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That's fine, but it doesn't go very far. All the numbers that are available show that most of those approaching retirement are woefully underfunded. If he's saying those numbers aren't applicable, he needs to come up with some that are bother credible, and prove his point.
Now we're closer to understanding each other. I don't doubt that many, many people approaching retirement are woefully underfunded. Whether it's really "most" people as you said above I'm not sure. It seems to me we would need a bunch of statistics in order to know one way or the other, including yours about 401(K) balances. But we would also need Roth IRA balances, bank CD balances, real estate rental net income and equity, future pension and/or annuity monthly amounts (in the case of annuities already purchased), and probably more that I haven't thought of. Even Social Security retirement benefits are part of the mix; while the average monthly benefit is only around $1200, the maximum benefit is nearly twice that. A person can live on $2300 or $2400 a month, although I'm glad I don't have to.
Last edited by Escort Rider; 04-28-2013 at 10:14 PM..
That's fine, but it doesn't go very far. All the numbers that are available show that most of those approaching retirement are woefully underfunded. If he's saying those numbers aren't applicable, he needs to come up with some that are bother credible, and prove his point.
Look, "underfunded" is a relative term. No one knows what is behind these people in the way of lifetime benefits, assets other than obvious cash, and their own individual talents.
We had a discussion on this board last year wherein people were talking about their retirement savings. Some with SS, but no pensions, had $400-$500k saved and would be renters all their lives. Some had excellent SS for both spouses, defined pensions w/COLAs for both spouses, and employer-paid retiree health care for life which more than covered living expenses, but only $150k in the bank and a mortgage. Many, many people retire with just those two legs - pension/SS plus health insurance - and for the most part will always be more than comfortable. Their income streams are the foundation.
My aunt/uncle, on the other hand, had minuscule SS, itty bitty pension, had to pay $600/mo for health insurance, yet managed to own their own home, plus a summer lake home, plus a rental property. How did they do it - for years they had owned one or two rental properties which they paid off, plus he was handy and in great health and could fix and build anything. They never lived large. She never worked. Yet when they died they passed on the lake property and their remaining duplex free and clear to their kids, plus cash gifts to relatives (including me and my brother) before their deaths. Plus, bailing their son out after his two divorces and giving him a substantial sum so he could begin again. But they never had even as much as $100k in the bank at any time in their lives. Last years of their life, they sold their single-family home, and moved into their remaining duplex, eventually asking the tenant to move because my aunt wasn't accustomed to living with anyone. One day she gave me $5k cash - she'd saved from the rent. That's how little they needed to live.
So, stop with the retirement savings/people being underfunded as a single issue. It isn't - not by a long shot. There are as many ways to get by in life and retirement as there are people and their talents.
Last edited by Ariadne22; 04-28-2013 at 10:12 PM..
We need to step back and realize a large number of Americans are financially unprepared for life and have lived most of it in poverty. So why would retirement be any different? Not to be cruel but what magically is going to happen at age 65 to change their status in life other than becoming medical care eligible? That's if they are fortunate enough to make it that far. Many low SS benefit recipients are that way because they were low wage owners during their working years and living just above the poverty level which continues into their senior years. Perhaps the real question is how many Americans will see a significant shift downward in the quality of their when they retire.
Now we're closer to understanding each other. I don't doubt that many, many people approaching retirement are woefully underfunded. Whether it's really "most" people as you said above I'm not sure. It seems to me we would need a bunch of statistics in order to know one way or the other, including yours about 401(K) balances. But we would also need Roth IRA balances, bank CD balances, real estate rental net income and equity, future pension and/or annuity monthly amounts (in the case of annuities already purchased), and probably more that I haven't thought of. Even Social Security retirement benefits are part of the mix; while the average monthly benefit is only around $1200, the maximum benefit is nearly twice that. A person can live $2300 or $2400 a month, although I'm glad I don't have to.
Just a word that the often quoted maximum is at the FRA. If they wait until 70 it is considerably more.
I think the days of true pensions like our parents probably knew are about to end. In fact many companies no longer offer anything but 401Ks etc. That is fine if you pay attention to what you are doing and realize it is up to you to control your future, to some degree. Will we be working more years and more of us, after age 70 having part time jobs? Probably, but our life expectancy is so much longer than it was 20, 30 or 50 years ago, this is ok. Many people we know still work 20 or so hours a week and are in their 70s and even early 80s.
In three weeks, I am taking a one-year sabbatical from the corporate world.
When I announced this a month ago, friends started calling with business opportunities and job leads. Since many of these are part-time positions, I may consider some of them ... in six months or so.
Seriously, I think that there are a lot of opportunities for people to stay actively engaged doing things that other folks don't take the time to do.
My days of working 60+ hours a week are over ... in three weeks.
For the poster who referred to "pensions like our parents probably had," I appreciate the "probably." Depends on who your parents were and what they did. I actually have an old-fashioned pension at my job, unlike my parents, who drove a taxi and waitressed. They ended up living on Soc.Security alone, and it was not at max. I have a hard time imaging a time and place where ordinary workers, like the electric company or something, worked there for most of the their working life and had a pension. Yow.
All the money magazine's going on about needing a million or more "to throw off $x" are scare tactics, obviously. Most people, even those who save, aren't going to have a million or so and live off the interest/dividends. If that's what we're supposed to do, I'm going to start hoarding the dog food. Oh, wait, they eat really good stuff. Can't afford it for myself.
With the incessently low interest rates to goose consumption, saving to live off interest is like watching a black-and-white TV show.
There will be a downward shift for the middle, no doubt about it. Their parents had pensions and they lived largely on 100% of their net income. For the kids with only a 401k they're being asked to fund their own retirement and live on 60% on a median income that is, inflation adjusted, lower than their parents. The underfunding of a 401k is an objective and logical result. The prole will never exceed a 75% pension with a defined contribution plan.
Sure, some well-to-do CD know-it-alls will pat themselves in the back because they love to gloat about their hobby of swapping trades on a computer screen netting them a retirement worth writing home about, but that doesn't make them the majority. Median wage earners are hosed with 300K in a 401k come their 60s. You'll smoke that in a decade.Otherwise you're taking a lifestyle shave so freggin' pointed you'll wonder why you gave yourself a paycut for 40 years for.
The solution is either some form of pension system or a drastic lowering of the Country's cost of living. Personally I'm hoping for the latter. It will be the only way to adjust for the funding deficit. I think enough people will be downgraded that we can make it politically happen to vote in change as Gen Y enters their 60s. I also envision a resurgence of Hispanic babyboom in the 2050s that will flood the Country's labor roles and begin replacing the tax base with unskilled labor. They will drive a largely diluted price index for every good and service in the Country, including housing. This in turn will lower the cost of living to a level where dopes with 40 years of work history and 300K on a stoopid 401k can stretch their dollar without being displaced from their retirement housing option.
Make no mistake, no statistically relevant percentage of the population is getting into retirement with 2 million in the 401k; that's just more CD elitism. Most proles will be lucky to have 200K in equity in a home and 300k in the bank plus SS. That's it. That's a decade's worth of 50% of peak working year income consumption, then you're in the street. That's not retirement.
For my part I'm chasing a government pension (military). After that, use the wife's income to pad personal savings towards retirement. That's probably where the 3-400k in savings will come from. The kid(s) will have to fend for themselves college wise. Maybe my GI BIll if it's still around for them to use. Otherwise they better take advantage of in-state tuition because I can't afford to student-loan-mortgage myself in my 50s considering my "pension" is probably going to be diluted anyways when Im my parents age. All in all, my household probably makes 2x the median household, so that says a lot considering few people in my professional circle consider that monastic retirement outlook all that enviable. I consider my retirement outlook austere, and most people are worse off income wise than my household. a big fat yes for me on the OPs poll.
You're trying to disprove statistics with conjecture, and it doesn't work. I haven't scene any numbers that suggest anything other than that the vast majority of Americans heading toward retirement are grossly unprepared financially to support themselves. If you have any hard numbers that show anything else, please post them.
there are no complete set of statistic that has ever been done. whatever numbers that are out there are piece meal. there is no complete financial profiling done at all for all of us .
net worth is a variable ,infinite thing and can not accuretly be guessed at by asking 120,000 people in the entire country which is what the census related one does.
everything else is just piece meal guesses by diffferent self interest groups who do not have access to everyones information.
case in point looking at a 401k balance which may not be representative of a persons full net worth at all.
there are no complete set of statistic that has ever been done. whatever numbers that are out there are piece meal. there is no complete financial profiling done at all for all of us .
That is true but there are ways to put together that set of numbers. It would be daunting yes but a study could be undertaken to find it.
Quote:
Originally Posted by mathjak107
net worth is a variable ,infinite thing and can not accuretly be guessed at by asking 120,000 people in the entire country which is what the census related one does.
everything else is just piece meal guesses by diffferent self interest groups who do not have access to everyones information.
case in point looking at a 401k balance which may not be representative of a persons full net worth at all.
The point here is that we define net worth in differing terms depending on the person's point of view. What some would say is a comfortable retirement is much different than another's. It is all based on perspective.
Also as someone mentioned the vehicle of 401k's for savings is powerful but under used by so many. Still mathjak is right in his assessment that there are more ways to skin a cat then the one mentioned here.
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