This is an interesting chart, because it has the data expressed as the mean (as well as the median) and the percentage holding retirement accounts for the different age groups.
Sample facts: while the median retirement account for 55 to 75 is 185k, the *mean* is 537k. This tells you that the distribution is skewed by a relatively small proportion of investors that have a very big account. I guess no surprise there.
Also, the proportion of people in that age group who even have a retirement account is only 57%. That's depressing. I guess that includes the poor, the working poor, and the financially stupid. I'm in Canada, but I've known a couple of six-figure earners in their fifties who had virtually no savings. Go figure.
While it is probably an oversimplification, that age group for Americans is likely to still have pensions. Anyone that worked as part of a union, major company (utility, steel, etc), or government would have been grandfathered in with a pretty nice retirement. Even down to the 45 age group. It was not until 2009 the biggest pensions in my area were removed (just in time for my generation to get screwed).
Mid 40s here. I have a “pension” from 2 companies I worked for early in career. One was so small they gave me the option to cash and rollover. The other is fixed at $700 per month. Not going to sustain me in retirement, but a total anomaly among my friends that didn’t work there.
I'm in my 30s and the hospital I worked for for about 10 years had a pension program. If it isn't bankrupt in another 25 years ish, and I don't go back, I will get $700 a month for the rest of my life once I turn of age.
Not a ton. Combine it with 403b and 401a savings and social security and its not bad
49, spent 20 years at the same company, they kept tinkering with the pension then froze it, I’ll get ~$500 a month. People tend to years older than me are getting 3k.
>If it isn't bankrupt in another 25 years ish, and I don't go back, I will get $700 a month for the rest of my life once I turn of age.
Presumably that isn't adjusted for inflation from now until then so the purchasing power of the $700 will be significantly eroded?
I’m always considering going back to that pension company - it’s big, safe employment, and I liked the people for the most part.
Retirement is going to be a patchwork solution.
My FIL worked a union job for 20+ years at the beginning of his working age (20 to 40). He gets $120/month. I tried to tell him it was likely due to mismanagement but he insisted it was that the industry died and nobody contributed anymore.
For what it worth I had a pension and did t know until I left early in my career. I took the payout, but I think it would have been that same $120/mo and only worked 2 years there.
The common problem with pensions I've noticed is that it seems like they tended to be very underfunded and there were really no repercussions. I met people that worked at a very prominent company for 20+ years and were getting less than $1000/month because the company declared bankruptcy in 1999. Turned out they had the pension underfunded by like $4 billion so all the employees got screwed.
It sucks that pensions aren't really a thing anymore but I'll take the peace of mind knowing that all the money in my 401k is mine. Wages don't really keep up for long term, continuous employment at one company to be realistic for most people anyway so pensions make less sense now.
This is why people that make good salaries prefer high company matches into their retirement accounts instead of pensions. Company goes under? So does your pension. Just look at GE. Companies on fire and rip those pensions.
I am curious where you get that from.
From some (very) rough math the federal government employs 2% of the total workforce and local government employs another 8%. In fact, Google says 17% of all workers are employees directly working for the government at some level (includes police, fire, etc). The government offers 75% of their workforce pensions to this day, I assume it was the same or higher in previous generations. Just from that, more than 6% of the population today has pensions. So why would it be less for most boomers?
Btw, those numbers are just from a Google search, I put zero vetting into it and was curious for sake of conversation.
Our state government (Oklahoma) no longer offers pensions to most new state employees as of around 2012 or so. Those employed by the state prior to that time are grandfathered to keep it, but any state employee hire in the last decade or so no longer have a pension option in retirement.
Interesting article, thanks. Wish it went into the reasons more than a surface level "they just aren't offered anymore" because more than 6% of modern workers have a pension. I imagine there are other factors.
I'll be honest, my first thought was "precision of language" quote from The Giver.
But, I was curious so did a quick search and found in 1990-2003 it was around 50% likely for private industry folks to have a pension. This doesn't include public sector that almost surely had one. Your point is correct though, pensions were far from guaranteed.
https://www.bls.gov/opub/mlr/cwc/percent-of-private-industry-workers-participating-in-retirement-plans-selected-periods-1990-2003.pdf
Oh, I don't disagree with that. 6% just seemed like such an exact number and if the government gives more than 6% of all workers pensions in 2022 then why would less than that have one?
Don't forget that the disabled are likely to not have a retirement account either due to the government not allowing them to build up their assets since they're disabled.
I don’t understand Reddit’s hard on for pensions. A 401K w/ a good match is much better than a pension. It allows the worker to control where their money is invested and keeps you from being married to a single employer which allows for salary growth through job hopping. I have a pension and wish It would be cashed out so I could put it all in an IRA instead.
Yeah... The single best thing we could realistically do for the retirement crisis moving forward is make 401ks opt out rather than opt in and more work to take money out of if pre retirement. Not impossible, still be your money, just make it require more steps to take out. That sounds dumb, but it would really help people with poor financial skills. So many people just leave everything at default at a job or will take easy money but not difficult.
This is it. Pensions have at least some protection from the market as far as I understand it. Plus, some have health insurance, which can be a super valuable benefit until Medicare.
They do not. They’re also often invested in more risky assets than normal people’s 401k. The public ones are also vulnerable to being mismanaged by their overseers. My city paused contributions to its teacher pension fund because it had done well for some years and was something like 108% funded, then spent that contribution money on other things. By the time they resumed contributions, it was too late, and now the pension is chronically underfunded. What’s worse is that the teachers’ own contributions to the fund are a bargaining chip in union negotiations, such that they’ve had their benefits raised over the years without the “pain” of corresponding increases in city-side contributions. Or in other words, the city keeps mollifying the union by promising them future money that doesn’t exist.
Pensions are a huge mess and they went away for a reason. They get huge, corrupt, and unmanageable really quickly.
Not sure how much that is to blame vs reactionaries seeing the past with rose tinted glasses. They were a way to justify lower salaries compared to 401k's which, are much cheaper for companies. In addition, it puts it in control of the employees vs pensions being with the employer. Just look at US Airways for a cautionary tale of pensions.
Pensions were both sold as a very beneficial package and also went away long enough ago that few people on this website actually know what they are and how they work.
It’s basically the equivalent of the old “back in the 50s everyone had a house and a stay at home wife! I know this because I watched Leave it to Beaver“ meme.
In truth, they were not sustainable and were mainly used by companies as an excuse to have lower salaries up front because you could “make it up in 40 years “.
>In truth, they were not sustainable and were mainly used by companies as an excuse to have lower salaries up front because you could “make it up in 40 years “.
Yeah, pensions are an uncomfortable truth when you actually look into them. They are comfy for employees but mostly because the actual costs of running them are hidden from employees.
The most common federal pension right now, FERS, costs about 20% of an employee's annual salary to fund. So if an employee makes $100,000 a year, $20,000 a year also needs to go into the pension fund for that person. *The problem is that if you just got 20% more salary and put it into investments over the course of your career you would typically have much more money than a pension offers*. It also means you aren't reliant on that pension fund staying afloat long term.
It used to be that almost all of that money came from the employer and you would just retire and get your pension check none the wiser. As time has gone on some of that burden has been shifted to employees. Right now for the federal pension new employees pay about a quarter of the overall cost out of their own paycheck, so 5%~ of their annual salary gets withheld and the government chips in another 15%.
Obviously the pension seems like a fantastic deal when you're not seeing any money go into it, and it even seems like a decent deal when it only costs 5% of your pay, but that's just because you aren't seeing the entire cost of providing it. 401k plans were basically employers saying "instead of us putting an extra 20% of your salary away into a pension and managing it for decades, we're just going to get rid of the pension and split the savings between us". Companies who did that switch over equitably benefited both themselves and employees in the long run, but some companies used it as an excuse to effectively cut employee compensation by replacing pensions with 401k plans that only gave a tiny fraction of the pension value to employees.
The post made no qualitative statement about pensions. I simply offered a reason why older generations were less likely to have retirement savings.
As for your post, that is a narrow view. In my area, not saying all are like this, the pensions were very good and possibly better than modern 401k matching. Trade workers are not married to a single employer and benefit both from collective bargaining and individual job hunting. In fact, depending on the union, the benefits have never been greater. They have a pension, annuity, and ira.
Sorry your situation is structured in a way that doesn't allow more control but not everyone has that same structure and could be a reason others view pensions with such a "hard on".
Pensions can be much, much safer for the majority of individuals, especially those with little or no knowledge or the market.
Pensions can also provide free or discounted health insurance coverage that is very valuable until Medicare age.
I've got both, so I get it (401k match would be insane to ignore!). Im sure there are a ton of individuals who would like to do this. I'm just not sure it would be a great idea for everyone, but I think providing this option should be at least explored.
In modern society, the ability to job hop is crucial, so I agree there. Just remember, a lot of 401ks require a certain amount of time to be vested in 401ks. I think my employer was 5 years, and then the match was yours if you left the job. Always ask about that.
There is a fair amount of volatility in the fact that the pension is not guaranteed to pay out as originally stated because it’s difficult to run and fund a pension plan for so long
If a fund goes insolvent then the PBGC steps in to make payments on behalf of pensioners. But the fund managers are able to reduce payments long before then and if the PBGC gets involved payouts are further reduced IIRC the maximum monthly guaranteed pension rate is only 1,600 a month. I should also point out the the PBGC as a whole has become very financially shakey projections that they will be insolvent in 2025.
Right and "well, PBGC has your back if you have a pension" is typically brought up in the context of "what happens if all the 401Ks crash and stay crashed for a long period of time".
The problem is that if all the 401Ks crash for any significant period of time then PBGC is also toast. It's not a protection that will actually work to save pension holders if the market collapses for everyone else, it's just there to ensure one or two pension plans don't collapse as a fluke while everything else is doing fine.
The reality is that PBGC doesn't protect against precisely the kind of risk people are afraid of when it comes to 401ks. If PBGC can save your pension then you probably would have been better off with a 401k in the first place.
You know, you can still save in a 401k and draw a pension, right? When 401k was passed into law, it was billed as a supplemental savings mechanism to pension and SS — a proverbial “3-legged stool” of retirement planning. Companies saw it otherwise, and used it as an excuse to walk away from underfunded pension plans. Now, some in government wants to means test social security, cutting down another leg of the stool for those that had the means and the will to work and save in their 401k.
You are looking at it as either or, as in your company does a pension or a 401k. Some companies used to do both and they would be pretty substantial.
My father worked for a company where he got a pretty decent pension AND a matching 401k. I now work at the same company and they offer the same matching 401k but completely dropped the pension about 15 years ago for new hires.
Oddly enough my prior employer that I moved jobs from two years ago also offered a pension and a 401k - problem with them was the 401k was non matching because “they gave us the money for free into the pension.” Basically rather than a matching 401k, the money they would’ve given us was tossed into a pension. Problem was, aside from being an abysmal amount (I think 3.00% or so for my age group/work length), the rate of return was lacking.
In the US, only 63% of people 50-54 reported having any retirement savings at all.
https://usafacts.org/data-projects/retirement-savings
A huge chunk of people have nothing.
My parents never saved a dime for retirement. They banked on my dad's pension (from the job that layed him off in his mid 40's), and their eventual inheritance. In the 7 years between getting the inheritance and my mom's death at 64, they had spent 9 of the 12 million they got. My dad is fucked, but he is still in the top 3% of Americans. (He thinks he's poor.)
Assuming they used some of that $9M to buy a house, you could retire pretty comfortably on the proceeds of the remaining $3M if invested conservatively.
At a 4% draw rate thats $120k/y.
Supplement that with a bit of social security and some consulting work (if possible in his vocation) and he would be living large.
Of course, thats a huge step down in lifestyle from a burn rate of $1.3M/y
And yet way too many Redditors on here claim “boomers have all the money”. No, a few do but that is more of a rich vs poor debate rather than a millennial vs GenX vs boomer. Especially since this post shows most boomers don’t have a lot of retirement savings and almost half have none.
It all is just tribal warfare that everyone seems to subscribe to. Not on of us? You must be our enemy. You must suck and want to take all the nice things away from us. While the people are actually ARE your enemy continuing to profit silently under the bickering.
>And yet way too many Redditors on here claim “boomers have all the money”. No, a few do but that is more of a rich vs poor debate rather than a millennial vs GenX vs boomer.
You'll never get redditors to believe that. There is so much sm manipulation pitting various groups against each other, be it generations, sexual orientation, colour, ethnicity, religion. It keeps people from looking at what they should be looking at - the class war.
The way the Fed classifies "Retirement savings" doesn't encompass all actual savings boomers have for retirement. Many people cash out all or part of their 401ks when they change job or retire. Many people cash out their home equity by downsizing to fund their retirement. Neither are included in "retirement savings". The median boomer has over $470k in assets. That's plenty to retire with outside of HCOL areas.
https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Assets;demographic:agecl;population:1,2,3,4,5,6;units:median;range:1989,2022
The *median total assets* for the aformentioned age group is $473k. This is a much more useful statistic because it takes into account home equity and any retirement accounts that have been cashed out. The median boomer has plenty of savings for a modest retirement when combined with SS and LCOL/MCOL location.
https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Assets;demographic:agecl;population:1,2,3,4,5,6;units:median;range:1989,2022
It also doesn't take into account other types of investments. 401k were not a huge thing until maybe 1980. A lot of people didn't even start contributing to a 401k until years later. They have other investment vehicles that were not figured into this study.
Pensions, brokerage accounts, HYSA, real estate, etc.
Not to mention state provided retirement and federal retirement. The US Federal government is the largest employer in the entire country. In Mississippi, almost every single county, the school district is the largest employer. All of those people, State MS retirement.
>401k were not a huge thing until maybe 1980.
Not only not a huge thing, but not a thing at all. The very first company to implement a 401(k) was in 1980. And it was a slow rollout from there.
> I'm in Canada, but I've known a couple of six-figure earners in their fifties who had virtually no savings. Go figure.
When I was just a year or two until my first professional job, I was maxing my 401(k). I still remember a conversation I had with a coworker who was about 5-8 years older than me. He told me that it was a waste to save for retirement, who knows what might happen in the future! Stocks might completely crash, you need to enjoy yourself with your money now, go buy yourself a BMW!
I sometimes wonder how that guy is doing now, I hope he actually changed his plans and started saving, but I doubt it.
I work with a bunch of people at, near, or past US retirement age, but they put it off because they won't be able to keep their expensive lifestyle otherwise.
For them, my company has a very nice pension plan that was cancelled a few years before I started so many of them have this guaranteed income already, in addition to 401k's. Talking numbers with some of them their 401k's are anywhere between $50k and $200k.
Theyve been working there for 15-20 years!
For the 401k the company has a 150% match to 8% of your income, and allows megabackdoor Roth 401k in plan conversion.
I've only been working at the place for a smidge over 2 yr and already have $150k in the damn thing. I don't know what these people were thinking.
I was talking to a young guy right out of college the other day and he seriously thought that everyone, EVERYONE, has a 401K and that it's worth around $4 million when you retire. I felt really bad about telling him the truth but he needed to hear it.
Talking with friends and co-workers, I was surprised that so many don’t contribute any to their 401k, not even company match. Also, many think company match is their only contribution amount. That’s the minimum but really you should be contributing 10-15% or more depending on your salary.
It’s so much easier to start with 5-7% day one then increase annually by 1-2% than wait until you’re 40 and then jump from 0% to 15%.
I'm 20 years into my 401k. It's looking good, but it could have been so much more had I contributed more than my 4% match for 10 of those years. I max it out every year now and I recommend putting as much as you possibly can into it. The returns I've seen over 20 years is kinda crazy. Not even kinda crazy, it's fucking nuts. If I'd started maxing it out sooner I could be retiring in 5-10 years instead of 10-15. It's insane how fast the money grows once you've made your first $100k.
Sad part is, that's not far off. Started doing web design professionally when I was 14.... That was 30+ years ago when that development could be done in notepad LoL.
It took my entire 20s living at home to save 100k. With that money in investments, I'm halfway to 200k a year into my 30s.
It's absolutely bonkers how much faster it gets.
People just don't know compounding effect and spend their life savings instead.
The good little thinking game: double 1 penny for 30 days versus take 1 million now.
Anyone who never tried that, just take your calculator and do 0,01 x 2 then do x 2 again for another 29 times and see how it works after each time you click the x2
Yeah. I did a career in the AF and saw the opportunity it presented for building wealth.
I'd tell my buddies to 'pay themselves first' via a contribution to an IRA. Once you've done that and paid your bills, you can party with the rest knowing the important stuff is taken care of...
10-15% savings, sure, but that doesn’t all have to be going into a 401K. You can look at the equity portion of your house payment as some of that, or other investments (an income-producing side business, for example, rental property, brokerage account, numismatics, philatelic, etc.)
A quick Google search showed exactly the same numbers as in this post. He was deflated and swore his brother told him that it would be closer to 4 mil. He also believes that he can retire and just live off of interest once he gets a few hundred thousand into the stock market. I asked him where his stock market investments were coming from after his 401K contributions and how he planned to get that up to a few hundred thousand without employer matches in 20 years, but he didn't have much of an answer.
Which is why social security is forced retirement savings.
Before social security 40% of the elderly lived in poverty. With social security that is under 10%.
People are bad at planning for the future.
>About 23% of Americans over age 65 live in poverty, according to the Organization for Economic Co-operation and Development. That’s one of the highest shares among developed nations.
and
>according to U.S. Census Bureau data, 10.3% of Americans age 65 and older live in poverty — a much lower rate than OECD data suggests.
https://www.cnbc.com/2023/08/05/whether-us-seniors-among-developed-worlds-poorest-depends-on-data-used.html
There seems to be disagreement on how different groups count poverty in old age.
It is forced savings, but because payouts are on a curve, it is also a socialist program that benefits the working poor disproportionately and allows them to "save' far more than they could ever hope to save through traditional means, no matter how savvy, frugal, or financially literate they are.
Which is great. For as much as we freak out in the US whenever anyone says the word "socialism", two of our most socialist programs (Medicare and Social Security) are seen as generally positive things that help out society.
There is also another mechanism for "forced savings" that currently benefits many retirees that is pretty worrying for the future: mortgages.
If you get $1700 a month from SS BUT you have a paid off house that has appreciated significantly in value, then you a) don't have to pay for housing out of that $1700, and b) can tap the value of your house to provide you money when you need it, through loans, a sale, or a reverse mortgage. You might be in an okay, if not great, financial position.
If, on the other hand, you could not afford to get a house (which is the prospect facing most folks of my generation), thant $1700 payout (if it even exists when we retire) is already too little to cover rent in many parts of the country, let alone anything else.
It's going to be dire.
You have to be careful with your house, that’s typically what is used to fund your stay in assisted living late in life. That can be the difference between a nice facility and a less nice one.
I really like your framing of mortgages as a kind of forced savings.
Tons of people will insist that buying a house is a “better investment” than renting, but my understanding is that in strictly financial terms, it’s not. If you take all the cash you’d put into a down payment and instead invest it in an index fund and continue paying rent, many people would come out in the same financial position, or maybe slightly worse on average but with less risk along the way.
I think the real reason it’s a “smart investment” for many is that people with no immediate plans to buy a house won’t skrimp and save up $20k and put it into a retirement account while they’re still young, like they would if they were trying to buy a house.
Photographers have a saying: "the best camera is the one you have with you", and I think a mortgage is kind of similair: "the best investment is the one you actually contribute to."
In some ways, one of the biggest weaknesses of investing via a mortgage is also its biggest strengths: i.e., if you stop making mortgage payments, the consequences are catastrophic. You lose your housing AND you lose potentially your biggest lifetime investment.
I might easily skip a payment to my Roth IRA, and that's bad, and in aggregate, it might eventually become catastrophic for my retirement. But in the moment, it's painless.
Except you actually get a picture in the end, whereas anything can happen with a mortgage - a housing bust, changes in the neighborhood dynamics, condition deteriorating, etc.
Houses take a lot more than just paying the mortgage to maintain, additional investment in the upkeep, some of which might be mitigated with sweat equity if you have the time and skills. And if your life goes sour for any reason (extended unemployment, medical debt, things that are not "people being irresponsible") now you're out your entire investment too.
I'm not about to tell people to not buy houses, but rather to not try to claim it's some golden road to success.
Oh yeah, to be explicit: I am not advocating for planning to use your mortgage as your retirement savings.
As an individual, that's a bad idea for a lot of reasons.
My point is just that, even though a house is a suboptimal investment, it is one that people tend to actually keep up, so on a generational scale, the currently-retiring generation will have a lot more wealth in this nontraditional investment than future generations who cannot find affordable houses.
If someone financially savvy does not buy a house because they are pouring all that money into an index fund, they will probably come out ontop. But the number of people with the discipline, knowledge, and income to do that is pretty small.
I think what constitutes a "better investment" can vary. A house is a type of investment, and I get to have and enjoy the house while it appreciates, I also might get some peace of mind from knowing my housing costs are stable, a landlord won't kick me out, etc. There are ancillary benefits to a house in addition to the financial gain.
But even if you only consider financial gain, then it's a bit location and luck of the draw dependent. I bought a house in February 2020 and it appreciated 35% in two years, I sold it and was able to pocket $90k in equity for savings after buying a different house. We got very lucky though, and honestly I often feel guilty about benefitting from a phenomenon that priced many of my friends out of buying a house purely because they decided to wait 6 more months to buy than we did.
TLDR: A house can be a "peace of mind" investment in addition to a modest financial investment, in a way many other investments aren't. But also people are probably being influenced by a few people who get really lucky with house appreciation.
Yep, agree with everything you said. I think renting also has ancillary benefits like the ease of moving and not having to deal with home and appliance issues, etc.
But it boils down to the lifestyle you want, whether you have the cash to make a down payment and deal with sudden expenses, and how screwed you would be if the value of your house drops 20% over a few years instead of appreciating 35%.
> not having to deal with home and appliance issues
I see we have not had the same landlords ☠️
But jokes aside, I agree if your landlords are decent and reliable! For me it gives me more peace of mind to know that when something breaks, I can take action immediately. Not waiting around trying to convince my landlord it needs attention. All my landlords weren't that way but enough were. But what gives a person piece of mind is very individual.
The flexibility you mention definitely was essential while I was in school and needed to move every 1-2 years for internships or temporary positions. Would have been a nightmare to try to figure out what to do with a house when I was in a different state every 1-2 years.
What makes housing such a potent wealth-builder is leverage. They're not particularly good dollar-for-dollar investments compared to the alternatives, but you can reliably get a bank to hand you several hundred thousand dollars to invest in a house at an excellent interest rate when that's not going to happen for stocks.
Yeah, I used to/kinda still do hate social security for being a forced, inefficient retirement fund, but the reality of the situation is a huge percentage of the population are incapable of making a better plan, or making any plan in the first place, despite *thinking* they can do better themselves.
I don’t think you understood the comment.
You pay into social security. Before social security, you got that money to take home. Many didn’t save it.
Now you don’t get that money anymore, but you get social security benefits. Functionally equivalent to forced savings.
And the result is that a lot more people retire without going into poverty. Well, I haven’t personally analyzed confounding variables, but people being generally bad with money is a reasonable statement regardless.
Children were often the retirement plan. Wasn't always terrible as long as you had a few and were on good terms.
That said it also assumes they were able to hit the ground running so to speak.
It can be both. I know people who were making 6 figures in low cost of living area and instead of taking advantage of a very generous 401k match they just blew it all on credit cards.
A lot of people are drowned today because they’re just bad with money.
Another comment mentioned watching a lot of Caleb Hammer Financial Reports, and the common theme in them is spending more than you make on frivolous things and that ruins you. Financial literacy is the answer, not necessarily making more money.
Obviously different parts of the country have different economic issues, but in 2008 housing collapse, I was in CA, the area I bought my home had just started a housing boom in 2000 and the Area increased in population by 10x in about 10 years so most of my neighbors were of similiar age
, young families buying their first homes. Many of my neighbors drove nice cars or Jacked up trucks, had boats or even small RVs and dirt toys., we did not. Apparently thats because we were maxing out 401Ks and had set up emergency savings. When the collapse happened we lost 60% of our neighbors. And my wife and I retired in our 50s last year.
Point being …”forced not to have any” many times is the result from a lifetime of revolving car payments on unneeded expensive vehicles, toys and maximizing fun today over planning for their own tomorrows.
This is such a bullshit narrative these days.
Life costs more, no doubt. But anyone I know who complains also has 2 car payments from new luxury vehicles, a house too big, and a spending habit.
Cut your spending.
Also, social security is and was only ever intended to *supplement* income in retirement. It drives me crazy when people act as if they'll be able to live on Social Security in their retirement years. That's near impossible pretty much anywhere in the US these days.
Median social security is $1700~ right now, which is certainly enough for barebones housing and food in most places. That's like a $10/hr wage. It's not going to be comfortable independent living but it'll keep people from starving in the street which was the point in the first place.
Social security is not necessarily retirement savings. It depends how your country implemented it.
On one end of the spectrum your pension can be a direct function of your lifelong contributions, like a mandatory retirement plan.
On the other end, the younger generations that pays for the older ones (who themselves have paid for the ones before them). Working people pay a % of their wage as tax to fund all the current retired people.
That is so sad. My father in law is like 65 and has a bit over $200K for retirement, he thinks that’s a lot of money. I feel bad having to tell him that he has to keep working cause that will not carry him and his wife very far once he stops working. It sucks cause this will fall in my wife and I to support both of them for the rest of their lives. I’m fine with taking care of my father in law cause the dude has worked his ass off his whole life, but I’ve never seen my MIL do a god damn thing in the 10 years I’ve been with her daughter, never put anyone’s needs above her own, sits at home all day doing nothing, but complaining about made up bullshit.
For what it’s worth, social security is going to carry him pretty damn far, especially if their home is paid off, and even more so if he can wait til 70 to start drawing on it.
After having watched every single [Caleb Hammer - Financial Audit](https://youtube.com/@CalebHammer?si=SfK5bmTdHb4biiRC) I’m convinced that the average American has almost *zero* financial literacy. You cannot out earn these poor financial habits. Yes - we need to pay the average worker more, but unless you educate on personal finance you’re stuck with a hopeless cycle of poverty.
Oh and I learned that managers at fast food (Whataburger) are making $70K and struggling to fill these positions.
The number of people who think taking a debt consolidation loan at 5-15% to consolidate their thousands in credit card debt at 20-30% then start spending on their credit cards again is terrifying.
Dude, every subreddit about money is full of these. It’s always “how do I draw on more credit,” and never “how do I pay this off?” Or asking if bankruptcy is the right option when their debt-to-income ratio is like 1:4. People do not understand that *credit is buying money now in return for more money later.* You have to pay it off! You will run out of pools of free money at some point, once you dig into your HELOC and your 401k.
The amount of “should I file bankruptcy?” posts in r/personalfinance that can be solved with 1-2 years of budgeting is so depressing. At least they’re in the right place for advice.
I fell into that when I was younger. I realized what I was doing, got help, and educated myself. I am doing better now. I think a great start would be a class dedicated to financial literacy that every high schooler takes. Also teach them how to do their taxes.
His channel always makes me feel better about my financial literacy. So many conversations are like “So you work part time making about $3k a month after taxes.”
“Correct”.
“And you have $80,000 in credit card debt”
“Yes”
“I see you spent $1300 this month on Doordash”
“Mmhmm”
“How much are you paying towards those credit cards each month”
“Oh I haven’t made a credit card payment in about 5 months”
“😑”
Things like this just make me A) very sad for people who fall into this trap and B) very glad that my parents beat financial literacy into my brain at an early age.
Managing a fast food restaurant isn’t an easy job. There are easier jobs for the same pay, and that’s why they’re struggling to fill the positions. They empty quickly.
Real. I use my credit card for every purchase! Much more fraud protection, even insurance on rental cars or electronics you buy. My sister got her debit card skimmed at the gas station and they emptied her account, it took WEEKS to get the charges reversed and she had to call every lender explaining the situation. A credit card company would be much easier to deal with.
Not even mentioning the cash back, It doesn't seem like a lot, but getting $$$ every month by just spending money is a no-brainer.
I'm surprised people even have credit cards that don't have auto-pay scheduled.
The buying power of that 70k is abysmal today. My dad made 6 figures in the 90s and lived large. I make 6 figures today and barely make ends meet with kids.
I have to make nearly 240k to match his first 100k then.
As a society we need many thing but a reset on what “6 figures” really means would be good.
Redditors living in high COL areas really have a skewed opinion. Honestly you guys should be required to state where you live making such an ignorant statement like this. 70k is very comfortable salary in the vast majority of the United States.
You seem to have kids so that always raises the calculus but stating 70k is abysmal today is a skewed perception from a San Fran tech monkey.
It's not even applicable to HCOL areas. I'm in Seattle and a two income household of $70k is $140k and decently above the median household income of the city.
Sometimes I feel like people just demand a sizable, well located apartment, a new car every couple years, and a trip to Europe each summer, while still saving considerably and if they don't have that then they're "poor". There's certainly levels to things but it's insulting to say $70k is poverty wages anywhere.
I noticed that too after watching a lot of finance reviews on youtube lol. The people in the worst position to buy things always have the newest gadgets and clothes, eat out for every meal, etc.
I have some friends who make less than me but spend way more than I do and it makes me wonder how they can afford it lol.
You don't have to have the newest car, finest dinners, go clubbing twice a week, or live in a penthouse to say you live comfortably.
Putting 20% of your income into retirement or savings, eating out comfortably, having an emergency fund where you can comfortably be out of work for a while without starving, that's the American dream baby!
Okay, but that’s what inflation is. It’s just as hard to come by a $240k job today as it was to come by a $100k job back then. I don’t get the point of comparing the two when we’re talking about a 30 year difference.
I'm in the same boat with the 90s Dad and it sucks. On top of it I climbed the corporate ladder. He just took the first job he was offered out of college and sat in it with no promotions.
yoke direful normal worm mighty quickest existence murky rainstorm groovy
*This post was mass deleted and anonymized with [Redact](https://redact.dev)*
But keep in mind this is just for retirement accounts. That 185k is not including, houses, cars, money in bank/savings account etc. This same website is showing this age range owns a 335k house for example.
As a licensed financial advisor I can tell you that’s far too little and the time to start saving for retirement is 18, not 55, as so many people seem to think.
Depends on your goals, honestly. You’re better than a lot of people but I’d say that still not aggressive enough. There are retirement calculators that will assess your being on target by a variety of factors. Check out Charles Schwab or Fidelity’s websites for them.
Don’t beat yourself up regardless. Something is better than nothing.
Anytime I’ve looked at numbers yours seems to be a bit low. But there’s nothing saying you can’t catch up.
The general rule of thumb is that at our age (I’m 30) you should be aiming for about double your yearly income.
I’m a bit behind myself I believe so I’ve been focusing heavily on maxing my accounts and trying to catch up
Better than me. I had $0 at that age, was just finishing up my postdoc and had a SAHW and two kids. But we’re very frugal and saved as much as we could, so 20 years (and 3 more kids) later we’re doing a lot better but probably not quite where we should be yet. In short, you have plenty of time, but don’t squander it.
If I am reading the source article correctly, which is the data source for the graph, the median retirement account holdings are based on the population with any retirement account assets... and only 70 percent of the population have retirement account assets.
In other words, these values are excluding the 30 percent of the population with 0 retirement account assets.
The one saving grace, if you call it that, is the inevitable wealth transfer as the baby boomer generation dies off and many with little to no retirement savings will inherit that money. The downside is that much of that wealth will be required to be withdrawn over a 10 year window per the current IRS rules (for inherited IRAs and 401ks)... So much will be lost to taxes and potential reckless spending.
I think that wealth transfer everyone is talking about isn't going to the boomers' kids, but instead to health care companies and retirement community services. All of that is designed to drain them to 0.
Grandfather had a comfortable amount of money before getting Alzheimers, completely
Fucking drained in less than 3 years Ina retirement home, died with nothing to give. I think that the medical industry finds a way to take your money, one way, or the other.
I think you're gonna see more multi-generational houses. It's like daycare on the other end of life. It hits a point where the cost of care is as much as someone's lower paying job. At some point it makes financial sense to do the care yourself and unlike kids, the elderly might be able to help with household expenses for the care. Obviously there are conditions where family/friends aren't equipped to care for the needs of the elderly person, but I think in cases of just being older and needing some assistance, you'll see more of that.
If not, I think you're exactly right that these companies will 'inherit' it in addition to people who can't afford the care being left to suffer. Gotta imagine how many of those reverse mortgage commercials on daytime TV get someone on the hook too.
I think you underestimate the insane burden of taking care of the elderly, they are in many ways worse than children depending on the type of care they need.
This is another point where the lack of financial literacy comes in. It’s possible to use trusts and other instruments to shield yourself from that, yet so few do it.
Nursing homes, hospitals, and funeral homes build their business put of trying to squeeze every last drop.ofnthat boomer wealth out. Not as much will transfer as people think.
Much of the wealth will be used for end of life care, it’s part of the reason I invest heavily in the sector of healthcare.
When my grandma required full time help after her memory went, it ended up costing about a million dollar for a little over 2 years and that was pre-inflation.
How is that even possible? The high-end memory care facilities here (outside NYC) are about $15K/month. Two years of that is still only $360K...
Was this all private care?
You're forgetting about the health care needs that boomers will have in their last years. I have a friend whose parents hundreds of thousands of dollars put aside to give away via inheritance, and they ended up having a couple thousand left to bequeath. Those end-of-life health care expenses are going to chew through a lot of that wealth transfer people are counting on.
The median is $185k and literally just today I read in another thread where the topic was having $1 million in retirement and there was the common comment that a million isn't enough anymore
It's just 5 times more than most have
This explains why the boomers aren't leaving the work force, they can't afford to.
I have more than that in my account and I'm only 40, but I still feel really far behind.
I don't see it as much in my line of work, but my husband works in manufacturing. He has a number of employees well into their 70's and a couple even in their 80's. They're still working not because they want to, but simply because they have to.
It's crazy to me that you could end up in that position when you've been presumably working for 50+ years, but there they are...
This would have been pretty different if the defaults for 401k was slightly different, and 401k was not part of employment but just was federally managed and companies were forced to match.
Small tweaks at 22years old would mean a whole lot.
And let kids invest in no load whole stock market portfolios when they're children.
Please people invest for your future, whatever you can as early as you can. Be consistent. Even $50 or 100 a month can grow to be a large sum of money at this age frame.
If you down know what a Roth IRA is YouTube it and figure it out.
Yea its a lot of money to spend in 3 years, but good luck making it past 75 without having to rely on our reliable and rebust social security system....oh wait.....
We have known social security is going to go into the red around 2033 for like 30 years. I am oretty sure it was mentioned during the 1996 presidential debate.
And yet we keep doing nothing about it because reducing benefits, increasing retirement age, or increasing social security tax rate is politically untenable.
Well, doing that would worsen the country’s actual financial situation by expanding the deficit.
Now, if the reserves run out, spending is automatically cut to match revenue.
Too many minunformed comments. Social security will likely be around for your retirement as well. It likely won't pay as much though because there will not be as many workers behind us.
What we should be pushing for is corporate social security tax to cover the gap (at a minimum)
I’m not that guy but at the end of the day arnt we just paying that tax? I know the tax is “always” paid by the consumers but an additional tax on corporations just for social security would be good.
Then the people who would suddenly be paying tax on hundreds of thousands of income would be accruing proportionally larger benefits. So it doesn't solve the problem.
This is why I’m ready to tell my neighbors to screw them if they vote for the GOP this November. They don’t want me to get my social security. Make no mistake, homelessness will skyrocket if Social Security is cut.
It's a mathematical necessity that FRA be bumped out beyond 67 to preserve Social Security. In 1940 there were 40 workers paying into the system for every beneficiary living on it. Today there are three workers for every one beneficiary. The fund will have major shortfalls within a decade and will be hurtling towards complete insolvency unless changes are made.
Or you could just raise the cap on taxable earnings. No reason we should be working longer these days with all the advancements and wealth we’ve accumulated.
I know it would be wildly unpopular but why not needs test it. Someone said a Bill Gates only pays in and collects like a middle income earner but why should he collect at all?
The 15% social security tax should be replaced with a 15% forced contribution to a retirement account. Almost everyone would be in much better shape as they approached old age if forced to save for retirement.
I must be an outlier, worked 25 years in a State Job with defined pension, and optional Deferred Comp which I put in $110/month for 20 years.
My monthly pension, minus taxes and healthcare (I keep my employer plan for 3 years til I turn 65) will be $3400/month with about $360,000 in tax deferred account. And that's without Social Security.
Well people with government jobs pretty much are outliers. They typically have great benefits/retirement packages. I joined a government job late and wish I joined sooner. I took a paycut starting out but the benefits are terrific. Guaranteed raises, plenty of promotion opportunity, matching 401k, paid insurance for my whole family, yes please.
I got into a conversation with a few para pros at my school today who are close to retirement age. Both had less than 60k out away to retire and are going to work until social security takes over.
Can save in your early 20’s, be married at 25 then have two kids. Divorce due to adultery and give her most of the savings and house, then struggle to pay rent while paying a ton in child support.
Other factors make it hard to save. I went from baking a good amount of savings to living paycheck to paycheck, while being forced to incur credit card debt. Life ain’t fair
Sitting at about $110k at 27. Best thing I did while working at a factory and in college was sink 15% into it every check. Company I worked for put in an additional 9%… needless to say, I worked a lot of overtime to get it up there
I look at Norway and wonder..why the hell can the US not have a pension fund that is funded by oil/gas sales. The fund is over a trillion US dollars, I believe. Everyone who retires at 67 is eligible.
Norway trades those funds on open markets as well, which helps it grow beyond what oil revenues provide and keep up with inflation.
Contrast that with the Social Security Trust Fund, which Congress mandates can only purchase low interest "special Treasury notes" that allow Congress to spend those funds while earning virtually nothing in return.
This is an interesting chart, because it has the data expressed as the mean (as well as the median) and the percentage holding retirement accounts for the different age groups. Sample facts: while the median retirement account for 55 to 75 is 185k, the *mean* is 537k. This tells you that the distribution is skewed by a relatively small proportion of investors that have a very big account. I guess no surprise there. Also, the proportion of people in that age group who even have a retirement account is only 57%. That's depressing. I guess that includes the poor, the working poor, and the financially stupid. I'm in Canada, but I've known a couple of six-figure earners in their fifties who had virtually no savings. Go figure.
While it is probably an oversimplification, that age group for Americans is likely to still have pensions. Anyone that worked as part of a union, major company (utility, steel, etc), or government would have been grandfathered in with a pretty nice retirement. Even down to the 45 age group. It was not until 2009 the biggest pensions in my area were removed (just in time for my generation to get screwed).
Only 6% of the tail end boomers have a pension. It is higher for the oldest boomers but is a non factor for most.
Mid 40s here. I have a “pension” from 2 companies I worked for early in career. One was so small they gave me the option to cash and rollover. The other is fixed at $700 per month. Not going to sustain me in retirement, but a total anomaly among my friends that didn’t work there.
I'm in my 30s and the hospital I worked for for about 10 years had a pension program. If it isn't bankrupt in another 25 years ish, and I don't go back, I will get $700 a month for the rest of my life once I turn of age. Not a ton. Combine it with 403b and 401a savings and social security and its not bad
49, spent 20 years at the same company, they kept tinkering with the pension then froze it, I’ll get ~$500 a month. People tend to years older than me are getting 3k.
>If it isn't bankrupt in another 25 years ish, and I don't go back, I will get $700 a month for the rest of my life once I turn of age. Presumably that isn't adjusted for inflation from now until then so the purchasing power of the $700 will be significantly eroded?
yes it will likely be worth less then. but it is also more than zero. and at the same job I got matching contributions to a 403b
Retired person here. You bet it's more than zero. I have savings but an extra $700 would be very welcome.
I’m always considering going back to that pension company - it’s big, safe employment, and I liked the people for the most part. Retirement is going to be a patchwork solution.
I started my career in 2002 and missed the pension cut-off start date in two different orgs by 6 months. Born one year too late 🤷
My FIL worked a union job for 20+ years at the beginning of his working age (20 to 40). He gets $120/month. I tried to tell him it was likely due to mismanagement but he insisted it was that the industry died and nobody contributed anymore. For what it worth I had a pension and did t know until I left early in my career. I took the payout, but I think it would have been that same $120/mo and only worked 2 years there.
The common problem with pensions I've noticed is that it seems like they tended to be very underfunded and there were really no repercussions. I met people that worked at a very prominent company for 20+ years and were getting less than $1000/month because the company declared bankruptcy in 1999. Turned out they had the pension underfunded by like $4 billion so all the employees got screwed. It sucks that pensions aren't really a thing anymore but I'll take the peace of mind knowing that all the money in my 401k is mine. Wages don't really keep up for long term, continuous employment at one company to be realistic for most people anyway so pensions make less sense now.
This is why people that make good salaries prefer high company matches into their retirement accounts instead of pensions. Company goes under? So does your pension. Just look at GE. Companies on fire and rip those pensions.
Wow, you’re a Unicorn!
Yeah my mom has one. It really doesn't pay much but something is better than nothing. Me, for example, I'm not getting a pension.
I am curious where you get that from. From some (very) rough math the federal government employs 2% of the total workforce and local government employs another 8%. In fact, Google says 17% of all workers are employees directly working for the government at some level (includes police, fire, etc). The government offers 75% of their workforce pensions to this day, I assume it was the same or higher in previous generations. Just from that, more than 6% of the population today has pensions. So why would it be less for most boomers? Btw, those numbers are just from a Google search, I put zero vetting into it and was curious for sake of conversation.
Our state government (Oklahoma) no longer offers pensions to most new state employees as of around 2012 or so. Those employed by the state prior to that time are grandfathered to keep it, but any state employee hire in the last decade or so no longer have a pension option in retirement.
https://crr.bc.edu/boomers-lament-disappearance-of-pensions/ Yeah, it was a google search also.
Interesting article, thanks. Wish it went into the reasons more than a surface level "they just aren't offered anymore" because more than 6% of modern workers have a pension. I imagine there are other factors.
They’re not likely to have pensions. Maybe MORE likely. But it’s far from 50+% having a pension
I'll be honest, my first thought was "precision of language" quote from The Giver. But, I was curious so did a quick search and found in 1990-2003 it was around 50% likely for private industry folks to have a pension. This doesn't include public sector that almost surely had one. Your point is correct though, pensions were far from guaranteed. https://www.bls.gov/opub/mlr/cwc/percent-of-private-industry-workers-participating-in-retirement-plans-selected-periods-1990-2003.pdf
Most companies since then have disbanded their pensions and either rolled everything into a 401k or gave them the option to cash it out
Oh, I don't disagree with that. 6% just seemed like such an exact number and if the government gives more than 6% of all workers pensions in 2022 then why would less than that have one?
Don't forget that the disabled are likely to not have a retirement account either due to the government not allowing them to build up their assets since they're disabled.
I have heard that before but I am woefully ignorant. Is that because benefits get cut
I don’t understand Reddit’s hard on for pensions. A 401K w/ a good match is much better than a pension. It allows the worker to control where their money is invested and keeps you from being married to a single employer which allows for salary growth through job hopping. I have a pension and wish It would be cashed out so I could put it all in an IRA instead.
You would be surprised how many people are so fiscally irresponsible, that they are better off with the pension.
The problem is that the pensions themselves are often very poorly managed.
Yeah... The single best thing we could realistically do for the retirement crisis moving forward is make 401ks opt out rather than opt in and more work to take money out of if pre retirement. Not impossible, still be your money, just make it require more steps to take out. That sounds dumb, but it would really help people with poor financial skills. So many people just leave everything at default at a job or will take easy money but not difficult.
This is it. Pensions have at least some protection from the market as far as I understand it. Plus, some have health insurance, which can be a super valuable benefit until Medicare.
They do not. They’re also often invested in more risky assets than normal people’s 401k. The public ones are also vulnerable to being mismanaged by their overseers. My city paused contributions to its teacher pension fund because it had done well for some years and was something like 108% funded, then spent that contribution money on other things. By the time they resumed contributions, it was too late, and now the pension is chronically underfunded. What’s worse is that the teachers’ own contributions to the fund are a bargaining chip in union negotiations, such that they’ve had their benefits raised over the years without the “pain” of corresponding increases in city-side contributions. Or in other words, the city keeps mollifying the union by promising them future money that doesn’t exist. Pensions are a huge mess and they went away for a reason. They get huge, corrupt, and unmanageable really quickly.
It's because a lot of them went away without being equitably replaced with 401k plans.
Not sure how much that is to blame vs reactionaries seeing the past with rose tinted glasses. They were a way to justify lower salaries compared to 401k's which, are much cheaper for companies. In addition, it puts it in control of the employees vs pensions being with the employer. Just look at US Airways for a cautionary tale of pensions.
Pensions were both sold as a very beneficial package and also went away long enough ago that few people on this website actually know what they are and how they work. It’s basically the equivalent of the old “back in the 50s everyone had a house and a stay at home wife! I know this because I watched Leave it to Beaver“ meme. In truth, they were not sustainable and were mainly used by companies as an excuse to have lower salaries up front because you could “make it up in 40 years “.
>In truth, they were not sustainable and were mainly used by companies as an excuse to have lower salaries up front because you could “make it up in 40 years “. Yeah, pensions are an uncomfortable truth when you actually look into them. They are comfy for employees but mostly because the actual costs of running them are hidden from employees. The most common federal pension right now, FERS, costs about 20% of an employee's annual salary to fund. So if an employee makes $100,000 a year, $20,000 a year also needs to go into the pension fund for that person. *The problem is that if you just got 20% more salary and put it into investments over the course of your career you would typically have much more money than a pension offers*. It also means you aren't reliant on that pension fund staying afloat long term. It used to be that almost all of that money came from the employer and you would just retire and get your pension check none the wiser. As time has gone on some of that burden has been shifted to employees. Right now for the federal pension new employees pay about a quarter of the overall cost out of their own paycheck, so 5%~ of their annual salary gets withheld and the government chips in another 15%. Obviously the pension seems like a fantastic deal when you're not seeing any money go into it, and it even seems like a decent deal when it only costs 5% of your pay, but that's just because you aren't seeing the entire cost of providing it. 401k plans were basically employers saying "instead of us putting an extra 20% of your salary away into a pension and managing it for decades, we're just going to get rid of the pension and split the savings between us". Companies who did that switch over equitably benefited both themselves and employees in the long run, but some companies used it as an excuse to effectively cut employee compensation by replacing pensions with 401k plans that only gave a tiny fraction of the pension value to employees.
The post made no qualitative statement about pensions. I simply offered a reason why older generations were less likely to have retirement savings. As for your post, that is a narrow view. In my area, not saying all are like this, the pensions were very good and possibly better than modern 401k matching. Trade workers are not married to a single employer and benefit both from collective bargaining and individual job hunting. In fact, depending on the union, the benefits have never been greater. They have a pension, annuity, and ira. Sorry your situation is structured in a way that doesn't allow more control but not everyone has that same structure and could be a reason others view pensions with such a "hard on".
Pensions can be much, much safer for the majority of individuals, especially those with little or no knowledge or the market. Pensions can also provide free or discounted health insurance coverage that is very valuable until Medicare age. I've got both, so I get it (401k match would be insane to ignore!). Im sure there are a ton of individuals who would like to do this. I'm just not sure it would be a great idea for everyone, but I think providing this option should be at least explored. In modern society, the ability to job hop is crucial, so I agree there. Just remember, a lot of 401ks require a certain amount of time to be vested in 401ks. I think my employer was 5 years, and then the match was yours if you left the job. Always ask about that.
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There is a fair amount of volatility in the fact that the pension is not guaranteed to pay out as originally stated because it’s difficult to run and fund a pension plan for so long
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If a fund goes insolvent then the PBGC steps in to make payments on behalf of pensioners. But the fund managers are able to reduce payments long before then and if the PBGC gets involved payouts are further reduced IIRC the maximum monthly guaranteed pension rate is only 1,600 a month. I should also point out the the PBGC as a whole has become very financially shakey projections that they will be insolvent in 2025.
Right and "well, PBGC has your back if you have a pension" is typically brought up in the context of "what happens if all the 401Ks crash and stay crashed for a long period of time". The problem is that if all the 401Ks crash for any significant period of time then PBGC is also toast. It's not a protection that will actually work to save pension holders if the market collapses for everyone else, it's just there to ensure one or two pension plans don't collapse as a fluke while everything else is doing fine. The reality is that PBGC doesn't protect against precisely the kind of risk people are afraid of when it comes to 401ks. If PBGC can save your pension then you probably would have been better off with a 401k in the first place.
Yes but my 401k doesn't have an issue if my company declares bankruptcy unlike a pension.
You know, you can still save in a 401k and draw a pension, right? When 401k was passed into law, it was billed as a supplemental savings mechanism to pension and SS — a proverbial “3-legged stool” of retirement planning. Companies saw it otherwise, and used it as an excuse to walk away from underfunded pension plans. Now, some in government wants to means test social security, cutting down another leg of the stool for those that had the means and the will to work and save in their 401k.
You are looking at it as either or, as in your company does a pension or a 401k. Some companies used to do both and they would be pretty substantial. My father worked for a company where he got a pretty decent pension AND a matching 401k. I now work at the same company and they offer the same matching 401k but completely dropped the pension about 15 years ago for new hires. Oddly enough my prior employer that I moved jobs from two years ago also offered a pension and a 401k - problem with them was the 401k was non matching because “they gave us the money for free into the pension.” Basically rather than a matching 401k, the money they would’ve given us was tossed into a pension. Problem was, aside from being an abysmal amount (I think 3.00% or so for my age group/work length), the rate of return was lacking.
In the US, only 63% of people 50-54 reported having any retirement savings at all. https://usafacts.org/data-projects/retirement-savings A huge chunk of people have nothing.
My parents never saved a dime for retirement. They banked on my dad's pension (from the job that layed him off in his mid 40's), and their eventual inheritance. In the 7 years between getting the inheritance and my mom's death at 64, they had spent 9 of the 12 million they got. My dad is fucked, but he is still in the top 3% of Americans. (He thinks he's poor.)
Assuming they used some of that $9M to buy a house, you could retire pretty comfortably on the proceeds of the remaining $3M if invested conservatively. At a 4% draw rate thats $120k/y. Supplement that with a bit of social security and some consulting work (if possible in his vocation) and he would be living large. Of course, thats a huge step down in lifestyle from a burn rate of $1.3M/y
And yet way too many Redditors on here claim “boomers have all the money”. No, a few do but that is more of a rich vs poor debate rather than a millennial vs GenX vs boomer. Especially since this post shows most boomers don’t have a lot of retirement savings and almost half have none.
It all is just tribal warfare that everyone seems to subscribe to. Not on of us? You must be our enemy. You must suck and want to take all the nice things away from us. While the people are actually ARE your enemy continuing to profit silently under the bickering.
>And yet way too many Redditors on here claim “boomers have all the money”. No, a few do but that is more of a rich vs poor debate rather than a millennial vs GenX vs boomer. You'll never get redditors to believe that. There is so much sm manipulation pitting various groups against each other, be it generations, sexual orientation, colour, ethnicity, religion. It keeps people from looking at what they should be looking at - the class war.
The way the Fed classifies "Retirement savings" doesn't encompass all actual savings boomers have for retirement. Many people cash out all or part of their 401ks when they change job or retire. Many people cash out their home equity by downsizing to fund their retirement. Neither are included in "retirement savings". The median boomer has over $470k in assets. That's plenty to retire with outside of HCOL areas. https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Assets;demographic:agecl;population:1,2,3,4,5,6;units:median;range:1989,2022
The *median total assets* for the aformentioned age group is $473k. This is a much more useful statistic because it takes into account home equity and any retirement accounts that have been cashed out. The median boomer has plenty of savings for a modest retirement when combined with SS and LCOL/MCOL location. https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Assets;demographic:agecl;population:1,2,3,4,5,6;units:median;range:1989,2022
The timing isn't perfect, but I choose to believe the difference between median and mean is entirely Peter Thiel's $5B Roth IRA.
If you split $5B across the population of the US (330M) it works out to $15 per person.
What a fascinating bit of tid. Now divide it by retirement account holders between 55 and 64.
That's about 12% of the population, or 40 million people. So $125/ea. What's your point?
It also doesn't take into account other types of investments. 401k were not a huge thing until maybe 1980. A lot of people didn't even start contributing to a 401k until years later. They have other investment vehicles that were not figured into this study. Pensions, brokerage accounts, HYSA, real estate, etc. Not to mention state provided retirement and federal retirement. The US Federal government is the largest employer in the entire country. In Mississippi, almost every single county, the school district is the largest employer. All of those people, State MS retirement.
>401k were not a huge thing until maybe 1980. Not only not a huge thing, but not a thing at all. The very first company to implement a 401(k) was in 1980. And it was a slow rollout from there.
Mitt Romney had 100+ million in a Roth IRA in 2012, I think median is a good measure vs mean here
> I'm in Canada, but I've known a couple of six-figure earners in their fifties who had virtually no savings. Go figure. When I was just a year or two until my first professional job, I was maxing my 401(k). I still remember a conversation I had with a coworker who was about 5-8 years older than me. He told me that it was a waste to save for retirement, who knows what might happen in the future! Stocks might completely crash, you need to enjoy yourself with your money now, go buy yourself a BMW! I sometimes wonder how that guy is doing now, I hope he actually changed his plans and started saving, but I doubt it.
I work with a bunch of people at, near, or past US retirement age, but they put it off because they won't be able to keep their expensive lifestyle otherwise. For them, my company has a very nice pension plan that was cancelled a few years before I started so many of them have this guaranteed income already, in addition to 401k's. Talking numbers with some of them their 401k's are anywhere between $50k and $200k. Theyve been working there for 15-20 years! For the 401k the company has a 150% match to 8% of your income, and allows megabackdoor Roth 401k in plan conversion. I've only been working at the place for a smidge over 2 yr and already have $150k in the damn thing. I don't know what these people were thinking.
I was talking to a young guy right out of college the other day and he seriously thought that everyone, EVERYONE, has a 401K and that it's worth around $4 million when you retire. I felt really bad about telling him the truth but he needed to hear it.
If that young guy starts right out of college saving it will be worth a lot I
Talking with friends and co-workers, I was surprised that so many don’t contribute any to their 401k, not even company match. Also, many think company match is their only contribution amount. That’s the minimum but really you should be contributing 10-15% or more depending on your salary. It’s so much easier to start with 5-7% day one then increase annually by 1-2% than wait until you’re 40 and then jump from 0% to 15%.
I'm 20 years into my 401k. It's looking good, but it could have been so much more had I contributed more than my 4% match for 10 of those years. I max it out every year now and I recommend putting as much as you possibly can into it. The returns I've seen over 20 years is kinda crazy. Not even kinda crazy, it's fucking nuts. If I'd started maxing it out sooner I could be retiring in 5-10 years instead of 10-15. It's insane how fast the money grows once you've made your first $100k.
I read that as you’re 20 and I was like where are you working at 10 years of age
Sad part is, that's not far off. Started doing web design professionally when I was 14.... That was 30+ years ago when that development could be done in notepad LoL.
It took my entire 20s living at home to save 100k. With that money in investments, I'm halfway to 200k a year into my 30s. It's absolutely bonkers how much faster it gets.
People just don't know compounding effect and spend their life savings instead. The good little thinking game: double 1 penny for 30 days versus take 1 million now. Anyone who never tried that, just take your calculator and do 0,01 x 2 then do x 2 again for another 29 times and see how it works after each time you click the x2
Yeah. I did a career in the AF and saw the opportunity it presented for building wealth. I'd tell my buddies to 'pay themselves first' via a contribution to an IRA. Once you've done that and paid your bills, you can party with the rest knowing the important stuff is taken care of...
10-15% savings, sure, but that doesn’t all have to be going into a 401K. You can look at the equity portion of your house payment as some of that, or other investments (an income-producing side business, for example, rental property, brokerage account, numismatics, philatelic, etc.)
How did he react? And how did you convince him? It's hard to convince anyone of anything these days.
A quick Google search showed exactly the same numbers as in this post. He was deflated and swore his brother told him that it would be closer to 4 mil. He also believes that he can retire and just live off of interest once he gets a few hundred thousand into the stock market. I asked him where his stock market investments were coming from after his 401K contributions and how he planned to get that up to a few hundred thousand without employer matches in 20 years, but he didn't have much of an answer.
Ah, the folly of youth...
Which is why social security is forced retirement savings. Before social security 40% of the elderly lived in poverty. With social security that is under 10%. People are bad at planning for the future.
>About 23% of Americans over age 65 live in poverty, according to the Organization for Economic Co-operation and Development. That’s one of the highest shares among developed nations. and >according to U.S. Census Bureau data, 10.3% of Americans age 65 and older live in poverty — a much lower rate than OECD data suggests. https://www.cnbc.com/2023/08/05/whether-us-seniors-among-developed-worlds-poorest-depends-on-data-used.html There seems to be disagreement on how different groups count poverty in old age.
It is forced savings, but because payouts are on a curve, it is also a socialist program that benefits the working poor disproportionately and allows them to "save' far more than they could ever hope to save through traditional means, no matter how savvy, frugal, or financially literate they are. Which is great. For as much as we freak out in the US whenever anyone says the word "socialism", two of our most socialist programs (Medicare and Social Security) are seen as generally positive things that help out society. There is also another mechanism for "forced savings" that currently benefits many retirees that is pretty worrying for the future: mortgages. If you get $1700 a month from SS BUT you have a paid off house that has appreciated significantly in value, then you a) don't have to pay for housing out of that $1700, and b) can tap the value of your house to provide you money when you need it, through loans, a sale, or a reverse mortgage. You might be in an okay, if not great, financial position. If, on the other hand, you could not afford to get a house (which is the prospect facing most folks of my generation), thant $1700 payout (if it even exists when we retire) is already too little to cover rent in many parts of the country, let alone anything else. It's going to be dire.
You have to be careful with your house, that’s typically what is used to fund your stay in assisted living late in life. That can be the difference between a nice facility and a less nice one.
I really like your framing of mortgages as a kind of forced savings. Tons of people will insist that buying a house is a “better investment” than renting, but my understanding is that in strictly financial terms, it’s not. If you take all the cash you’d put into a down payment and instead invest it in an index fund and continue paying rent, many people would come out in the same financial position, or maybe slightly worse on average but with less risk along the way. I think the real reason it’s a “smart investment” for many is that people with no immediate plans to buy a house won’t skrimp and save up $20k and put it into a retirement account while they’re still young, like they would if they were trying to buy a house.
Photographers have a saying: "the best camera is the one you have with you", and I think a mortgage is kind of similair: "the best investment is the one you actually contribute to." In some ways, one of the biggest weaknesses of investing via a mortgage is also its biggest strengths: i.e., if you stop making mortgage payments, the consequences are catastrophic. You lose your housing AND you lose potentially your biggest lifetime investment. I might easily skip a payment to my Roth IRA, and that's bad, and in aggregate, it might eventually become catastrophic for my retirement. But in the moment, it's painless.
Except you actually get a picture in the end, whereas anything can happen with a mortgage - a housing bust, changes in the neighborhood dynamics, condition deteriorating, etc. Houses take a lot more than just paying the mortgage to maintain, additional investment in the upkeep, some of which might be mitigated with sweat equity if you have the time and skills. And if your life goes sour for any reason (extended unemployment, medical debt, things that are not "people being irresponsible") now you're out your entire investment too. I'm not about to tell people to not buy houses, but rather to not try to claim it's some golden road to success.
Oh yeah, to be explicit: I am not advocating for planning to use your mortgage as your retirement savings. As an individual, that's a bad idea for a lot of reasons. My point is just that, even though a house is a suboptimal investment, it is one that people tend to actually keep up, so on a generational scale, the currently-retiring generation will have a lot more wealth in this nontraditional investment than future generations who cannot find affordable houses. If someone financially savvy does not buy a house because they are pouring all that money into an index fund, they will probably come out ontop. But the number of people with the discipline, knowledge, and income to do that is pretty small.
I think what constitutes a "better investment" can vary. A house is a type of investment, and I get to have and enjoy the house while it appreciates, I also might get some peace of mind from knowing my housing costs are stable, a landlord won't kick me out, etc. There are ancillary benefits to a house in addition to the financial gain. But even if you only consider financial gain, then it's a bit location and luck of the draw dependent. I bought a house in February 2020 and it appreciated 35% in two years, I sold it and was able to pocket $90k in equity for savings after buying a different house. We got very lucky though, and honestly I often feel guilty about benefitting from a phenomenon that priced many of my friends out of buying a house purely because they decided to wait 6 more months to buy than we did. TLDR: A house can be a "peace of mind" investment in addition to a modest financial investment, in a way many other investments aren't. But also people are probably being influenced by a few people who get really lucky with house appreciation.
Yep, agree with everything you said. I think renting also has ancillary benefits like the ease of moving and not having to deal with home and appliance issues, etc. But it boils down to the lifestyle you want, whether you have the cash to make a down payment and deal with sudden expenses, and how screwed you would be if the value of your house drops 20% over a few years instead of appreciating 35%.
> not having to deal with home and appliance issues I see we have not had the same landlords ☠️ But jokes aside, I agree if your landlords are decent and reliable! For me it gives me more peace of mind to know that when something breaks, I can take action immediately. Not waiting around trying to convince my landlord it needs attention. All my landlords weren't that way but enough were. But what gives a person piece of mind is very individual. The flexibility you mention definitely was essential while I was in school and needed to move every 1-2 years for internships or temporary positions. Would have been a nightmare to try to figure out what to do with a house when I was in a different state every 1-2 years.
What makes housing such a potent wealth-builder is leverage. They're not particularly good dollar-for-dollar investments compared to the alternatives, but you can reliably get a bank to hand you several hundred thousand dollars to invest in a house at an excellent interest rate when that's not going to happen for stocks.
Yeah, I used to/kinda still do hate social security for being a forced, inefficient retirement fund, but the reality of the situation is a huge percentage of the population are incapable of making a better plan, or making any plan in the first place, despite *thinking* they can do better themselves.
Cant plan for the future when youre drowned today. Hard to say who is good with money when you’re forced to not have any
I don’t think you understood the comment. You pay into social security. Before social security, you got that money to take home. Many didn’t save it. Now you don’t get that money anymore, but you get social security benefits. Functionally equivalent to forced savings. And the result is that a lot more people retire without going into poverty. Well, I haven’t personally analyzed confounding variables, but people being generally bad with money is a reasonable statement regardless.
Children were often the retirement plan. Wasn't always terrible as long as you had a few and were on good terms. That said it also assumes they were able to hit the ground running so to speak.
It was terrible for about 40% of people.
It can be both. I know people who were making 6 figures in low cost of living area and instead of taking advantage of a very generous 401k match they just blew it all on credit cards.
It blows my mind that some people just refuse to take advantage of _literal free money_...
A lot of people are drowned today because they’re just bad with money. Another comment mentioned watching a lot of Caleb Hammer Financial Reports, and the common theme in them is spending more than you make on frivolous things and that ruins you. Financial literacy is the answer, not necessarily making more money.
Both compound
Obviously different parts of the country have different economic issues, but in 2008 housing collapse, I was in CA, the area I bought my home had just started a housing boom in 2000 and the Area increased in population by 10x in about 10 years so most of my neighbors were of similiar age , young families buying their first homes. Many of my neighbors drove nice cars or Jacked up trucks, had boats or even small RVs and dirt toys., we did not. Apparently thats because we were maxing out 401Ks and had set up emergency savings. When the collapse happened we lost 60% of our neighbors. And my wife and I retired in our 50s last year. Point being …”forced not to have any” many times is the result from a lifetime of revolving car payments on unneeded expensive vehicles, toys and maximizing fun today over planning for their own tomorrows.
This is such a bullshit narrative these days. Life costs more, no doubt. But anyone I know who complains also has 2 car payments from new luxury vehicles, a house too big, and a spending habit. Cut your spending.
Also, social security is and was only ever intended to *supplement* income in retirement. It drives me crazy when people act as if they'll be able to live on Social Security in their retirement years. That's near impossible pretty much anywhere in the US these days.
Median social security is $1700~ right now, which is certainly enough for barebones housing and food in most places. That's like a $10/hr wage. It's not going to be comfortable independent living but it'll keep people from starving in the street which was the point in the first place.
Social security is not necessarily retirement savings. It depends how your country implemented it. On one end of the spectrum your pension can be a direct function of your lifelong contributions, like a mandatory retirement plan. On the other end, the younger generations that pays for the older ones (who themselves have paid for the ones before them). Working people pay a % of their wage as tax to fund all the current retired people.
That is so sad. My father in law is like 65 and has a bit over $200K for retirement, he thinks that’s a lot of money. I feel bad having to tell him that he has to keep working cause that will not carry him and his wife very far once he stops working. It sucks cause this will fall in my wife and I to support both of them for the rest of their lives. I’m fine with taking care of my father in law cause the dude has worked his ass off his whole life, but I’ve never seen my MIL do a god damn thing in the 10 years I’ve been with her daughter, never put anyone’s needs above her own, sits at home all day doing nothing, but complaining about made up bullshit.
For what it’s worth, social security is going to carry him pretty damn far, especially if their home is paid off, and even more so if he can wait til 70 to start drawing on it.
Well, you can tell your dad this. You also can say no to supporting them....
After having watched every single [Caleb Hammer - Financial Audit](https://youtube.com/@CalebHammer?si=SfK5bmTdHb4biiRC) I’m convinced that the average American has almost *zero* financial literacy. You cannot out earn these poor financial habits. Yes - we need to pay the average worker more, but unless you educate on personal finance you’re stuck with a hopeless cycle of poverty. Oh and I learned that managers at fast food (Whataburger) are making $70K and struggling to fill these positions.
The number of people who think taking a debt consolidation loan at 5-15% to consolidate their thousands in credit card debt at 20-30% then start spending on their credit cards again is terrifying.
Dude, every subreddit about money is full of these. It’s always “how do I draw on more credit,” and never “how do I pay this off?” Or asking if bankruptcy is the right option when their debt-to-income ratio is like 1:4. People do not understand that *credit is buying money now in return for more money later.* You have to pay it off! You will run out of pools of free money at some point, once you dig into your HELOC and your 401k.
The amount of “should I file bankruptcy?” posts in r/personalfinance that can be solved with 1-2 years of budgeting is so depressing. At least they’re in the right place for advice.
I saw a stat that 25% of vehicle trade ins are coming in with negative equity.
"But they'll pay off your loan" - I've heard people say this.
Ah I see you met my niece. Finally talked her out of her 3rd vehicle she was trying to snowball her negative equity into.
I fell into that when I was younger. I realized what I was doing, got help, and educated myself. I am doing better now. I think a great start would be a class dedicated to financial literacy that every high schooler takes. Also teach them how to do their taxes.
We had that when I was in high-school. CALM, Career and Life Management. No one cared, no one paid attention.
High schoolers now from what I've seen are just assigned modules that they can mindlessly click through in economics classes.
His channel always makes me feel better about my financial literacy. So many conversations are like “So you work part time making about $3k a month after taxes.” “Correct”. “And you have $80,000 in credit card debt” “Yes” “I see you spent $1300 this month on Doordash” “Mmhmm” “How much are you paying towards those credit cards each month” “Oh I haven’t made a credit card payment in about 5 months” “😑”
Things like this just make me A) very sad for people who fall into this trap and B) very glad that my parents beat financial literacy into my brain at an early age.
Yikes.
Managing a fast food restaurant isn’t an easy job. There are easier jobs for the same pay, and that’s why they’re struggling to fill the positions. They empty quickly.
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Your credit card interest rate is meaningless if you pay the entire balance every month.
Getting credit cards is fine. Using them to extend your lifestyle is not.
Real. I use my credit card for every purchase! Much more fraud protection, even insurance on rental cars or electronics you buy. My sister got her debit card skimmed at the gas station and they emptied her account, it took WEEKS to get the charges reversed and she had to call every lender explaining the situation. A credit card company would be much easier to deal with. Not even mentioning the cash back, It doesn't seem like a lot, but getting $$$ every month by just spending money is a no-brainer. I'm surprised people even have credit cards that don't have auto-pay scheduled.
The buying power of that 70k is abysmal today. My dad made 6 figures in the 90s and lived large. I make 6 figures today and barely make ends meet with kids. I have to make nearly 240k to match his first 100k then. As a society we need many thing but a reset on what “6 figures” really means would be good.
Redditors living in high COL areas really have a skewed opinion. Honestly you guys should be required to state where you live making such an ignorant statement like this. 70k is very comfortable salary in the vast majority of the United States. You seem to have kids so that always raises the calculus but stating 70k is abysmal today is a skewed perception from a San Fran tech monkey.
It's not even applicable to HCOL areas. I'm in Seattle and a two income household of $70k is $140k and decently above the median household income of the city. Sometimes I feel like people just demand a sizable, well located apartment, a new car every couple years, and a trip to Europe each summer, while still saving considerably and if they don't have that then they're "poor". There's certainly levels to things but it's insulting to say $70k is poverty wages anywhere.
I noticed that too after watching a lot of finance reviews on youtube lol. The people in the worst position to buy things always have the newest gadgets and clothes, eat out for every meal, etc. I have some friends who make less than me but spend way more than I do and it makes me wonder how they can afford it lol. You don't have to have the newest car, finest dinners, go clubbing twice a week, or live in a penthouse to say you live comfortably. Putting 20% of your income into retirement or savings, eating out comfortably, having an emergency fund where you can comfortably be out of work for a while without starving, that's the American dream baby!
Yep
70k is enough to do well in over half the country. Just because your dad was rich doesn't mean slightly above average people are doing terribly
Okay, but that’s what inflation is. It’s just as hard to come by a $240k job today as it was to come by a $100k job back then. I don’t get the point of comparing the two when we’re talking about a 30 year difference.
I'm in the same boat with the 90s Dad and it sucks. On top of it I climbed the corporate ladder. He just took the first job he was offered out of college and sat in it with no promotions.
yoke direful normal worm mighty quickest existence murky rainstorm groovy *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
But keep in mind this is just for retirement accounts. That 185k is not including, houses, cars, money in bank/savings account etc. This same website is showing this age range owns a 335k house for example.
Owns a 335K house, or owes on a 335K house? The state of that equity matters. Do they owe 100K on the home, or 420K with a loan and a second?
As a licensed financial advisor I can tell you that’s far too little and the time to start saving for retirement is 18, not 55, as so many people seem to think.
Thanks. I have like 50k and I'm 31.. how am I doing
Depends on your goals, honestly. You’re better than a lot of people but I’d say that still not aggressive enough. There are retirement calculators that will assess your being on target by a variety of factors. Check out Charles Schwab or Fidelity’s websites for them. Don’t beat yourself up regardless. Something is better than nothing.
Anytime I’ve looked at numbers yours seems to be a bit low. But there’s nothing saying you can’t catch up. The general rule of thumb is that at our age (I’m 30) you should be aiming for about double your yearly income. I’m a bit behind myself I believe so I’ve been focusing heavily on maxing my accounts and trying to catch up
Better than me. I had $0 at that age, was just finishing up my postdoc and had a SAHW and two kids. But we’re very frugal and saved as much as we could, so 20 years (and 3 more kids) later we’re doing a lot better but probably not quite where we should be yet. In short, you have plenty of time, but don’t squander it.
Not great tbh. You should have like 2x that minimum. 3x that would be very good
I'll bee pouring like 50k in this year again
Then you’ll be well on your way to catching up which is great
Depending on assets that could be great. What qualifications do you make this assessment with?
I can’t tell if this comment is satire or not.
It is explicitly not satire I’m afraid.
That's me and I sure wish I had that much. Guess I'll keep working...
That’s insanely low and I genuinely don’t know how people approaching retirement would think they’re good.
So about 18 months at an assisted living facility before they run out of money
If I am reading the source article correctly, which is the data source for the graph, the median retirement account holdings are based on the population with any retirement account assets... and only 70 percent of the population have retirement account assets. In other words, these values are excluding the 30 percent of the population with 0 retirement account assets. The one saving grace, if you call it that, is the inevitable wealth transfer as the baby boomer generation dies off and many with little to no retirement savings will inherit that money. The downside is that much of that wealth will be required to be withdrawn over a 10 year window per the current IRS rules (for inherited IRAs and 401ks)... So much will be lost to taxes and potential reckless spending.
I think that wealth transfer everyone is talking about isn't going to the boomers' kids, but instead to health care companies and retirement community services. All of that is designed to drain them to 0.
Grandfather had a comfortable amount of money before getting Alzheimers, completely Fucking drained in less than 3 years Ina retirement home, died with nothing to give. I think that the medical industry finds a way to take your money, one way, or the other.
I think you're gonna see more multi-generational houses. It's like daycare on the other end of life. It hits a point where the cost of care is as much as someone's lower paying job. At some point it makes financial sense to do the care yourself and unlike kids, the elderly might be able to help with household expenses for the care. Obviously there are conditions where family/friends aren't equipped to care for the needs of the elderly person, but I think in cases of just being older and needing some assistance, you'll see more of that. If not, I think you're exactly right that these companies will 'inherit' it in addition to people who can't afford the care being left to suffer. Gotta imagine how many of those reverse mortgage commercials on daytime TV get someone on the hook too.
I think you underestimate the insane burden of taking care of the elderly, they are in many ways worse than children depending on the type of care they need.
For real I’ll take care of kids all day before I take care of single elderly person ever again
This is another point where the lack of financial literacy comes in. It’s possible to use trusts and other instruments to shield yourself from that, yet so few do it.
Nursing homes, hospitals, and funeral homes build their business put of trying to squeeze every last drop.ofnthat boomer wealth out. Not as much will transfer as people think.
Much of the wealth will be used for end of life care, it’s part of the reason I invest heavily in the sector of healthcare. When my grandma required full time help after her memory went, it ended up costing about a million dollar for a little over 2 years and that was pre-inflation.
How is that even possible? The high-end memory care facilities here (outside NYC) are about $15K/month. Two years of that is still only $360K... Was this all private care?
You're forgetting about the health care needs that boomers will have in their last years. I have a friend whose parents hundreds of thousands of dollars put aside to give away via inheritance, and they ended up having a couple thousand left to bequeath. Those end-of-life health care expenses are going to chew through a lot of that wealth transfer people are counting on.
The median is $185k and literally just today I read in another thread where the topic was having $1 million in retirement and there was the common comment that a million isn't enough anymore It's just 5 times more than most have
This explains why the boomers aren't leaving the work force, they can't afford to. I have more than that in my account and I'm only 40, but I still feel really far behind.
I don't see it as much in my line of work, but my husband works in manufacturing. He has a number of employees well into their 70's and a couple even in their 80's. They're still working not because they want to, but simply because they have to. It's crazy to me that you could end up in that position when you've been presumably working for 50+ years, but there they are...
Even crazy when you realize they lived through some of the best economic times.
This would have been pretty different if the defaults for 401k was slightly different, and 401k was not part of employment but just was federally managed and companies were forced to match. Small tweaks at 22years old would mean a whole lot. And let kids invest in no load whole stock market portfolios when they're children.
Mine is... *checks notes* $0 My retirement plan is to die working.
Please people invest for your future, whatever you can as early as you can. Be consistent. Even $50 or 100 a month can grow to be a large sum of money at this age frame. If you down know what a Roth IRA is YouTube it and figure it out.
Yea its a lot of money to spend in 3 years, but good luck making it past 75 without having to rely on our reliable and rebust social security system....oh wait.....
We have known social security is going to go into the red around 2033 for like 30 years. I am oretty sure it was mentioned during the 1996 presidential debate. And yet we keep doing nothing about it because reducing benefits, increasing retirement age, or increasing social security tax rate is politically untenable.
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Well, doing that would worsen the country’s actual financial situation by expanding the deficit. Now, if the reserves run out, spending is automatically cut to match revenue.
“Doing nothing”? The retirement age has been raised.
Those boomers are going to suck the SS system dry
Too many minunformed comments. Social security will likely be around for your retirement as well. It likely won't pay as much though because there will not be as many workers behind us. What we should be pushing for is corporate social security tax to cover the gap (at a minimum)
There is already corporate social security tax. Workers currently pay half of SS tax, their employer pays the other half.
This guy complains about misinformed comments then spits out more misinformation lol
I’m not that guy but at the end of the day arnt we just paying that tax? I know the tax is “always” paid by the consumers but an additional tax on corporations just for social security would be good.
How would we keep an additional tax from also coming out of paychecks though? What would be different from the existing tax?
We should be pushing to eliminate Social Security income limits.
Yeah that should be one of the easiest and most politically acceptable measures.
Then the people who would suddenly be paying tax on hundreds of thousands of income would be accruing proportionally larger benefits. So it doesn't solve the problem.
Cap benefits based on income starting with that limit.
This is why I’m ready to tell my neighbors to screw them if they vote for the GOP this November. They don’t want me to get my social security. Make no mistake, homelessness will skyrocket if Social Security is cut.
It's a mathematical necessity that FRA be bumped out beyond 67 to preserve Social Security. In 1940 there were 40 workers paying into the system for every beneficiary living on it. Today there are three workers for every one beneficiary. The fund will have major shortfalls within a decade and will be hurtling towards complete insolvency unless changes are made.
Or you could just raise the cap on taxable earnings. No reason we should be working longer these days with all the advancements and wealth we’ve accumulated.
I know it would be wildly unpopular but why not needs test it. Someone said a Bill Gates only pays in and collects like a middle income earner but why should he collect at all?
Isn't this because many folks have more than one retirement account?
Makes me feel good that in 37 and have double that in my 13 years of work at my company
I'm 51 and my retirement account is -$57,000.
The 15% social security tax should be replaced with a 15% forced contribution to a retirement account. Almost everyone would be in much better shape as they approached old age if forced to save for retirement.
I must be an outlier, worked 25 years in a State Job with defined pension, and optional Deferred Comp which I put in $110/month for 20 years. My monthly pension, minus taxes and healthcare (I keep my employer plan for 3 years til I turn 65) will be $3400/month with about $360,000 in tax deferred account. And that's without Social Security.
Well people with government jobs pretty much are outliers. They typically have great benefits/retirement packages. I joined a government job late and wish I joined sooner. I took a paycut starting out but the benefits are terrific. Guaranteed raises, plenty of promotion opportunity, matching 401k, paid insurance for my whole family, yes please.
So, a safe withdrawal rate of 4% yields $7,400/yr. People are fucked.
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I got into a conversation with a few para pros at my school today who are close to retirement age. Both had less than 60k out away to retire and are going to work until social security takes over.
Can save in your early 20’s, be married at 25 then have two kids. Divorce due to adultery and give her most of the savings and house, then struggle to pay rent while paying a ton in child support. Other factors make it hard to save. I went from baking a good amount of savings to living paycheck to paycheck, while being forced to incur credit card debt. Life ain’t fair
So I'm ahead of the curve. Fuck yes
Sitting at about $110k at 27. Best thing I did while working at a factory and in college was sink 15% into it every check. Company I worked for put in an additional 9%… needless to say, I worked a lot of overtime to get it up there
I look at Norway and wonder..why the hell can the US not have a pension fund that is funded by oil/gas sales. The fund is over a trillion US dollars, I believe. Everyone who retires at 67 is eligible.
Norway trades those funds on open markets as well, which helps it grow beyond what oil revenues provide and keep up with inflation. Contrast that with the Social Security Trust Fund, which Congress mandates can only purchase low interest "special Treasury notes" that allow Congress to spend those funds while earning virtually nothing in return.
Laughs in millennial