retired and no money saved? (rate, medical, obligation, average)
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Check out that article. Anyone agree with him? I'm skeptical.
I agree with him as far as it goes. Fees for mutual funds, etc. are going down, and as fee disclosure improves, the fees for administration also go down. Both the Bush and Obama administrations and Congress deserve credit for improving 401k fee disclosure, and for pushing automated plans and automatic enrollment.
It's also true that not everyone got those defined benefit pensions. People tend to romanticize the past a bit too much. The truth is that people of previous generations were better savers, they didn't live as long, and they had more modest expectations, so saving gobs of money for retirement wasn't as big of an issue.
The Vanguard post also mentions that the fundamental problem is we're too much of a consumer society...and can anyone really disagree with that? A lot folks, liberal and conservative alike, basically agree with this, even if they disagree on what to do about it.
..Escort Rider...snipped..That brings a contentious issue to the discussion, namely Social Security. There seems to be a tacit assumption that living on SS alone is impossible, but that's not true. The average SS retirement benefit is approximately $1200 per month, and of course I admit that would be pretty grim is that's all one had coming in. But the maximum benefit is almost twice that. Many people draw more than the average benefit, by definition. I draw $140 per month, so my low benefit is bringing down the average and someone has to be getting more than average..snipped..
I don't draw near that much as a female and I don't know many people that do....who are these people that can draw $1,200 and more.....a fortune in my book.
The unions mostly did have and continue to fight for defined benefits plans. The autoworkers were/are a good example of comfortable retirements and I know a lot saved money as well. I had several as clients over the years as snowbirds. That won't be the same now but, we still have teachers, service personell, policemen, government workers who will retire with tidy pensions. Not so in the private sector but what is left as a private sector anymore, working at bussing tables in the tourist industry.....?
I agree with him as far as it goes. Fees for mutual funds, etc. are going down, and as fee disclosure improves, the fees for administration also go down. Both the Bush and Obama administrations and Congress deserve credit for improving 401k fee disclosure, and for pushing automated plans and automatic enrollment.
It's also true that not everyone got those defined benefit pensions. People tend to romanticize the past a bit too much. The truth is that people of previous generations were better savers, they didn't live as long, and they had more modest expectations, so saving gobs of money for retirement wasn't as big of an issue.
The Vanguard post also mentions that the fundamental problem is we're too much of a consumer society...and can anyone really disagree with that? A lot folks, liberal and conservative alike, basically agree with this, even if they disagree on what to do about it.
Re pensions--not everyone got them, but plenty did. Plus, employers paid a greater% of healthcare costs back then. And healthcare before the 90s was much more affordable. The 401k fees are a non-starter. Sure, the fees are decreasing, but that is only in the last few years. This has yet to have any impact, and does not support his argument. Same for automated plans/enrollment. Americans have been consumers since the end of WWII. Nothing new there. What IS new is that our economy has fundamentally changed beginning from the late 70s: a double whammy of vastly increased disparity of wealth coupled with globalization. This is the real culprit as to why so many are falling behind. But I still think people could save more than they do, absolutely.
There are plenty of people like my parents, who chose to save the bare minimum in the 401k and have to live in my grandparents paid for house while my grandparents are in the nursing home. My grandparents grew up in the depression, worked for a very long time with one of the utilities, saved every month and retired wealthy. My stepdad is working until he is 70 1/2 because they still want to have the country club and the trips. Mom just works part time. I am reasonably certain there is nowhere near the 200k in savings it will take to just to get them to 80 when factoring SS (my calcs use 3600 for combined monthly net SS income plus 1400 month from savings for 60k/yr income). They are banking on my grandparents passing away while still leaving a nest egg for them to feed off of.
I love them but their financial life makes me sick.
My wife and I (mid-30s, Gen-X) make 6 figures and cannot afford a country club, fancy cars and granite countertops because we are paying off student loans and the house is on a 15 year mortgage. Rest assured, we will be taxed into oblivion to pay for the Boomers lack of planning. It also appears that the US is taking the Russian solution to the SS problem by running a behind the scenes inflation scheme (ie. CPI calculations are manipulated or just wrong) to hold down SS COLAs while real inflation runs 5% according to the Big Mac index. That is pretty ugly too.
I never understood this. Risk your retirement just to fund your kids schooling? What if they flunk out. Not saying you shouldn't fund nothing, but risk my future and hope my kid turns out to be a doctor and can take care of me. Just sounds strange.
I have an obligation to both society and the children I brought into society here. I owe both that my kids get the best education possible. And I cannot secure my own future at the expense of my children's future. What kind of mom would I be if I did that?
I have an obligation to both society and the children I brought into society here. I owe both that my kids get the best education possible. And I cannot secure my own future at the expense of my children's future. What kind of mom would I be if I did that?
A better mom. It's the same principle as what they tell you to do on airplanes in case the cabin pressure goes: put your face mask on first, then help your child.
Then again your government could do what ours did, forcing employers to pay superannuation for their employees as part of their salary package, then guaranteeing that super, and topping it up for you if you have a low income.
A better mom. It's the same principle as what they tell you to do on airplanes in case the cabin pressure goes: put your face mask on first, then help your child.
Bad analogy. In this case, it's one or the other. If I keep the money, they don't get an education. So it would be like me putting on my mask and just letting them die because there will be nothing for them because I kept it.
How is leaving my kids without an education so I can retire helping them in the slightest? How is it helping society to shove my uneducated kids off on society?
Sorry, I owe it to my kids and to society to educate them....so let's hope I'm healthy enough, long enough to take care of my retirement after that.
I have an obligation to both society and the children I brought into society here. I owe both that my kids get the best education possible. And I cannot secure my own future at the expense of my children's future. What kind of mom would I be if I did that?
You would be a normal mom who has to plan for themselves AND your kids. Should your kids get their whole life handed down to them?
You obligation is to be there for them....not be there as in their spare room for 20 years until you die!
You can be there for them when your retired and they make mistakes. You can help them financially because you were smart and planned out your retirement. What if your kid/s turn out to be deadbeats now what....your don't have a retirement and they certainly won't be helping you anytime soon. Save for your OWN retirement and be there when they need you. It shouldn't be the other way around. You can still provide some for education, but if it means risking your own future for a chance that your kid becomes a doctor and can take care of you the odds aren't looking so good. What if they just become an average Joe and make 40k a year with a family, kids, and house....won't be much left for Ma and Pa. Everyone thinks their kids will be the best people out there and make more than you ever imagined. It rarely works out that way.
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