Interesting retirement information
 

One fund I have is run by Hartford. Every three months they send a little newsletter along with their quarterly report. This is part of said newslatter:

Do You Measure Up?

Have you ever wondered how you compare financially to your neighbors and your friends?
Results from a recent study show where most Americans stand in terms of income, net worth, homeownership, and debt. Take a look at how close you come to the "norm".

AGES 25-34: Investors in ths age bracket are typically launching their careers, starting families, and looking toward home ownership. Median income is $45,000, and only 39% own their own home.They typically carry credit-card debt of $3,700. Although investors in this age bracket generally aren't focused on retirement, this may be the best time to begin saving because the investments will have more years to accumulate earnings.

AGES 35-44: This group of investors feel that they are in the financial "hot seat." Nearly 70% own homes and many support young families, so expenses typically rise. Median home debt is $80,000, but net income is about $55,000. Net worth approaches $95,000, and one million people in this bracket are millionaires.

AGES 45-64: These investors are generally in a position to make the most of their wealth-reducing debt and looking toward retirement. Median net worth is about $163,000 for those aged 45-54, but it jumps to $217,500 for those aged 55-64. Home debt also declines to $55,000 for people in their late 50s and early 60s, down from $75,000 for those in their late 40s and early 50s. Median income for those aged 45-54 is $67,500 and 76% of those individuals own their home.

AGES 65+: Retires Americans have a median net worth of $199,500. Their average income is $32,500, 44% of which comes from Social Security, followed by 27% from retirement and 10% from other savings. Retirees typically spend 11% of income on health-care expenses and donate about $1,700 a year to charity.

Just because "most people" fall into a certain category doesn't mean its the best place to be. The figures below illustrate the median amount Americans have saved in their employer-sponsored retirement accounts. These amounts fall well below what most people will need in order to retire comfortable>


AGE 25-34 $12,067
AGE 35-44 $32,026
AGE 45-54 $44,829

end of article

Comment...Anyone ever figure how much you will need to retire and how you are going to amass that amount? (hint...it would take one million dollars invested at 5% to provide $50,000 per annum without touching the principal)

Im 48 and I think about it alot. Ive been tracking my net worth since 1998. By keeping track it helps me see where Im at and gives me insentive to save and to pay off my debts. I payed off my mortgage this year as I plan to retire soon. I figure that being debt free I won't require to draw as much from my investments and savings. The wife will be eligible for a very nice pension when she is 52, she is a school administrator. Ive been putting the max into my 401K for years and also have a nice amount in other investments. We don't budget but I do track our spending. We don't have to work now if we wished to scale back alittle. That fact alone sure reduced the stress at work a ton. It enambled me to go to the boss and work things out so I no longer work nights or weekends. I use to put in 60hrs a week reqularly. Now I may work 35.

I don't know how anyone could get by with the amounts in the article. I'm not planning on getting anything from SS, so if I do it will just be a bonus. I think most will have to work till they die if they don't start saving more. Of coarse this may be the answer to keeping SS afloat.

Those numbers are scary. The old folks I know are true misers. They live on little income/SS and modest savings. What happens to the newer generations that have never experienced a depression or really tough times.

dm, I remember jousting with you a few years back about paying down debt vs. investing the cash. Given the shaky real estate foundation, I've been paying down debt. It definitely feels good to have no burden on your back. I cannot afford toys (haven't bought a single toy or plaything in months), but less debt = less required income = less hours to work = more free time to enjoy what I have.
jurgen

Funny my grandparents had substancially less than 200 grand and they lived quite comfortably in there retirement. They were simple people with simple tastes. They owned ther home which helps alot. Its not hard to get by with out a lot of luxurires, there are many of us who do this everyday. Of course I live in the midwest not hollywood so our views of happy retirement are quite different.

My Father had around $400k when he passed 12 years ago. His biatch wife (my stepmother) squandered as much as possible but us three kids got around $75k of it. Invested part and lost part (divorce) but still am worth almost as much as he was when he passed and I am 52.

Have a few more years to build up something to retire with but have been watching it closely and putting 15% into my 401k for years now.

Its something that we need to really keep an eye on!

JoeA

Net worth includes equity in your primary residence. Yes, that's part of your net worth, but you can't buy groceries with it unless you take out a loan.

A better financial picture is achieved when you look at your true net worth and subtract the equity in your primary residence.

Only 35 here, and I think about this quite alot. I have put bits of money into a 401K one and off for 10 years. This year I started putting in the max. I should have around 30k by the end of the year.

Do this every year until you retire and life will become a lot easier with one less thing to worry about!

Joe A

49, self employed and scared s**tless. How many people do you know who aren't even thinking about it. Most people I know are waiting for "somebody else" to provide for them. My dad gave me a book by Robert Kiyosaki called "Prophecy", on his death bed. Since reading that and and asking questions of people who have set up their own retirement, I have taken action and am close to securing a baseline cash flow for my retirement. Let's face it people their is no one to take care of retirees anymore. It is up to each of us to plan our future.

MOther handles all of my finances..so I don't even have a clue as to what I am really worth.....I jut take out so much money every month from the Trust Fund and just spend it...Sometimes Mother really pulls out her hair with the amounts I spend...especially if I go on a binge month after month.....the last real big binge I went on was in 2000....But SHHHH...I don't want Mother getting wind of this...I just didn't go out and blow the money at the Tables or Buffet like she thinks......No I bought Art, Sterling and othere assorted hard asset items....with the exception of a couple of real clunkers they have done really well on the order of 5X's......http://www.kaleden.com/detail,allan-adler-large,587661.html

Now this may come as news to most of U...but Tabby is a really a Fked up person.... U see he is always angonizing over money....day and night, night and day....it never fking ends....and U want to know something it's ALL MOTHERS FAULT.....Tabby was brought up where NOTHING was bought on Credit....even the house only had a less than 25% to loan value....and that was for income taxes...Mother and Daddy used 15 watt light buldbs to save on electricity...everything went into the bank....Mother didn't even buy a car for 7 years and only did so because the old one wouldn't go anymore...she wore it out.... then she went down to the local Auto Auction...and bought one Wholesale....So Tabby quiet to the contrary of his public image is a fking MISER....he won't spend a dime on anything that doesn't hold value....as in collectable...right now he needs a new TV set....his old one died...he is so fking cheap that he is content to use his 1987 20 incher, that he has to get up an manually change the channel on.... Now U would think that he would lighten up and buy a nice 60 inch Samsung or somethin....BUT NOOOOO......

And this is really a good one...how many people here own Consumer Electronics that actually GO UP IN VALUE.....Well Tabby does....he bought MCIntosh Stereo equipment back in 1978....His Pre Amp and Amp are still worth what he paid for them back then....that is totally amazing in of itself...but the Tuner he bought a MR78 is now worth at least DOUBLE what he paid for it...ARGGGG...I give up....

This is so timely.

I just met with my financial advisor last week. The last time we met was 3 years ago. He set me up with a MSA ( Medical Savings Account) and some good Term Life insurance policies.

Now at the ripe old age of 39 I am trying to play catch up with my retirement. We are building a 20 year plan to have me VERY comfortably retired. He was talking about Roth IRA's and Simple IRA's one of them will allow you 9K a year investment per person. If I start now I will see a couple of Mil by retirement per person. (Wife and I) I want to be done by 59. Possibly sooner, holding controling principle of my business and drawing dividends while I persue other dreams.

I have ZERO debt and I am VERY proud of that. My net worth is in the 1.1 million range right now. I feel like I need to get a good plan going so I can kick back and relax in 20 years. Besides retirement accounts I am starting up a LLC with 2 other guys where we buy older homes needing TLC and flip them in transitional neighborhoods. The white bread neighborhoods are out of touch with reality as far as value is concerned so we are taking a chance on our first house. If it works out well, many more are to follow.

When I look at the number of companies no longer offering traditional "defined benefit" retirement plans,the movement to "privatize" social security, and the number of companies that will not have medical coverage for retirees, I wonder if those under 40 will be able to ever retire unless they are extremely lucky. I have worked out some financial plans for people over the years, and it begins to look impossible for the typical Joe Sixpack making 50k to 60k per, with 2 kids and a mortgage to ever save or invest enough to be comfortable.

I think that is wrong. If one saves 10-15% of pretax income at a reasonable rate of return, one can have a nice nestegg. I have a spreadsheet that uses minimum wage, 12.1% of income, invested tax-free, in 10 yr treasury bonds. After 40 years, it is not quite possible to retire and live off the funds, but it is close. I think a family with 50-60k combined income should be able to accomplish this easily, assuming they don't buy unnecesary toys. I think it's an issue of 'I won't' instead of 'I can't.'

turbo:

They would have to start young, max out to the legal limit, have a bit of luck, not wind up using part of it along the way for tuition or other emergencies. If an individual wanted $50k per year for 30 years (the end of which the balance would be zero) at modest 5%, they would need $789k in the bank. The worst part is none of this takes inflation into consideration. At present yields on long term securities, one has to reduce the effective yield over time. Using the "rule of 72" (72/inflation rate) shows that at a 4% average inflation rate it would only take 18 years for the prices to double. So in 36 years of savings, costs would quadruple ar put another way, that goal of $50k in purchasing power would now be equivalent to about $12,500 in actual purchasing power. A 3% inflation rate takes 24 years which would be kinder to the long term saver.

Many people I have counseled are people who have refinanced their primary residence at least once for varying reasons, putting themselves further back on the curve. Of these, there are quite a few who have no idea how they are going to retire, but conclude that they will anyway. As for unnecessary "toys", the most difficult concept to get across is the difference between "need" and "want". It is not unusual to see people in their 30s externally living at the same style as their parents who have 25+ years on them in terms of paying things down. THis desire for a better lifestyle results in more debt load and less money for investing and saving.

Edited..I made a math error on savings.

I'm not planning on "retiring" per se. You rest....you rust. Saw it in my own family. My grandfather started working manual labor when he was 12 and stopped when he was 84.

Soon after his retirement his health began to decline. You need something to keep both your mind and body active....and if you can make some bucks on the side, so much the better.

You ahve to remember that "retirement" is a fairly new concept and that not long before WW2, a large portion of the populace didn't really retired. Now, we feel that somehow this is an entitlement, which it really is not

So I don't think I will "Retire". Even if I only have a part time job, I think I'll be at it for a long time as we are a fairly long lived bunch.

Otherwise, your article made me feel pretty good as I appear to have at least made some good financial decisions.

BTW Moneyguy: As someone under 40, I can say that I am all behind privatizing social security. In fact I'd sacrifice everything I've paid in so far, just to be able to invest what is coming down the pike. If I make bad decisions, so be it. Much better than having somebody else make those decisions for me, or worse yet, making no decisions at all.

1967:

I don't have a problem per se with some limited form of privitzation, but the truth of the matter is that there are many people who will not or cannot save, due to constraints on their income. I would like to see Social Security set up as an "insurance" type of system where what is paid in would buy a guaranteed annuity if that is what the individual desires. I keep going back to companies like Global Crossings, Enron and now a major airline, all with retirement plans in which employees invested that have left them with nickels on the dollar. If you do make those "bad decisions", then will there not have to be some kind of fund to assist you? Don't rule that out. Our society seems, at its core, to have some sensitivity toward the poor, who may be in that condition for reasons that have nothing to do with their desire not to be. We already have Roth IRAs, Keough plans and others that should encourage people to save for the future, but do they? We have companies that "match funds", but how many people take full advantege of this gift? These are already "privatized" methods of saving for retirement. They exist now. Do we need another, especially whan so many people are not even taking advantage of what is already out there?

Planning to work far beyond accepted retirement age is a gamble. Health may be a factor and that is something one cannot predict with any degree of accuracy.

Max out the IRA, the Keough or the deferred income plan. Plenty of opportunity there for individual saving. Look at the Social Security as an insurance policy to take care of those not so fortunate.

Finally, the other gamble is the obvious difference between defined contribution and defined benefit. The first assumes positive long term growth. The latter is a more absolute number that can be used for actual planning.

Good luck for the future, everyone!!!

Been thinking about this lately...

31, 100k in 401k (contribute 15% max every paycheck).

Owe 250k on 375k house. Make about a buck-ten a year. No debt. No kids.

Any suggestions?

The answer is obviously NO, but I don't think anyone is asking for another MECHANISM. Just let me do what I want, with the money that I earned.

Well, no one ever promised that you'd be healthy, wealthy or wise. These are all things which must be worked at. Neither is anyone guaranteeing that we will even survive to collect SS.

I am maxed....and I do not count on SS for anything. The fact is that at the current rate, it will be worth NOTHING by the time I "retire". Why would you throw good money after bad? The money I have put into SS is a complete sunken cost and as I said, i will willingly sacrifice it provided the gov't would let me do what I want on a going forward basis.

Thankfully all my retirdmants are in the hands of the Hillary and The Party, and also the Other Party. You see They only have my best interests at heart.

Take last week for instance, hard at work putting this as top news by Chuck and Joe, along with the reporter and his wife Mandy G.

I am confident things will work out and they are not sitting on theirs, getting free lunches, and putting all the millstones around others.

Oh yea.....inflate.....inflate......inflate......infl ate........