Hold off retiring until 80? Wow!!

[Hugh R]

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.

[patssle]

1/2 of those surveyed have only socked away a median of $25,000. ... 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

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.

[targa911S]

Damn I missed it. I'm already retired.

[MysticLlama]

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.

[speeder]

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

[GH85Carrera]

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.

[sjf911]

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.

[Hugh R]

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.

[nostatic]

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).

[Tervuren]

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.

[Hugh R]

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.

[Hugh R]

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.

[MysticLlama]

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.

[MysticLlama]

Originally Posted by Hugh R

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.

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.

[masraum]

Originally Posted by MysticLlama

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 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.

[MysticLlama]

Originally Posted by masraum

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.

...snip...

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.

[VincentVega]

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

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.

[Hugh R]

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

[VincentVega]

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.

[masraum]

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.