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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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.