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Good luck helps in whatever we do in life. I'm lucky enough to have both my parents still alive and in great physical and mental condition. I'm also fortunate to have a little supplemental income from that land rent (as do my three siblings) that I can stick away in various investments. I don't see it, I don't touch it, I just invest it and let it grow.
Good luck helps in whatever we do in life. I'm lucky enough to have both my parents still alive and in great physical and mental condition. I'm also fortunate to have a little supplemental income from that land rent (as do my three siblings) that I can stick away in various investments. I don't see it, I don't touch it, I just invest it and let it grow.
The answer to your question is no they can't; median income households are effed. You have to have excess income above and beyond cost of living in order to aggressively fund a retirement plan. Very few will be able to attain a 75% retirement making median wages. The austerity required in order to accomplish that is a non-starter. As much as I am not supporting the idea of living beyond your means, it is simply too uphill for a household making 50K to retire comfortably (or even to 75% of their income). They can mitigate the pain by living frugally and not leveraging (financing homes with inflated values that exceed 2x their yearly income for example..), but generally speaking even that won't allow them retirement funding worth any consequence.
Remember marginal utility theory. The closer you are to cost of living, the more valuable your last dollar is. You can't retire when your last dollar is spent on an EITHER/OR choice between entertainment choices or retirement funding. The one glaring thing these posters never tell you is that they aren't maxing their ROTH with their rent money; they got that much extra after rent and life. It is beyond disingenuous to spout that you max contribute to these def. contribution vehicles without admitting your income is high to begin with. They even disclaim "barring any change", which is to mean they'll fund retirement as long as their disposable income allows. The money for retirement goes out the window along with the splurge entertainment money when things get tight. To suggest going through 40 years of life without facing that scenario in America is laughable, and naive.
And here's another thing, and I consider myself a frugal guy: The masses have to retain a sense of purpose. Living monastically in order to have the same monastic lifestyle in retirement is never going to be palatable to the majority. I know this is a very slippery slope but I'm not going to begrudge the mouthbreathers the desire to live with some abandon. Particularly for people with no way in hell of ever attaining an above median wage, to be told to go Greek and live miserably for 40 years. I would make the same choices: live it up and roll the dice.
Recognize CD is a repository of financially-savvy self-patters. This venue is not a reflection of the median. None of them are making retirement possible because they are cutting coupons and foregoing consumer electronics. You need money to make money.
My real world advice to the real majority of Americans (those making less than 75K household)? Go cheap on housing and education. Yep, that's pretty much it. Reach your 50s with a paid off home and minimize the financing of goods that only serve non-economic valuation returns. Try to take care of your health as you approach your 40s and 50s (so as to minimize the negative effects of health care costs young in life) and live a little. Recognize you'll most likely have to retain some part-time occupation, especially if divorced or married with a non-contributing spouse. Consider relocation to a cheaper part of the country in order to stretch your retirement dollar. Recognize it is unlikely you'll get a 2million balance at the end of your toil, though some could. But for God's sake, LIVE...enjoy your avocations and recreational pursuits; yes that requires spending money. Do it. Nobody goes to the grave saying "dang I wish I had gone back to mutual funds a little early on my retirement planning", but I guarantee ya a lot go to the grave saying "dang, I wish I had given [...] a shot". Good luck!
Got my Social Security estimate and figure it should be possible to live. Heck, it's more than some young folks live on. Probably work part time if something is available. I am sure cab drivers retire as soon as they qualify, SS replaces a much higher share of their income they don't lose much. And are glad to get out of that business.
I do have "good parents" but in the sense that they've been there for my siblings and I throughout the years; through good times and bad. "Good parents" aren't measure in terms of financial accomplishments but rather in their ability to rear respectful, hard-working, honest, and self-thinking adults from childhood. I DO have good parents but I don't think of them as such in terms of their financial status.
That being said...I am GRATEFUL to have an extra $72K/ year to stick in the bank on top of my current salary. It's certainly nice to have but some will always have MORE than I do and some will always have LESS. I'm fine being in the middle of the road, I don't begrudge anyone who does better than myself.
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Recognize CD is a repository of financially-savvy self-patters. This venue is not a reflection of the median. None of them are making retirement possible because they are cutting coupons and foregoing consumer electronics. You need money to make money.
There are some immensely financially astute people on this forum that I enjoy reading. They've helped me straighten out a few investments and become more in-tune with retirement and saving. I'm thinking of opening a second ROTH IRA from the suggestion of a forum member. It makes sense, in my mind, to contribute to multiple retirement vehicles so I'll have a decent income when I finally decide to hang it up and retire. The financial gains at my age from two ROTH IRA's fully funded until I'm 60 years old could be quite advantageous.
The answer to your question is no they can't; median income households are effed. You have to have excess income above and beyond cost of living in order to aggressively fund a retirement plan. Very few will be able to attain a 75% retirement making median wages. The austerity required in order to accomplish that is a non-starter. As much as I am not supporting the idea of living beyond your means, it is simply too uphill for a household making 50K to retire comfortably (or even to 75% of their income). They can mitigate the pain by living frugally and not leveraging (financing homes with inflated values that exceed 2x their yearly income for example..), but generally speaking even that won't allow them retirement funding worth any consequence.
You make some very valid points. I honestly think something is going to have to give. Either COL must go down as people are forced to rein in the spending, or you're going to see a lot of people in complete financial turmoil... As in, seniors better have some family to house them or they will be living on the streets. Senior gologs, that's my prediction in the coming years.
As the same time, I do believe that Americans have been living and consuming in an unsustainable fashion. Buying things on debt was a great way to keep the economy rolling, but without it, we're going to see some form of contraction. That is where I believe the COL will be forced down. If people can't consume it, supply and demand dictated the prices will have to fall. This is a big reason I am holding off on home ownership for the time being. Some people get lucky, make 75K out of college, get their 1st home relatively quickly, and they see nothing wrong with the real estate prices as they are. As I see it, I've been working since 16, watched my pay increase gradually but COL also rise, saved my money diligently, and I can't bring myself to shell out 100K for a relatively modest home. I work too hard for my money, and I know what it is to sacrifice to set something aside. Apparently, others see it my way because the prices just keep dropping. Maybe if those 100K homes turned into 60K homes I might take the prices seriously, but there is a definite correction taking place.
More than ever, we are finally seeing the free market actually reveling itself. Wages are falling because you can't have an economy built on getting fat and trading houses with one another. It doesn't make any sense that the guy actually building the house is doing so for a miniscule wage while the real money is in producing nothing. Seems the free market thinks the way I do.
As for the average income crowd and saving for retirement. It's possible. When I started working years ago, I was making $14/hr living with the folks. Saved a lot then. When I moved out, I was making $15/hr and never had to dip into savings to get by. Even when the economy took a total dump and I had to take an $11/hr job, I worked the OT, picked up a part time job or two, found small gigs to earn decent money... Again, didn't touch the savings or anything. I also paid very close attention to what I was spending, and how I could stretch those dollars. I ditched TV, ditched the landline , opted for a reasonable internet option, shopped around carefully for rent, and when I could pay things like insurance all at once to save 10%, that's exactly what I did. It's not my problem if everyone else wants to live a $30/hr on half that. Many contractors have been getting low balled for years and getting by on 40-50K. They all seem to do just fine, and have retirement goals and plans like anyone else. Median income is around 24K/yr, yet the cars that folks drive around wouldn't suggest it's that low. Time to face reality...
You guys really think you know what state the US economy will be in 25 years? Stick it in your mattress because they got the boomer's money and soon they'll be coming for yours!
You say "they" got the boomer's money. Who is they? "They" will soon be coming for yours, you say? That implies they aren't coming for it already. Whoever "they" are, why aren't they already coming for it? Why are they waiting? How soon is "soon"?
I am a boomer. (Well, technically just a tad too old to be one, as I am 68.) No one has my money, nor has anyone tried to get it. My sister is 65. No one has her money either, nor has anyone tried to get it. What the hell are you talking about?
What crazy advice to "stick it in your mattress". What about fire, flood, tornado, and theft? Do you think your hiding places are good enough to fool a determined, experienced, professional thief? Lots of people have come out on the wrong side of their bets on that score.
I do have "good parents" but in the sense that they've been there for my siblings and I throughout the years; through good times and bad. "Good parents" aren't measure in terms of financial accomplishments but rather in their ability to rear respectful, hard-working, honest, and self-thinking adults from childhood. I DO have good parents but I don't think of them as such in terms of their financial status.
I agree. I was just mocking the other poster who said you were lucky. If you were "lucky" so were all the other posters in this thread.
I was trying subtly to stress that your parents were financially competent. You weren't any luckier than the other people in this thread.
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Please explain.
