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I think people visiting personal finance forums tend to be people who do think saving for retirement is important.
Yeah, that's the frustrating thing about it all. The people who need to get the message are the ones not getting it and the people reading the articles about how 1/3 of people aren't saving for retirement are the ones who probably don't need to.
With a paid-off home and one (or two) social security checks to live; it is more than enough for retirement. Maybe the American are smart so they invest their "retirement" into a paid-off home instead of trying to throw all their hard earned money into the stock market that can vaporize 50% of the value at age 60? My parents belong to those 1/3 with no IRA, 401k but they have a house that they almost pay off, one government pension check and one SS check.
With a paid-off home and one (or two) social security checks to live; it is more than enough for retirement. Maybe the American are smart so they invest their "retirement" into a paid-off home instead of trying to throw all their hard earned money into the stock market that can vaporize 50% of the value at age 60? My parents belong to those 1/3 with no IRA, 401k but they have a house that they almost pay off, one government pension check and one SS check.
I think the nonsavers generally don't own their home and thus have nothing. If you don't have enough income to escape paycheck to paycheck living, you are very unlikely to qualify for a mortgage.
Most non savers will counter their habit of not saving with something along the lines of "Well I wan't to enjoy my life! So I'm not worried about saving." Even if we go by that argument it doesn't make much sense to not save.
Here is an example:
I save anywhere from 35-41% of my gross income every year. This will allow me to retire very comfortably at 48. And currently I don't really skimp on how I live my life.
But let's assume that someone can take an extra two weeks of vacation every year because they save less then me. Assuming they started working at 21, from 21-48 that gives them an extra 54 weeks of vacation then me. However, the price they will pay is they will work well into their 60's for this short sighted thinking.
On the other hard, I will have made up for not taking those 54 weeks of vacation by the time I'm 49. And from 49-65 (assuming the non saver retires at 65) I will have an extra 862 weeks of vacation over the non-saver because I decided to save! Even if the non saver retires at 65; chances are his retirement income will be much lower then mine. So even when we are both retired I will enjoy my retirement much more then the non saver. So not saving makes no sense even if you try to make the "enjoy life" argument.
Yes, I think it's nuts to NOT max out a matched 401(k) contribution. As a non-saver I can say this because employers that don't pay sufficient wages for workers to save are NOT the ones who offer a 401(k) match.
The IRS is offering you a 50% match on the first 2k you contribute to your IRA. Take advantage if you possibly can.
Most non savers will counter their habit of not saving with something along the lines of "Well I wan't to enjoy my life! So I'm not worried about saving." Even if we go by that argument it doesn't make much sense to not save.
Here is an example:
I save anywhere from 35-41% of my gross income every year. This will allow me to retire very comfortably at 48. And currently I don't really skimp on how I live my life.
But let's assume that someone can take an extra two weeks of vacation every year because they save less then me. Assuming they started working at 21, from 21-48 that gives them an extra 54 weeks of vacation then me. However, the price they will pay is they will work well into their 60's for this short sighted thinking.
On the other hard, I will have made up for not taking those 54 weeks of vacation by the time I'm 49. And from 49-65 (assuming the non saver retires at 65) I will have an extra 862 weeks of vacation over the non-saver because I decided to save! Even if the non saver retires at 65; chances are his retirement income will be much lower then mine. So even when we are both retired I will enjoy my retirement much more then the non saver. So not saving makes no sense even if you try to make the "enjoy life" argument.
That's my mom's argument. She was running low on money last year (she's been unemployed for 30 years), got a "bump" from my dad (sold one of his properties) and suddenly she's off to Iran for 3 weeks and a half a dozen domestic trips this year already. She asked if we would fly over for Christmas and I said it's not in our budget/vacation plans so she offered to pitch in.
I told her I couldn't have her do that as we can afford it, we just don't want to blow our yearly travel fund on one vacation and besides, it was just 9 months ago you were literally crying you had no money, do you really have the funds to offer... what about your retirement, you could live to be 110...
Her response? "or I could die tomorrow.. how do you know? You don't. So let me pay for your trip and then you can pay for me when I'm 110"
That conversation left me anxious for days. My husband and I work to save between 30-40% (paycheck, not gross). Budgeting is very important to me. We've got college educations and retirement to save for...
My mom, and other people like her, are what I'd describe as hedonistic, living life to maximize personal pleasure on a whim until some sort of reality hits them in the face and then they freak out... At least that is the way it's been with her for as long as I've known her... I'm just waiting until these incidents become more serious... which happens when you get old and frail.
If you don't have enough income to escape paycheck to paycheck living, you are very unlikely to qualify for a mortgage.
And how much do you think that to be?
DH and I will escape paycheck to paycheck living upon retirement.
Until then, no matter how much comes into the house, we live paycheck to paycheck. Because until retirement happens, we will be saving and investing. Those are just as important as any other bill.
Oh, and we do not have a mortgage. That was paid off ages ago.
To each their own. Some people don't mind taking out loans and paying compounding interest to fulfill their instant gratification desires. Some people (like me) are addicted to saving as much money as they comfortably can and only going into debt if it's for leverage purposes. I can understand both points of view. In America a person making 20k a year can live a pretty luxurious life (for a while) using debt. Personally, I almost get a high from seeing my net equity go up and knowing I'm not going to be working well into my golden years. Driving an old paid off truck and abstaining from eating out too often don't negatively impact my life in the slightest.
Yes really. You are going to give up a free 80 cents on every dollar because it's not 100 cents on the dollar? Very short sighted. If the company has allocated compensation to you, you should take it even more so than just make an excuse of the match not being enough to contribute 5%
It's not short-sighted at all. 401k mutual funds aren't the only investment tool out there, and not everyone wants to wait until 59.5 to access their nestegg. Not to mention, MOST companies 401k funds are crap and a big chunk of your return will be eaten up by hidden fees that you're never told about. If you're set on staying with your company for a while and even more set on working a regular career until you're 59.5, then I guess maxing out your contribution to take advantage of the match would be a fine option.
I contributed for a while when I had an office job, but I plan to retire well before 59.5 and would rather have my money available to me to invest and withdraw on my own terms.
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