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The overwhelming majority of minimum wage workers don't have access to 401k savings plans.
Their first priority would be to get up and out of the minimum wage job for something better if they can. Then, they should open an IRA.
If you have a minimum wage job, you probably can get one of those anywhere, so there is no stopping you from moving into an area with maybe a good community college program for training in some wanted field, maybe some kind of medical tech? I would move out of state, if I had to. When I graduated high school I moved to a slum where rent was cheap and there was good public transportation and a college nearby. I got a job and went to school. It was really tough, but worth it.
All you can do in life is try - and keep trying. Don't stand in one place, complacent or feeling sorry for yourself or becoming dependent on another person. If you are not moving yourself forward you are actually going backward.
Set a long termed goal and then just concentrate, not on the goal, but on the little objectives that you need to get there. Put one foot in front of the other. Just keep doing that, attending to the challenges of the moment, and you will end up in a better place than you are now(even if you don't reach the goal, you will be better off).
One can open an IRA at their bank for as little as $100. After the account has grown over a few years you can move it to a brokerage firm like Fidelity and then start investing in stocks, bonds, mutual funds.
There are opportunities for min wage workers to save as well.
Their first priority would be to get up and out of the minimum wage job for something better if they can. Then, they should open an IRA.
If you have a minimum wage job, you probably can get one of those anywhere, so there is no stopping you from moving into an area with maybe a good community college program for training in some wanted field, maybe some kind of medical tech? I would move out of state, if I had to. When I graduated high school I moved to a slum where rent was cheap and there was good public transportation and a college nearby. I got a job and went to school. It was really tough, but worth it.
All you can do in life is try - and keep trying. Don't stand in one place, complacent or feeling sorry for yourself or becoming dependent on another person. If you are not moving yourself forward you are actually going backward.
Set a long termed goal and then just concentrate, not on the goal, but on the little objectives that you need to get there. Put one foot in front of the other. Just keep doing that, attending to the challenges of the moment, and you will end up in a better place than you are now(even if you don't reach the goal, you will be better off).
Not all 401k plans have company matches, either.
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 don't know if Mcdonalds pays minimum wage. I don't know if Mcdonalds offers its minimum wage workers 401k plans and profit sharing. I seriously doubt this.
I didn't, but I was most heavily invested when the market was booming. I don't think younger people can rely on another dot.com type of boom period to make up for lost time. I agree with you. It is much, much, more important these days for people to subscribe to periodicals like Kiplingers and study and invest as much as possible because that will probably be all they have.
You cannot rely on government. Look at the postal service, and how they are delinquent in paying into that fund for their employee's retirement. Think about how much the dollar may be devalued when you reach retirement age. There are so many factors not in your control, but all you can do is what is left available to you, and that is to save, and save and invest as much as you can.
Social Security is a far more stable source of retirement income than 401k plans. Pensions are far better than 401k plans.
The problem is people don't make enough. We have a huge percentage of workers who don't have access to 401k plans. We have a huge percentage of workers who make very low wages. In fact I'd say the majority of American workers earn low wages.
66% of all American workers earn less than $39,900. The 401k and IRA plans were not designed for people with such low salaries. This is why they are failing in the real world to provide adequate retirement savings.
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.
Thank you!!
I totally agree with your post.
I opened a 401k while still in college and working retail with only a paltry employer match, lost a huge chunk like most people in 2008, lost a few jobs, had jobs with no match, etc and here I am at 34 with less than $30k in my 401k. And its not for lack of trying. I've contributed as much as I could for over 10 years. I stay out of debt, buy used, live a frugal life and put money away in personal savings but that account just isn't growing. And when it does, it declines again. I doubt it will ever hit 6 figures.
So I am looking into IRAs but preferably no fee ones. But truthfully, I have a hard time having faith that anything will get me up to the savings I may need. Some years I earn $50k, some only $35k, the job market is unstable and I have no idea where I'll be next year or the year after that. I just keep putting in.
I opened a 401k while still in college and working retail with only a paltry employer match, lost a huge chunk like most people in 2008, lost a few jobs, had jobs with no match, etc and here I am at 34 with less than $30k in my 401k. And its not for lack of trying. I've contributed as much as I could for over 10 years. I stay out of debt, buy used, live a frugal life and put money away in personal savings but that account just isn't growing. And when it does, it declines again. I doubt it will ever hit 6 figures.
So I am looking into IRAs but preferably no fee ones. But truthfully, I have a hard time having faith that anything will get me up to the savings I may need. Some years I earn $50k, some only $35k, the job market is unstable and I have no idea where I'll be next year or the year after that. I just keep putting in.
But its not growing...its just not growing.
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.
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