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The idea that most of America can fund a retirement even coming close to what they'd get if they had a pension is laughable. As posted, median income is $52k and you're seriously suggesting people can live on 2/3 of their available pay? That is a joke and I don't blame anyone for not maxing out their 401ks at lower incomes. The reality is most of America can't retire comfortably simply because they didn't earn enough to do so.
People don't get paid more now, they get paid less, all the well paying union jobs with pensions are in China now.
If you've been a saver all your life you can often times make it on 2/3 of your pre retirement income. SS knocks down the requirement to come from your assets a good deal as well. I think it's mostly a lack of financial understanding combined with the idea of retiring at 55-65 that is the biggest issues, a higher income would lead most to spend even more so that isn't the fix alone
If people want a pension when they retire why don't they save money in their 401k and then go by an immediate annuity when they retire.
I just ran a calculator. If a married couple started saving $5k/yr at 25 ($2.5k each per year), then at 30 started saving an additional 3% per year on that 5k if they only got a real return of 4% CAGR by the time they are 65 they would have roughly $750k. If you took $750k and put it into an immediate annuity you could get roughly $3.6k/month. That plus two social security paychecks would be more than enough to live on in most parts of the US. As many people on here have mentioned the issue isn't the 401k, the IRA, or anything else, it's that people can't picture their future selves, so they don't bother saving. If you assume a real CAGR of 5% you will end up with the same amount if you save $4k/yr then an additional 3% every year after 30.
Last edited by mizzourah2006; 03-07-2016 at 11:50 AM..
The idea that most of America can fund a retirement even coming close to what they'd get if they had a pension is laughable. As posted, median income is $52k and you're seriously suggesting people can live on 2/3 of their available pay? That is a joke and I don't blame anyone for not maxing out their 401ks at lower incomes. The reality is most of America can't retire comfortably simply because they didn't earn enough to do so.
People don't get paid more now, they get paid less, all the well paying union jobs with pensions are in China now.
most Americans do retire . they just make do with what they have . money will always seek its own level like water .
it may not be a lifestyle you or i would want but every day more and more folks are retiring on what they have and making it work
a huge part of our savings in retirement goes just to funding healthcare and long term care . for those with low enough incomes and low net worth all that is given to them or close to it . for a couple that is the equivalent to as much as 300-400k in assets they don't need because they have healthcare subsidized or medicaid ..
a huge part of our savings in retirement goes just to funding healthcare and long term care . for those with low enough incomes and low net worth all that is given to them or close to it . that is the equivalent to as much as 300-400k in assets they don't need .
That's the biggest part of why I think pensions are still good :S
The money part, while nice, my 401k "should" provide more. But it's the health insurance that I can carry into retirement that is what makes having it good to me. Though kind of off subject for this thread about "retirement money"
Without the politics, wasn't ACA suppose to help with this some? Not entirely sure how ACA works since I don't shop on that market.
It also doesn't help that most people with 401ks are still subject to the emotional turmoil of market swings. Many people will sell their 401k investments and move to straight cash when the market drops significantly and won't buy back in until the market is significantly higher than it used to be.
IMO that is one of the main reasons pensions are more successful. You are forced to contribute and you don't have a say in how your money is invested. I want neither of those, but I do understand that for most people it is the best option.
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