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Recently I read a very good article about kids and wealth or lack of it in the retirement years.
It turns out that having kids is not a factor whatsoever -- as long as you ditch the kids at some point - when they are 18-23 or so. If you can't get your kids to grow up and have to go on supporting them indefinitely then they can make you poor, but as long as you get your kids to grow up and take care of themselves by the right age, they will not affect your ability to retire comfortably.
For one, having kids actually encourage home ownership, and once you own a home, you no longer have mortgage payments or rent payments. If you don't spoil them hopelessly, kids don't require a cell phone, and they can watch the same television you watch, and they don't even need cars until they can afford their own car. They can work their way through college if they choose to go. They may be an expense -- but as long as you get them on their own by the proper time, you will have enough time to finish saving for retirement.
I have long had the guess that the ability to retire comfortably is driven largely by whether one does, indeed, own their home without a mortgage payment. Although even having a mortgage to pay would be far superior to paying market rent.
But I've never seen any actual data on this. Does the article provide any hints at least?
And the OP article was misleading. Broken down by age, those 50+ have an average balance of $234K in their retirement accounts. I posted a link earlier with the age group breakdown.
Just taking the average of all 401K savers is not valid because younger workers have a lower balance.
Also, many companies have modified their 401K plans so that workers are automatically enrolled with min taken out of their checks. They have to opt out now instead of opting in.
So that's a start for a nation of non-savers.
If my employer automatically enrolled me in a 401(k) I would ask him, HowTF (TM) much do you expect me to put into a 401(k) with a minimum wage income?
It is to laugh. If there are minimum wage employers that automatically enroll their employees in 401(k) plans, I'd like to know who they are so that I can deride them.
It has to be mandatory in the schools and employers should make attending basic 401K classes mandatory as part of employee orientation. I have observed way too often that character is only one aspect of this problem. Some people come by the motivation to manage money easier than others. At the very least, everyone should get the same basic financial education to level the playing field. Beyond that point, I agree with your "you can lead a horse to water..." statement.
If I were required to attend a mandatory 401(k) class, I would ask my employer, WhoTF (TM) do you think you're kidding? HowTF much do you expect us minimum wage peons to put into a 401(k)?
Chiel, I am not smart. I am at best average. I also worked 2 jobs. Lets face it there wasn't a big demand for a sniper in the civilian market. Thats what I faced when I left the military. I delivered Pizza at night and hung sheet rock by day. It sucked. We had a 19 inch TV forever.
(light goes off in head)
Now there's an idea for a downscale retailer for the new economy:
If I were required to attend a mandatory 401(k) class, I would ask my employer, WhoTF (TM) do you think you're kidding? HowTF much do you expect us minimum wage peons to put into a 401(k)?
Just in case this was not a rhetorical question:
-Google '401k calculator' and take your pick of the top 10 results.
-Then plug in:
$15,000 annual salary (full time minimum wage with 2 weeks unpaid vacation = 2000hrs x $7.25)
5% contribution (works out to about 15 dollars a week)
75% employer match
Starting age = 16
Starting value = $0
Retirement age = 65
Annual rate of return = 5%
Expected annual salary increase = 1%
The amount in this hypothetical account at age 65 will be over $300,000. Play with the numbers a little - it is enlightening.
Compound interest is a powerful thing, but of course you need some discipline too. So in response to your post - Saving $15 per week is not unreasonable, and I think a minimum wage employee should definitely be able to contribute to a 401K.
Nobody puts a gun to your head and forces you to have kids.
The other thing is that I know several single folks who earned ok incomes all their lives but are now broke in their late 50s and early 60s due to not saving and poor decisions. And these are smart people who should know better. The 2 people I'm thinking of in particular just did not have a savings ethic. Both thought they would just be able to work until age 70....I don't understand how they could never imagine that they might become disabled or booted out of the work force before age 70. It's like they lived in their own fantasy world.
My oh, my!
You're right, of course. We tried very hard to have our kids. But so what? They cost money! I still say not too many with kids do the early retirement thing.
I would not work for minimum wages. I would find a better paying job and save.
How much would you save if you couldn't get a job paying better than minimum wage? The local economy where I lived was in worse shape than the national economy is today or was a few years ago.
-Google '401k calculator' and take your pick of the top 10 results.
-Then plug in:
$15,000 annual salary (full time minimum wage with 2 weeks unpaid vacation = 2000hrs x $7.25)
5% contribution (works out to about 15 dollars a week)
75% employer match
Starting age = 16
Starting value = $0
Retirement age = 65
Annual rate of return = 5%
Expected annual salary increase = 1%
The amount in this hypothetical account at age 65 will be over $300,000. Play with the numbers a little - it is enlightening.
Compound interest is a powerful thing, but of course you need some discipline too. So in response to your post - Saving $15 per week is not unreasonable, and I think a minimum wage employee should definitely be able to contribute to a 401K.
I have never had an employer match available. And I can't make that 5% contribution because I have a student loan payment more than 2x whhat that 5% contribution would require.
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