Sometimes I see these kinds of articles and am blown away. To put it in perspective, the article does say that relatively few companies even offer the plans these days. Nevertheless, how much are people saving on their own? Does anyone know those numbers? If the numbers are similar, what are the long-term implications of having a nation where many people have nothing saved for retirement?
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A lot of the younger employees in my office - meaning they've graduated college in the last 5 years, believe they just can't afford to do save even $25/paycheck. They have really high rent (our office is in NYC), a ton of student loans with unfavorable interest rates, and the cost of living is really really high here. It's a scary thought, and I know a lot of them think they can make it up when they get older.. but the statistics show that contributions before 35 will have huge impacts in the long run. A lot of it is choice, but it's also a lot about salaries not being proportional to cost of living around our big cities.
Years ago I worked for a company and we had a meeting with HR, the 401 administrator held up a cup of Starbucks coffee and said, "if one put away the $ amount that this coffee costs, there would be X amount of dollars in 25 years", forget the exact amount but it was eye opening.
It's definitely harder to save now, especially with student loans looming large over my generation's heads. Some friends have $100K+ in debt, makes it next to impossible to save money if you also want a house, kids, etc.
I'm at 9% or so with up to 6% matched. I can probably afford to bump that up but its tight right now with our mortgage and daycare, among other expenses.
I think I read our generation will need about $1.2-$1.5 million in assets per person for a comfortable, 30 year retirement. That's still only $40k-$50k per year which will be worth a lot less in 35 years. That will probably cover property tax, various bills, and the occasional vacation.
Scary.
Forget afford. Just, what SHOULD you spend on. I make a good living, and I brew my own coffee in a travel mug ~4/5 days. On the days Im too busy, I use gift cards from Dunkin Donuts which have a net price of $1.70 per cup.
The boomer generation has shit savings. Very consumer oriented plus stagnant real wage growth for everyone but the top earners. I think younger generations are really scarred by the 2008- recession. People are saving more vs. consumer spending (nothing you can do if you get blown up on staples or medical). Here is the US personal savings rate over time.
Of course the problem now is that for various reasons (I think income inequality in particular), expected returns are not great in stocks and laughable for interest bearing investments.
Damn!!! Way to go!!! 8 years should give you another 500k at least!
Kind of getting nervous about it
There are legislative movements to push the retirement age out further, which potentially waters down the job market even more.
Bottom line is, we either need to bolster Social Security and legislate shorter careers and workweeks, or face a future of constantly high unemployment and a seriously broke-ass generation of Seniors in their kids basements and on the streets.
I teach a consumer math course in high school and try to emphasize to the students that there are two classes of people - the investor class and everyone else. They owe it to themselves and their children/grandchildren to make the small sacrifices to join the investor class. I try to show them that life is better in that class. Yet I still see plenty of kids who get their first job after high school making $12/hr and the first thing they do is buy a pickup with a $700/month payment, and even more on insurance.
I don't blame them either - they've learned their values from the older generations.
Since I read that book in my mid 20s we have open savings accounts and retirement accounts everywhere we've worked, we happen to work for a great organization that contributes 10% on our behalf and we also take a vantage of a cash matter plan but I'm finding that is becoming more and more rare these days
I think the general rule is to save 10% of your income, but everyone I've met with from financial advisors to insurance guys have told me I'm going to need more like 20%. It's doable but budgeting is hard. Lean heavily on my wife to keep our finances in order because she's better at it than I am
We might have an universal base income, as automation takes over various jobs
And companies said FU and took them away...
I am fortunate to have 2 of them.
Kind of getting nervous about it
You need to force yourself to save. Pay yourself first, consider it as a bill just like any other you must pay and budget your life accordingly.
When saving/investing for long term you have three factors; the amount saved, the rate of return, and time you have saved. Of those three assuming you invest wisely/conservatively time will have the largest impact because of the power of compounding.
You literally can't get those years back and even smaller amounts invested early in life will reap large rewards because of compounding.
With a calculator once I showed my nephews how if they invested a regular monthly amount from twenty years old until thirty and for some reason never added to it (not that they shouldn't) they would have a greater amount at sixty-five than if they wait to start investing that same amount when they were thirty and did so regularly until they were sixty-five.
Kind of like the old lesson, if you worked a job for a month and were offered a thousand dollars a day or a penny a day doubled each day which would you take?
Those early years of building up some sort of long term retirement savings are too precious to waste. Do yourself a favor and start saving something each month even if you have to start small and build on that. Pay Yourself first!
I made some huge moves in terms of percentage gains with some blue-chip stocks lately, but I just don't have enough cash saved up to really move the needle
we are going to have a generation of americans who are going to retire with literally nothing except Social Security ..
My wife and I just had our first child in October, so I will need to see how that changes my finances; I am going to do my best to cut frivolous expenses (bars and restaurants) from my budget in order to avoid lowering my contributions towards my retirement.
I really want out of this rat race. Hopefully if I keep this up I can retire in my mid 50s.
+1
It's a great feeling to be able to walk around a piece of property knowing that you own it free and clear.
Our kids (4 and 7) will be able to go to a public university unless we have a significant turn of events that drain our resources. That is how we have chosen to live and we are also very blessed that we both have well paying jobs.
We may not go on exotic vacations and we don't drive fancy new cars. We may not even buy the daily coffees either. For my sacrifice, I hope I don't have to bail out all the people who didn't save like we did.
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And companies said FU and took them away...
I am fortunate to have 2 of them.
That's my point. Pension plans should be mandated by law. At least for larger employers. Most people don't have the time, expertise, and often the financial ability, to save on their own.
we are going to have a generation of americans who are going to retire with literally nothing except Social Security ..
Yep. And then they'll start going after that.
though it only takes one crash to instantly wipe out years of gains, so people relying right now on money in investments to be there (and be there at an appreciating level) in 10 years (for example) should exercise at least a little caution.
The biggest impact for me will be putting three kids through college.
My trick was to put the raises I got into my 401(k) every year. Since I already lived off of the previous year's salary I knew I could do it without making sacrifices to the budget. Over time I got to the max contribution, and we were able to increase the family's budget. It wasn't even that long either.
A lot of the younger employees in my office - meaning they've graduated college in the last 5 years, believe they just can't afford to do save even $25/paycheck. They have really high rent (our office is in NYC), a ton of student loans with unfavorable interest rates, and the cost of living is really really high here. It's a scary thought, and I know a lot of them think they can make it up when they get older.. but the statistics show that contributions before 35 will have huge impacts in the long run. A lot of it is choice, but it's also a lot about salaries not being proportional to cost of living around our big cities.
I'm finishing up school in NY this year but I don't know how intent I am on staying here. Saving is my number one priority but from all my friends paying rent with respectable starting jobs it seems like a hard task to accomplish. I don't think I'm opposed to moving elsewhere at this point, unless I decide to live with relatives for a year or two.
I max out my 401K each year, but I feel that anything beyond the "free money" should go into another fund. It's something I want to look into this year.
If putting 4% of my salary into 401K maxes out my company match, maybe it's smart to take the rest of it and invest elsewhere.
I agree that almost everyone can save something, but many people are suffering from stagnant wages and staggering debt. Automation, outsourcing, and insourcing (H1-B visa) are eliminating millions of jobs, creating increased competition for those that remain. That decreases wages.
Debt is also soaring. Student loan debt is now $1.4 trillion nationally, and the average 2016 gradate had $37K in loans. The average monthly car payment passed $500 last year for the first time, and rents and the cost of medical care have skyrocketed.
These problems will only worsen because of the looming crisis with public pensions. Shortfalls in expected investment returns for pensions must be made up either by cutting services or increasing taxes. But most taxpayers in the private sector will never receive a pension. They will therefore suffer these hardships without receiving any benefit. Any tax increase will make it harder for everyone to save. There will be a generational fight about this issue.
Pension Problems - ( New Window )
I max out my 401K each year, but I feel that anything beyond the "free money" should go into another fund. It's something I want to look into this year.
If putting 4% of my salary into 401K maxes out my company match, maybe it's smart to take the rest of it and invest elsewhere.
IMO I think it would be wise to set up something like a ROTH for anything above what your company is willing to match. Gives you more alternatives and control of your money, and you won't get hit with taxes on that money when pulling it out once you are in retirement.
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that felt they couldn't afford to buy a cup of coffee at Starbucks every day and it probably totaled 2/3s of the room
Forget afford. Just, what SHOULD you spend on. I make a good living, and I brew my own coffee in a travel mug ~4/5 days. On the days Im too busy, I use gift cards from Dunkin Donuts which have a net price of $1.70 per cup.
The boomer generation has shit savings. Very consumer oriented plus stagnant real wage growth for everyone but the top earners. I think younger generations are really scarred by the 2008- recession. People are saving more vs. consumer spending (nothing you can do if you get blown up on staples or medical). Here is the US personal savings rate over time.
Of course the problem now is that for various reasons (I think income inequality in particular), expected returns are not great in stocks and laughable for interest bearing investments.
It's such a massive savings to bring your own lunch and coffee when working in the city. Probably everywhere, but I think it's exacerbated here.
I agree that almost everyone can save something, but many people are suffering from stagnant wages and staggering debt. Automation, outsourcing, and insourcing (H1-B visa) are eliminating millions of jobs, creating increased competition for those that remain. That decreases wages.
Debt is also soaring. Student loan debt is now $1.4 trillion nationally, and the average 2016 gradate had $37K in loans. The average monthly car payment passed $500 last year for the first time, and rents and the cost of medical care have skyrocketed.
These problems will only worsen because of the looming crisis with public pensions. Shortfalls in expected investment returns for pensions must be made up either by cutting services or increasing taxes. But most taxpayers in the private sector will never receive a pension. They will therefore suffer these hardships without receiving any benefit. Any tax increase will make it harder for everyone to save. There will be a generational fight about this issue. Pension Problems - ( New Window )
George Will on pensions? That's like calling on Dr. Kervorkian to treat the flu.
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In comment 13368849 jeff57 said:
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And companies said FU and took them away...
I am fortunate to have 2 of them.
That's my point. Pension plans should be mandated by law. At least for larger employers. Most people don't have the time, expertise, and often the financial ability, to save on their own.
Disagree about a mandate. We already have a mandated pension program, called social security. What you're advocating is that someone will simply be unable to decide that they dont want to contribute to an employer based pension. Money doesnt come out of nowhere -- if an employer must fund a pension, it will pay a little less (evidence: currently some employers are competitive for workers by offering lower pay but a pension).
What about people who are waiters for a few years before going to law school? Should they be forced to save 10% of $20k when that $$ will be a pittance vs. their post-education careers? What about people who never intend to retire? What about people who have other, immediate needs?
I just dont think a one sized fits all approach works. I think pensions are great. I also think this isnt 1955, and there are a lot more risky/abusive tactics by companies that make pensions riskier. What happens when you put your future in the hands of the company, and they underfund, take risky bets, and eventually go under? What happens when there is a run on the PBGC? Or PBGC has to charge so much that it's a material drag on returns?
It's such a massive savings to bring your own lunch and coffee when working in the city. Probably everywhere, but I think it's exacerbated here.
Yup. I try to do it (did it today) but sometimes I get lazy. Im at my best when I just buy some turkey, a loaf of bread, and a bag of apples and leave it in the office. I find it hard to eat for under $8 unless Im getting pizza. Usually more than $11. Adds up.
Also, someone mentioned $800 phones. I literally do not understand how people of modest means can outfit a family with 4 iPhones.
The only ones that will come out smelling like roses are the political class and their cronies.
By the time someone racked up student loans debt, car payments, home mortgage, and credit card debt they are pretty much fucked for life.
I won't toot my horn with numbers but none of the above applies to me, just a general observation.
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It's such a massive savings to bring your own lunch and coffee when working in the city. Probably everywhere, but I think it's exacerbated here.
Yup. I try to do it (did it today) but sometimes I get lazy. Im at my best when I just buy some turkey, a loaf of bread, and a bag of apples and leave it in the office. I find it hard to eat for under $8 unless Im getting pizza. Usually more than $11. Adds up.
Also, someone mentioned $800 phones. I literally do not understand how people of modest means can outfit a family with 4 iPhones.
I have a $345 per month Verizon bill for my phone, my wife's phone and two kids phones, and that includes buying two of the phones outright - the other two have the cost of the phone built into the monthly payment.
That does include insurance which really means when my kids break their phones I "only" have to pay $150 to get the phone replaced which I've had to do twice now.
I max out my 401K each year, but I feel that anything beyond the "free money" should go into another fund. It's something I want to look into this year.
If putting 4% of my salary into 401K maxes out my company match, maybe it's smart to take the rest of it and invest elsewhere.
401k is usually the best bet unless you have 1) bad investment options, 2) want more flexibility than a retirement savings plan can offer, or 3) you're currently in a super low/no tax bracket. It's just tough to overcome the tax advantage (both immediate and the tax free reinvestment), especially at higher income levels.
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It's such a massive savings to bring your own lunch and coffee when working in the city. Probably everywhere, but I think it's exacerbated here.
Yup. I try to do it (did it today) but sometimes I get lazy. Im at my best when I just buy some turkey, a loaf of bread, and a bag of apples and leave it in the office. I find it hard to eat for under $8 unless Im getting pizza. Usually more than $11. Adds up.
Also, someone mentioned $800 phones. I literally do not understand how people of modest means can outfit a family with 4 iPhones.
Even if everyone in the family *must* have a phone, keep them for 3+ years instead of upgrading immediately every 2 years (or more often now). Over a 6 year period, that's a minimum savings of $800 per person. Invest those savings and watch them grow over a 30+ year working career into a nice retirement nest egg.
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In comment 13368861 Sec 103 said:
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In comment 13368849 jeff57 said:
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And companies said FU and took them away...
I am fortunate to have 2 of them.
That's my point. Pension plans should be mandated by law. At least for larger employers. Most people don't have the time, expertise, and often the financial ability, to save on their own.
Disagree about a mandate. We already have a mandated pension program, called social security. What you're advocating is that someone will simply be unable to decide that they dont want to contribute to an employer based pension. Money doesnt come out of nowhere -- if an employer must fund a pension, it will pay a little less (evidence: currently some employers are competitive for workers by offering lower pay but a pension).
What about people who are waiters for a few years before going to law school? Should they be forced to save 10% of $20k when that $$ will be a pittance vs. their post-education careers? What about people who never intend to retire? What about people who have other, immediate needs?
I just dont think a one sized fits all approach works. I think pensions are great. I also think this isnt 1955, and there are a lot more risky/abusive tactics by companies that make pensions riskier. What happens when you put your future in the hands of the company, and they underfund, take risky bets, and eventually go under? What happens when there is a run on the PBGC? Or PBGC has to charge so much that it's a material drag on returns?
Social security is not a pension program. It was never intended to be. It is an insurance program. People were supposed to rely on it to keep them from being destitute, not as a primary savings for retirement.
I mentioned larger employers, and it would cover more than temporary and seasonal workers. Saying this is not 1955 is meaningless. It's not 1955 because large employers decided to change the social bargain, with no increase in real wages to compensate for a less contribution for benefits.
Bashed? No, you are 100% correct.
we are going to have a generation of americans who are going to retire with literally nothing except Social Security ..
Grift? I don't think so. I see no reason why employers should bear 100% of the market risk as they do with defined benefit plans. And if you think 2008-9 was bad as things stood, think what the obligations of DB plans would have done to businesses. Unemployment would have been even worse. And what's going to happen to government DB plans in future years will make the case the DC plans are the way to go.
I DO think employers should make contributions to either a defined contribution plan or a match under a 401(k) plan.
And if a generation has nothing to retire on but Social Security they are at least partially culpable.
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In comment 13368929 BrettNYG10 said:
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It's such a massive savings to bring your own lunch and coffee when working in the city. Probably everywhere, but I think it's exacerbated here.
Yup. I try to do it (did it today) but sometimes I get lazy. Im at my best when I just buy some turkey, a loaf of bread, and a bag of apples and leave it in the office. I find it hard to eat for under $8 unless Im getting pizza. Usually more than $11. Adds up.
Also, someone mentioned $800 phones. I literally do not understand how people of modest means can outfit a family with 4 iPhones.
I have a $345 per month Verizon bill for my phone, my wife's phone and two kids phones, and that includes buying two of the phones outright - the other two have the cost of the phone built into the monthly payment.
That does include insurance which really means when my kids break their phones I "only" have to pay $150 to get the phone replaced which I've had to do twice now.
I just shaved 80 bucks off my Verizon bill with more data by moving to a newer plan.
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my company matches "50% of the first 4%" so basically, I get 2% match. They also throw in 2% for "profit sharing".
I max out my 401K each year, but I feel that anything beyond the "free money" should go into another fund. It's something I want to look into this year.
If putting 4% of my salary into 401K maxes out my company match, maybe it's smart to take the rest of it and invest elsewhere.
IMO I think it would be wise to set up something like a ROTH for anything above what your company is willing to match. Gives you more alternatives and control of your money, and you won't get hit with taxes on that money when pulling it out once you are in retirement.
I think so, too.. but it's wise to see an advisor. I have a lot of money in the 401K, and the compounding maybe more important than what I'm contributing.
Social security is not a pension program. It was never intended to be. It is an insurance program. People were supposed to rely on it to keep them from being destitute, not as a primary savings for retirement.
I mentioned larger employers, and it would cover more than temporary and seasonal workers. Saying this is not 1955 is meaningless. It's not 1955 because large employers decided to change the social bargain, with no increase in real wages to compensate for a less contribution for benefits.
The world is what it is. Social security has become the defacto "pension" for a lot of seniors.
Similarly, it would be great if that social bargain were still in place (except of course it wasnt available to women or minorities). But it was a bargain, not a mandate. I think it works better as a bargain.
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In comment 13368957 Deej said:
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In comment 13368929 BrettNYG10 said:
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It's such a massive savings to bring your own lunch and coffee when working in the city. Probably everywhere, but I think it's exacerbated here.
Yup. I try to do it (did it today) but sometimes I get lazy. Im at my best when I just buy some turkey, a loaf of bread, and a bag of apples and leave it in the office. I find it hard to eat for under $8 unless Im getting pizza. Usually more than $11. Adds up.
Also, someone mentioned $800 phones. I literally do not understand how people of modest means can outfit a family with 4 iPhones.
I have a $345 per month Verizon bill for my phone, my wife's phone and two kids phones, and that includes buying two of the phones outright - the other two have the cost of the phone built into the monthly payment.
That does include insurance which really means when my kids break their phones I "only" have to pay $150 to get the phone replaced which I've had to do twice now.
I just shaved 80 bucks off my Verizon bill with more data by moving to a newer plan.
I'm going to be out of contract with them soon, I'll reassess then.
What you've left out with respect to large employers is that it's not 1955 with respect to health insurance as well. That, inflation adjusted, requires them to make much larger contributions for THAT benefit.
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In comment 13368911 feelflows said:
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my company matches "50% of the first 4%" so basically, I get 2% match. They also throw in 2% for "profit sharing".
I max out my 401K each year, but I feel that anything beyond the "free money" should go into another fund. It's something I want to look into this year.
If putting 4% of my salary into 401K maxes out my company match, maybe it's smart to take the rest of it and invest elsewhere.
IMO I think it would be wise to set up something like a ROTH for anything above what your company is willing to match. Gives you more alternatives and control of your money, and you won't get hit with taxes on that money when pulling it out once you are in retirement.
I think so, too.. but it's wise to see an advisor. I have a lot of money in the 401K, and the compounding maybe more important than what I'm contributing.
You don't have to lose any of the compounding in that fund. Don't pull anything out of the 401k, and keep contributing every dollar that they will match since that's free money. But beyond that I don't see a benefit of adding more to that 401k but instead sending any additional money to something you set up yourself.
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Social security is not a pension program. It was never intended to be. It is an insurance program. People were supposed to rely on it to keep them from being destitute, not as a primary savings for retirement.
I mentioned larger employers, and it would cover more than temporary and seasonal workers. Saying this is not 1955 is meaningless. It's not 1955 because large employers decided to change the social bargain, with no increase in real wages to compensate for a less contribution for benefits.
The world is what it is. Social security has become the defacto "pension" for a lot of seniors.
Similarly, it would be great if that social bargain were still in place (except of course it wasnt available to women or minorities). But it was a bargain, not a mandate. I think it works better as a bargain.
The world is what it is till it isn't. As a bargain, it worked well for employers, not for most employees.
Similarly, it would be great if that social bargain were still in place (except of course it wasnt available to women or minorities).
Women and minorities worked in large corporations and all the benefits of that social bargain were available to them.
Bashed? No, you are 100% correct.
I dont think 100% correct, but I think the general idea is valid -- we're not going to have a country with 60% of seniors living just off SS at current levels. The pain will have to be spread out a bit. As a saver, I just expect it. In fact, I consider it the price of growing stock prices in an era where consumers arent doing any better.
It's a shell game. Both parties pander to the extremes on either side that push issues that are lighting rods for people but are generally less important. The important things get overlooked and pushed further away for others in the future to tackle.
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my company matches "50% of the first 4%" so basically, I get 2% match. They also throw in 2% for "profit sharing".
I max out my 401K each year, but I feel that anything beyond the "free money" should go into another fund. It's something I want to look into this year.
If putting 4% of my salary into 401K maxes out my company match, maybe it's smart to take the rest of it and invest elsewhere.
IMO I think it would be wise to set up something like a ROTH for anything above what your company is willing to match. Gives you more alternatives and control of your money, and you won't get hit with taxes on that money when pulling it out once you are in retirement.
I think Roths are dumb. Tax break for regular vs Roth are the same, unless you're going to switch tax brackets (and most people are expected to go down in bracket in retirement). As a wise tax lawyer friend once told me, never count on tax policy staying consistent over 30 years -- take the benefit now (traditional IRA) vs. in the future.
Other than different brackets there is one other reason to go Roth, which is that it lets you effectively shield more $$. 5500 after tax is more than 5500 before tax. However, Roth also has income limits, so for the people most able to take advantage of that quirk, it is unavailable.
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last few elections just goes to show how awful this country's priorities have become
It's a shell game. Both parties pander to the extremes on either side that push issues that are lighting rods for people but are generally less important. The important things get overlooked and pushed further away for others in the future to tackle.
Disagree but dont want to delve into politics.
That's why they should take action sooner than later though. The adjustments (e.g. higher retirement age, COLA changes, increase in taxable threshold, etc) needed to maintain it so that money in > money out are still relatively minor. The 'fixes' will only get more painful the longer we wait, especially if immigration decreases and the workforce growth slows/declines.
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Social security is not a pension program. It was never intended to be. It is an insurance program. People were supposed to rely on it to keep them from being destitute, not as a primary savings for retirement.
I mentioned larger employers, and it would cover more than temporary and seasonal workers. Saying this is not 1955 is meaningless. It's not 1955 because large employers decided to change the social bargain, with no increase in real wages to compensate for a less contribution for benefits.
The world is what it is. Social security has become the defacto "pension" for a lot of seniors.
Similarly, it would be great if that social bargain were still in place (except of course it wasnt available to women or minorities). But it was a bargain, not a mandate. I think it works better as a bargain.
The last 40 years, companies have not expanded their workforces (at least not here), women heavily entered the labor pool, and companies do not need to offer increased wages or benefits. Couple that with accounting rules changes that required companies to put their pension liabilities on their balance sheets, and goodbye defined benefit plans and non-catastrophic employer paid health insurance.
If you are an employer, you benefit from an expanding labor pool and exposing the exiting labor pool to competition. They are still at it where companies re-locate in areas where there are multiple colleges. Nothing like a yearly pool of fresh-faced college grads to keep the existing workforce in line.
There is no "social bargain" and there never was.
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In comment 13368999 jlukes said:
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last few elections just goes to show how awful this country's priorities have become
It's a shell game. Both parties pander to the extremes on either side that push issues that are lighting rods for people but are generally less important. The important things get overlooked and pushed further away for others in the future to tackle.
Disagree but dont want to delve into politics.
Yeah, We don't want to derail the thread. And my point was just in general and meant to be non partisan that this county really hasn't dealt with some important issues.
I apologize for the remarks
2) delaying benefits
3) Raising taxes
and what brave politician is gonna take that on before it's urgent?
Other than different brackets there is one other reason to go Roth, which is that it lets you effectively shield more $$. 5500 after tax is more than 5500 before tax. However, Roth also has income limits, so for the people most able to take advantage of that quirk, it is unavailable. [/quote]
That is the exact reason why I put money into Roth.. I max out both Roth 401k Limits and Roth IRA limits.. and on the side I do taxes for people and the smart ones always bring up this point about why Roth when they expect to pay less taxes during retirement years.. and I always tell them that $5500 + $17.5K in roth is greater than $5500 and $17.5K in regular.. I would only recommend Roth if you are close to maxing out the limits..
Also, as a bit of a futurist, I think we have a massive jobs crisis coming (as someone mentioned). Things will eventually find an equilibrium but the transition will suck hard (though less so due to globalization -- the 3rd world workers will get smashed the hardest by stuff like 3D printing). It would be awesome if our leaders could figure out a way to guide us thru these waters without tumult, but it's expecting too much I think.
I'd have to give it more thought, but I think we need to get away from taxing work and get closer to taxing production. Bill Gates this week said if a robot takes a person's job, we should tax the robot. That would need to be explored before I endorsed it, but there is something self-defeating about how much we tax the laborer vs. capital vs. non-labor productive inputs. I get why (legacy, ease of substitution issues). But what may work for maximizing GDP may not work for society.
In today's dollars according to AIER, is $116827.
Think about that. Where the hell can you buy a decent house for that money? Maybe a burnt out section in Detroit. I believe the high cost of a house/rent has crippled the middle class.
Add to that the horrific cost of medical insurance and you can see why most people struggle to save a dime. Sure, there's income inequality problems but the cost of housing alone is enough to seriously hurt most families.
AIER COLA calculator - ( New Window )
We will and we do. I help some family who are in that situation.
I think what you're going to see is more families with 3 generations under one roof. It used to be more the norm. I think there was a stretch of middle class prosperity in the 20th century that could end up as a historical anomaly. That, or a populist revolution will lead to some more transfer from the affluent to the working class.
I think you will see massive social change. There already are huge numbers of Americans who are looking more towards socialism because of their limited success in their limited time in a "capitalist" society. If the current or next generation is burdened with having to provide for their kids and parents for their entire life? All while having the experience of seeing/hearing previous generations talk about freedom 55? Pretty obvious that will be reflected in consumption, politics, and society in general in a pretty massive and potentially frightening way.
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stories are very interesting, I posted it thinking more about what this means for the future. I know people in their 70s who still have old-style pensions. After they die off, will we really be facing a future where a lot of people are trying to live on $1000 a month SS? And if so, what would that look like?
We will and we do. I help some family who are in that situation.
I think what you're going to see is more families with 3 generations under one roof. It used to be more the norm. I think there was a stretch of middle class prosperity in the 20th century that could end up as a historical anomaly. That, or a populist revolution will lead to some more transfer from the affluent to the working class.
If the current populist "revolution" is any indication, it's more like a transfer from future generations to current generations of all classes.
If the current populist "revolution" is any indication, it's more like a transfer from future generations to current generations of all classes.
This is a different breed of populism. I'll leave it at that.
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If the current populist "revolution" is any indication, it's more like a transfer from future generations to current generations of all classes.
This is a different breed of populism. I'll leave it at that.
There's at least a subset of this current breed that is related to this thread (lack of jobs, savings, etc). In the states that mattered the most (Penn, Ohio, Wisc, Mich) you could argue it was the majority.
I assume that $24k includes your company match? Because the annual limit is $18k (IIRC).
Unless you are eligible for "catchup" contributions.
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In comment 13369262 giants#1 said:
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If the current populist "revolution" is any indication, it's more like a transfer from future generations to current generations of all classes.
This is a different breed of populism. I'll leave it at that.
There's at least a subset of this current breed that is related to this thread (lack of jobs, savings, etc). In the states that mattered the most (Penn, Ohio, Wisc, Mich) you could argue it was the majority.
I dont agree but I dont want to lose this thread with politics.
There is a significant and growing segment of the population that looks at various tax credits as their savings plan. I'm not kidding about that. Refund time is when they do their shopping. They get tight on cash just before tax time and when they want to do their holiday shopping they go into sell mode. Then, when they file their taxes and get their returns they go into buy mode.
I just sold a car that I had put over 30,000 miles on for only $1,100 less than I paid for it using this strategy. That's pretty miniscule depreciation (imagine getting 120,000 miles for $4,400), and I'm going to keep doing this. I've been thinking about other ways to buy low and sell high against these market forces too. Pre-paid tattoos anyone?
No - the vehicle I sold just this week was a 2007 Mercedes Benz C280 4Matic.
any tips on additional places to put my money? I've got an extra 10,000 or so to "play with" so to speak ... any help would be greatly appreciated
Young people especially are worried about being liquid for a house purchase, wedding, vacation, etc. and I'd wager there's a lot of money sitting in savings/checking accounts to be used for a large purchase or an emergency.
I know that's separate since there's no growth potential, but wanted to throw it out there since I feel like my age bracket does this at a high rate.
any tips on additional places to put my money? I've got an extra 10,000 or so to "play with" so to speak ... any help would be greatly appreciated
^ roth portfolio is very aggressive, something with a relatively "Safe" long term return would be ideal. additional mutual funds outside of Roth?
Young people especially are worried about being liquid for a house purchase, wedding, vacation, etc. and I'd wager there's a lot of money sitting in savings/checking accounts to be used for a large purchase or an emergency.
I know that's separate since there's no growth potential, but wanted to throw it out there since I feel like my age bracket does this at a high rate.
Depends. For an 'emergency fund', you should aim for 6-12 months of expenses. But if you're saving for a large purchase you may want/need a lot more than that. You can still keep that money invested (as supposed to straight cash) somewhere, you just need it liquid, i.e not a retirement fund with withdrawal fees. Your large purchase horizon (5, 10, 20 years, etc) then determines your investment mix (e.g. CDs, bonds, stocks, etc).
Young people especially are worried about being liquid for a house purchase, wedding, vacation, etc. and I'd wager there's a lot of money sitting in savings/checking accounts to be used for a large purchase or an emergency.
I know that's separate since there's no growth potential, but wanted to throw it out there since I feel like my age bracket does this at a high rate.
The highly publicized data about cash on hand was the report that 47% of Americans would deal with an unplanned $400 emergency by either borrowing, selling something, or would be unable to raise the money.
Doesn't exactly point to a lot of people who are sitting liquid.
My guess is that there are plenty of BBIers this relates to... - ( New Window )
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currently getting a 414h from work and max out my Roth IRA yearly ...
any tips on additional places to put my money? I've got an extra 10,000 or so to "play with" so to speak ... any help would be greatly appreciated
^ roth portfolio is very aggressive, something with a relatively "Safe" long term return would be ideal. additional mutual funds outside of Roth?
One thing to take into consideration is the fact that it doesn't matter whether dividends in a Roth are qualified or non-qualified. That brings REITs into play. I'd be leery of commercial office space REITs but it might worth doing some homework on assisted living or medical REITS.
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In comment 13369403 annexOPR said:
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currently getting a 414h from work and max out my Roth IRA yearly ...
any tips on additional places to put my money? I've got an extra 10,000 or so to "play with" so to speak ... any help would be greatly appreciated
^ roth portfolio is very aggressive, something with a relatively "Safe" long term return would be ideal. additional mutual funds outside of Roth?
One thing to take into consideration is the fact that it doesn't matter whether dividends in a Roth are qualified or non-qualified. That brings REITs into play. I'd be leery of commercial office space REITs but it might worth doing some homework on assisted living or medical REITS.
Funny, my Roth is where I keep my Vanguard REIT ETF. It's not a big investment.
Good for you! She sounds like a smart young lady.
since we are not a country that is going to let old people die in the street, the government will wind up taking care of them anyway. we just need to enforce the laws and make sure payroll taxes are paid, so the system does not go broke or having to wind up cutting benefits
i read SS accounts for 37% of total retirement income nationwide. but what is happening now is more and more people are retiring outside of the US because they can't make it here on just their SS. So that is money that is flowing out of the country.
since we are not a country that is going to let old people die in the street, the government will wind up taking care of them anyway. we just need to enforce the laws and make sure payroll taxes are paid, so the system does not go broke or having to wind up cutting benefits
i read SS accounts for 37% of total retirement income nationwide. but what is happening now is more and more people are retiring outside of the US because they can't make it here on just their SS. So that is money that is flowing out of the country.
Anyway, my wife was diagnosed with a serious health issue recently - 51.
Not getting political, but Health issues are extremely relevant in our house.
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She nets about $100 a month in pay. Along with some graduation money she was just able to get the $1000 together to open an account with Vanguard and start a Roth. We told her we would do a 100% match in for whatever she deposits until the end of senior year.
Good for you! She sounds like a smart young lady.
If the school's won't make it mandatory to learn basic finance principles, parents really need to step up; good for you (I mean that)!
I was naturally a saver at a young age, probably from my grandfathers advice who wasd WW2 vet who learned a trade (electrician) and never ever missed work. Lived and died in the only house he ever owned which was paid off well before his retirement. I will be passing on that wisdom to my daughter, its the most important thing they can possibly learn in that middle school-high school timeframe.
people would rather spend on iPhones and digital cable than save? I don't really care what happens to them. People who truly don't have the means to save is another matter. Most people who think they don't have the means, actually do, IMO. they simply choose not to and pretend that it is out of their control.
but I agree, the young should be more aggressive - which I'd love to be. Where to put the money, now that is the question.
I was gonna start a new thread, should I? not trying to hijack the thread, but 401K talk seemed somewhat relevant.
Fixed
It had been going up way before Trump.
if I contribute max to a Roth annually, is their a limit to how much money I can put into a mutual fund(s) outside of the Roth?
I was lucky to be able to cash out a pension from an old job and between that and other 401Ks from other jobs, I'm doing ok. I actually started doing brokerage stuff through my IRA. One of my stocks is getting bought out, I nearly doubled my investment!!!! Yeah me! Hubby is self employed so he does a SEP. We hopefully will have a decent retirement. Not that great, but comfortable.
Does anyone actually do that? My wife and i have 4 months worth of mortgage payments in our emergency savings account, and that's probably more than we need. Hell you could use a line of credit as an emergency fund if you had to.
My SO stands to make $60K a year (in today's dollars) from a state pension...a pension which is massively under-funded.
$60K a year is A LOT of money to possible have or not have in retirement. How the hell do you make plans given that information?!
That is fine, but you better secure that line of credit NOW while you are employed. Keep it at a zero balance and dip into it only in the case of an emergency
My SO stands to make $60K a year (in today's dollars) from a state pension...a pension which is massively under-funded.
$60K a year is A LOT of money to possible have or not have in retirement. How the hell do you make plans given that information?!
yeah the whole thing is a pile of uncertainty. What I would really like to do is pull all of my 401k money out and move it into a self directed retirement fund. Then, use that fund to purchase an apartment building. The income stream would have to go back into that fund (you cannot touch it) or you will get taxed heavily. Then, when you are 65 you can begin drawing the money/positive cash flow from the rents as your source of income. If you do it right, your monthly income will be much greater than if you were to just leave that money in a 401k. Plus, you are not eating into the value if you bought a building. You live off of the rents and the building value is still there. You can then pass it onto your kids. Don't want to manage a building? A management company will do it all for you for anywhere from 5-7% of the rent roll.
Does anyone actually do that? My wife and i have 4 months worth of mortgage payments in our emergency savings account, and that's probably more than we need. Hell you could use a line of credit as an emergency fund if you had to.
For some of those people, sure, there's no way they could do it. But for many, it's because they've chosen to live above or to the limit of their means. I've known many, many people who have no excuse to not have that fund. But they have prioritized the new car, new furniture, big TV, etc, etc.
...if you are under the age of 55 (maybe under 60), there's a pretty good chance your Medicare and Social Security benefits are in for a haircut.
A serious haircut.
if I contribute max to a Roth annually, is their a limit to how much money I can put into a mutual fund(s) outside of the Roth?
You'll probably pay a little more in fees with a retirement age fund (0.15-0.16 with Vanguard), but you won't have to adjust the balances yourselves (e.g. periodic rebalancing and allocation changes).
Other option is to pick a target fund and then just invest in the underlying funds yourself with roughly the same percentage. Here's the Vanguard 2040 breakdown:
Ticker | % Invest | % Fees (Admiral)
VTSAX | 52.1% | 0.05%
VTIAX | 35.1% | 0.11%
VBTLX | 9.00% | 0.06%
VTABX | 3.80% | 0.12%
And there's no limit on the amount you can invest in non-retirement accounts.
...if you are under the age of 55 (maybe under 60), there's a pretty good chance your Medicare and Social Security benefits are in for a haircut.
A serious haircut.
That has been the chant from the 70's. So has the advice not to count on social security for anything.
"Entitlements" aren't going anywhere for a while.
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...if you are under the age of 55 (maybe under 60), there's a pretty good chance your Medicare and Social Security benefits are in for a haircut.
A serious haircut.
That has been the chant from the 70's. So has the advice not to count on social security for anything.
"Entitlements" aren't going anywhere for a while.
It was raised in the 70's, and Reagan and Tip O'Neil bought at generation worths of time to fix the issue with their 1983 compromise. All of us have been paying more and waited a year or two longer to qualify for full benefits since then.
Well, a generation has passed and nothing further has been done to resolve the issue. And given the current atmosphere in Washington I don't see anything being done. There was a fix among the many provisions of the Simpson Bowles Commission recommendations, but that was ignored by both parties because too many sacred cows would have been gored. And since the ignoring was bi-partisan, the media quickly lost interest.
As things stand, the system can operate as it stands for about another 15 years. Maybe a little less if the avalanche of people filing with disabilities continues. Then the haircut begins. Then everyone who is getting benefits, whether they've just turned 67 or have been receiving benefits for decades, is affected. Contrary to what some have said, people will not be getting nothing. But as MS said, there could be a haircut.
The question is - does America have the stomach to reverse course and have Grandma and Grandpa working til' they literally die, and/or living in spare rooms and basements, as it was in days before Social Security? Do we have the stomach for growing populations of elderly homeless, for the return of 'alms homes'?
I'm betting we do. Though America has made great progress in Civil Rights and equality when it comes to sex, race and religion - if anything, we've gone in the reverse direction regarding class. Upward mobility opportunity has been shrinking in this country for generations, the disparity between upper and lower class - the rapidly shrinking middle class draws much criticism and sympathy, but little if any action and legislation.
The future as I see it is bleak. We've completely forgotten the lessons of the greatest generation that lived through the Great Depression and WWII, and it's no coincidence that as they die off, we simply stop truly caring for one another the way they did.
Fidelity recommends have 2x your salary in your 401k by 35 which is pretty doable. My wife doesn't have a ton, we've mainly been focusing on mine since my employers have matched much more than hers but that's something I'll need to address soon, and definitely by the time daycare expenses are over with.
I am guessing she will buy a modest used car at that point so she has some transportation but the majority will go into savings and retirement.
She is saying all the right things, hopefully she follows through. But this is a kid that has done all her clothes shopping at Goodwill and has already sold the majority of her civilian wardrobe and prom dress through some site on the internet. Plus, you cannot spend too much on a submarine...LOL.
In short, she did not inherit her father's financial "skills."
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But as MS said, there could be a haircut.
The question is - does America have the stomach to reverse course and have Grandma and Grandpa working til' they literally die, and/or living in spare rooms and basements, as it was in days before Social Security? Do we have the stomach for growing populations of elderly homeless, for the return of 'alms homes'?
I'm betting we do. Though America has made great progress in Civil Rights and equality when it comes to sex, race and religion - if anything, we've gone in the reverse direction regarding class. Upward mobility opportunity has been shrinking in this country for generations, the disparity between upper and lower class - the rapidly shrinking middle class draws much criticism and sympathy, but little if any action and legislation.
The future as I see it is bleak. We've completely forgotten the lessons of the greatest generation that lived through the Great Depression and WWII, and it's no coincidence that as they die off, we simply stop truly caring for one another the way they did.
The key to the 1983 "patch" was that everybody, except those that were already retired and collecting benefits, suffered some degree of pain. What I see at this point is that everybody down in DC wants somebody else to pay for the fix. The difference between the parties is who that somebody is.
And this is all occurring in the backdrop of the fact that a significant portion of the problem come as a result of decisions made before many of us were born and/or (with respect to the 1973 addition of COLA's) were eligible to vote. Medicare is even worse. On one side of my family, my grandfather retired the year before Medicare was enacted. My grandmother lived until 1991. Covered for 26 years without ever having a deduction from her or my grandfather's paycheck. Add to that the inflation in Medical costs and no wonder the system is going broke.
Fidelity recommends have 2x your salary in your 401k by 35 which is pretty doable. My wife doesn't have a ton, we've mainly been focusing on mine since my employers have matched much more than hers but that's something I'll need to address soon, and definitely by the time daycare expenses are over with.
Main reasons for a rollover would be better fund options and/or ease of management. It's a lot easier to rebalance your portfolio if everything is in one place. That said, if you don't mind the little extra work once a quarter (or however often you rebalance), then I would go with whichever plan offers better fund options. Or a 3rd option is to roll it over to an IRA. I did the latter with my old 401k and started an IRA with Vanguard. Their fund expense fees are as cheap as you'll find and you get free trades of all their mutual funds/ETFs.
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In comment 13370318 njm said:
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Add to that the inflation in Medical costs and no wonder the system is going broke.
So the necessary adjustments to Social Security will come, but not until it actually crashes. Pathetic, but that's how we roll here.
thinking a vanguard retirement target fund in addition to maxing out my Roth should have me in great shape 30 years from now.
thank you guys again for any help you can provide.
thinking a vanguard retirement target fund in addition to maxing out my Roth should have me in great shape 30 years from now.
thank you guys again for any help you can provide.
I'm not one to recommend trying to time the market and certainly not an expert on whether it will keep rising or drop soon.
Generally speaking though, dollar cost averaging in addition to periodically rebalancing your portfolio helps to smooth out the peaks and valleys. So if you have $10k to invest, you could invest $2500 each quarter this year rather than all at once.
Obviously if you're using a target fund, then you can ignore rebalancing as they'll take care of that for you.
I can't predict what might happen in 10-15 years, but if the situation is the same in DC as it is today Social Security may stay "crashed" unless the changes can be done through the reconciliation process.
BTW- a month ago I got a new insurance card proving I am have a Pediatric Dental Care Plan as required under the ACA. I have no kids under 19, and my premium is therefore zero, but I get annual summaries of the plan and a statement that my premium will remain at zero as well as a pretty new card reflecting changes in coverage. Of course the insurance company has to bear the administrative cost of doing all that for me. And the ACA was supposed to help reduce costs?
I'm expecting a significant salary bump within the next year, so laying the groundwork to be as aggressive as possible in 2018
thank you again, much appreciated
It may become unrecognizable compared to how it is today, but today's system is unrecognizable relative to 20 years ago.
Alarmist phrases like "crash" and "broke" are more about the person who says it than what they are saying.
When your bike used to break, did you run around screaming "My bike is broke! My bike is broke!" or did you try to find a way to fix it?
my girlfriend is terrified to enter the world of investing ... I simply respond with "well, the rich aren't going to let it collapse or things will be so bad that money will be irrelevant"
basically, it'll rise/fall, but the money will be there barring a planet of the apes/return of the dinosaur situation.
I guess it could happen.
- Notch up retirement age, perhaps exempting certain professions
- Means test so the likes of Buffett aren’t receiving a check (it’s a “net”, after all)
- Hike capital gains over x amount to help fill coffers
Medicare/health care – coupled with the right’s blind adherence to trickle down - is the real problem that will bankrupt the USA and a “fix” (insofar as that’s even possible) is the opposite of straightforward and entails deeply moral (eg EoLC) as well as economic considerations.
Whether or not one is a proponent of Single payer (and the overwhelming amount of Americans – even right wing ones – are, at least in part…as that shockingly, mind-blowingly stupid sign xmead posted confirms) it makes little sense to have it apply to only ~1/5 of the population, and the sickest ~1/5 at that. It’s necessarily a recipe for a wildly expensive program since there are very few healthy to balance out the infirmed.
But since the private insurance Co.s obviously wants nothing to do with Granny’s cancer & Alzheimer’s and since under 65s are entrenched in a deeply inefficient and immoral system of their own seemingly impervious to sensible reform (again, one points to the aforementioned sign…oh my fucking God is that person stupid) we’re left with the status quo.
For the under 65s I’d decouple insurance from employment by nixing preferential tax treatment and – with stringent federal standards (in order to prevent a race to the bottom at the state level) allow everyone to buy their own plan from any insurance company. Ocare at least began the framework to make this possible. You own the plan of your choosing, our businesses are unburdened.
But for Medicare? Fuck if I have a solution. I’m sure not gonna be the one to tell Granny her last month on this planet is “too expensive”
- Notch up retirement age, perhaps exempting certain professions
- Means test so the likes of Buffett aren’t receiving a check (it’s a “net”, after all)
- Hike capital gains over x amount to help fill coffers
Medicare/health care – coupled with the right’s blind adherence to trickle down - is the real problem that will bankrupt the USA and a “fix” (insofar as that’s even possible) is the opposite of straightforward and entails deeply moral (eg EoLC) as well as economic considerations.
Whether or not one is a proponent of Single payer (and the overwhelming amount of Americans – even right wing ones – are, at least in part…as that shockingly, mind-blowingly stupid sign xmead posted confirms) it makes little sense to have it apply to only ~1/5 of the population, and the sickest ~1/5 at that. It’s necessarily a recipe for a wildly expensive program since there are very few healthy to balance out the infirmed.
But since the private insurance Co.s obviously wants nothing to do with Granny’s cancer & Alzheimer’s and since under 65s are entrenched in a deeply inefficient and immoral system of their own seemingly impervious to sensible reform (again, one points to the aforementioned sign…oh my fucking God is that person stupid) we’re left with the status quo.
For the under 65s I’d decouple insurance from employment by nixing preferential tax treatment and – with stringent federal standards (in order to prevent a race to the bottom at the state level) allow everyone to buy their own plan from any insurance company. Ocare at least began the framework to make this possible. You own the plan of your choosing, our businesses are unburdened.
But for Medicare? Fuck if I have a solution. I’m sure not gonna be the one to tell Granny her last month on this planet is “too expensive”
It's rare that someone so quickly and succinctly makes your point for you, so really...thank you.
If your daughter decides to leave the service after her obligation, she will get some net benefit with the new Blended Retirement System. If she decides to stay all 20 years, she will still get the benefit but probably not as great as those grandfathered in. Either way, your daughter is in a good place with the only real pension plan that will never go away.
But doing an Roth now is great for your daughter ($100 now? We used to get $50 as plebes). I started when I was 24 by maxing out my Roth (took a huge hit in the crash, but I saw that as an opportunity in the long run), so good on you for setting her up right when she's so young!
Link - ( New Window )
I second this greatly. I spent part of it buying a used car, uniform (Marines get screwed with this one since we have to buy all new uniforms as opposed to our Navy classmates), and putting it into savings. I wish that I would have invested, but I didn't know shit about it and no one told me to do so until I sat down with my company commander in my first unit.