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The median income in this nation is $26,324, which is $12.66 that's not much higher than minimum wage. 66% of all American workers earn less than $39,900.
In fact, 75% of all working adults 50-64 make less than $52,000 a year.
The vast majority of people don't make enough money to live, have children, pay for health care, buy a home, and save for retirement.
This is the problem with these 401k plans, they were set up for people with very high incomes. They were not designed for people making $35,000 a year.
Simply saying people should try harder ignores the fatal flaw in using 401k plans as the primary retirement vehicle.
It is a failure for the vast majority of workers.
IRA retirement accounts are worse than 401k plans for retirement.
I am not saying that life is unfair. I am saying that, rather than putting a bullet in your head, try to do the best you can with what you have. When I was young I gambled by not having health insurance. I did not have children. I took a roommate to free up cash. I saved up, initially, for each college course that I needed to get that undergrad degree and took them as I could. I walked as much as I could to save transportation costs. I ate cheaply. I did not have an extensive wardrobe and no good jewelery.
Sometimes you just have to sacrifice for what you want. It is better to feel as though you are going forward in life than just sitting around feeling sorry for yourself.
I think it is just horrible what people are put through in order to achieve in our society. On the other hand, we do have some in the population who are not willing to put forward enough effort to reach their preferred lifestyle.
In some countries people are taxed higher than here, meaning their salaries are generally lower, and there is more of a public safety net. In the states we are expected to save and take care of our own retirement, etc.
In a lot of ways I wish the system would change, but we are presently stuck with what we have and may as well make the most of it.
The fantasy promise of the 401k of becoming a millionaire is way out of reach for the vast bulk of workers.
When you read Money or Forbes, or Fortune, and they discuss 401k plans, they make it seem so easy, just start saving a little when you are 25, work 40 years and all will be good.
The problem is life gets in the way. Over the course of 40 years what is the likelihood that a person won't have an extended bout of unemployment that causes them to tap their savings? What are the chances a person won't get divorced or have a sick child, parent, spouse, or personal illness that costs money, what about buying a home, affording children, paying for college?
Combine that with the low wages of most workers and it becomes very clear why the 401k is inadequate as the primary income for retirement.
The 401k was created by the government as a way to allow corporations to shield the income of highly paid executives from taxation. It was not created for people making $40,000 a year. This is why it fails most workers.
A person can control certain things. Do not marry a partner who does not make a decent income, too, or one who does not share an attitude of saving and investing and bettering themselves. Do not have kids. Move to a place that will better your position, either with a cheaper education, rent, more employment opportunities.
Things suck, but you still have options. If you sacrifice.
You are right, and then the government thinks that by making most workers pay into social security that some how makes growing old comfortable. I have family members who have worked 30 years to only get $800 a month.
A whole 30 years? Why should anyone get to retire after only 30 years? People are living longer and should work longer.
When SS began in 1935, live expectancy for men was 59.9 years and for women 63.9. Retirement age was 65. SS was designed for the few who survived long enough to collect. That's why the system worked. All paid in and few drew benefits. That was the intent of the designers.
Now the life expectancy for a man is 75.6 years and for a woman 80.8. Full retirement age is between 65 and 67. SS was not designed for people to draw benefits for an average of 10-15 years. And as life expectancy rises, it only gets worse.
Either the retirement age needs to rise to reflect longer life expectancies or the percent paid by workers needs to rise or benefits need to be cut. Or some combination of all 3. What's not workable is the long term survival of the system we have now, but people don't want to hear that hard truth and pandering politicians sure don't want to tell them.
A whole 30 years? Why should anyone get to retire after only 30 years? People are living longer and should work longer.
Exactly. I've worked for 21 years now and I'm only 38 years old. Working 30 years is nothing. I do not feel sorry for anyone who only worked 30 years and are now retired and destitute, unless they became sick or disabled and are unable to work.
Exactly. I've worked for 21 years now and I'm only 38 years old. Working 30 years is nothing. I do not feel sorry for anyone who only worked 30 years and are now retired and destitute, unless they became sick or disabled and are unable to work.
A person starting work at 20-21 would be 50 now. Few companies want to hire older workers.
The American dream exists-- except that it is a nightmare. Why would anyone be dumb enough to try to retire I'm the US? Make 60k per year w your wife and live like you make 40k. Then retire in Asia or central America where you can live like a king.
The American dream exists-- except that it is a nightmare. Why would anyone be dumb enough to try to retire I'm the US? Make 60k per year w your wife and live like you make 40k. Then retire in Asia or central America where you can live like a king.
Correct...
I love my country, I served and was wounded in battle and did so proudly. What it has become scares me. Worse still the direction it is heading.
I have been slowly moving my investments out of the US. Something 10 years ago I never would have dreamed of doing.
I look at the entitlment minded, greedy and undisiplined and I see a once great nation coming apart.
People don't plan and dont even make an attempt to save and some how thier burden becomes mine. Why ? Because I sacrificed and planned. I saved and did without.
The common excuses:
You got lucky
Not everyone makes 100k a year. Niether do I and never have.
You never got sick. Cancer came back 3 times. Went to Thailand for treatment and saved a bundle.
Nor everyone was taught to save. Niether was I. I came from a very poor family.
Not everyone knows how to invest. Niether did I. I hired someone who does.
I watch finacial programs and self educate. I listen to those who have money and how they invest.
I never rob my tomorow for today.
It isn't rocket science.
I was rereading this thread and wanted to add that for some low income retirees with little or no savings, subsidized housing is an excellent option to enable people to live independently. Yes, there are usually waiting lists, and in some areas these apartment sites are undesirable or poorly managed. However, this is not the case for all of them. I had a relative live for many years in a lovely senior apartment building that had just two floors. All residents were 62 and older with no exceptions. My relative paid 30% of her $950 monthly income for rent and that included everything but electric and a reduced cost cable bill. Her apartment had a fairly spacious living area and bedroom that was newly carpeted and painted when she moved in, a garden for residents and a community room. She had transportation to doctors, stores, and the senior center. She managed without owning a vehicle. She could walk to the downtown area of the town and enjoyed doing so. She was frugal, but did not feel poor. Because she was a widow at 45 and had to finish raising three children, her retirement savings were very modest. She was able to keep her savings, because only the interest from savings counted toward her income for her eligibility for this subsidized apartment. This apartment was truly her lifeline to living independently for a dozen years before she passed away.
[quote=GiantRutgersfan;25292823
How is this country supposed to deal with these peoples mismanagement of their lives? This is going to have dramatic effects on a ton of things[/quote]
We've conditioned people for a few decades to expect the government (using other people's money) to take care of them. So this is the result you should expect.
The only solution is very long term. Get the government out of retirement programs and train kids from an early age to save for their own retirement. Couple that with tax incentives to save more. Unfortunately, we do just the opposite. We tax earnings on your savings.
It's an interesting phenomenon. We tax tobacco to discourage it's use, and we tax interest earned so we discourage savings.
At some point (and really this is already happening) underfunded retirees are going to become like locusts, scouring the (financial) land for any tidbits of money they can find. They'll use their mass to vote in policies that help themselves at the detriment of those working, and those who have adequately saved. At some point the workers/savers are going to get fed up with this and either fight or leave. When that happens, one way or the other. the retiree class will be screwed.
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