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Four in 10 Americans don't see retirement ever happening

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

#21

Post by jogjayr »

wutbrodo wrote: post #20
madengr wrote: post #16

Earlier quoted context omitted.

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 i…

> I would've thought that some level of liquid savings would (on average) come before locking up money in a 401k

This is correct. But most personal finance wisdom advises keeping no more than 6 months - 1 year of expenses in liquid savings. After that, funding your 401k to get the maximum company match, then your IRA and Roth IRA, and maxing out 401k, is preferred. If there's still money left over after that, it goes into post-tax investments.

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

#22

Post by cylinder »

notacoward wrote: post #12
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 poo…

Nah it's definitely a thing. Generalisations are borne out of truth. Just look at all the waste ... Living far from work, driving alone in an Escalade or huge pickup 30 miles to work, cooling entire houses to 18C etc. It's in your face everywhere you look. Even the toilets are wasteful!

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

#24

Post by notacoward »

cylinder wrote: post #22
notacoward wrote: post #12

Earlier quoted context omitted.

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 poo…

Nah it's definitely a thing. Generalisations are borne out of truth. Just look at all the waste ... Living far from work, driving alone in an Escalade or huge pickup 30 miles to work, cooling entire houses to 18C etc. It's in your face everywhere you look. Even the toilets are wasteful!

I'm not saying those things don't happen. I'm just saying they're the tip of the iceberg. The part below the waterline - the part that does the real damage - is the vastly greater numbers of middle-class and poor people, and the reasons why they behave the way they do. The glittery ice on top barely matters. The real problems are the advertising and finance industries which were way oversized since long before tech came along, an educational system that leaves most people vulnerable to their manipulation, and politicians who make the whole situation worse with their misguided (or venal) policy making. Maybe callous condescension makes some people feel better about themselves, but it's really not very helpful.

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

#25

Post by madengr »

jogjayr wrote: post #21
wutbrodo wrote: post #20

Earlier quoted context omitted.

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 i…

> I would've thought that some level of liquid savings would (on average) come before locking up money in a 401k This is correct. But most personal finance wisdom advises keeping no more than 6 months - 1 year of expenses in liquid savings. After that, funding your 401k to get the maximum company match, then your IRA and Roth IRA, and maxing out 401k, is preferred. If there's still money left over after that, it goes…

Problem is you can’t fund a 401k and traditional IRA at the same time. Then you can’t fund a Roth IRA if you make too much (and it’s only $3k/year anyway). The government has rigged it so they are getting a cut of your retirement savings, one way or the other.

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

#26

Post by bobthepanda »

temp129038 wrote: post #18

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.

That version of retirement is extremely modern (postwar-Great Society ish). A return to working life or poverty for seniors would be a return to form.

Until Social Security and Medicare happened most seniors lived in abject poverty. https://www.nasi.org/discuss/2015/08/social-security%E2%80%9...

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

#27

Post by jogjayr »

madengr wrote: post #25
jogjayr wrote: post #21

Earlier quoted context omitted.

> I would've thought that some level of liquid savings would (on average) come before locking up money in a 401k This is correct. But most personal finance wisdom advises keeping no more than 6 months - 1 year of expenses in liquid savings. After that, funding your 401k to get the maximum company match, then your IRA and Roth IRA, and maxing out 401k, is preferred. If there's still money left over after that, it goes…

Problem is you can’t fund a 401k and traditional IRA at the same time. Then you can’t fund a Roth IRA if you make too much (and it’s only $3k/year anyway). The government has rigged it so they are getting a cut of your retirement savings, one way or the other.

You can fund a traditional IRA and 401k up to a certain MAGI.[2] If your spouse doesn't work, or their work doesn't offer a 401k, you can fund a traditional IRA for them as well. Roth IRA is $5.5k/year.[0] If your 401k plan allows in-plan conversions you can also do mega backdoor Roth IRA contributions up to something like $37k. [1]

0. https://www.nerdwallet.com/blog/investing/roth-ira-contribut...

1. https://thecollegeinvestor.com/17561/understanding-the-mega-...

2. https://www.quickanddirtytips.com/money-finance/retirement/c...

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

#28

Post by wutbrodo »

jogjayr wrote: post #21
wutbrodo wrote: post #20

Earlier quoted context omitted.

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 i…

> I would've thought that some level of liquid savings would (on average) come before locking up money in a 401k This is correct. But most personal finance wisdom advises keeping no more than 6 months - 1 year of expenses in liquid savings. After that, funding your 401k to get the maximum company match, then your IRA and Roth IRA, and maxing out 401k, is preferred. If there's still money left over after that, it goes…

> most personal finance wisdom advises keeping no more than 6 months - 1 year of expenses in liquid savings

I was unclear: by "liquid" I didn't mean in cash equivalents like an emergency fund. I just meant "not locked away until retirement, under threat of penalty" the way tax-advantaged retirement accts are.

At the very least, I'd expect that most people with a 401k have a ton of assets tied up in houses that are often to big for them after eg their children move out: downsizing and unlocking those assets is a pretty common sense move in the context of "not having enough saved for retirement".

I think the high level point I'm going for here is that I'm not sure that 401k balance is a good proxy for overall retirement savings, as implied by the comment I originally replied to. I don't have the data on this though

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