Many of my friends and family report they can't afford to retire! (grandparent, depression)
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our matches were only 1k a year in our 401k . i did just fine . in fact if i didn't have the 401k and used an ira and tax efficient accounts in my brokerage account things would not have been much different .
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.
Very interesting, thank you for sharing! Sounds like how my parents had it back then.
I'm 32 yrs old and even I think it's ridiculous to assume that someone that started their career in 1972 would be able to pull off a retirement of over a million dollars. We're talking about someone that was born in 1950 or 1949 here. That means their parents were survivors of the great depression. Do you honestly think kids of depression parents were going to trust the stock market in the 1970s? What about the recession in the early 80s? Let's not forget that people still thought they would have pensions, SS, and plain cash savings in order to retire. Let's also remember that college degrees weren't the norm so people hit career ceilings once college degrees started to flood the job market.
As another poster said, pre-tax savings accounts weren't around and definitely didn't become widespread until well into the 90s/2000s. My aunt is 60 and has a union pension plus 401K, but she worked at the same phone company for 40 years and never switched jobs. She still doesn't have much of a retirement savings just because people back then didn't understand things like inflation, stocks, interest, etc.
I do have another aunt that is a silent generation baby and she did retire w/2 million dollars, but it went down to about 500k after 2008. Even then, she had my grandparents attitude about debt (never), never bought a house (her rent was $525 when she died), and benefited from the 90s boom and cellphone stocks. She also had no kids. An older generation boomer was likely to come from a large family and therefore likely (not always, but likely) to have a couple of kids themselves before the age of 30. If you think someone with kids is going to save that automatically and not have emergencies because Johnny attempted a slam dunk and broke his leg (happened w/my brother), this is seriously the most unrealistic thread ever, LOL.
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Do you honestly think kids of depression parents were going to trust the stock market in the 1970s? .......
She still doesn't have much of a retirement savings just because people back then didn't understand things like inflation, stocks, interest, etc.
I do have another aunt that is a silent generation baby and she did retire w/2 million dollars, but it went down to about 500k after 2008. ........
Sadly, ignorance of money and finances is quite common. That is about all your family examples show. Assuming that others have the same level of financial ignorance is a mistake.
My maternal grandfather was an illiterate, peasant farmer who migrated from Europe. He lived through the Depression and even worse conditions in Europe. He may not have been educated but he always talked about having your money "work" for you. He worked with a hoe and mules, but he also bought land, and stocks and real estate a few pennies at a time. He died relatively rich and he taught his kids to save and invest. My parents certainly bought stocks in the '70s. They made sure I took some of my lawn mowing money and I also bought a few shares....which are worth a lot today. Understanding budgets and saving is something I always believed should be taught to small children. Then they need to understand interest and compound growth and mortgages and, yes, stocks and bonds. This is not rocket science, just the very basics of thriving in the world.
Sadly a lot of people are like your relatives with no understanding. Sadly others made the same mistake as your aunt who saw her investment drop less than half due to the recent Great Recession. Others of us avoided that mistake. If she had held firm, her $2 million would be worth at least $5 million today.
One of the big differences between the "haves" and "havenots" is the understanding of finances. Those with little money, spend as fast or faster than they earn and are always behind. Those with even minimal understanding, save, invest, and grow their assets.
The problem is not that people make too little, its that they spend too much. Now certainly there are those who really can't afford to stop working because a health problem bankrupted them. Some also don't know what else to do with themselves so they keep working. But IMHO, most people just spend too much, have too lavish a lifestyle, have wasted too much money on fancy homes and new cars, or they paid for all their kids college education. Look at how much people eat out, when they all have a kitchen at home. Just notice how busy Stabucks is. Just check out houses that were built 40-50 years ago and the houses built today. 4 people do not NEED, 2500 sq. ft. of living space. Just look at the closets and see how big they are for all the woman's clothes. Then you'll see why they have no savings.
But even if they don't have a big retirement income, many of these people the OP is referring to could still retire if they would scale back their lifestyle, get a smaller, cheaper place, etc.
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.
Maybe they don't really want to retire and just tell you they can't afford to because the actual reasons are none of your business?
I just got back from my hometown's fall festival. A lot of high schoolers come back during this time. Its your standard flyover town that has been struggling hard since all the industry moved out. It was a great place to grow up, a vibrant town of 12,000. The oil embargo in the 70's seemed to be the beginning of the economic downtown and its been a downhill slide since. The town is a shadow of its former self, no employment, 8,000 people who all look really really rough. People who stayed seem fairly poor and I wouldn't be surprised if they won't have much money if, when they are retired. My impression is that the whole town is on disability, another form of unemployment now.
I was surprised though by the amount of money others (visitors), mostly those who left, seemed to have. Plenty seem to have done really really really well for themselves. I'm happy for them and also wistful.
The problem is not that people make too little, its that they spend too much. Now certainly there are those who really can't afford to stop working because a health problem bankrupted them. Some also don't know what else to do with themselves so they keep working. But IMHO, most people just spend too much, have too lavish a lifestyle, have wasted too much money on fancy homes and new cars, or they paid for all their kids college education. Look at how much people eat out, when they all have a kitchen at home. Just notice how busy Stabucks is. Just check out houses that were built 40-50 years ago and the houses built today. 4 people do not NEED, 2500 sq. ft. of living space. Just look at the closets and see how big they are for all the woman's clothes. Then you'll see why they have no savings.
But even if they don't have a big retirement income, many of these people the OP is referring to could still retire if they would scale back their lifestyle, get a smaller, cheaper place, etc.
I think it is boredom also. Was it here that someone mentioned that in the old days, just keeping up with your home and family was a full time job- laundry and ironing - two days.
I have family and friends that go to Wal-Mart or one of those type of stores almost every single day. They don't NEED things, they just need to fill their time.
One relative has THREE jobs because she confesses she has a shopping addiction. No other hobbies but work and shopping. Oh and church and drinking - weird combination - lol.
I used to go to the mall every Saturday. I felt it was just something I was supposed to do.
No more. I stay home and keep to my online hobbies. Of course they think I am nuts because I am talking to "weird" people on line.
We can be our own worst enemy when we think we "have to have" big houses, expensive cars, closets full of clothes (mostly never worn).
Have you ever stepped into a youngster's bedroom/playroom?? More toys in there than any toy store I've ever gone into. And the cost of the toys? And of course the child is involved in many after-school activities that cost money, too.
I know for myself my own shortage of money is due to more spending than money coming in. I was bored, lonely, scared, felt somewhat abandoned, etc.
The problem is not that people make too little, its that they spend too much.
That may be true for people whose incomes are $100k+ and claim they have no money; not so much for people whose household income is below the median.
Quote:
Originally Posted by augiedogie
But IMHO, most people just spend too much, have too lavish a lifestyle, have wasted too much money on fancy homes and new cars, or they paid for all their kids college education.
Again, that doesn't pertain to the millions and millions of people who simply don't earn enough to have money to save at the end of month after paying essential bills, much less worry about living a lavish lifestyle.
Quote:
Originally Posted by augiedogie
Look at how much people eat out, when they all have a kitchen at home. Just notice how busy Stabucks is.
So going to a restaurant or a coffee shop occasionally is the reason people can't afford to retire? Seriously?
Quote:
Originally Posted by augiedogie
Just check out houses that were built 40-50 years ago and the houses built today. 4 people do not NEED, 2500 sq. ft. of living space.
I like how you put NEED all in caps. For that matter, nobody NEEDS a house. There are many things that people don't NEED to survive. However, there's also a concept called quality of life.
Quote:
Originally Posted by augiedogie
Just look at the closets and see how big they are for all the woman's clothes. Then you'll see why they have no savings.
Oh, so it's the woman's fault that she and her husband can't retire! I get it now! She shouldn't have bought so many clothes throughout the years!
That's a bit sexist isn't it? FWIW, I always spent more on clothes during my working career than my wife did.
Quote:
Originally Posted by NYgal1542
And of course the child is involved in many after-school activities that cost money, too.
OMG! Someone call child protective services!!!
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