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I'm surprised no one has brought up the most common reason:
Most people plan to work a lot longer than they do. Some are forced out because of ageism in the workforce, others are forced out because they are no longer productive. Still others have medical issues that they didn't expect to have and can no longer work.
I'm shaking my head over the fact that poverty, as a lifelong situation has been quite normal for millions of workers in America, these folks get old, they are just as broke now (in retirement) as they were when they worked the low paid jobs. It's pretty obvious that a ton of people don't really understand the depth and width of American poverty, they still advocate for low wages, no benefits, hard work, and long hours---for others...
There’s one thing that’s never talked about. There is a psychological component to money that can’t be discounted. It’s not just low wages. We made low wages when we first got married, and managed to save 3000 our first year. In 1983.
I know people who retaliatory spend. He bought X, oh, I’m spending on Y. They made decent money, but have had vehicle after vehicle repo’ed, and have crawled into a hole so deep it isn’t funny. And if you try to point it out, it’s yes, but. (I’m not butting in, she asked for advice)
My Dad died in 1981 at 57, which thrust my mom and me into poverty. Mom was a stay at home mother, I was in college. She was 54, and had 35,000 to live on till she could collect widows benefits. She had a little job at the local library. She worked about 25 hours a month.
This whole thing made me and my then boyfriend, now husband, decide that saving was a high priority, and that living frugally was fun. But honestly, who knows if my father hadn’t died, we’d be big spenders.
By the way, when Mom died in 2010, she had around 100k in investments and IRAs. She did something right.
We've been living in an rv for two years now, and have met a wider variety of people than you would meet in your typical suburb. Ive been surprised at how many struggle financially. Some of them struggle financially, imho, because they retired early and they cant really afford the health insurance.
But thats not the only reason. Some struggle for other reasons. Some men have had substantial portions of their pensions taken because of a divorce settlement.
So I thought it would be an intersting discussion for posters to tell what they know to be other reasons why people, after working their whole adult life are still living paycheck to paycheck.
My mother was forced into the workforce in the late 60's after my father suffered a TBI. Our grandfather paid for her to go to secretarial school (one of few feasible options for a working mom then). Secretaries and other traditionally "female" jobs did not pay much. My mother worked as a legal secretary then at a bank, ending in HR at that bank.
For decades of work, she gets a $400 a month pension, and SS around $1300 a month now. Her home that she and my stepfather bought in the late 70's for $36,000 was in a neighborhood that declined. She didn't have enough income to have repairs like a new roof done. It was falling apart around her. We ended up selling it for $50,000 as-is. My mom was lucky and did have some investments due to my grandparents, but after 3 years in assisted living that was gone. Thank God we had the "carrot" to offer to get her into a nice place.
Many boomers were lucky enough to get inheritances and homes from their parents that had increased in value, current generations are not going to be as fortunate.
Divorce is a big factor too. My brother was forced to support two households on an auto mechanics salary for 15 years or so, in his prime earning years. It wasn't that he lost a pension, but he was unable to save for all those years which had a big impact later.
A high school classmate of mine was in a catastrophic vehicle accident back in August. A month or so in ICU followed by a month or so at The Shepherd Center, a specialty spinal rehabilitation hospital, in Atlanta. Paralyzed from the chest down and will need constant care for the rest of his life.
He's 32-33 with twin toddler girls. He can no longer do his job. His wife had a job, but with all the medical trips and such, who knows if that's still going to be around. They are selling their house. I have no idea what their finances are like, but it has to be utterly devastating. Just on the surface you're going from two incomes to one income permanently, with unbelievable medical expenses on top of that.
You can go from upper middle class to completely screwed with something like this.
I would think he would get disability from the government if that’s the case. That’s why it’s important to have disability insurance while working. I had private insurance on top of what my employer offered.
Last edited by NewbieHere; 11-07-2018 at 12:58 PM..
A high school classmate of mine was in a catastrophic vehicle accident back in August. A month or so in ICU followed by a month or so at The Shepherd Center, a specialty spinal rehabilitation hospital, in Atlanta. Paralyzed from the chest down and will need constant care for the rest of his life.
He's 32-33 with twin toddler girls. He can no longer do his job. His wife had a job, but with all the medical trips and such, who knows if that's still going to be around. They are selling their house. I have no idea what their finances are like, but it has to be utterly devastating. Just on the surface you're going from two incomes to one income permanently, with unbelievable medical expenses on top of that.
You can go from upper middle class to completely screwed with something like this.
Sadly, he survived the accident. If he had died at the scene, his family would not have been saddled with huge & ongoing medical expenses, and his widow would have collected life insurance.
Well, I think that's overly simplistic and probably only true in cases where both parents had the same mindset. I wonder how many of those situations there really were. For example my parents were different as night and day when it came to finances and I suspect that was often the case back in our parents day.
My mom's outlook was summed up by her favorite phrases: Save for a rainy day, Never buy anything you don't need, Always pay your bills first, Look out for yourself first because nobody else will, and Needs come before wants.
My dad's outlook, summed up by HIS favorite phrases, was Money is for spending, Live for today because tomorrow is never guaranteed, It's my/your/their money and I/you/they have a right to do whatever I/you/they want with it, and Wants are just as important as needs.
As a result the mortgage payment was always several months behind and the credit cards always carried a balance. My mom agonized over it but it didn't bother my dad in the least. My dad was the breadwinner and so he made all the money decisions of course. That was the norm back in the 1950s/60s. My mom didn't even open the mail if it was bills, but left them on the sideboard for my dad to open. Often they sat there for weeks unopened but because it wasn't "her job" to pay the bills she never opened them. She was the one who answered the phone calls from the bank and the collection agencies though, because they called the house during the day.
Nevertheless I do not think my dad was a "bad parent" nor my mom a "good parent" when it comes to finances. My dad's money decisions didn't mean that our family was poor, it just meant that my dad was always in debt. But that honestly never bothered him. What influenced me most was that my dad was always a positive happy person and my mom was generally negative and miserable, so I identified far more with my dad than with my mother. Including about finances.
I think a person's "debt tolerance level" depends on how fearful they are of losing it all.
Someone who is very fearful and skittish will probably be a saver. Your dad sounds like an extreme example by simply letting it slide by, but a lot of people are willing to trade monthly payments for an enhanced lifestyle.
I was nearly fired back in early 2016. I had a lot of debt. I had a certain priority list of what would be paid, and in what order. Housing and critical utilities were first, followed by a car payment. The unsecured debt was the last on the last list.
I'm single with no kids. I could go back to a $3,000 old car and a crappy 1BR if I had to. If I had a wife and kids depending on me, I'd kind of have to do better.
I would think he would get disability from the government if that’s the case. That’s why it’s important to have disability insurance while working. I had private insurance in top of what my employer offered.
My father after his TBI was too much for my mom to take care of. She had to enter the workforce, with a 5 year old and 12 year old at home. So disability income didn't matter, because he had to go to a Veterans home. If he had died my mom would have gotten insurance and it would have been much different.
I'm not sure they had state/federal disability in the 60's, did they? I don't think buying private disability was a thing then, but not sure. He was in his only 30 or so, maybe as he got more established he would have.
I would think he would get disability from the government if that’s the case. That’s why it’s important to have disability insurance while working. I had private insurance in top of what my employer offered.
But that could take months and months to see the first cent. Meanwhile, the bills are piling up. It doesn't do much for an immediate need.
Quote:
Originally Posted by SportyandMisty
Sadly, he survived the accident. If he had died at the scene, his family would not have been saddled with huge & ongoing medical expenses, and his widow would have collected life insurance.
This guy apparently cannot be killed. When we were in high school, he was a passenger in another severe MVA. The driver was not wearing a seatbelt, was DUI, and ejected from the vehicle - killed at the scene. Jeff lived, but he cut off two fingers. He was also in another catastrophic accident involving a motorcycle about five years ago, but recovered.
A case like this is an extreme example, but it could happen to anyone.
Injury/disability shortened their working years and medical costs took all their existing savings.
They lost their investments in 2008.
Their pension went south.
Lived beyond their means (big house, fancy cars, maxed out credit).
College for the kids not doable but did it anyway.
Second mortgage.
Bankruptcy.
Relied on expected inheritance.
But that could take months and months to see the first cent. Meanwhile, the bills are piling up. It doesn't do much for an immediate need.
This guy apparently cannot be killed. When we were in high school, he was a passenger in another severe MVA. The driver was not wearing a seatbelt, was DUI, and ejected from the vehicle - killed at the scene. Jeff lived, but he cut off two fingers. He was also in another catastrophic accident involving a motorcycle about five years ago, but recovered.
A case like this is an extreme example, but it could happen to anyone.
You can negotiate about payment. Trust me I did, they are happy if you can pay anything. I was not near destitute either.
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Solly says — Be nice!
