Are we supposed to be surprised that the generation that is still digging out from their student loan debts don’t have much saved for retirement?
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Planning on either a wealthy child or a slick suicide at 65. So far, that’s all I got.
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Actually that literally sounds pretty lucky. I’m 36, live with chronic illness, work full time but worry about when that could change… and I feel lucky to have been able to buy a house. Like, sincerely lucky. It’s not even an amazing house. It’s way out in the scrubby part of the hot dry lands between the places one might desire to see in Texas, I’m terrible at maintaining it though I honestly do try to keep things getting repairs as needed, most of the nearby houses are rentals, and the fence needs to be replaced but I feel lucky because, hell, it’s a decent enough house not in a flood plain and with a decent HVAC system.
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It’s already exploding in slow motion. Lots of Boomers lost their retirement savings in 2007-8, meaning they had to stay in the workforce, meaning they occupied jobs that might have been taken by Millenials had they retired (Gen Xers, of course, always knew they were screwed).
I know quite a few people in their 40s/50s who have nothing saved and a couple who are constantly in debt. I genuinely wonder if some of them (esp. the ones who have no kids or are estranged from them) will show up on my doorstep when we’re all old.
But one needs to be lucky to have enough base funds to sensibly shepard. Health, social capital, job opportunities, hometown, etc. are all determined by accident of birth. Bootstraps and good decisions only get you so far, especially in late-stage capitalist America.
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Unfortunately for many of us, that is our only retirement option. The right has dismantled our unions, depleted our social security, and taxed the poor and middle class in to desperation.
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Yes, we are lucky enough to have been born in the time and place we were. That is true. On the other hand, doing what millions of others have done is not pure luck.
Actually the #1 reason is that for the last 40 years companies have been shifting the responsibilities and costs of providing their employees with a retirement to their employees.
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And of course, if you’re not in that 42% at the moment, you’re probably one unexpected medical expense away from it.
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I think of it as working until I just can’t anymore, then dying in squalor.
As a GenX person, I never actually had hope for any more than that.
I’ve been putting money into a retirement IRA since I was 24. (I returned a wallet full of cash to a financial planner who had dropped it at my workplace, so the kind old gentleman set me up with the account as a thanks for being honest and not taking any of the cash. He was an angel, though I didn’t realize it at the time.) $20 bucks a month for a decade and a half didn’t move the needle all that much, but I’ve recently buckled down on saving, and now it’s at least 3 years of living expenses, woo-fucking-hoo.
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My first job as a young man was with an established company with multiple unions and typical (for the time) traditional retirement pensions. As a 20 year old, retirement was a million years away and something I had absolutely no ability to grasp the significance of.
I remember at the time the big hullabaloo was the switch-over from traditional pension plans to 401k’s. The company was split between for/against with most younger employees eager to take control of their retirement investments and the older, tenured employees worried about losing their guaranteed benefits.
Fast forward 30 years and while I am personally sitting pretty well with my retirement portfolio (mostly due to keeping out of debt and a relatively high combined income), I would still kill for a guaranteed pension plan instead. The last couple of years my 401k and IRAs have gained nicely but is still very much undervalued compared to what it should be given the tumult of the stock market between 2001 and 2015.
Unfortunately, too many people have bought the myth that the stock market is the only way to gain wealth when it’s really nothing but a huge casino. Some get lucky but most walk away worse off. My father squandered his considerable inheritance (and his life) gambling on risky stocks and died penniless. I have vowed to not repeat his mistakes but the only vehicle available to me is the same system that ultimately destroyed him. As a result, I only invest in the least risky mutual funds I can find and I will never gamble on any individual stock.
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Correct. There is no way on god’s green earth that I could afford to outright buy a house or condo, and I’m pretty far from being someone who’s made a bunch of terrible decisions in my life. My wife and I had to move to a new apartment last year when our rent went up over $100, and we were only able to do that because I have amazing parents who were able to help us with the security deposit.
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Because it might screw up their clickbait headline.
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Then there are millions of lucky Americans. I thought I could never afford to buy property, but I did, with no down payment, and ended up paying less on the mortgage than when I was renting.
My point is not that everyone should be like me. My point is that circumstances can change.
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I am actually half way to my retirement goals at 44.
So, we’re all (anonymous) friends here, right? Would you be willing to share more specific details?
I’m a bit older than you (48) and have $430k in my 401(k). My house is worth $350k ish and I have around 50% equity (super low APR on a 30 year fixed mortgage).
I have two kids about to go to college and that’s probably going to take around $200k-$300k of my savings (ouch) on top of the $80k we have in 529 plans.
Assuming I can rebuild my savings after my kids are done bleeding me dry, I believe by the time I turn 65 I would have a house worth $350k and maybe $400-$500k in my 401(k).
I was thinking I was doing pretty good, then I looked at ADP’s retirement costs estimator. By the time I’m 80, they think I’m going to be spending $10k / month on healthcare. Does that make any sense at all?
How much should a person coming up on 50 have in savings if they want a comfortable retirement?
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The key is to start saving/investing early in life and be consistent (save with every paycheck). Taking advantage of a matching 401k plan should be a no brainer. The power of compounding is lost on many people. Also maxing out contributions when possible, eliminating debt, avoiding risks with your nest egg, planning for multiple streams of income once retired (social security, pensions, dividends, part time work, etc.) and making catch up contributions once you reach 50 should all be part of everyone’s plan. And work at staying healthy to reduce illness, injuries and medical costs. I recently found the site Retirement And Good Living which provides information on all these issues as well as many other retirement topics and also has several retirement and health calculators.
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Keep in mind that the people telling you that you don’t have enough saved are the people who want to sell you their services. If you ask them, you will NEVER have enough saved-because then you wouldn’t need their services, and that’s bad for (their) business.
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Not really a guarantee because…
My union’s multi-employer pension fund is in the shitter because of unrealistic expectations and mismanagement. Absent a public bailout I don’t expect to see more than couch cushion change out of that pension. Public employee pension plans are in the same boat, but magically are backed by taxpayers to whom the can was kicked down the road . Pension plans are reliant on the same risk calculations everyone else is subject to, and sometimes fuck it up badly.
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I cannot speak to all your own specifics or my own. I will say the recommendation is to have around 1.5 mil available in retirement. Whenever you choose to make that happen.
I also have 3 kids one approaching college in a year. My suggestion is to NOT let them bleed you dry. The 529s are there to assist them. Let them take out loans and make good choices about cost to value of their education. You and they are better off if they have education debt they can earn money to pay off and you having a good savings for your retirement so they do not need to support you.
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I’m in my fifties - and I know that at least three of my closest friends of my age have exactly zero saved for retirement. I think you’d be surprised how common it is.
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Every piece of this advice boils down to: “already have enough money that you can afford to save some of it”. For people who live paycheck to paycheck, “just save money!” is a useless suggestion. Save it from where? How? It’s just a more polite way of saying “have you considered not being poor?” And without that savings in hand, any unfortunate happenstances (car accident, injury, sudden medical bill, even jury duty*) just drive you further away from being able to build the savings you need to make progress. “Stay out of debt!” is all well and good, but when your fully-paid-off car unexpectedly dies and you suddenly have a car payment and a higher insurance premium to cover, I’d like you to tell me where that money’s going to come from when you’re already just scraping by. “Be healthy!” is great for people who don’t have chronic health problems that incur large medical bills on a regular basis.
You can do well by making sound financial decisions and being “sensible”. But being sensible and making sound financial decisions does not mean you will do well. Luck, either day to day or by circumstance of birth or marriage, goes a long way toward influencing whether any of the advice you provided is worth anything at all. All advice like this ultimately does is re-entrench the absurdist notion that people who are poor or not financially successful are simply doing something wrong, and therefore it’s their own fault, and we as a society have no obligation to help them.
*) Jury duty in Washington pays $10 per day. Not per hour, per day. And while employers are obligated to give you the time off, they are not obligated to pay you while you’re gone.
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