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I am not talking about households that make almost $70,000 a year. I am talking about households that make $30,000 a year or less, people who really have nothing left after they pay for housing, utilities and transportation (and driving clunkers, not expensive cars). And I am not one of those people but I do know people in that situation.
I also know people who say they have no money but somehow have money to hang out in the bar several times a week. I don't understand that. No wonder they have no money.
So I get what you are saying, that a lot of people can make better choices and would have money to put away for retirement. I was only referring to those who really only have enough money to make ends meet - and maybe not even that.
But you are right, even that is a choice. They could get an education or training so they can make more money and put themselves in a better financial situation.
Some also are content to be on government assistance and figure the government is taking care of them now and will take care of them after retirement too.
The way I see it , you have to have a " number ". During your working years , do everything legally and humanely possible to achieve that " number ".
Y'all might not agree with me here but I basically divide the U.S into 3 zones when it comes to retirement -
Tier 1 , Tier 2 and then everything else.
My hypothetical retired couple fulfills the following conditions - quite healthy , has no dependents , a paid off nice but not over the top house , two very nice luxury but again, not extravagant cars ( again paid off ) and of course a very comfortable passive income on top of all these.
Tier 1 - Coastal CA , LA, Beverly hills , Bay Area, Upscale parts of the Tristate area ( NY, NJ, Connecticut ) , Hawaii, Maybe even some expensive parts of Florida ( South beach etc ) - I figure you need ~ 7.5 million dollars ( 3 million dollar house, 4 million for 160 k passive income and the rest for emergency funds , cars etc )
Tier 2 - Major cities in other states - I cannot list all of them but just to give some examples - Austin, Tx , Dallas , Tx, Atlanta, GA, Orlando, FL, Triangle area , NC , Seattle, WA etc. - I figure you would need ~ 5 million ( 1.5 million house, 3 million for 120 k passive income , rest the same )
Tier 3 - everything else including where I am living right now ( Medium Sized city in NC 1 hour away from Raleigh ) ~ 2.5 million ( 500 k for house , 1.5 million for 60 k passive income , rest the same )
This lifestyle would be very comfortable but still not " flying first class, country club membership " comfortable. And to be frank , 97 % of americans would kill for this lifestyle in retirement so it's good enough.
If you really want to go Rural or remote - maybe 1 million would do it. ( and this amount is more than what 90 % of Americans have anyways ).
So, take a look at this chart and depending on your situation in life and where you want to live , start pilling up ...!! Even if you are lucky enough to be making big bucks, live way below your means and retire rich ...!!.
Assumes you want to live and work in one place, then suddenly retire and move away to some different place, leaving friends, family, and other networks you've built up over many years behind in favor of people and places you don't really know and where you have to learn how to live your day-to-day life all over again. What's the big advantage in doing that?
yep , I agree. we couldn't think of just moving away from our kids , grandkids and friends just because it cost less some where else.
we are retiring in queens in nyc and do not need 7 million in assets. in fact 1/2 that will work out just great.
Going through the last days posts on this thread I realized how little we understand the nature of our consumer society and it's mandate of spending, not saving. As more people become determined to save and live frugal the lack of consumption pulls on the GDP base, growing unemployment and underemployment are the result of underconsumption. The truth is that since the end of the second world war America has become accustomed to this dilemma, the old wisdom of saving was born out of a necessity. A cash based society meant having money always, full price, no minimal payments or deferred interest.
The introduction of consumer credit wasn't a bad thing for the working class, it was indeed their saving grace in so much of that mythical upward mobility dream that was sold to them. Now we see those who pontificate on their pulpits of frugality, chiding the unwashed with dire admonitions of certain failure for their evil spending, but it was that money in circulation that brought the tendency for wealth to concentrate in line with the need for currency to be distributed more evenly.
Yes, spending less is wise for the individual but as a national policy it isn't in the cards to have a greater reduction in spending as an answer to our financial contraction. Retirement savings were part of the total compensation package for workers for a very good reason, to allow the retired to continue to "contribute" to the overall GDP. "Capitalism is a dog chasing it's own tail and sometimes catching it", goes the old saw, and from time to time we see this as economics manifest. As business determines to pay less and less, wages, benefits, taxes, it slowly strangles the very people they hope to have as customers.
People don't save for good reason, that would be the fact that they have been inundated for over half a century to spend and spend, grow the economy, grow it more each year, more than the rest of the world, MORE, MORE, that was the rallying cry of the "worlds greatest economy," and now, we are admonished to save, never mind the fact of the resulting contraction.
I believe the above post from last year does an excellent job in summing up the underlying strength of the domestic economy. Unlike the Brazils, Saudi Arabias, Indonesias, and Chinas (although, they are trending towards such a model) of the world, the U.S. is a net importer/consumer. Therefore, to say that the marginal propensity to save should be increased drastically among the populace is to undermine why the U.S. market is one of the most sought after regions in the world. This isn't to say that Americans shouldn't consider retirement an important goal; however, it is highly necessary to anticipate a correlation between lowered marginal propensity to consume and lower economic output, and thus prosperity.
Assumes you want to live and work in one place, then suddenly retire and move away to some different place, leaving friends, family, and other networks you've built up over many years behind in favor of people and places you don't really know and where you have to learn how to live your day-to-day life all over again. What's the big advantage in doing that?
I am looking at this thing from a financial standpoint exclusively. Of course these other things y'all listed matter also. I can't factor them in when posting a thread like this can I ?
yep , I agree. we couldn't think of just moving away from our kids , grandkids and friends just because it cost less some where else.
we are retiring in queens in nyc and do not need 7 million in assets. in fact 1/2 that will work out just great.
By upscale parts of NYC , I meant more like Manhattan. If you were retiring in Manhattan , how much would you need ?
I never thought about having a future so it makes sense. I screwed up my career and life and although I'm recovering now, I was planning on killing myself anyway so why would I care about saving money? That's a solid 50-60 years in the future and anything could happen. You have to have some fun when you're young.
By upscale parts of NYC , I meant more like Manhattan. If you were retiring in Manhattan , how much would you need ?
i would up it to 3.5- 4.5 million.
we own investment co-ops overlooking central park so i would feel comfortable renting in the area with 3.5-4.5 million . while not a posh life it would be enjoyable .
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