Four in 10 Americans don't see retirement ever happening • Hacker News Board

Re: Four in 10 Americans don't see retirement ever happening

#11

Post by wutbrodo » Sat, Jun 08, 2019, 1:34 AM UTC

jc01480 wrote: post #9

Frankly, the American Dream of retirement and ‘golden years’ has long passed. The 2008 crisis wiped out everything people I know had for retirement. I’d rather save my cash than put it into another person’s hands hoping for modest interest returns at the risk of knowing we’re just around the corner from another 2008-like crisis. I’m working to make something for my wife after I’m gone. I’d be a horrible retiree anywa…

> . I’d rather save my cash than put it into another person’s hands hoping for modest interest returns at the risk of knowing we’re just around the corner from another 2008-like crisis.

I'm not sure I understand; if you had a basic passive portfolio during the 2008 financial crisis, you did pretty well for yourself: crashing rates meant that your bond-heavy portfolio increased in value. On top of that, rebalancing the longer-term portion of your allocation into stocks at the nadir means you got a ground floor ticket to a historically good bull market. All of this is with the most conservative, mechanical, low-touch investing strategy possible.

I might be misunderstanding something about the above, but failing that: what is your actual concern about another 2008-crisis-like event?

Re: Four in 10 Americans don't see retirement ever happening

#12

Post by notacoward » Sat, Jun 08, 2019, 1:34 AM UTC

drcross wrote: post #6

I don't mean to sound mean but it seems to me as a European that Americans value comfort and convenience over being prudent and thrifty. I hear stories from people on massive salaries yet struggling to make ends meet due to a lifestyle of extravagant food choices, car purchases and other material junk which is not necessary. The saving grace of all of this is the recent trend on the topic of FIRE- people who realise…

As an American, I'd say your statements have a grain of truth to them but you're probably not looking at the right demographic. The people with "massive salaries" barely make a dent in those statistics. Those numbers come from people in the middle and working class. I have a lot of sympathy for them, having been there myself a long time ago. It might not be their fault that their means are more limited, and being poor shouldn't have to mean a lifetime of unceasing self-denial. I don't begrudge anyone their occasional moment of (relative) luxury. On the other hand, going into massive persistent credit-card debt for the sake of having the latest phone or TV is just crazy and it's a common syndrome. There's something very sick about a society that pushes that lifestyle on people who never got a good enough education to realize that there are better alternatives. It's predatory. So your criticism (if it was even that) is justified, but IMO misses the real point of how we came to be that way.

Re: Four in 10 Americans don't see retirement ever happening

#13

Post by wutbrodo » Sat, Jun 08, 2019, 1:35 AM UTC

madengr wrote: post #2

The majority of the remaining 6/10 have inadequate retirement savings. I believe the average 401k balance of 45-50 YO is between $96k to $108k.

Not disagreeing with you, but I don't actually know the answer to this question: what's the proportion of retirement savings that's in a 401k? I'd expect that someone with 108k in a 401k has a pretty substantial amount outside of it too, right?

Re: Four in 10 Americans don't see retirement ever happening

#14

Post by thekyle » Sat, Jun 08, 2019, 2:03 AM UTC

madengr wrote: post #10

jc01480 wrote: post #9

Frankly, the American Dream of retirement and ‘golden years’ has long passed. The 2008 crisis wiped out everything people I know had for retirement. I’d rather save my cash than put it into another person’s hands hoping for modest interest returns at the risk of knowing we’re just around the corner from another 2008-like crisis. I’m working to make something for my wife after I’m gone. I’d be a horrible retiree anywa…

My 401k is now worth about 5x what it was in 2008, mostly due to compounding, which is why I don’t understand “people losing everything”. They would of had to sell it all at the bottom of the market.

> They would of had to sell it all at the bottom of the market.

Yup, that's pretty much it. Unfortunately many people don't have the stomach for the market and end up selling at the worst possible time trying to avoid additional losses.

After all, if everyone was totally rational and held through downturns then market crashes would largely be eliminated.

Re: Four in 10 Americans don't see retirement ever happening

#15

Post by washadjeffmad » Sat, Jun 08, 2019, 2:32 AM UTC

wutbrodo wrote: post #13

madengr wrote: post #2

The majority of the remaining 6/10 have inadequate retirement savings. I believe the average 401k balance of 45-50 YO is between $96k to $108k.

Not disagreeing with you, but I don't actually know the answer to this question: what's the proportion of retirement savings that's in a 401k? I'd expect that someone with 108k in a 401k has a pretty substantial amount outside of it too, right?

Hah. You've gotta be rich to be poor.

Massive savings are unlikely in a government or other public role where you can get tremendous matching (14% on 6% investment) in 401k.

I would have been starving myself for a mediocre payoff in a few decades if I'd stayed in research. $40-odd-k with a $2000/mo take-home after insurance and taxes made it hard to save for a down payment in an area with a $250k median home price while trying to keep up my IRA. Not to mention you lose money every year because the state doesn't always grant COL increases.

I lived off of $20/mo 6Mbit DSL that I had to cancel for a month every half year and then renew so I didn't have to pay $60/mo, drove a 10 year old car, didn't own a smartphone, never took a vacation, and cooked all of my meals while shopping only at Costco and the local ethnic markets. It still cost $18,000 to afford a year of life.

Oh yeah, student loans. It's like forgetting you have cancer. After a while it becomes part of your identity.

108k at retirement is nothing. You can lose that in one trip to the hospital, one unlucky year in whatever overvalued market you invested in, a few years of predatory rent agreements or having to help raise your grandkids. To someone with the kind of wealth you're thinking of, that's like the $25/mo I send to my checking so my bank doesn't close the account.

Re: Four in 10 Americans don't see retirement ever happening

#16

Post by madengr » Sat, Jun 08, 2019, 3:03 AM UTC

wutbrodo wrote: post #13

madengr wrote: post #2

The majority of the remaining 6/10 have inadequate retirement savings. I believe the average 401k balance of 45-50 YO is between $96k to $108k.

Not disagreeing with you, but I don't actually know the answer to this question: what's the proportion of retirement savings that's in a 401k? I'd expect that someone with 108k in a 401k has a pretty substantial amount outside of it too, right?

Probably not. 45-50 YO are still to young to have pensions. The fact of having a 401k pretty much means no pension. Everyone I know with a traditional pension is 60+.

I’m lucky to come in on the tail end with a 401k and employer funded annuity, but any hires at my employer in the 21st century just have a 401k.

Re: Four in 10 Americans don't see retirement ever happening

#17

Post by notacoward » Sat, Jun 08, 2019, 3:33 AM UTC

madengr wrote: post #10

jc01480 wrote: post #9

Frankly, the American Dream of retirement and ‘golden years’ has long passed. The 2008 crisis wiped out everything people I know had for retirement. I’d rather save my cash than put it into another person’s hands hoping for modest interest returns at the risk of knowing we’re just around the corner from another 2008-like crisis. I’m working to make something for my wife after I’m gone. I’d be a horrible retiree anywa…

My 401k is now worth about 5x what it was in 2008, mostly due to compounding, which is why I don’t understand “people losing everything”. They would of had to sell it all at the bottom of the market.

2008 to today is eleven years. Please look at the immediately previous eleven-year period. The 2008 crisis left the S&P down compared to where it had been in 1997. How cheerful would you be about retirement if your own 401(k) returns had been negative over the last eleven years. What if a 2008-like event happened just before you had planned to retire, or just before/after other major financial events such as buying/selling a house or kids hitting college or someone getting sick?

It's great that your prime savings years have coincided with an exceptional run-up. I also have been fortunate. The difference seems to be that I don't look down my nose people who lacked perfect flexibility wrt when to enter or leave the market. I have reasons to believe I've been pretty smart about my savings and investments, but I still admit the role that pure luck has played.

Re: Four in 10 Americans don't see retirement ever happening

#18

Post by temp129038 » Sat, Jun 08, 2019, 3:41 AM UTC

Personally I think the younger generation will rethink the entire notion of what retirement is. The stereotype of counting the days til 65 and then all of a sudden you’re playing golf every day for the rest of your life is just comical.

Re: Four in 10 Americans don't see retirement ever happening

#19

Post by [deleted] » Sat, Jun 08, 2019, 4:13 AM UTC

drcross wrote: post #6

I don't mean to sound mean but it seems to me as a European that Americans value comfort and convenience over being prudent and thrifty. I hear stories from people on massive salaries yet struggling to make ends meet due to a lifestyle of extravagant food choices, car purchases and other material junk which is not necessary. The saving grace of all of this is the recent trend on the topic of FIRE- people who realise…

[deleted]

Re: Four in 10 Americans don't see retirement ever happening

#20

Post by wutbrodo » Sat, Jun 08, 2019, 6:33 AM UTC

madengr wrote: post #16

wutbrodo wrote: post #13

Earlier quoted context omitted.

Not disagreeing with you, but I don't actually know the answer to this question: what's the proportion of retirement savings that's in a 401k? I'd expect that someone with 108k in a 401k has a pretty substantial amount outside of it too, right?

Probably not. 45-50 YO are still to young to have pensions. The fact of having a 401k pretty much means no pension. Everyone I know with a traditional pension is 60+. I’m lucky to come in on the tail end with a 401k and employer funded annuity, but any hires at my employer in the 21st century just have a 401k.

Right, I didn't assume pensions (tbh I'm young enough that defined-benefit pensions sound like a strange anachronism to me). I wasn't asking about retirement flows but rather retirement stock: I would have imagined that someone with that level of 401k savings would also have retirement savings that didn't live in a tax-advantaged account. My parents never had enough money to put in their 401k, and I've always maxed it out, so I don't have a good model of how partial-contribution decisions are made, but I would've thought that some level of liquid savings would (on average) come before locking up money in a 401k