One-third of Americans only have $1,000 saved for retirement

[darkewaffle]

People are fucking miserably bad at managing money, nothing newsy about that.

 

[Leyawiin]

Social Security isn't going anywhere. Even when the trust fund runs out the anticipated payroll taxes at that time will cover 75% of retiree benefits if they do absolutely nothing. Eliminating the payroll cap would help towards narrowing that gap. Just make all income taxable, not just the first $117,000.

 

[Sho'Nuff]

The only reason SS currently has a "deficit"(technically it is not a deficit) is because elected officials robbed Peter to pay Paul. The trust fund, which is required by law to be paid back, is solvent until 2033.

The reason for the deficit (ok, insufficient $) in the trust fund is irrelevant. The problem exists and it either needs to be fixed (unlikely) or the program needs to be reformed.

FWIW I am not a republican or a democrat. I am an independent. I call things as I see them and I really do not care who did or did not create the problem. Pointing fingers doesn't solve anything.

SS really isn't that large of a problem.

With all due respect I think you are misleading yourself. At least 30% of people in this country don't have a dime to retire on and will likely be entirely dependent on SS to get by, and you think its not a large problem? Forgive me but I do not follow your logic.

It can be slightly tweaked through a combination of measures(hike in retirement age, small benefit cut, substantially raising the cap of SS taxable income, etc) and then run indefinitely but Republicans do not want that.

Sure, the problem can be fixed by the measures you specify. But who is going to vote for them? Or rather, who is going to vote for a senator/rep that wants to reduce SS benefits, make them unavailable for a longer period of time, and increase taxes? Don;t kid yourself into thinking that only republicans have figured that out. ALL politicians know that their meal ticket is stamped by giving the voting population what it wants, not what it needs. That leaves the issue to the public to resolve, and we know that will go nowhere because the bulk of the public is looking for a handout. So its a chicken and egg problem. Can't have reform before politicians that will pass the reform are voted into office, but politicians that will pass the reform will not be voted in unless the public has no idea what their plans are with respect to SS.

Republicans want to get rid of the program entirely(which is why they have blocked any real reforms, ones that actually save SS and not do away with it) for the past 20 years. We have known about this problem for close to 30 years, but we can't do something to change it, we have to wait until the last minute to change it, or wait until its to costly to fix it? The issue should have been dealt with more than a decade ago, but nope. We can spend $4-6trillion on unnecessary wars, but we can't come up with a plan to make SS solvent?

.

I agree with all of your points except your attribution of the blame solely to republicans. SS is a bipartisan issue. Qualitatively it affects all Americans equally (inasmuch as the benefit is supposed to be the same), though it is more important of course to those that are less well off. NO politician wants to F with something that is that important to so many people. They might say they do on paper or in a speech, but secretly they want the status quo because the status quo is what keeps them in office.

That said the real problem is medicare(and healthcare in general). Everyone lumps SS and Medicare into one when they say "entitlements" will eat up the budget. Medicare is a much much bigger problem.

FYI - Medicare and SS ALREADY DO eat up large swaths of the federal budget. Roughly 44% of the 2013 "budget" (I forget, was there a budget in 2013? Hard to recall in the current administration) went to medicare, medicade, CHIP, and SS. Defense spending was 19% of the budget.

http://www.cbpp.org/cms/?fa=view&id=1258

The reality is the US needs to INCREASE TAXES and CUT SPENDING. The problem is NEITHER side wants to cut spending(they just want to cut the other sides spending) and the Republicans only want tax cuts.

Agreed. Now how do we convince large portions of the voting population of this fact so that we can get some people in Washington with enough stones to actually do what is right for the country, instead of what is right for themselves?

 

[Red Squirrel]

Does this count RRSPs as well? If yes, that is really sad. I already have like 10k in RRSPs. (my password for their system seems to not be working so can't verify, sent them a tech support email)

Heck, if I did not buy RRSPs I would end up having to owe taxes at the end of the year. Most people buy them mostly for that reason alone.

 

[dr150]

people who work diligently are already forced by the gov't to pay for the people who don't or (supposedly) aren't able to, so it's not like this will be any different.

That's why it's important to put as much money as you can in a ROTH IRA or ROTH 401k (many employers are starting to add this R401k feature)

You pay taxes NOW, before the shit hits the fan......which it will.

A corrupt/fractured/ineffective govt. will seek the easy way out and tax their way through the problem with saver's tax deferred plans that will go to support the non-savers.

The next 25+ years are hyperventilatingly sad when you foresee a longer living human riddled with illness from obesity, with little/no savings, debt, a bankrupt SS system, floundering in an off-shored jobs environment and with a deteriorating skill-set that only sets them up to work a PT job at Walmart with no benefits.

The way to shield you next egg is by paying the taxes now as this will be the last bastion Congress will touch before causing a revolution. Hopefully one will be dead before this last scenario happens.

 

[slag]

http://finance.yahoo.com/news/ameri...ved-for-retirement-ebri-report-134741117.html

What happens if your old, you have $100 dollars to your name, and you can't work anymore?

Will the people who saved diligently, have to pay for the people who didn't or weren't able to save for retirement?

D:

Obama will take care of you.

 

[Imp]

Not surprised given the average income and the financial management ability of most people I come across.

The most "financially smart" people I know:
1. One is cheap as hell and believes that the only way to save money is to buy a house -- houses statistically only match inflation?
2. One is a spender, burns every dollar, and only believes in investing in real-estate -- then proceeds to take loans against the house and pay just the interest.
3. Last one believes real estate and gold are the only viable investments.

That's the best of the bunch... Everyone else I meet tells me that I'll "lose all my money" by investing in stocks. And I should buy real estate ASAP!

P.S. I'd like to retire the second I have $1M in investable assets. A yield of 5% would give me a comfortable income until death, I can work side jobs for bonus money.... That's a long ways off.

 

[Mai72]

My fav audio book is "The Millionaire Next Door."

It should be required reading for anyone who is interested in his or her financial well being.

 

[darkewaffle]

My fav audio book is "The Millionaire Next Door."

It should be required reading for anyone who is interested in his or her financial well being.

An audio book as required reading?

 

[BoberFett]

$1,000? Lucky bastards.

I tend to start from scratch every decade or so.

 

[BoberFett]

This isn't surprising because wages have gone down and become stagnant in America while the top 1% wages and profits are up. At this point most American's just don't have the ability to save anymore. I know many people who are living paycheck to paycheck. Any major financial issue or crisis can put them in the "red" and potentially send them to the streets.

It is a sad affair when American's are fighting for the right to get paid decent wages that allow the ability to save money and pay basic needs.

But yet Americans have more toys than ever before.

Americans have the ability to save, they choose not to.

 

[Mai72]

But yet Americans have more toys than ever before.

Americans have the ability to save, they choose not to.

Americans have a problem with delaying gratification.

 

[dr150]

My fav audio book is "The Millionaire Next Door."

It should be required reading for anyone who is interested in his or her financial well being.

As often critiqued, schools at the high school level should have a required course on how to manage money and debt effectively....and watch the Suze Orman Show on CNBC, .

Kids should start investing already in their teens, even if it's a small amount

Specifically, the rule of compounding with a disciplined savings plan works so well when you start very young that it salves many issues you'll run into down the road.

Below is a graph of a one-time $5,000 investment initiated at different ages (assuming avg. market long-term return with dividend reinvestment):

“The most powerful force in the universe is compound interest.” ~Albert Einstein


A $5,000 investment initiated at age 22 into a ROTH IRA vs. Traditional IRA (assumes historical market annual return w/ dividend reinvestment and 25% tax rate)

 

[zerocool84]

I'm guessing you forgot about how hard our economy was hit. My mom was at her company for 15yrs, got let go four years ago. She's 62 and can't get hired because of her age. No one wants two hire someone that is nearing retirement age. Plus if she took social security right now she'd only get $700/month to live on.

 

[purbeast0]

As often critiqued, schools at the high school level should have a required course on how to manage money and debt effectively....and watch the Suze Orman Show on CNBC, lol.

Kids should start investing already in their teens, even if it's a small amount

Specifically, the rule of compounding with a disciplined savings plan works so well when you start very young that it salves many issues you'll run into down the road.

Below is a graph of a one-time $5,000 investment initiated at different ages (assuming avg. market long-term return with dividend reinvestment):

“The most powerful force in the universe is compound interest.” ~Albert Einstein


A $5,000 investment initiated at age 22 into a ROTH IRA vs. Traditional IRA (assumes historical market annual return w/ dividend reinvestment and 25% tax rate)

i remember when i took my business class in college, some information about a roth ira that my professor told me.

if you maxed out your roth ira from the age 20-30, then stopped, you would have a shitload more money in your roth ira than you would if you maxed it out from 30-60 due to the compounding interest. and this was obviously if you had the average return of 10% or hwatever it was at the time (2002 or 2003).

i didn't start my roth until i was like 25, and i didn't max it out either . but the past years i've been maxing it out. i just wish i had started earlier though, but back then it would have been much harder to max it out.

 

[overst33r]

That's why it's important to put as much money as you can in a ROTH IRA or ROTH 401k (many employers are starting to add this R401k feature)

http://thefinancebuff.com/case-against-roth-401k.html

 

[ImpulsE69]

Americans have a problem with delaying gratification.

Americans are being marketed to nearly the entire time they are awake. It is no wonder. If companies could figure out a way to market to you in their sleep they'd do it.

 

[dr150]

http://thefinancebuff.com/case-against-roth-401k.html

Very few articles doing a CON to a PRO on this evolving subject, especially when written in 2008.

This subject has been sliced and diced every which way by extremely smart people on Bogleheads and by noted financial experts, and the consensus is, if possible, the ROTH.

The threat of higher taxes is a huge bullet to Traditional's pro's. This is the reason why ROTH contributions and ROTH conversions by the wealthy have hit year-over-year record levels at brokerages.

The best thing I could advise anyone looking into these or other vehicles is to head over to http://www.bogleheads.org/forum/index.php and read up as much as you can on the matter. Your head will explode with the wealth of information available there but it's worth your time!

Regardless of the angle, the most important thing is to save as that's the linchpin. :thumbsup:

 

[OverVolt]

Well if you paid off your house and stuff over your lifetime your bills should drop significantly in retirement. I don't get the whole "You need $50k/yr to maintain your lifestyle when you are 65" cause who the hell does that.

If where I live were paid off I would only need like $20k/yr.

 

[OverVolt]

Americans are being marketed to nearly the entire time they are awake. It is no wonder. If companies could figure out a way to market to you in their sleep they'd do it.

Yea anybody can give their credit card to every free ipad website they find, its the consequences that get you.

 

[stlc8tr]

Very few articles doing a CON to a PRO on this evolving subject, especially when written in 2008.

This subject has been sliced and diced every which way by extremely smart people on Bogleheads and by noted financial experts, and the consensus is, if possible, the ROTH.

The threat of higher taxes is a huge bullet to Traditional's pro's. This is the reason why ROTH contributions and ROTH conversions by the wealthy have hit year-over-year record levels at brokerages.

That article had 4 very good points on why a traditional vehicle might be better than a Roth but you just dismissed it by saying that the "consensus" is that a Roth is better. Not very persuasive, IMO.

Tax rates might be higher in the future. But no one knows.

What about a VAT? Right now, that doesn't look likely but if a VAT was implemented, it would be devastating to a Roth since the Roth would still be taxed.

I think it's best to have a mixture of both. How to allocate between them is a matter of personal preference.

 

[Eug]

Does this count RRSPs as well? If yes, that is really sad. I already have like 10k in RRSPs. (my password for their system seems to not be working so can't verify, sent them a tech support email)

Heck, if I did not buy RRSPs I would end up having to owe taxes at the end of the year. Most people buy them mostly for that reason alone.

Americans don't have RRSPs. They have 401ks. RRSPs are a Canadian thing.

Speaking of Canada, the average lifespan at age 65 is 19 years for males and 22 years for females. Therefore, if you're in good health (with a better than average potential lifespan), I think you should plan for about a 30 year retirement past age 65, or at least 25 years minimum.

 

[BoberFett]

Americans are being marketed to nearly the entire time they are awake. It is no wonder. If companies could figure out a way to market to you in their sleep they'd do it.

Waaah, poor Americans have no self-control and believe every commercial they see.

Suck it up, buttercup.

 

[Bateluer]

Will the people who saved diligently, have to pay for the people who didn't or weren't able to save for retirement?

That wealth would be redistributed to those who need it more. You think just because you've saved your money over decades that you deserve it? Sorry, this is 21st century America.

 

[ImpulsE69]

Waaah, poor Americans have no self-control and believe every commercial they see.

Suck it up, buttercup.

That was kind of my point The pushers are being enablers. You know the keeping up with the Jones' and gotta have it now. I fight my wife over this on a weekly basis. She for some reason thinks she doesn't need to save money lol.