Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Here is an interesting bit of an article. Too much alarmist for my liking but many of you are on that band wagon so you might all find something to take from it.
May 27, 2013 — Several recent surveys of current and prospective retirees paint a very disturbing picture about retirement in America. The data made us realize that we American workers are kidding ourselves- with potentially dire consequences for our retirements. The studies drew us to come up with 7 dangerous retirement fantasies. Following those we have included the supporting data from the surveys.
The 7 biggest lies that workers tell themselves about their retirements: 1. I can’t save any more than I do. The fact is that if you are working, there is always something (clothes, alcohol, tobacco, eating out) you could cut to save a little more.
2. I will solve my retirement problem by working past 65 or even longer. Sadly, even though people say they will work, what they don’t count on is losing their job or their health. Some 42% of current retirees stopped working before they were 60 (Source: BlackRock and Boston Research Group poll).
3. Once I retire I will find some full or part-time work to supplement my income and give me a comfortable retirement. Fact: only 25% of retired workers have any employment income
4. My 401k or savings will provide the bulk of my retirement income. Fact: only 15% of retirees get 25% or more of their retirement income from their 401k type accounts. About half (47%) of Americans 45 and over have less than $25,000 in savings
5. I will have enough saved to last my lifetime. Fact: Only a quarter of workers think their savings have to last more 30 years. But people are living longer – what happens if you retire at 65 and live 30 more years? Or if your spouse survives you beyond that?
6. Medicare will take care of my medical expenses. Fact: A retired couple will need somewhere between $220,000 and $293,000 for ordinary health-related expenses for 20 years of retirement. (Society of Actuaries (SOA) using data from Health Care Cost Institute (HCCI)
7. I have a good idea of how much I’ll need for retirement, and how to invest it. Fact: 45% of workers just guess how much they’ll need for retirement. Only 18% have asked a financial advisor for assistance in determining that amount, with just 23% using a financial advisor for investment advice.
Alarming Data
Consider these snippets from the surveys (see Further Reading below). What makes the data even more alarming for the future is that many current retirees, particularly those with traditional defined benefit pension plans, have it better than younger workers.
- Seven out of 10 workers say they will work for pay after they retire – yet only 25% of adults over 65 actually have any work income
- Although many more current workers are now much more likely to say they will work past 65, almost half (47%) of retired workers reported that they had to retire before they intended (usually because of poor health or a job loss)
- Adults aren’t saving nearly enough to pay for a comfortable retirement. Half of Americans (47%) 45 and over have less than $25,000 in savings (ERBI survey). Only 57% of workers are saving for retirement
- Mathew Greenwald, who heads the research firm that conducts EBRI’s annual survey, believes that Americans’ explanation for their saving troubles is “not really true” – most of them could save a little more if they wanted to
- EBRI research found in 2010 that 60 percent of those 65 or older received at least 75 percent of their income from Social Security. One-third get at least 90% of their retirement income from Social Security
- Defined benefit pension programs (fixed payments regardless of contribution) are very rare now. And only 58% of American workers are enrolled in pension or 401k type plans
- About half of workers (48%) assume that their 401k will be their largest source of monthly retirement income. But only 15% of retirees get 25% or more of their retirement income from their 401k type accounts
- Retirees aged 61-70 are taking out alarming amounts of money from their 401ks – before they are required to age 70.5 (EBRI)
- Some 28% of surveyed workers say they are not at all confident about being able to have enough for a comfortable retirement.
For the most part, a good, sensible list in the OP. However, I dispute #6 (health expenses in retirement). I believe those figures (which I've seen before) are grossly exaggerated; in order to derive those numbers, certain unlikely assumptions have to made, assumptions that are way on the high side.
I know that Medicare will indeed take care of my medical ecxpenses. In some previous thread (don't ask me to remember which one, please), I spent some time calculating a worst case scenario, using the co-pays of my Kaiser Medicare Advantage Plan and assuming the most horrible medical problems imaginable, such as several surgeries a year, etc., then multiplying by however many years. The numbers (dollars) were far, far below what is quoted in $6 above. And no, I'm not going through all that again. And yes, I should have saved it somewhere for future use.
For the most part, a good, sensible list in the OP. However, I dispute #6 (health expenses in retirement). I believe those figures (which I've seen before) are grossly exaggerated; in order to derive those numbers, certain unlikely assumptions have to made, assumptions that are way on the high side.
Agree. I do not believe the report/list is alarmist, imo it reflects much more of a reality than "boomers are retiring well-off."
I also agree with your assessment of #6, but then I have someone in my class whose husband, age 59, has had catastrophic illness and unbelievable medical bills (even with his good job insurance) that could well put him in that category of expense. Whether or not he would be an outlier I don't know; it would be frightening if the stats showed otherwise.
Even just a quick and simple math excercise tells me I agree with #6 (in our case) but that would be if the chronically ill person(s) responsible for the high expenses actually lasted 20 years.
There are a few medications/conditions I can think of that would cause big bills while not necessarily causing a shorter life span, but most don't.
However,if a married couple (which the article is using) and both needing a lot of medical care....or one after the other, it is still not an extraordinary amount.
Medicare A alone at the current round figure of $100 a month ( not factoring in any increases)for two for 20 years is $48,000.
We're generally in the $8000 to $10,000 a year now, with only one incurring extra drug expenses......20 years of that.....$200,000
Even just a quick and simple math excercise tells me I agree with #6 (in our case) but that would be if the chronically ill person(s) responsible for the high expenses actually lasted 20 years.
There are a few medications/conditions I can think of that would cause big bills while not necessarily causing a shorter life span, but most don't.
However,if a married couple (which the article is using) and both needing a lot of medical care....or one after the other, it is still not an extraordinary amount.
Medicare A alone at the current round figure of $100 a month ( not factoring in any increases)for two for 20 years is $48,000.
We're generally in the $8000 to $10,000 a year now, with only one incurring extra drug expenses......20 years of that.....$200,000
Since I posted this a few people have replied and many have great points. I will interject my opinion here going line by line.
Quote:
Originally Posted by golfingduo
1. I can’t save any more than I do. The fact is that if you are working, there is always something (clothes, alcohol, tobacco, eating out) you could cut to save a little more.
Absolutely agree. Tobacco use could put in easily 3 to 4k per year of hard savings. Some of the other discressionary spending is good as well but live today as well as live for the future.
Quote:
Originally Posted by golfingduo
2. I will solve my retirement problem by working past 65 or even longer. Sadly, even though people say they will work, what they don’t count on is losing their job or their health. Some 42% of current retirees stopped working before they were 60 (Source: BlackRock and Boston Research Group poll).
It is good to say that but in some stretches of the history of this economy we had high unemployment rates. Older people are less likely to find employment in some industries.
Quote:
Originally Posted by golfingduo
3. Once I retire I will find some full or part-time work to supplement my income and give me a comfortable retirement. Fact: only 25% of retired workers have any employment income
See point 2 above.
Quote:
Originally Posted by golfingduo
4. My 401k or savings will provide the bulk of my retirement income. Fact: only 15% of retirees get 25% or more of their retirement income from their 401k type accounts. About half (47%) of Americans 45 and over have less than $25,000 in savings
If this is the case than only 47% of us are actually making that attempt. It is something we as a society could mandate. Our employers should have a package available even without matching to offer employees. Just the ability to put away money periodically that can grow and be taken with you to other employment will be an improvement. If we truly want to help that is something we collectively could do.
Quote:
Originally Posted by golfingduo
5. I will have enough saved to last my lifetime. Fact: Only a quarter of workers think their savings have to last more 30 years. But people are living longer – what happens if you retire at 65 and live 30 more years? Or if your spouse survives you beyond that?
For the 47% of us that do save many of us do not have enough. Yes that is true but at least it will get you through to that time. That is a very important point. Many people dream of life after working. Some are more grandeous than other. There are a percentage of that 53% that do not even care or try. Anyone hazard a guess?
Quote:
Originally Posted by golfingduo
6. Medicare will take care of my medical expenses. Fact: A retired couple will need somewhere between $220,000 and $293,000 for ordinary health-related expenses for 20 years of retirement. (Society of Actuaries (SOA) using data from Health Care Cost Institute (HCCI)
This could be a good number and studies show that but this has to be an average over a 20 year period that some of the dollars can be from multiple sources.
Quote:
Originally Posted by golfingduo
7. I have a good idea of how much I’ll need for retirement, and how to invest it. Fact: 45% of workers just guess how much they’ll need for retirement. Only 18% have asked a financial advisor for assistance in determining that amount, with just 23% using a financial advisor for investment advice.
I went to see a financial advisor and he was supposed to get back to me on a financial plan. It would seem that he would prefer someone making 6 and 7 figures and younger to figure out a plan. So how much will I need in retirement. I can only guess on my own. Based on my figures I believe I met my goal though I am not retired yet.
Quote:
Originally Posted by golfingduo
Alarming Data
Consider these snippets from the surveys (see Further Reading below). What makes the data even more alarming for the future is that many current retirees, particularly those with traditional defined benefit pension plans, have it better than younger workers.
- Seven out of 10 workers say they will work for pay after they retire – yet only 25% of adults over 65 actually have any work income
probably due to the economy.
Quote:
Originally Posted by golfingduo
- Although many more current workers are now much more likely to say they will work past 65, almost half (47%) of retired workers reported that they had to retire before they intended (usually because of poor health or a job loss)
Becoming more visible but probably happened for as long as people have been alive.
Quote:
Originally Posted by golfingduo
- Adults aren’t saving nearly enough to pay for a comfortable retirement. Half of Americans (47%) 45 and over have less than $25,000 in savings (ERBI survey). Only 57% of workers are saving for retirement
If you have saved only $25k over your lifetime you either one didnt try, or two had not made enough money to even begin to save. 25k will not buy you a retirement period.
Quote:
Originally Posted by golfingduo
- Mathew Greenwald, who heads the research firm that conducts EBRI’s annual survey, believes that Americans’ explanation for their saving troubles is “not really true” – most of them could save a little more if they wanted to
As explained above somethings are self inflicted. Still if you make enough money and save some, remember to live while you can as well. Too many people focus on the future and forget the now. Flip side a great many more focus on the now and forget the future.
Quote:
Originally Posted by golfingduo
- EBRI research found in 2010 that 60 percent of those 65 or older received at least 75 percent of their income from Social Security. One-third get at least 90% of their retirement income from Social Security
It is how we have trained our people. It is not just our country look at others who have the same system.
Quote:
Originally Posted by golfingduo
- Defined benefit pension programs (fixed payments regardless of contribution) are very rare now. And only 58% of American workers are enrolled in pension or 401k type plans
Defined pension programs where the employer provided the sole income for that will probably never make a huge comeback but defined pensions such as Keoughs SEP's and 401k/403b should be making much more in roads into society. We as a group could do much more.
Quote:
Originally Posted by golfingduo
- About half of workers (48%) assume that their 401k will be their largest source of monthly retirement income. But only 15% of retirees get 25% or more of their retirement income from their 401k type accounts
Back to not enough of us take advantage of what we can do.
Quote:
Originally Posted by golfingduo
- Retirees aged 61-70 are taking out alarming amounts of money from their 401ks – before they are required to age 70.5 (EBRI)
If you only have 25k then what do you expect?
Quote:
Originally Posted by golfingduo
- Some 28% of surveyed workers say they are not at all confident about being able to have enough for a comfortable retirement.
All of this means that we need to get our elected representatives to do something other than argue. Also we should insist our own employers to provide at a minimum even if there is no matching. Any money saved prior to being spent with restrictions gives people at least some incentive to save.
Just my honest opinion. I am not a money guru by any means but I do understand micro and macro economics.
Even just a quick and simple math excercise tells me I agree with #6 (in our case) but that would be if the chronically ill person(s) responsible for the high expenses actually lasted 20 years.
There are a few medications/conditions I can think of that would cause big bills while not necessarily causing a shorter life span, but most don't.
However,if a married couple (which the article is using) and both needing a lot of medical care....or one after the other, it is still not an extraordinary amount.
Medicare A (I think you mean "B" here) alone at the current round figure of $100 a month ( not factoring in any increases)for two for 20 years is $48,000.
We're generally in the $8000 to $10,000 a year now, with only one incurring extra drug expenses......20 years of that.....$200,000
Am I correct to assume that you have only traditional (sometimes called "original") Medicare coverage without having purchased any supplement? If this is not correct, then what is it that Medicare (plus the supplement) or your Medicare Advantage Plan is not covering? In the case of my Medicare Advantage Plan, the amounts you're citing are completely impossible.
Am I correct to assume that you have only traditional (sometimes called "original") Medicare coverage without having purchased any supplement? If this is not correct, then what is it that Medicare (plus the supplement) or your Medicare Advantage Plan is not covering? In the case of my Medicare Advantage Plan, the amounts you're citing are completely impossible.
Same here. We have a gold-standard supplement through our retirement plan which includes unlimited prescription benefits with easily affordable co-pays. If I read the EOBs correctly, my recent neurosurgery penciled-out at somewhere in the neighborhood of $170,000. I paid nothing!
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Which of These 7 Fantasies Could Wreck Your Retirement
