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How much bigger was the $45K than what she would have received without the $150K buy-in? My first reaction was that's a great deal but I'm assuming she would have gotten maybe $35K or so without the buy-in?
She wouldn't have qualified for a pension at all. It was either buy the five year service credit or say goodbye to a pension totally. With her life expectancy, paying for the service credit and getting the pension was the only way to go.
If you start at 25-30 and you invest say 6K a year in a 401K plus get another 2K in match - you'll have around 1.3 million dollars at 60
so why do so few people have million + in a 401K?
I see these statistics and they're always misleading. Nobody stays at one company their entire career anymore. Most people (including myself) have 401ks from multiple employers, that we rollover to IRA's when leaving the company. Why these IRA numbers aren't included in the calculations are beyond me.
Aside from that, too many people live paycheck to paycheck in this country. They live above their means and want the latest and greatest of everything. They aren't willing to delay gratification somewhat in favor of a long term goal. For those reasons, they're constantly struggling, irrespective of their income levels.
She wouldn't have qualified for a pension at all. It was either buy the five year service credit or say goodbye to a pension totally. With her life expectancy, paying for the service credit and getting the pension was the only way to go.
I think it's partly lack of education, partly the fact that many jobs don't come with a 401k, and partly the fact that for many people the priority is buying property. I know this forum is full of old people who are convinced that everyone can be a 401k millionaire and a homeowner if they just stopped buying avocado toast and iphones, but I think for many young people today, their priorities are more in the here and now. The gap between average wages and property prices in most markets have widened to historic levels, and people either just don't have anything to spare, or they think it would be better put towards a down payment.
the other big factor is education. people just don't understand compounding, and they don't understand that 'risk' is just a measure of volatility and not an inherently bad thing. I have a friend who is 38 and has all his retirement money in bonds, simply because he doesn't want to take 'risk' with his savings. I've tried to point out that if his savings compound by 8% a year for 10 years, even if we had a 20% down year he'd still be way ahead, but he just doesn't get it.
It's all relative to what one has. That said, while accruing $1M for retirement (by the age of 60, per the OP) could absolutely be considered sound financial planning for many, it isn't 'wealth' in and of itself.
Quote:
Originally Posted by CorporateCowboy
There's a difference between a $1M net worth at 30 vs. $1M for retirement (to live on for 30 years) at 60. The former has a real shot at accruing 'wealth'.
Sorry if I completely missed this but what is your definition to what it means then to have wealth?
Retired Baby Boomer here. For most of my working life, there was no Roth, no IRA, no 401k, not even a regular savings plan at work that had a match. These tax advantaged vehicles came very late in my working career.
While the standard comment is that employers provided pensions to us, in reality the amount of pension income is very small unless you were a government or railroad worker. "The median annual pension benefit ranges between $9,262 for private pensions to $22,172 for a state or local pension, and $30,061 for a federal government pension and $24,592 for a railroad pension."https://www.newretirement.com/retire...o-you-compare/
The fact that I could afford to retire at all is due to having been raised by parents who lived during the Depression who stressed wants versus needs.
I was taught to save, not spend. Never buy anything the first time you see it. Take the time to think about it. If it's gone when you go back, that's ok. You lived without it before, no major crisis here.
Birthdays and holidays are opportunities to celebrate with family and friends; presents and things are not needed to wish each other happy birthday. Just a hug is needed. [pre-covid obviously].
Retired Baby Boomer here. For most of my working life, there was no Roth, no IRA, no 401k, not even a regular savings plan at work that had a match. These tax advantaged vehicles came very late in my working career.
While the standard comment is that employers provided pensions to us, in reality the amount of pension income is very small unless you were a government or railroad worker. "The median annual pension benefit ranges between $9,262 for private pensions to $22,172 for a state or local pension, and $30,061 for a federal government pension and $24,592 for a railroad pension."https://www.newretirement.com/retire...o-you-compare/
The fact that I could afford to retire at all is due to having been raised by parents who lived during the Depression who stressed wants versus needs.
I was taught to save, not spend. Never buy anything the first time you see it. Take the time to think about it. If it's gone when you go back, that's ok. You lived without it before, no major crisis here.
Birthdays and holidays are opportunities to celebrate with family and friends; presents and things are not needed to wish each other happy birthday. Just a hug is needed. [pre-covid obviously].
Maybe more hugs and fewer I-phones would help.
Are your views based on anything other than the standard boomer sense of self-satisfaction?
Adjusting for inflation, median income has increased 29% since 1960, whereas median house prices have increased by 121%.
I know you want to believe that it's all due to your moral superiority, but the fact is the generation of today are not playing on the same playing field as you were. Not buying an iphone isn't the key to affording the basic 'american dream' that prior generations were able to.
The method of saving and investing for retirement is actually extremely simple. However, human nature does not want to do what is simple.
No matter how much or how well you explain it, most people will not do it.
This has been my experience as well. Even with myself, I sub-optimized the investment part. Fortunately, I got the saving part right. Most people get both wrong.
What employer doesn’t have a 401k plan? Even McDonalds, Walmart and Starbucks have 401k plans.
Young people are inclined to talk about all kinds of ways they spend their money, travel to places and splurge on things. How often do you go to a party where people discuss their retirement accounts? It is not considered to be the sexiest topic of conversation.
Lots of small employers don't have 401k type plans. Not everyone works for a big company or the government. Something like 50% of the workforce doesn't have access to a 401k. That shouldn't be an excuse not to save and invest, but it is a legitimate problem. And it usually it's the lowest paid segment of the workforce the hardest.
We really need uinversal 401ks. I don't think employers should be forced to match, but it would be very easy to set them up based on the federal government's TSP plan for its employees. It really would not be that expensive, either.
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