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What do you mean by companies funding 401ks? The employees fund their own 401k. Some companies offer a matching contribution but they are not required to do so.
Pensions were never a good business decision. For employees, it just seems silly to give up a lifetime of earnings for a pension.
The match. And when they make deposits. It’s not like when you get your paycheck, that match is in your 401k account. It’s called a 401k float- and it’s not legal, but it does happen.
And don’t forget... rules and laws can change... and not always to our benefit.
All I’m saying is watch these people carefully and don’t put all your eggs into one basket. Especially if you’re young, you can fund accounts in smaller amounts, so saving doesn’t seem onerous.
In 1984 at the age of 27 I finally moved out of my parents home into a cute little 1BR apartment in a complex one town over. My income back then was $18,000/year and my rent for that little apartment was $350/month which included water and I had to pay for telephone and electric so with that I was paying around $375/month total which was 25% of my income.
For the heck of it a few months back I checked what the going rents were for 1BR apartments in my old complex and they are now $1,000/month. When you add basic cable and electric the cost to live in my old apartment would be at least $1,150/month. So 34 years later the cost to live in my old 1BR apartment has a little more than tripled.
If the past is any prediction of the future 30 years from now triple that $1,150 rent and it will be around $3,450/month. If a $1,500 monthly Social Security benefit in 30 years turns into a $5,300/month and out of that you have to pay a rent of $3,450/month that is 65% of that benefit. And if a $1,500/month benefit today puts one over the HUD income threshold, so likely will a $5,300/month benefit 30 years from now. So after paying $3,450 for rent, that leaves $1,850 to pay for remaining expenses. If food prices should also triple over the course of that time, someone who now pays $400/month for groceries will be paying $1,200/month. And if all other expenses such as health insurance, car insurance, etc. is today another $500/month triple that = $1,500/month. So out of that $5,300/month benefit one would still be short $850 to cover all their expenses.
If you consider the above scenario, to cover all expenses by year 30 one would need minimally an additional $10,000 of annual income to supplement their $63,600 Social Security income to cover their basic expenses.
Most people would radically alter their life-styles to make ends meet.
The local culture here is big on independence and self-sufficiency, that is why life is so inexpensive here.
Lifespan is probably longer with a better quality of life. Exercise, nature and healthy organic food. In a much less expensive area.
Who can go wrong with that. That's gotta be heaven!!
Let's say you retire early and then your money runs out about the time when you start collecting Social Security.
It seems like you could do OK even as a single person. Let's say you get $1,500/month in Social Security.
You can move into a subsidized senior complex where you pay 1/3 of your income, which would be $500. You'd also get $200/month or so in food stamps, and you would also get Medicaid. If you live in a city, you could get senior bus/train passes which should be very cheap.
So really, your monthly expenses would be as follows:
$500 Rent
$50 Bus pass
$300 Food (since $200 is covered by food stamps)
$0 Medical since you get Medicaid
$50 cell phone with unlimited data
$100 household goods
------------
$1,000 total expenses per month
That means you would have $500 left over for whatever you want. Not a bad deal if you ask me.
$200 for food? Whose world do you live in? That was cut back to normal levels of $155 a month. Obama raised it via XO for the recession.
If you're making more than $800 a month SS you get $16 in the state on Washington for food....
I would like to comment on welfare in general .....I am in my 60's and to me welfare was invented to provide only temporary assistance ....to be a safety net for those who suddenly experience a severe hardship resulting in interruption of income....
But what has happened in my opinion is the welfare system, like most good intentions government programs, has been allowed to be greatly abused.....today I feel many look at being on welfare as a life style.....there seems to be many young kids today who have never seen a parent who needed to leave the apartment or home to go to a real job......Welfare has become a way of life for many and they expect it to last a life time...but no politician that I know has the nerve to do something about the abuse of the system....
But hopefully things will start to change as I recently heard of a work requirement to be attached to those receiving medicaid....this is a good start ...those over a certain age as well as the disabled will not be affected by the work requirement in order to obtain or keep medicaid but there are many ages 20 - 40+ on welfare who could go to work tomorrow if they were forced to or face possible criminal fraud charges resulting in real jail time upon conviction..
We need to get people here in the states out of the state of mind that being on welfare is a life style and let's get back to it being what it was intended for....a safety net for a temporary interruption of income...
It's not unusual for programs to mature and find their nitch and do MUCH more than they started out being. And unless you have a LOT of money, for most social security is going to be a tight fit, and will require some hard decisions. And how many of these are not going to find any job or just can't do them?
Good thing this work requirement doesn't appply to 60plus. I'm getting extra help as my social security check was too bare to pay the bills and medicare costs. And I was getting disability before and it was less, and often didn't stretch all that well. A lot of people do move to places its cheaper and not needing to drive a lot are fine with them, but you still need some way to get places and most of the time its going to cost something. And what do people do when they live in little much less populated places (like I do) and if I was looking for a job I'd have to *somehow* find a way to have a car. Also, I'm not sure I should even drive. My eyes don't focus right and the distance of car to object may be larger or smaller than it really is. Not at all a good idea for driving.
A lot of people will keep driving until some bad event proves they shouldn't and why would anyone want to convince those who figure it out yourself and have everyone's safety in mind? Or is the idea it doesn't really matter, they are just old?
The match. And when they make deposits. It’s not like when you get your paycheck, that match is in your 401k account. It’s called a 401k float- and it’s not legal, but it does happen.
And don’t forget... rules and laws can change... and not always to our benefit.
All I’m saying is watch these people carefully and don’t put all your eggs into one basket. Especially if you’re young, you can fund accounts in smaller amounts, so saving doesn’t seem onerous.
Matches are not required by law. They can go away or be reduced at any time. Mine had been reduced by 1%.
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But hopefully things will start to change as I recently heard of a work requirement to be attached to those receiving medicaid....this is a good start ...those over a certain age as well as the disabled will not be affected by the work requirement in order to obtain or keep medicaid
just in Kentucky - Kentucky is the first state to implement a work requirement for Medicaid - no state has ever done this before - the following people will be exempt: work requirements would only apply to 'able-bodied' adults, coming with exemptions for children, the elderly, pregnant women and people with disabilities.
4 days ago - WASHINGTON (Reuters) - Kentucky on Friday became the first U.S. state to require that Medicaid recipients work or get jobs training, after gaining federal approval for the fundamental change to the 50-year-old health insurance program for the poor. The Centers for Medicare and Medicaid Services issued ...
Temporary Aid for Needy Families, or TANF, is a block grant program which replaced Aid to Families with Dependent Children, AFDC, in 1996 to reflect the welfare reform guidelines. The TANF program offers a cash grant to families each month for a period of up to two years and has work requirements.According to the Department of Health and Human Services, single parents with children under age six are required to spend 20 hours a week on work-related activities, including job training; those with children over age six must spend 30 hours a week in these tasks.
Last edited by matisse12; 01-16-2018 at 05:51 PM..
Let me tell you... if companies can figure a way to not fund 401ks, they’ll do it. Because they aren’t the ones who’ll be screwed if they do it.
Anyone planning on just one thing is crazy. If you have a 401k, also open an IRA. And save money, too, outside of retirement.
Quote:
Originally Posted by charlygal
Matches are not required by law. They can go away or be reduced at any time. Mine had been reduced by 1%.
All the 401Ks that my employers have offered have been administered by outside investment firms, like Fidelity or Merrill Lynch, for example. It's a lot like an IRA, but the 401Ks will usually allow higher annual contributions than an IRA, and the 401K contributions can be through payroll deduction. The employer must deposit contributions no later than the 15th business day of the following month (or sooner, in some cases). The employer might also offer a matching contribution, but they can also increase, reduce, or eliminate that contribution (as Charlygal states), at their discretion, with proper notice.
My parents (Silent Generation) had pensions, but most Boomers & later generations are going to be less likely to be eligible for pensions, and will more likely have to rely on Social Security & 401Ks/IRAs for retirement income. I would agree with Tallysmom that it would be best to also consider IRAs and other savings/investments, even with an employer 401K. But the only employer expense for a 401K (outside of the employer contribution, if offered), is usually just a nominal administrative fee paid to the investment group handling the employer's account.
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