Hold off retiring until 80? Wow!!
 

From the LA Times today. Many Americans say they will have to work until they're 80 - latimes.com

Forget about retiring at age 55. Or 65. Or perhaps even 75.

One-quarter of middle-class Americans fear they will have to work until they're at least 80 years old to afford a comfortable retirement (if "retirement" is even the right word, given that many of these people may never actually retire)....

The average person has squirreled away a mere 7% of their hoped-for retirement savings -- a median of just $25,000 versus a desired goal of $350,000, according to the survey. Three in 10 people in their 60s have less than $25,000, suggesting they'll have no choice but to live on Social Security.

The poll found that 37% of people have no retirement savings, and more than half of them have socked away nothing for their children's college educations.


The survey of 1,500 Americans was conducted from early August to late September.

1/2 of those surveyed have only socked away a median of $25,000. Wow, just wow. I started my first job out of college in 1979 earning $17,500/year. I think by the time I got married 5 years later, I had at least that much, if not more in IRAs/401Ks.

All you guys here in your 20's and 30's if you aren't putting something away religiously for your retirement, this is what will happen to you. Start early, the magic of compound interest is what will carry you. Even in today's piss poor market. Unless of course you believe some on the Board who think it won't matter in the long run.

I guess people grow up expecting to rely on the government in retirement.

I'm only 25 and I already have more than 25k saved. It'll be nice to have my own income from savings plus SS....if America is still around by the time I retire.

Damn I missed it. I'm already retired.

I have to wonder about these studies sometimes.

I look at them, and think, really?!?

A GOAL of 350k, and only 25k saved?

I'm only 33 and past that, and my goal is surely higher.

But then I get on Pelican, and fell like I'm in the bottom 5% sometimes, not aggressive enough to go for more $$ sometimes, etc.

I think living near a city vs. just in the overall nation makes things a bit different, almost to the point that two different studies are needed, major metro vs. everywhere else.

I'm in my early 50s and I haven't even picked a career yet.

The man that started the business I am in took in his words early retirement at age 92. He still misses the job and he is 95 now.

It makes me wonder if it is even worth saving for retirement. With as many that aren't, we will face such a social crisis eventually that the only option to the hand wringing will be to redistribute the retirement savings of those that were responsible enough to save.

Steve, unfortunately you may be right. Congress has, especially when the dems were in power, looking at exactly that. Taking IRAs and 401Ks in the name of "Protecting the investors" and issuing them IOU also know as annuities. This may get moved to PARF, but it shouldn't. Its about planning for your own future. Never mind, I answered my own statement, its about personal responsibility.

The problem is where to put it. I have my retirement account (TIAA-CREF) split between stocks and annuities (around 60/40). Last quarter the stock side lost more than I contributed (which was a not-insignificant amount). I'm wondering if I should shift my allocation more to annuities. I figure I'd look to start "retiring" in about 20 years (at 70).

So long as I can move around on my feet, I'd not want to retire, but I would like to take a lot of awesome vacations, so "retirement" savings are still taking place @10% of my current income.

Todd, I'm there, I plan to "retire" in about 7 years at 65 and I've had the same miserable performance with my portfolio recently. I'm going more to annuities as I get older. My point as the OP was to tell the kids here to put something away now. Don't start thinking about pension and retirement funds when you're 40 or 50.

I'm a long way from a financial guru, but I see things getting worse before they get better. The European debt thing is musical chairs on the Titanic. Greece, Italy, Spain, Ireland, Portugal ARE going to default. The numbers are irrefutable. Its just a matter of time; I give it a year. Again, I don't want this to go to PARF. But its time we woke up and smelled the burnt toast.

When I say "retire" I mean I have a choice to work because I want to, not because I have to. A mentor of mine in motion picture and TV safety is still on his game and sharp as a tack at 75 y/o and works and travels the world consulting to Studios doing blockbuster movies. I want to be like that.

There is also something to be said about investing for the long haul and adding some stability.

We bought a house we wanted to live in for the long term, vs. the whole "starter house" syndrome. Just sticking to the loan with a few extra bucks paid in here and there will get it paid off @ 55, which should make the retiring at 60-65 much easier.

To many people try to move up over and over and never get past the paycheck to paycheck thing. (self included sometimes, but trying to grow up)

That whole stealing and redistributing 401ks thing is a real worry though. I contribute a little to a Roth, but I'd rather not pay the taxes now than *hope* they don't change the rules on the Roth later.

Ditto.

I was bored out of my mind when I spent a couple months between jobs in 2008, even though I had a stop gap contract money wise.

I think that overall, Pelican does have a different class of folks than if you were to just grab a bunch of random folks off of the street. Not everyone here is rich, not everyone here is a doctor or lawyer or engineer, but I think most of us are probably outside of the norm. So in that way, I think you are correct.

You also have to remember that income figures are pretty sad. When they say that most folks only have $25k. I've seen some figures from the 2005 Census that say that 60% of US households made less than $57k. That might not be bad if you're a young single guy, but if you're a family with a few kids, that's not leaving much money for savings.

Here are some figures that I found on the Internet.

20% of households made less than $19k
40% of households made less than $36k
60% of households made less than $58k
80% of households made less than $92k
95% of households made less than $166k
98% of households made less than $250k

Now, imagine being a husband and wife with a little kid or maybe 2 and making $40-50k a year. It'd be damn hard to do that, have reliable transportation, a house with enough rooms for your family, save for college and save for retirement. Don't forget that these folks also want some of the nicer things, the guy probably wants a 52" TV for watching the game on weekends. I'd also say that most folks seem to have some vice or habit that costs them money, whether it be alcohol, tobacco, caffiene, lottery tickets, whatever....

It should be a lot easier to understand how most folks only have $25k in the bank. And honestly, the only reason that's probably true is because they have averaged up to that because of the minority who have a lot of savings.

It's really sad if you think about it too much.

And that's why I don't like to think about it too much. :(

Though I look at how I grew up, small town, decent living on my dad's $40k give or take, and yet not even 1-2% was saved, and we actually could have spared it. Saw my dad get a retirement with a couple small pensions + SS that ended up working out, but it was more luck than planning.

A lot of times it's a priority thing, so I would like to plan better.

I want to be doing something I enjoy with a side bonus of spending money when I'm 80, not stuck going to work because I don't want to eat cat food.

I hear you about different income levels but 350k seems ridiculous. If that's the magic # I feel much better. Of course it's way off and while I think I'm ok I'm not kidding myself.

The trick for me is to find the balance of saving and enjoying life. I sometimes defer to the former. Luckily I usually have some extra cash at the end of the month. If I cant find a compelling investment I put most on the mortgage and put the rest in a MMA. Not scientific but it seems to be working.

350k? I cant get over that #. Crazy.

My goal is $2 million. I'm not there but I'm at a mil on paper.

Nice round #, I have a similar target. The hardest things things for me to account for are healthcare costs and inflation. Not sure how anyone can really estimate either ~30 yrs out. I'm 36 and have some time I guess, but it's still something I think about a lot. I still dont understand why the 401k and Roth limits are so low. Different conversation I guess, but quite a limitation.

Don't forget that most folks, like 99% of US folks, don't live to be 80.

Yeah, that's probably a depressing thought too.

AND - pay off your mortage B4 U retire....

I think we see a whole new class of Older people that are truly needy in the next 20 years. I know so many people in their 50's and even 60's living one paycheck from being broke, no savings and a big home loan.

I feel so blessed that my wife and I each have a very good traditional retirement plan, 2 IRA's and SS in the future. My medical costs nothing, hers $359 a month. I give thanks every day......

i just turned 30 last week, and i've been maxing out my 401k for years. i will retire at age 53 (have to be retired by 56 by law). my retirement system is a 3 part system, with my annuity, 401k and SS. i'm not counting on anything, but on paper, i should be around 4 mil when i decide to quit. in addition to maxing out the 401k, i still only live on 40% of my net paycheck. 60% of my net pay is diverted into a separate account that i don't touch. it's extreme, but i'm still able to live comfortably on the 40%. i'm very lucky.

So was I. Then I got divorced, lost half of my 401,lost my job, my house and still have to pay outrageous child support for a few more years, and then will have 2 kids in college.

I will be working until the day I die.

My house is my retirement... don't have kids, so if the house is payed off at 60, i can use that to suppliment my own pension.
Banks already have special kinds of loans where you get funding based on the notion they will to settle the debt with the house sale after you are gone. basically a reverse mortage of sorts.

Nostatic nailed it. A lot of people who did/do put money into various investment vehicles have lost bigtime (or will) because of the shennanigans that have gone on and are still going on in the markets.

I'm an example of this phenomenon - in 2008 I was 38 and had a few tens of thousands spread across 401k and stock accounts. By early 2009 the values had dropped to a little over $10k. I ended up having to cash out what little I had left (and take the penalty) to pay the rent and other expenses after being laid off. I funded my cross-country relocation to get the job I have now with a mix of the last of those funds plus some credit cards. I'm now 40 and have been able to get a retirement fund going again as well as some small investments and finally buying a house, but total net worth is still around half of what it was. And I've been lucky. A market shellacking and a year out of work will do that - and plenty of people have been (and still are) out of work for much longer periods. Having folks working into their 70s and 80s won't help the job markets either (low/no attrition).


Many others had to do all the bad things I had to (like see their nest eggs get destroyed, have to burn off savings and retirement/investment funds, run up debts, sell assets at huge losses, etc) WITHOUT finding meaningful work that allows them to rebuild at all. It's a way ****tier situation out there than a lot of folks realize and a lot of it falls directly back on our own culture of debt, easy money (e.g. "flip houses instead of working", "invent new financial products that are really just skimming off of O.P.M.", "why work for money when you can get money to work for you?") and corruption (a government that only responds to big-money lobbyists).

There are going to be a LOT of people seriously screwed in their so-called "golden years" - the ripple effects from the housing bubble and Wall Street sleaze culminating in the 2008 crash will be felt for many years to come.

One thing is certain however - that most of the idjuts who bought all them McMansions and lived large from 2003-2007 - will NEVER accept responsibility. They'll blame Bush, Obama, Congress, God, their dog and everyone else before they'll ever look in the mirror, much less admit fault. That's now a distinctly American trait as well.

I didn't know I had to put away only $350,000 (that means $700k for husband & wife?).
I could have quit years ago. But I enjoy the pawnshop too much, I'll probably still be there when I'm in my 70's.
Jim

The problem I have read is that many are relying on the sale of their family home in order to finance, or partially finance their retirements. So what happens to the resale market for homes once it's glutted with the baby-boomers selling en mass? You might find that your house has de-valued considerably thanks to supply and demand... too much supply from a generation that could afford to buy a home, and no demand from the successive generation who is no financial position to purchase.

As for me, I'm just hoping that the Canadian government is still sitting on some cash to fund the federal public service pension that I've been earning over the years when it comes time for my golden handshake.

Dang...missed it by 32 years :).

ps: Make no mistake, I'll always "work"...just don't have the desire or need to base what I do everyday on $.

I think masraum put it best. The members of this board (OT and the 911 board) are probably not your typical people. The majority of workers right now are just getting by, so forget about saving for retirement. And let's not forget that the norm used to be that if you worked for a large company you got a retirement. Unless you employed in state, fed or local government, those days are long gone. A person didn't have to save the way they do today. If you worked for a company that had a retirement program, got your house paid for in 30 years and were eligible for Social Security, you could have a comfortable retirement. Not any more.

And sadly, you can't save as much today as you were once able to thanks to rapidly increasing prices on homes, groceries, gas, utilities, etc happening at the same time as wage freezes, "voluntary" salary and benefit decreases and hugh unemployment.

Remember the days when a man working at the local hardware store (working, not owning) could afford to buy a house and a car and support his wife and family on just his income? Now, it takes two large incomes to support this lifestyle and even this is unsustainable with the ever-increasing costs of living. Maybe the Sister Wives guy has the right answer... well, having multiple partners out working, not having them staying at home making dozens of dependents like he's doing.

Something has to give. Companies cannot expect to plump up their bottoms lines forever at the expense of their workers. Once there are no workers, there will be no one to purchase their products, or take advantage of their services.

the critical point for that has already come and gone, where do you think the credit explosion came from?

I would contend, that if you look at the size of the houses people built back then, the build quality of the cars back then, etc, that you could still sustain a similar lifestyle with a similar job. The quality of living has gone up, and the cost of living has gone up with it. If you cut a lot of the modern crap that you don't really need, its not as bad. Go look at the bare metal interior in a 1950's car, then go look at the lush interior of a modern Honda. Even our "cheap" cars are extremely luxurious. Throw in "Cable TV", Cigarettes, Big House payment, etc, and the cost has gone up because the amount of things we have has increased.

We've become too obsessed with appearance, try planting a food garden in your yard and see what the neighbors think, but raising some of your own food used to be common practice...

I was raised in a 2 bedroom house, with three siblings, it doesn't take a huge house to raise a family. Not much income did my parents have either, but they were resourceful.

Good point. You can still buy a MB in Germany with crank windows I believe. Not over here, everything has to have all the bells and whistles. That is just stupid.

Even Henry Ford understood this concept way back in the 19-oughts.

Part of the problem now is people don't care whether their customer base really can afford the product - they know it'll just be bought on credit anyway. *clang* kick that can down the road and let the kids/grandkids sort out the mess as long as you "get yours".

I'm starting to look at this whole game of life as "all I have to do is survive until I'm old enough to (hopefully) educate my kids about how to do the same and then it's not my problem anymore..." It's tragic to look at it that way but it's become so soul-crushing and spirit-numbing that one almost can't help it.

My father retired at 72. Sort of. He then worked part time at his old job, with no direct reports, 1/2 pay, no incentive pay, etc. He finally really retired this year, at 83 years old...He wants to work!

I'm no depending on a house sale for any income - I'm outta that and rent. As long as I can keep a job and the market doesn't completely collapse I'll be able to throttle down in a decade or two (like others, I don't see myself "retiring"). But while some people complain about the value of their house dropping (which for many was not real money), others of us see actual cash money that we put into the market vaporizing. Those are two different things.

i doubt that very much.
It's not cost effective to still keep non electric windows in the production line..
it would actually cost more to get a crank window car then an electric one, simply through economy of scale.


I actually have been gearing up to grow my own food, cause i think it's gonna get worse in the coming years, when oil runs out or at the very least becomes more expensive.

I'm not getting much volume yet, i'm mostly trying to figure out what works and what doesn't... but i have bought the house intentionally with a big back garden .. for that purpose. I'll have chickens and rabbits soon...And not just for eggs and cuteness.

Average retirement savings for the population as a whole are completely meaningless to me. You need to take into account wages and age. As has been said, $25k savings at 25 years old earning $25k a year and you'd be golden, $25k savings at 60 while earning $75k and your beyond screwed.

Is there a rule of thumb that says to retire at X (say 65), assuming SS stays the same you should have $Y savings by 30, 40, 50 etc? I've seen various online calculators and those provided by my 401K company, e-Trade, TD Ameritrade etc and every time I run them I seem to come up with wildly different answers that takes me from hide my head in the sand panic to wild ecstasy. Add in the volatility of the last few years and my savings have varied by +25% to - 35% of their current value, that alone makes it difficult to predict the future.

I think another thing a lot of Gen X and Y people do is assume they'll inherit a substantial amount from their parents, even if it's 'only' the house that can then be sold to top up their savings. I think that's an increasingly bad assumption as I see more and more people who will need to live of their houses to cover retirement medical bills etc

I think that the you folks need to be reminded that if they do the deductions for a 401k and based on the tax free mark there is an optimum point where they can actually take home the same amount of pay but also be socking some away. I don't think alot of wage earners know that.

I have been retired for 7 years and was very anxious when I first retired as to whether I could maintain a lifestyle that I was accustomed to, it was stressful the first few years particularly going through the financial roller coaster of the markets.

Sometime long before I retired I had heard that to maintain a lifestyle you needed to have access to income equal to 80% of your working income. From my experience that is a pretty accurate figure.

The other guide is to not expend more than 4% of your net worth in any given year. I also find that to be a pretty accurate figure.

I think most investment calculators are inflated because they represent organizations that want to manage your money and obviously having too little is to their advantage so their programing inflates the figure.

After a certain number of years of working and getting raises, I always banked or invested any raise that I got, always maxed my 401K and also funded a deductible IRA as long as I could. We didn't go out and spend the new found income, it went into investments. We lived in the same house for 35 years with minimal improvements other than necessary.

I have no doubt that a high percent of the population is not prepared to retire and live at the lifestyle they are accustomed, that scares me. I had many neighbors who always had new expensive cars and other stuff, I never knew how they did it.