest all you can!!
Question: What would you rather have 7% guaranteed or average 8% over 5 years?
Certainly 8% is > 7%, right? but thats not how investing in the stock market works. Fund x averages 8% per year for 5 years, so should I invest in that one?
lets see , take $1000 invested in the fund that averages 8%
end of year 1 fund is up 25% $1250
end of year 2 fund is up 3 % $1287
end of year 3 fund is up 25% $1609
end of year 4 fund is up 5 % $1689
end of year 5 fund is down 18% $1385
so this fund averages 8% per year for 5 years and you have $1385
now take a 7% per year on $1000
end of year 1 fund is up 7% $1070
end of year 2 fund is up 7% $1144
end of year 3 fund is up 7% 1225
end of year 4 fund is up 7% $1310
end of year 5 fund is up 7% 1402
so 7% beats 8%!!
the sequence of returns whether growing the money or withdrawing the money, is the thing missed in most financial planing. And since we can never know the returns
its best to invest all you can!!
now Jim, just because you dont have kids and are married does not make you gay.
I started saving after I retired from the AF about 11 years ago at that point my investments were 10k. My 403b is over 500k now (with my wife's 401k part time employee at over 60k) with 8 years to go until I retire again. My emergency savings is a little low only 15k but will increase dramatically when my house is paid off in 5 years. You have to be dedicated to investing for your retirement. I talked to my boys about investing while they were in college and proud that when they got their first post college jobs the both invested 10% of their pay in their 401k's.
Actually I was surprised by some stats. My son is a millennial and we were discussing this the other day.
16% of millennials have $100,000 k saved. Not bad for average age of about 32.
The article said they are as good as anyone else in the saving category despite college loans etc. Where they drop off is many are afraid of the market as they were just starting work around the crash of 08/09. This will hurt in the long run.
To the OP my guess is it is like many things these days. We have a barbell society. On one side there are those saving just fine and on the other side there are those saving nothing. Little in between.
As I look at our family [including in laws] it looks very much the same. Yes and No with not much in the middle.
