Many of my friends and family report they can't afford to retire! (move, federal)
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I had this conversation with a friend once. Her: I can't afford to retire. Me: Well, you can. But you'd have to give up your twice a day dining out, leasing a new car every two years, buying all new clothes every season, having your hair cut/colored/styled every two weeks, professional mani/pedi/massages, going shopping for stuff you don't need for entertainment, vacations three times a year, giving money to your adult children, etc. Her: Well, I can't give all that up! Me: Well, then you can't afford to retire.
i'm not sure what you were thinking because none of this makes any sense. Especially since you claim to be 62+ and would have been working in the 1970s.
First of all, your entire premise/scenario is ridiculous. Someone who made $22k in 1972 would be making a hell of a lot more than $67k in 2016. Are you aware that $22k is the equivalent of over $126k in 2016 dollars? So in your scenario, someone started their first job at the equivalent of a six-figure salary, and then was such a poor performer over the years that their pay has been reduced by about 50% over a 40-year career.
Secondly, $22k was about triple the average salary back then. Relatively few people were making $22k at the time, and those who were certainly were not right out of school at the beginning of their work career.
Finally, 401(k)s did not even exist in 1972. The law that created them did not come into existence until 1978, and even then, such plans did not become common until the mid-1980s.
I have been talking to lots of my friends and family who are in their 50s and 60s about two of my favorite topics- money and retirement. Many of them are still working and claim they will keep working FULL TIME until the day they die. I tried to tell them that there are few full time workers in their 70s, 80s and 90s, but they did not believe me.
They said it was impossible for someone who was a middle class person all their life to get enough money together to retire.
This got me thinking. What if someone had started working full time in 1972 at age 22 and turned 66 this year. 44 years of full time work. They started their first job at age 22 at $18,000 a year and made a conservative three percent increase a year. After 44 years of working, their salary is now $67,000 a year. (Which is a three percent increase a year.)
From age 22 they put in 6% of their income into a 401K and increased that amount to link with their 3% salary increase each year. The company matched an additional 3% for a total of 9%. (The average company match)
What would they have if the person would have invested in a fund that matched the S&P 500:
$2,635,483.00 (Over 2 1/2 Million Dollars)
(OK, you say, no one works non stop for that many years, they may have faced layoffs and emergencies. Then lets cut that amount in half to 1.3 million. They can still afford to retire! And that amount does not even consider Social Security and any other savings.)
(FIRST PARAGRAPH).........working full time until the day they die
Attitudes like that is why I wished mandatory retirement age was still the norm.
I have witnessed on jobs I worked, on board of directors that I served on, that a big problem for employers is people with an attitude that they will work forever.
I wish I had $10 for every case I witnessed where the worker's productivity was lacking yet they believed they were the best worker and most valued employee. They also let it be known they would play the ........"age discrimination card "...if any talk of letting them go arose.
My advice to employers is to closely monitor every employees performance ( especially once they hit 60 )
The reason being is when mandatory retirement was the rule, you could overlook slight drops in performance because you knew in a few years they would have to retire.
Today, if their performance is slipping around age 60, document it and get rid of them !
Keeping them on longer might result in them stating they are not retiring and then you got a problem for many years.
Nip it in the bud ! Document and get rid of " dead wood" or you might have those low producers around for another 20 years.
As I stated, I witnessed this scenario all too often.
Nausikaa you are spot on. In 1972 I was working at my first job making a grand total of about $0.75 an hour at shoe shop. In the army in 1976 I made $4094 for the year. 11 years later I made 18k and that was when I was able to start saving for retirement. It was the first job I had that offered a 401k for retirement. I remember getting a 27 inch picture tube to replace the one I had that broke and doing the work myself because it was damned expensive. Like you I can afford to retire because I and my wife tossed plates at each other but never gave up on what we had. Here we are today half retired and doing just fine thank you very much.
I started work as a secretary for the State of Florida in 1971. In order to get this job I had to pass a typing and shorthand test, and also pass a test administered at a local junior college. I was 23 years old. My yearly salary was approximately $3,600.00. The minimum wage was $1.60. My husband was just starting out, after having served four years in the US Air Force. We had a one-year-old child who was in daycare. In Florida we had a small apartment with no AC, and a used car with no power steering or AC.
We were early 1st and 2nd year baby boomers. Both of our mothers were widows, so if we ran out of money, there was no safety net. No credit card. Most cars back then broke down about once a month! We bought recap tires. We never went out to eat. We had 3 channels on the black and white TV. We used cloth diapers.
Oh, what an easy life we baby boomers had! I can't imagine anyone I knew that made $18k a year. We bought 1.5 acres of land, paid for it, and had a house built on it by 1975. Grand total of $26k.
As far as saving money, well we weren't able to save initially, but along the way it did happen. Back in the 1970s there were no instructions about how to save, no 401Ks, usually no grand inheritance from parents, no cheap appliances, TVs, or washing machines. Appliances were v expensive. We used to get our TVs repaired at the TV repair shop. Can you imagine! Ha ha.
My point is (sorry for the ramble), that the idea that most people made $18k per year in 1970, in middle America, is ridiculous. I went on to obtain 2 years of college and another type certificate. We moved to Atlanta in the mid 1980s, and only then did I make $18k a year in 1986, and that was considered v good money for a female. Get real!
PS. We have a v comfortable retirement, in large part because we never divorced, There was plenty of plate throwing and yelling, but we persevered, and now have a great life.
1978, my first year out of college, I made $8,000 at a job in New Jersey. I went back to school and got a master's degree. My first job after that, in 1981, in Savannah, Georgia, was $15,400.
My advice to employers is to closely monitor every employees performance ( especially once they hit 60 )
To more closely monitor people over the age of 60 is discrimination. Any employer with half a brain monitors the performance of all employees and gets rid of the slackers regardless of their age.
To more closely monitor people over the age of 60 is discrimination. Any employer with half a brain monitors the performance of all employees and gets rid of the slackers regardless of their age.
School districts are a great example of not documenting and having employees in their 70's who should have been put out to pasture about 10 years back.
I cut the 2.6 Million figure in half to account for lower raises and periods of unemployment and other issues. It still gives them lots of money to retire.
Then go out on the street and try to shake some sense into all those people! Oh right...you can't even persuade "all the family and friends" you have that say they can't afford to retire. Did you show them your pretty example? With a graph and everything?
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