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I would not help out people who don't save for retirement.
How does someone reach the age of 65 and not have one dime saved in an account anywhere?
Actually, it would be quite easy. If you've worked a fairly low salary or low wage job all your life, and you happen to have had a catastrophic illness or permanent disability in your family, it would be very hard to accumulate very much in savings. Or if you were downsized a couple of times in your work life, lost your house, made ever less with every job after downsizing, it would be really easy to have nothing saved.
There are many reasons for people not having savings.
Some of them are terrible luck in the lottery of life.
They won't be homeless. They can move into subsidized senior housing available everywhere for 30% of their SS checks. They can be dual eligibles for Medicare/Medicaid - and even have their Medicare Part B premium paid in some states and have little in the way of medical expenses. Medicaid even has some dental and vision benefits, iirc. The remaining 70% of their SS checks they can use to buy food, they may even qualify for food stamps depending where they live, eat their dinners at senior centers, take the bus wherever they're going. They won't be homeless. They just won't have much in the way of fun money and will have to count pennies - and maybe even go bankrupt once or twice while retired. Many seniors do. Run up what they can't pay cash for on credit cards.
I don't claim to be an expert but I'm skeptical about how easy all of this is. I've heard of people being on waiting lists that are years long to get into subsidized housing.
They won't be homeless. They can move into subsidized senior housing available everywhere for 30% of their SS checks. They can be dual eligibles for Medicare/Medicaid - and even have their Medicare Part B premium paid in some states and have little in the way of medical expenses. Medicaid even has some dental and vision benefits, iirc. The remaining 70% of their SS checks they can use to buy food, they may even qualify for food stamps depending where they live, eat their dinners at senior centers, take the bus wherever they're going. They won't be homeless. They just won't have much in the way of fun money and will have to count pennies - and maybe even go bankrupt once or twice while retired. Many seniors do. Run up what they can't pay cash for on credit cards.
That's a plan that will fail in the end. Your plan to run up your CC is only good for a few months
It recently came up in conversations with a couple of people I know (I know them separately, I don't mean they are a couple) that neither of them is saving anything at all for retirement. Nada, zilch, zero. They are both around 50, working full time, career type jobs but for different reasons, neither is saving anything at all. They both rent, so they won't have the fall back of a paid off home to live in. One of them seems to have a small employer funded 401k, so that's at best a few percent of salary, the other one I know for sure doesn't contribute at all and there is no employer contribution, so they truly have absolutely nothing saved for retirement.
I know the best answer is to keep my mouth shut, but would you say anything at all, maybe point them to some really, really basic budgeting and saving information? If you would say anything, do you have an specific websites or books you'd suggest?
At this point, I'm thinking I wouldn't initiate a conversation but if the subject came up again, I might say something like "I have some resources I could suggest if you wanted to take a look". But then again, it might fall on deaf ears given that the answer to "what do you plan to live on in retirement" was basically a shrug.
I am only 32 so I may still be too green and have to much faith in people but over the last ten years I have accumulated a wealth of knowledge about personal finance and investing. I am doing way better than 90% of the people I know. I have been able to share some of the knowledge I learned and it has helped more than a few people really turn their finances around!
I don't spend a ton of time around people and I am big on not judging anyone for living life as long as it doesn't effect me. I also don't offer unsolicited advice but I do love talking about anything in great detail and what I experience is that most people just don't know how to filter through the tremendous amount of crappy advice.
With some help and great unemotional explanations once they understand how easy and rewarding it is to just have basic financial health they do get themselves to a better position.
Many years ago I had a team of employees reporting to me with some not participating in the 401K program with a 50 % match. I sat each down individually and asked them if we needed to take a 10% pay cut would they survive or would they leave the company. They all said they would stay. I told them then they could afford to put 6% of their pay in to get the match. Almost all took my advice and now 30 years later I run into them and they thank me for my guidance and crow about their $450,000 401K.
If married they should consider life insurance which can be an instant fund if one died. As getting them to think about the retirement years just ask them if they ever considered what their guaranteed income will be at retirement?
Now understand a 401k amount isn't guaranteed. 2008 blew up the best laid plans for many people who banked on 401k' s..
The wife when we saw her before a Thanksgiving was asking us about affording XMas gifts since we retired. We mumbled we didn’t spend anything on ourselves that didn’t fit in a stocking. We mumbled about the kids and our grands.
Oh, that's rich. I know you can't say anything, but the answer to the Q of how you can afford Christmas gifts is "we made it a rule to pay ourselves first and saved and planned for retirement our entire married life." Of course, next thing you know, she'll be asking you for money. So, mumbling is probably the wiser answer.
Quote:
Originally Posted by emm74
I think it really is more about not earning enough money to cover some of the unexpected expenses she's had.
Honestly, there's a lot to this, especially if she never married and has always lived alone, and doesn't think about investments much. It's hard for single women - at least it was in my era - especially if never married. I've often said a woman should be married at least once. When we split, I took the investment real estate, he took his business. We both were in decent shape after the divorce because of the marriage - pooling of resources. That real estate was my foundation. Also, I was always very money focused, understood investment and leverage, and knew the value of compounding. So, the last ten years I worked at (fortunately) somewhat higher than average wages I forced myself to stash the max into retirement accounts - 401k, IRA, HSA, even borrowing against the HELOC to do it - because the tax-deferred stock market appreciation and 15% tax savings far outweighed the small tax-deductible 5% mortgage interest paid. Today, retired, I have far more discretionary income than I ever did when I worked - when I really did live paycheck to paycheck - BECAUSE I was saving so much.
These days, of course, more are highly-paid professionals, so women in that category should not be having a problem. But, for the ordinary single female earning $50k/yr., it's not easy.
Quote:
Originally Posted by emm74
I don't claim to be an expert but I'm skeptical about how easy all of this is. I've heard of people being on waiting lists that are years long to get into subsidized housing.
People die all the time. Waiting lists for senior subsidized housing generally run about two years. These developments exist everywhere - they even advertise for low-income seniors around here - located in very nice suburbs. A year or two before retirement, if she doesn't think her SS will cut it, she should get herself on one or more of these lists.
Quote:
Originally Posted by boston904
That's a plan that will fail in the end. Your plan to run up your CC is only good for a few months
Well, that's only if your card limit is low. If she's working, she must have cards with decent limits - or should have. She may find after retirement she needs that credit to keep going until she is able to restructure her way of life.
Last edited by Ariadne22; 01-07-2018 at 07:37 PM..
It recently came up in conversations with a couple of people I know (I know them separately, I don't mean they are a couple) that neither of them is saving anything at all for retirement. Nada, zilch, zero. They are both around 50, working full time, career type jobs but for different reasons, neither is saving anything at all. They both rent, so they won't have the fall back of a paid off home to live in. One of them seems to have a small employer funded 401k, so that's at best a few percent of salary, the other one I know for sure doesn't contribute at all and there is no employer contribution, so they truly have absolutely nothing saved for retirement.
I know the best answer is to keep my mouth shut, but would you say anything at all, maybe point them to some really, really basic budgeting and saving information? If you would say anything, do you have an specific websites or books you'd suggest?
At this point, I'm thinking I wouldn't initiate a conversation but if the subject came up again, I might say something like "I have some resources I could suggest if you wanted to take a look". But then again, it might fall on deaf ears given that the answer to "what do you plan to live on in retirement" was basically a shrug.
I haven't read all 10 pages of this topic but am curious. Have you asked (or considered asking) them why they aren't saving/planning for retirement or what their retirement plan is? Listening to what they say may open a door for more conversation and suggestions.
I asked a good buddy this same thing a while back and he had planned to work until he couldn't and then live on a ranch where he knows the owner. We talked more over the years and now he's finding out what he does or doesn't have covered by SS and is looking at working for at least 10 years in a county job full-time to get some kind of pension. He lives frugally and is a pretty smart guy but had never really thought about this stuff much as he lives a cowboy life style and bounces from job to job.
CAHntr - When I asked my over 65 friends why they haven't saved, I was told by both of them that they enjoy taking risks.....that is the fun in life. They also said that when they make money (sales) they like to spend it. To each his own.
So I will probably always help my family because I've been in financial and emotional difficulties a time or two.
My first house caught on fire when I was out of work. my brother GAVE ME 25K without me asking and never once asked me to pay him back. When my husband died, I had a really hard time moving forward, he was the love of my life and his death rocked my world. Even though I actually had the resources I simply could not get out of bed. thank god for my best friend, she paid my sons college tuition (he was a freshman at the University of Cincinnati) and covered my mortgage. once again never mentioned it to me, I found out when I finally called PNC to find out what type of hole I had dug.
So yes, I do not considering my family as asking for "handouts".
What awesome family and friends. A true blessing.
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