11 ms·

1 in 3 Americans Have $0 Saved for Retirement (2016)

163 points by helloworld 9y ago

maaaats 9y ago
A few years ago I learned about the FIRE-community. Financial Independence, Retire Early. I'm more in the FI part, saving a big portion of my income. By living on roughly half my income, I save up for a "year of not working" each year. This gives me a lot of freedom and ease of mind. Keeping this up, one could theoretically retire with 16 years of working according to this calculator. It also shows americans saving the least https://networthify.com/calculator/earlyretirement https://networthify.com/calculator/earlyretirement
- wiz21c 9y ago
  Honest question : how much do you sacrifice to be able to live on roughly half your income ?
  - deleted 9y ago
    [deleted]
  - hycaria 9y ago
    While I probably don't earn as much as OP, when I compare myself to my friends, I earn more than most and still spend less, living on about half my income too. Main differences in lifestyle are I don't buy shit (I don't even shop online at all most of the time so no temptation, when I consider buying an item I ask myself "do i really need this" and most often find that I don't, I try to get most items from nearby businesses, I don't subscribe to stuff may it be paying services or even newsletters, hell I even found half of my furniture on the streets or second hand), I cook like 90% of my meals (takeaway is an extra 2-3 times per month average, I bring my food to work, I try to do as much as possible from scrap), I don't spend as much time/money in bars or other social activities as them, and I don't take trips across the globe (I am lucky enough to have enough family-owned places to spend my vacations at, I also avoid flying far for ecological reasons).
    - sgberlin 9y ago
      Pretty close to what I'm doing except the travelling/flying part, which is important to me. I don't even like "owning stuff" or subscriptions so I naturally only buy things I can't go without.
  - maaaats 9y ago
    People like to ask that question, as it gives them an easy out; "those guys probably live boring lifes". I'd say I don't sacrifice much. I spent a month income on vacation this summer, went skiing in the alps this winter. I have hobbies I enjoy where I don't cheap out on gear or experiences. I'm privileged to have an income that enables this. But still I'm baffled on how my peers with the same income use all their money. And I don't really see how they are able to spend most of their money, and how they benefit from it compared to me. For comparison, my salary is about $70K in Norway. IF I'd felt I now sacrifices something of importance, it still would be worth it. I can take years off and do what I want, switch to a lower paying job with higher QoL etc, retire early or other things, while those not making the same "sacrifices" will have to work.
    - kowdermeister 9y ago
      "And I don't really see how they are able to spend most of their money" Probably on down payment on things they couldn't afford to buy by cash. Or there are plenty of hobbies that are very expensive.
    - silvestrov 9y ago
      Getting a new car every 3-4 years is extremly expensive. A lot of people think they can't live with an old beater, that they absolutely must have a "new-ish" car. An old beater for those people is a 5 year old car. An old beater for me is an 15-20 year old car. "Warren Buffett lives in a modest house that's worth 0.001% of his total wealth".
      - SimonPStevens 9y ago
        > Warren Buffett lives in a modest house that's worth 0.001% of his total wealth Haha. Not very practical for most people. If you take "total wealth" to be assets - debts, my house is worth about 400% of my total wealth.
      - SmallDeadGuy 9y ago
        An old beater car can be a huge inconvenience though. My 16-year old (when bought) Saxo had to have bearings replaced, but the bolts for the suspension arm were so rusted they snapped during the process and cost me 1/2 the price of the car to get a new arm and bolts, too. Replaced that car with a 15-year old Astra for a little more oomph (1.6L over 1.1L) which recently had it's handbrake rust onto the disc. A few whacks with a hammer fixed that, but I couldn't use it until after the place I wanted to go was closed because I needed my girlfriend to be able to hit the foot brake when I hit the handbrake off. Both cars required a replacement battery within a year of buying, as well as new stereo wires for the Saxo which I had to acquire from a Peugeot 106 in a scrapyard and various bulbs for the Astra. These problems are less about age but more about previous owners and myself. I can't wait until I can afford a newer car, something closer to 5-10 years old instead of 15-20, because I won't be praying that my car will pull off every time I haven't used it for 3 days.
  - throwaway0255 9y ago
    I do the same (actually I live on more like 40% of my take-home), and I don't feel as if I've sacrificed anything. The amount I live on has slowly gone up since I started working. It's just that when I get a raise or promotion or new job, I don't spend the new cash flow, I save it. A couple years from now I'll probably be living on 30% of my take-home, but the amount I spend every month will probably have gone up slightly. The question you should be asking is how much do you sacrifice by not saving? I could get fired tomorrow and my bills would still all be paid for years. When I retire it's going to be in a big house with kids and grandkids that have their college paid for. I can retire at 45 if I really want to. Knowing all that is incredibly comforting and peaceful. Just the feeling is worth it. I used to spend my entire paycheck on bills and put the next month's spending on a credit card. My net worth was negative. That way sucks. This way is better. People probably thought I had more money before because of all the useless flashy crap I bought. Fuck those people, I'm doing way better than all of them now and I know it. I used to drive a really nice car thinking it made me seem important or something. Now I know only idiots are fooled by that trick, and to everyone else the car just made me look broke and stupid.
  - sgberlin 9y ago
    For me the only part that is a sacrifice, I guess that would be a "feature" for people who like cooking, is that I basically don't eat out when I'm at home. On the other hand I travel about 2 months a year and I just do that then.
  - icelancer 9y ago
    >how much do you sacrifice to be able to live on roughly half your income ? Unless the person has a very high salary, the sacrifice is that they don't have kids.
    - hycaria 9y ago
      But why would anyone need expensive offspring that will experience the downfall of our planet (and have its share participating in draining the last ressources), let alone numerous copies of it ? All jokes aside, tbh I doubt that people start living frugal on half an income and then go on living paycheck to paycheck because of kids. Because living frugal often means questioning your decisions and I doubt the motivation for parenthood withstands this easily, and also because I guess one can be frugal in a familial setting too, if you have a partner who shares your interest. All the kids I see have way much more shit than their attention span could ever care for, parents want gardens even though it's expensive and unnecessary, buy new when they outgrow everything so fast anyways... They don't need all this stuff, exactly like we don't need most of it.
  - czechdeveloper 9y ago
    This really depends on your income and where you live. I sacrifice nothing as half of my income is enough to cover lifestyle I want.
  - lemondrops 9y ago
    I live on ~30% of my income, which I would consider a modest "upper entry level developer" in my country. I don't feel like I sacrifice anything, though it is true that I'm lucky to share an already cheap apartment with my SO. (But we also only have heating in two of our rooms, and not even a sink in the bathroom - we brush our teeth in the kitchen. I guess this would already be inacceptable for many...) I don't own a car because I can bike or walk everywhere. I only use prepaid cards for my mobile phone, no data plan, because I always found the idea of paying for mobile internet ridiculous when there is wifi all around us. (Plus, I don't like how being online all the times makes me check my phone so often.) I don't need a new shiny phone every two years and will use my Fairphone 2 until it dies on me. I do eat out 3-4 times a week for lunch at work, but when at home I cook 99% of the time. Sometimes I eat out with friends, go to the cinema etc. I buy clothes maybe once or twice a year but avoid expensive brands like the plague, except for things like running shoes or other "long term equipment". When it comes to my hobbies, I don't sacrifice anything, but I naturally like to do things that are inexpensive or for free like excercising and spending time outdoors, reading, watching movies... My most expensive hobby is probably indoor rock-climbing, which I don't do that often sadly, and the subscription to the martial arts club that I train at weekly. I just spent almost 500€ to attend PyCon this year, and nearly three times that much for my yearly holiday. For me it's not even a concious act of saving, I just naturally live this way and don't need much. I don't like owning too many things, they feel like a burden. The money keeps accumulating (I saved 30K€ the last two years, living as described above), and I honestly don't know what to do with it or how to use it wisely in regards of the future... Real estate seems like a good investment, but comes with its own problems.
- sgberlin 9y ago
  Yes! I save roughly half. I don't plan to live on where I am right now in the future, so basically every month of working means 2-3 months of "not working" in a cheaper location.
- onion2k 9y ago
  Money won't help very much if society collapses.
  - splike 9y ago
    How do you propose we save for the future then? Gold? Bottle caps?
    - onion2k 9y ago
      I propose that we change society to be fairer rather than have people suggest living on half your income is a viable retirement plan. Failing that, 5.56mm rounds and canned goods.
      - loco5niner 9y ago
        > change society to be fairer I hope by this you mean "Rewards come from hard work and delayed gratification" rather than "take from the rich, give to the poor".
- SimonPStevens 9y ago
  Do plans like this ever take family and children into account though. As a single person it's all very well saving half your income if you are reasonably well paid. But if you have children I just don't think that's practical. I saved a fair bit before kids. Then me and my partner made the decision that we wanted one of us at home to bring up the kids, and not have them raised by daycare workers. So now we have one income, and more expenses than before. I'm reasonably well paid, drive older small cars, don't have any particularly expensive hobbies or holidays. I still save, and contribute to a private pension, but the idea of saving 50% of my income is unachievable. Now that's fine if you don't want kids, but I often think these lifestyle philosophies promote themselves as fantastic and obvious, and why doesn't everyone do it. But forget to balance them with the hidden sacrifices you have to make that they never seem to mention.
  - maaaats 9y ago
    I want kids some day, and I know saving 50% at that time might lead to sacrifices I don't want to make. But until then, I would probably have had a professional career anywhere from 7-13 years. Those savings can then accumulate rents for a long time, even though I wont be able to contribute any new significant amounts.
  - MaurizioPz 9y ago
    I have 2 kids (5yo and 2yo) and right now no problem at following this plan (started when my first born was born). It can be done, you need to make sacrifices but the sooner you start the better you will be later on
    - SimonPStevens 9y ago
      Can I ask, do you and your partner both work? What sacrifices are you making to get to 50% savings?
- splike 9y ago
  Thanks for sharing, that's pretty interesting. My question is how do you typically invest your savings? Do you invest it into stocks, or something like Lending Club?
  - maaaats 9y ago
    Index funds, mostly.
- billf1953 9y ago
  You realize that saving half your income is actually living on a sixth. The government always get a third.
will_brown 9y ago
I wonder what these figure would be in countries like Russia or China. I would also say American's are simply bad at planning for the future, and highlight the fact that 75% of Americans die intestate (or without a Will). But, I think the truth is that is only part of the explanation. While a Will would benefit and be applicable to everyone, not just people with assets, retirement is purely for people who have some type of financial surplus and lets get real. Most Americans are debt financed, from housing, to transportation, to schooling, to even putting food on the table. It would be very interesting to see how many of those 2/3's who are saving for retirement are actually debt financing their retirement funds (which admittedly makes sense with employer matching), meaning they are living off credit and going (further) into debt while simultaneously saving for retirement. I would venture to guess the numbers are much worse than this article even concludes.
- TheAdamAndChe 9y ago
  It's not so much that Americans are bad at planning, it's just that they're not taught to do it. It's not taught in schools, and because their parents didn't need to plan so much when the economy was much better, it wasn't a skill that has been passed down. I bet a much of those "millennial trends" killing off overpriced businesses like Applebees and whatnot is due to the internet spreading financial literacy to the younger generations. That and they're too poor to eat there, but I bet the internet is having an effect too.
  - obstacle1 9y ago
    Not being taught a thing and being bad the thing are not mutually exclusive.
  - icelancer 9y ago
    >It's not so much that Americans are bad at planning, it's just that they're not taught to do it. It's not taught in schools, and because their parents didn't need to plan so much when the economy was much better, it wasn't a skill that has been passed down. This is simply not that true. It was taught in my public school and taught to most of my friends that went to public schools near me. Also taught in college. It didn't help. The power of compounding interest is taught to almost everyone and even fake quotes from Einstein used to hammer it home. My generation (mid-30s) faced a post-graduate nightmare of a job market after 9/11 and then the 2007 credit decoupling in combination with a massive run-up in real estate values in the largest cities in America. No one had money to save. I have managed to save starting in my 30s but I have quite a few friends who work paycheck to paycheck. The education was there. The ability is lacking.
lsiebert 9y ago
Health care, education and other costs keep rising, (even when adjusting for inflation). Wages have been stagnant when adjusting for inflation. And hey, it's almost time for the census to report. September 12, 2017. https://www.census.gov/newsroom/press-releases/2017/advisory-income-poverty.html https://www.census.gov/newsroom/press-releases/2017/advisory...
- l5870uoo9y 9y ago
  If we are to realise the great potential that lies ahead with mass automatisation and AI, we must ensure that whole of society benefits from this. There must be more focus on sectors such as logistics which are being hit first by mass automation. We need to define a new social contract between employees, workers and technology to make this work.
  - throwawaywonk 9y ago
    Also you could just have unions and corporations could stop dicking people over. :)
  - lsiebert 9y ago
    Hmm... Contracts tend to favor those with more power. I worry that the wealthy will see those less fortunate not as a potential engine to accelerate overall growth, but as a burden, and, with the weakening of workers rights and unions accelerated by the trends you mention, the new social contract may be less beneficial then even current circumstances. In which case I'm sure there will be those who blame immigrants, people of color, the government, unions, etc. Certainly it won't be the wealthy who are blamed, they will be instead admired for their supposed acumen, despite the fact that the majority of the wealthy inherit their wealth, and that majority has been rising. https://www.economist.com/blogs/buttonwood/2014/03/inequality https://www.economist.com/blogs/buttonwood/2014/03/inequalit...
fastbeef 9y ago
This is really scary. The whole western world is in for a rude awakaning in the coming years with regards to retirement. Retirement is the golden carrot dangled in front of us for all our working lives, an embodiment of Protestant work ethic - "work hard and you will be rewarded in the end". However, very much has changed since retirement and pensions were designed. I can't find a good source, but (in Sweden) when pensions were introduced after WW2 people worked from their late teens until they died (40+ years of productivity), produced 3 or more children per woman (good population age distribution, the classic "pyramid") and the average lifespan was 64 years (1 year before retirement). Nowadays, many of my peers don't get a "real" job until their early/mid-thirties (work for 30 years of producitivty), produce 1.7 children per woman if they reproduce at all (leading to a top-heavy population where fewer and fewer young people must support more and more old people) and life expectancy is much, much higher. Now, these things are in of themselves good, but they break the original design horribly. I really, _really_ hope that we can cross the chasm to a robot-centric/base-income society before it all breaks down. EDIT: Found this after posting: https://en.wikipedia.org/wiki/Pensions_crisis https://en.wikipedia.org/wiki/Pensions_crisis
- deleted 9y ago
  [deleted]
- morecoffee 9y ago
  > The whole western world is in for a rude awakening in the coming years with regards to retirement. No kidding. Who will pay for all the people who didn't save? The people who did. I have very little expectation of keeping most of my money as I get older.
  - frisco 9y ago
    > I have very little expectation of keeping most of my money as I get older. Welcome to the world of Bitcoin and Monero.
    - googletazer 9y ago
      Incredible that you are so heavily downvoted. Just shows the level of fear and disdain that even technical people have towards cryptocurrency.
lwhalen 9y ago
I have accepted a long time ago that I will be unable to 'retire' in the traditional sense. I fully expect to be working pretty close to 40+ hours a week when I keel over (hopefully quickly, and without a prolonged illness). "Die old, happy, and fast".
gasof 9y ago
What incentives do people under 30 have left to build a pension? Is it a better deal than schemes like putting 80% of your extra money on the bank and 20% in riskier investments?
- gehsty 9y ago
  In the UK the benefits of paying into a pension are tax based, you don't pay tax on what you put in, and you then take it out at a lower tax threshold on retirement (compared to what you would pay to have it in your pay packet). If you are a higher rate tax payer this is a huge benefit - you can take up £40k before it becomes taxable, tax for high earners can be 40% - but it doesn't really help people on lower incomes who are at most risk of not having any savings.
  - anonymousDan 9y ago
    Aren't you at risk though of the government shifting the goalposts (e.g. wrt retirement age)?
    - danielmg 9y ago
      Not really. They are moving the state pension age out but the private pension age stays static at 55. They have also given more freedom on how to use the private pension funds come retirement. THe idea is to reduce the burden of the state pension. It would be counter productive to do anything counter to that. However - the left keep wanting to take away higher tax relief on pensions. Which sounds great unless you are a nuclear family where 2 people will rely on one person's pension (like my wife will - we also have other compounding circumstances). If they cut this relief I'll leave the country or go self-employed and play the system, as it will push my marginal tax rate to a stupid rate.
    - lmm 9y ago
      Yes, but the old are a key voting demographic, so governments tend to be very cautious about anything that might be seen as anti-pension.
    - 9y ago
godzillabrennus 9y ago
The wealth imbalance taking shape over the last 40 years is likely why. Everything in our modern world feels like it's about to pop. Too much change too quickly for our establishment to adapt.
- WalterBright 9y ago
  Don't overlook the massive increases in government spending at all levels. That money has to come from somewhere.
  - RobertoG 9y ago
    Government spending could be called also government investment. Money is only a number. Real resources is what have to come from somewhere.
meirdavis 9y ago
I don't think this study paints a complete picture. It asked about specific retirement funds, rather than wealth in general. If someone aged 50 has 20k in an earmarked retirement fund but a net worth of 1.5m, that person is fine, but considered by this study to be unprepared for retirement.
- systematical 9y ago
  Okay, but how many Americans have that kind of networth?
jldugger 9y ago
Well, that's not super surprising, for a variety of reasons. 1. Young people don't save. The survey defines millienals as age 18-34. I figure half of that group is working low skill jobs and can't afford to "save" (more on that later), or attending college and is not eligible to 'save'. And many of those graduated at age 22 should spend the next 10 years focusing on student loan debt repayment -- very few investments pay off better than 6.8 percent fixed! 2. Social Security covers spouses. Stay at home moms who divorce at year 11 after a midlife crisis gone wrong are eligible for 50 percent of their spouse's eventual benefit. More if they're dead. 3. Social Security does alright by low income workers. Reuters estimates a hypothetical 'return' of 6.79 for a very low income couple born in 1943. https://www.reuters.com/article/us-column-miller-socialsecurity-idUSBRE89H0YG20121018 https://www.reuters.com/article/us-column-miller-socialsecur... 4. A lot of Americans live paycheck to paycheck. There was that Federal Reserve study that said something like half of americans surveyed couldn't come up with 400 dollars to pay for an emergency. I don't anyone actually thought 'maybe it's because their savings are all locked up age 59 & 1/2'.
- JumpCrisscross 9y ago
  > Young people don't save Balancing that equation, however, one can expect--ceteris paribus--those people to have some combination of lower (a) taxes to fund education for the next generation or (b) costs associated with having to pay for their respective kids' college costs (since those kids will also take on debt to finance education). Blowing a hole in this model is the increasingly-glaring reality that today's generation will have received no support from the last one, thus being forced to finance its education and have to pay for the next generations' educations.
  - icelancer 9y ago
    The best fix for this - which is in the works - is destroying the higher education model through MOOCs and alternative credentialing programs. The education bubble can't be long for this world.
    - kamaal 9y ago
foxfired 9y ago
This is a direct testament to: > Socialism never took root in America because the poor see themselves not as an exploited proletariat, but as temporarily embarrassed millionaires.
- patrickaljord 9y ago
  This is assuming that socialism helps the poor, which is something anyone who has even very basic knowledge of 20th century history knows could not be farther from true.
  - bhaak 9y ago
    I think you and the OP have a clash of definition and are looking at different models of socialism. You look at the socialism how it was conducted in the USSR and Eastern Europe where OP is probably looking at Western Europe. Socialism isn't well defined and ranges from far left to Democratic socialism. Discussions with an American POV often neglect to acknowledge that in Europe lots of governments in Europe have socialist parties in them.
    - patrickaljord 9y ago
      I'm French, I use the definition of socialism other French thinkers have such as Tocqueville, Jean-Baptiste Say or Bastiat. This definition includes all the kinds of socialism you described and as these thinkers say they are all bad and since the 20th century we also know they are criminal the more they are enforced.
      - bhaak 9y ago
        Whereas we already know since the 19th century that capitalism is criminal the more it is enforced? If your government is criminal it doesn't matter if you're living in a capitalist, socialist, communist, or pastafarian state. I fail to see how the mixture of socialism and capitalism as it was implemented in most of Western Europe in the second half of the last century could be used as an argument for the hypothesis that "all kinds of socialism are bad".
mjevans 9y ago
I don't believe the stock market is a stable or good place to invest (anymore). I think the historic performance figures of the US stock market related to the unusually positive world position of the country after the last world war. There was a baby boom, there was a space race, there was a 'cold war' and lots of planned spending and many tech advances. I've seen an unending series of bubbles (and suspect they were happening even when I was a kid); the baby boomers looking for places to invest for a quick return, only to have their nest eggs smashed by the greedy sales people who (I at least hope) believed those were actually sound investments even though they should have known better. Thus, I see the stock market as almost a casino; with odds rigged for the rich with not-quite insider trading. My 'retirement plan' is to keep working, and to keep working, and to maybe live long enough that real socialism can happen after automation eats every job I don't want.
- kobeya 9y ago
  > I don't believe the stock market is a stable or good place to invest (anymore). The facts have consistently shown otherwise...
- sddfd 9y ago
  What about exchange traded funds? The general trend is still upwards and the Bubbles don't change that. Of course if you get in just before a bubble bursts, you lose at first and may have to wait a long time to break even. But judging from history (data since 1900) you will break even eventually.
  - IanCal 9y ago
    There's a good story of the worst market timer, who invests only at peaks: http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/ http://awealthofcommonsense.com/2014/02/worlds-worst-market-...
  - blubb-fish 9y ago
    That's my strategy. I invest in 1000+ Euro batches in ETFs. By now I covered half of the world or more. Nonetheless it is a bit frustrating to see ETFs bouncing up and down - everytime Mr Trump says something stupid you can expect the MSCI World to drop and with it everything else, too. Even a globally diversified ETF seems to be indirectly highly US centric. The DJ drops - then also ETFs focusing on Asian EMs drop. It's a bit ridiculous. And sometimes I am sceptical if the average market growth of up to 10% per year can be expected for the future.
peterburkimsher 9y ago
I don't expect to live in the same country 5 years from now. I currently live in Taiwan, and hope to move to New Zealand at the end of the year. My dad told me I should think about retirement, but I see no reason to save for retirement when I can barely pay for the visa application. I've already made the lifestyle sacrifices - I don't even have a driving license, I can't afford to marry, and I travel once or twice a year only to visit parents. Once, I had money that I thought I didn't need for a year. It was a scholarship from university, awarded simply because I studied engineering. I decided to invest it. I bought $1000 of gold, and $1000 of shares. I wanted to buy Apple shares, but the banker at UBS told me that I would have to pay huge fees simply to get the shares - unless I bought shares in the bank, which had no fees. But that was 2008. The bank shares went down to $300. The gold went up to $1070. It was a terrible investment. I lost all trust in bankers. During that year, I went on exchange programme to California and some situations in life meant that I desperately needed the money. But it was locked up in shares and gold, and I couldn't get to it. So now I just keep a current account. Major life problems happen to me quite regularly, and I can't have my resources locked away when I need them. Maybe I'll be able to save after I settle down somewhere. But I also wonder whether just giving it all away to friends would provide a better investment. Social capital is resistant to inflation, war, banking crises, environmental disasters, and everything else I expect to happen during my lifetime.
- tehlike 9y ago
  giving it all away to friends? terrible idea. Most often in life, you are on your own.
  - saiya-jin 9y ago
    you won't get better relationships just by giving wealth to people, more like the opposite. that's not how people work
- Al-Khwarizmi 9y ago
  Friends are of course very important, but you make it sound as in a Civilization game: throw some gold at them so their friendliness towards you will increase by X points. It doesn't work like that!
robertlagrant 9y ago
The graphs showing what different ages groups have saved for retirement seem to forget that older people have had more time to save.
- dredmorbius 9y ago
  Analysis will generally look at what cohorts had at the equivalent stages of their lives.
michaelbrooks 9y ago
I'm from the UK and have little to no savings. What has helped me to save is using a Messenger bot called Plum. It looks at my income and outgoings and will save little bits of money when it thinks is the best time to take it out. It also knows exactly what amount to take out at the time as well and is super clever. I have managed to save just over £200 over the period of 5 months which may not seem like a lot, but it's the most I've saved and has helped me a lot. Imagine how much I can save in 5 years if I don't take anything out and this is without having to lift a finger or even think about what I need to do in order to start saving. If America has anything like this, then I recommend you try it out.
- iuguy 9y ago
  If you want a good place to go to look into getting more for your financial future that's UK relevant, the /r/ukpersonalfinance reddit has a really amazing flowchart and they're really helpful.
  - dan1234 9y ago
    The flowchart is greate, but nothing compared the encyclopaedia that is /u/pflurklurk, who hangs out there.
    - iuguy 9y ago
      At first I thought it was weird that I built a shrine to his divine wisdom, but after praying to it for a few nights I realised there's nothing wrong with it at all... I just hope he doesn't ask for human sacrifices...
  - michaelbrooks 9y ago
    That is definitely a great subreddit. I have also created my own site to help people in the UK save and manage their money through the use of apps and bots [0]. http://aisaver.co.uk http://aisaver.co.uk
    - iuguy 9y ago
edison85 9y ago
Luckily social Security is there and spouses that don't work receive 50% of the benifits so there's a big chunk of the 1 in 3. Add up all your yearly earnings capped at $110k today's dollars, convert to today's dollars, divide by 420. Take 90% of first 850, 33% of 850-5200, and 16% of the rest. If you've worked minimum wage for your entire life and your spouse stays at home, that's still 95% of your yearly income. If you have home equity that means no mortgage payments or even a potential reverse mortgage. If you are Middle class, can move to lower CoL too. It's really not that big of a problem if we increase age/decrease benifits for extremely high earners
Aoyagi 9y ago
But they do have a new iPhone the week it comes out, right?
- kobeya 9y ago
  The 1 in 3 that don't have any savings? Probably not.
  - dan1234 9y ago
    Not having savings doesn't necessarily mean they don't have access to easy credit. Apple even run their iPhone Upgrade Programme[1] to get people paying monthly for their new phone (+ Applecare). [1]https://www.apple.com/uk/shop/iphone/iphone-upgrade-program https://www.apple.com/uk/shop/iphone/iphone-upgrade-program
  - Sholmesy 9y ago
    I would say they probably do. I think the OP's point is that those that save often spend or debt-finance a lot of things like phones & cars. I feel slightly jaded when I see people with $1k phones who clearly can't afford it, when I'm rocking an iPhone 5. Probably not a healthy psychological state and I feel a bit like a "financial puritan" at times, but it irks me for some reason. I understand debt and having access to capital is useful in a lot of ways (expansion, plant & asset purchase etc), but I feel like being able to buy a rapidly depreciating asset on credit, at extortionate rates, that provides no additional utility to capture value (a $200 and $1k phone have similar utility) is a bit of a ridiculous scenario.
  - loco5niner 9y ago
    More likely the ones without savings got the latest iPhone than the ones with savings. How do you think each group got where they are now?
thinkMOAR 9y ago
slightly joking, but still semi serious i wonder if the 1 in 3 that are obese are the same group. Spend it all, eat it all, i guess it is comparable.
- scrps 9y ago
  The cheapest food is among the nutritionally worst food you can buy. That is of course just one of the causes. http://seriecientifica.org/sites/default/files/povertyobesity.pdf http://seriecientifica.org/sites/default/files/povertyobesit... https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3198075/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3198075/ http://news.nationalgeographic.com/news/2014/09/140901-american-diet-obesity-poor-food-health/ http://news.nationalgeographic.com/news/2014/09/140901-ameri...
  - thinkMOAR 9y ago
    Yes, which allows people to buy even more crap food. Though that doesn't answer my curiosity if financial planning and 'food' planning have some sort of relation.
StanislavPetrov 9y ago
What makes this even worse is that a lot of "savings" that people DO have put away for retirement are in the form of pensions, bonds, and other financial obligations that are underfunded and mostly illusory. You need look no farther than the state of Illinois to see just how bad the situation can get. A lot of people who think they have pensions and other payments coming from the state of Illinois (and soon, many other states, cities, and municipalities) are going to be very, very disappointed. We are drowning in debt on every level, both personal and governmental, and the FED and other central banks are running out of ways to make it seems like it isn't a big problem.
- kamaal 9y ago
  Pensions have long been a mess because of shady union practices. They generously award over time to retirees in the last 3-4 years of service, this often sends up their average compensation by a factor of 3 to 4. Then you also have other benefits. No pension fund can pay for something like this. So you have to take money from the tax payer to pay for these people. The day tax payers decide to call it quits, it will all collapse. Plus this still doesn't say anything about people in non-govt sectors.
NicoJuicy 9y ago
This is actually depressing, i save over 1500 € / month in Belgium... But, i need to invest more. And then again, i don't spend money on stupid things ( perhaps reason #1 why people can't save money.. I don't need the latest iphone or anything. My car is used from 2008, some people just want to buy a new one and spend 5x as much for a vehicle) Only 2 ways to get rich: Invest or save more than someone else.
- aidenn0 9y ago
  In the US, if you don't have health insurance, than having savings is arguably unwise. A single illness or injury that requires an ER visit can easily total $250k which would completely wipe out the savings of someone making 2x the minimum wage ($7.50/hr) and saving at a rate of 10%[1]. If you don't have the assets, then the hospital is limited in how much it can recoup from you, and they usually write it off rather than garnishing your wages. Might as well live large until that happens. 1: Also as a note, this person making double minimum wage and working 40 hours per week is making ~2150€ / month. There are vast numbers of people doing much worse than this. In fact it's fairly close to the 33rd percentile of household (not individual) income in the US (~$30k/year which works out to 2121 € / month).
  - nicky0 9y ago
    As someone from a country with a state care system. This is fascinating, I never heard that perspective. Why save, when they'll just come and take it from you when you get sick! It's pretty tragic but it makes perfect sense.
  - anarazel 9y ago
    Using 401ks/IRAs/etc protects you against that to some degree.
  - NicoJuicy 9y ago
    I am very disgusted by this system, coming from Belgium. I think America is far below Europe's health system
sametmax 9y ago
Not just in America. I don't have any saving at all, and a lot of people around me neither, and I'm in France. Now theoretically, we all pay regularly to the state for that. But in practice, none of us believe we will see the color of it when we grow old. Last week a dear and poor friend of us said she wanted to go to school again, but that the one she wanted in cost 5000€/year and she didn't have the money. We secretly discussed to create a common money pot to pay the tuition for her. I suggested that we all put 500 € each and solve the problem. All the participants were all above 30, none of them had children, all of them were working. Half of them don't even own a car, as in my city it's a useless expense. Yet it was a rude awakening: most of the people at the table could not afford such an amount. Even once in their life for a very old friend. So we discussed a bit, and it turns out most of us don't have any saving and just live by the day. Comfortably, granted. They are not poor, they eat well, they have clothes and can afford pleasures. But if anything happen to any of us, we are screwed. We have no buffer of any kind. The cost of life is, of course, part of the cause of this. But also the fact that our lives are very instable : breakups, job changes, moving in/out, make it hard to save. It's also a cultural problem: enjoying ourself have been more important that savings. But there is also another issue: individualism. The thing is, most of us could probably find 500 € to give away. But the solidarity is not strong enough for this effort. So if friends won't get out of their way to do that, I have little hope that society will solve the retirement puzzle. People care about _their_ retirement, not about everybody's retirement, not how society will find a balance or how their neighbor is going to survive.
- oskarth 9y ago
  > So we discussed a bit, and it turns out most of us don't have any saving and just live by the day. Comfortably, granted. They are not poor, they eat well, they have clothes and can afford pleasures. But if anything happen to any of us, we are screwed. We have no buffer of any kind. The solution to this largely a matter of a shift in attitude. Start saving 10% of your salary right now and stop buying new clothes, eating out etc. Having a buffer is way more important. There are plenty of resources for learning how to live frugally. The benefits of having a cushion, however small, are enormous. Of course, that doesn't take away from the other points you mention. But it's by no means an unsolvable problem for the average comfortably-living individual.
headmelted 9y ago
Maybe you shouldn't save for a retirement then. Maybe no-one should. I think about this quite a bit. I'm quite frugal in my personal life (although certainly I could be more so), so I actively save for the future as a matter of course. I'm also aware of the statistics around personal debt levels and net assets in the public at large and while it's clear there's a rude awakening to be had, I'm less and less convinced over time that the "awakening" is going to be of those who have no savings in place when they need them. It seems pretty apparent to me that if the majority of people have no assets in a couple of years/decades (regardless of why that might be) and wealth inequality peaks to such extremes, then it's very likely the first political candidate to offer hard socialism (debt-driven basic income guarantee coupled with ultra taxation of higher net worth individuals) will sweep in an election, and the money problem will correct itself at an individual level. Of course this isn't a solution to the living-beyond-your-means problem, and causes it's own problems (inflate the currency with QE, capital flight of high net worth individuals to friendlier jurisdictions), but I don't think that will matter in this scenario. If the nature of people now is to be relatively short-sighted with regards to money, then what reason is there to expect that people in general are going to be any different in the future? I fully expect it will be people who are saving their income that will pay to fund those who are not in the future if the latter is the majority.
- icelancer 9y ago
  >I fully expect it will be people who are saving their income that will pay to fund those who are not in the future if the latter is the majority. Absolutely. I expect the government to renege on most tax-advantaged programs for retirement they instituted in the 1960s and on (Roth IRA etc). I expect Social Security to stop being paid to higher net-worth individuals or for them to be pushed into a later age where they can collect it. The crisis we face isn't one that is going to be fixed easily. Government receipt shortfalls project to be massive in a few decades.
- kamaal 9y ago
  >>it's very likely the first political candidate to offer hard socialism (debt-driven basic income guarantee coupled with ultra taxation of higher net worth individuals) will sweep in an election, and the money problem will correct itself at an individual level. As someone who has had experience living in that system let me tell you the moment something like that can even happen. Most rich people from whom you could take significant for your socialist schemes will leave the country. Leaving behind a very very small part of usable money for your schemes. It will be over before it begins. You have also now scared away almost every single economic prime mover individual from the economy to a point almost any body smart will only have one option for a good future- To leave the country and immigrate to else where. And there will always be some capitalist heaven which will welcome all this smart people with open arms. With this set up your common pool of money from which you wished to pay for your Basic income will shrink year after year, until bankruptcy and total investor loss stares you in the face. >>I fully expect it will be people who are saving their income that will pay to fund those who are not in the future if the latter is the majority. They won't(rightly so) and that is what will be the biggest problem in the times to come. The only way in the future is to make good decisions for the future or suffer.
oliyoung 9y ago
All of this is thankfully foreign to the average Australian, an employer in mandated to pay +9% of an employee's salary into a superannuation account that cannot be withdrawn from unless you retire (or suffer “severe financial hardship"). The average 39 year old man will retire with AU$300k, while Women retire on AU$180k. https://en.wikipedia.org/wiki/Superannuation_in_Australia https://en.wikipedia.org/wiki/Superannuation_in_Australia
- apexalpha 9y ago
  Same here in the Netherlands. Everyone has to pay into a pension fund (entrepeneurs and some fields excluded). In total, the Dutch pension system now has almost 2 trillion USD saved up and invested for 17 million people. This was implemented to prevent the dystopia that the article predicts: people who save money having to pay for people who didn't.
- xxxxxxxx 9y ago
  Unless you get divorced and lose half. Divorce twice? Now you 're in really big trouble. What if you die before retirement? You have made the mandatory payments, but got nothing for it. What if the stock market crashes the day you retire? The Australian system is not perfect - it's a compromise.
  - oliyoung 9y ago
    I've been divorced, it's not included, if I die, it's my estate, and it survived 2007's crash
maruhan2 9y ago
ok so if we assume that the average life expectancy is 90 years old with equal distribution. 1/3 of Americans are 30 years and younger. Most people saving starting then. Looking at it that way, 1/3 seems like a high number.
askvictor 9y ago
Clickbait-y title, or at the very least a sensationalist and simplistic interpretation of the data. That 1 in 3 is mostly young people; they have neither the ability to save (due to low wages, student debt, being priced out of the market) nor the incentive (retirement is too far away, perhaps also concerns the stock market is not a safe place). Probably not much trust in the system overall either, given how the older folks seem to keep pulling the levers to maintain things for their own benefit.
mschuster91 9y ago
Doesn't surprise me, and the problem exists also in countries like Germany. Common point seems to be that "millennials" (and low-earning people) in cities suffer from extremely high rents which take away their ability to save anything, especially for downpayments on an owned flat/house, and those on the countryside have low costs of living but often enough nothing more than Social Security to pay the bills. Trump didn't get elected in the flyover states without reason, and the AfD in Germany has their stronghold in the poorer parts of Germany. In addition, in the US you can go bankrupt from being injured. Your medical system is... unimaginably bad from German POV.
chank 9y ago
It's way worse than that. Less than half of respondents even have more than 10K saved. It's likely that most still won't have enough at retirement age to do so.
throwaway2016a 9y ago
To relate this to Hacker News even more... We are constantly told that we should risk our financial freedom to start a company. Go without pay take massive credit card debt to fund our company, etc. and we glorify people who have done that successfully and write off people who failed. Or worse, told to go without pay / deferred pay / less pay to work at someone else's company with less than 5% equity. Often less than 0.5% When someone tells me they felt a $4000+ booth at a conference was so critical to their company that they maxed out their personal cards I cringe. What this survey doesn't seem to have is how many of those people have negative savings (aka, debt). Also, it is unclear to me if homeowner equity is in the mix. Where I am the average house is $250k. In my neighborhood that is $400k. If I pay my mortgage diligently for the next 25 years and do basic upkeep (new roof, new furnace, etc) I will be in the $300k+ bracket too. I know for a huge number of people home ownership isn't an option but I'd point out it could very well explain why a large portion of people sit at $300k+.
ge96 9y ago
I know everybody gets old but this idea of "saving for retirement" rather be limber and free than old and free. I realize it would also suck flipping burgers at 70. So I don't really have an argument, chasing the dream, maybe not see the age of retirement.
scarface74 9y ago
I come from a middle class background and I haven't personally seen what retirement based on your own savings looks like. My grandparents lived off of social security, my parents are living off of a combination of pensions, social security, my mom sort of working as a consultant when she gets bored and generous company stock benefits from when my dad was working as are most of my relatives of that generation. Because of a lot of dumb decisions made earlier in life, my retirement savings are relatively meager. But on the other hand, I don't dream of the day that I can retire. My job as a software developer is not physically demanding and my job was my hobby for 10 years before I started working professionally. In 20 years of working, I've never hated my career. I imagine retirement for me to be doing contracting/consulting/ teaching part of the year instead of working for a full year. I wouldn't need to retire to enjoy my hobbies -- I enjoy my hobbies everyday and get paid for it. My only other hobby is exercise and I don't need to retire to enjoy that.
codingmyway 9y ago
Bring back 'long life' insurance, the one where the money of those 'lucky' enough to not run out of money before they die goes to the survivors who need it. It became taboo and phased out or banned because of obvious conflicts of interest and incentives but if managed well to not enable those incentives it could make a come back.
micheljansen 9y ago
A few months ago, someone gave me a simple piece of financial planning advice that completely changed the way I think about retirement. Most financial planning advice focuses on regularly putting money away for some returns. Returns are important, but they are only part of the story. Much more important is that putting a portion of your income away every month creates habits that stick by making you get used to having less money available, while at the same time ensuring that in the future, you will have more available. It cuts both ways! Think of it like this: say you have an income of 5.000 per month. You don't put away anything away and when you retire, you receive a state pension of 1.000, so your income drops by a staggering 3.000 per month. Or you could pretend that your income is only 4.000 per month and put away the rest. You live a bit more frugally, but now when you retire, your pension is 3.000 per month, so the difference is much smaller. Of course there are also other ways besides saving for pension that address the amount of money you need in the future, rather than increasing the money that you have available from a pension. Buying a house and paying it off is a good example. The principle is the same: reduce the gap between your income/expenses now and your future income/expenses. Disclaimer: I am not a financial advisor, so please do not base major life decisions on this.
cbanek 9y ago
I also imagine that some of the people with $0 saved toward retirement also have it even worse than that, and may have a negative net worth, especially after the housing crisis. Things like credit card debt and payday loans will bleed you dry before you can even think about retirement as well.

163 points by helloworld 9y ago

A few years ago I learned about the FIRE-community. Financial Independence, Retire Early. I'm more in the FI part, saving a big portion of my income. By living on roughly half my income, I save up for a "year of not working" each year. This gives me a lot of freedom and ease of mind. Keeping this up, one could theoretically retire with 16 years of working according to this calculator. It also shows americans saving the least https://networthify.com/calculator/earlyretirement https://networthify.com/calculator/earlyretirement

wiz21c 9y ago
Honest question : how much do you sacrifice to be able to live on roughly half your income ?
- deleted 9y ago
  [deleted]
- hycaria 9y ago
  While I probably don't earn as much as OP, when I compare myself to my friends, I earn more than most and still spend less, living on about half my income too. Main differences in lifestyle are I don't buy shit (I don't even shop online at all most of the time so no temptation, when I consider buying an item I ask myself "do i really need this" and most often find that I don't, I try to get most items from nearby businesses, I don't subscribe to stuff may it be paying services or even newsletters, hell I even found half of my furniture on the streets or second hand), I cook like 90% of my meals (takeaway is an extra 2-3 times per month average, I bring my food to work, I try to do as much as possible from scrap), I don't spend as much time/money in bars or other social activities as them, and I don't take trips across the globe (I am lucky enough to have enough family-owned places to spend my vacations at, I also avoid flying far for ecological reasons).
  - sgberlin 9y ago
    Pretty close to what I'm doing except the travelling/flying part, which is important to me. I don't even like "owning stuff" or subscriptions so I naturally only buy things I can't go without.
- maaaats 9y ago
  People like to ask that question, as it gives them an easy out; "those guys probably live boring lifes". I'd say I don't sacrifice much. I spent a month income on vacation this summer, went skiing in the alps this winter. I have hobbies I enjoy where I don't cheap out on gear or experiences. I'm privileged to have an income that enables this. But still I'm baffled on how my peers with the same income use all their money. And I don't really see how they are able to spend most of their money, and how they benefit from it compared to me. For comparison, my salary is about $70K in Norway. IF I'd felt I now sacrifices something of importance, it still would be worth it. I can take years off and do what I want, switch to a lower paying job with higher QoL etc, retire early or other things, while those not making the same "sacrifices" will have to work.
  - kowdermeister 9y ago
    "And I don't really see how they are able to spend most of their money" Probably on down payment on things they couldn't afford to buy by cash. Or there are plenty of hobbies that are very expensive.
  - silvestrov 9y ago
    Getting a new car every 3-4 years is extremly expensive. A lot of people think they can't live with an old beater, that they absolutely must have a "new-ish" car. An old beater for those people is a 5 year old car. An old beater for me is an 15-20 year old car. "Warren Buffett lives in a modest house that's worth 0.001% of his total wealth".
    - SimonPStevens 9y ago
      > Warren Buffett lives in a modest house that's worth 0.001% of his total wealth Haha. Not very practical for most people. If you take "total wealth" to be assets - debts, my house is worth about 400% of my total wealth.
    - SmallDeadGuy 9y ago
      An old beater car can be a huge inconvenience though. My 16-year old (when bought) Saxo had to have bearings replaced, but the bolts for the suspension arm were so rusted they snapped during the process and cost me 1/2 the price of the car to get a new arm and bolts, too. Replaced that car with a 15-year old Astra for a little more oomph (1.6L over 1.1L) which recently had it's handbrake rust onto the disc. A few whacks with a hammer fixed that, but I couldn't use it until after the place I wanted to go was closed because I needed my girlfriend to be able to hit the foot brake when I hit the handbrake off. Both cars required a replacement battery within a year of buying, as well as new stereo wires for the Saxo which I had to acquire from a Peugeot 106 in a scrapyard and various bulbs for the Astra. These problems are less about age but more about previous owners and myself. I can't wait until I can afford a newer car, something closer to 5-10 years old instead of 15-20, because I won't be praying that my car will pull off every time I haven't used it for 3 days.
- throwaway0255 9y ago
  I do the same (actually I live on more like 40% of my take-home), and I don't feel as if I've sacrificed anything. The amount I live on has slowly gone up since I started working. It's just that when I get a raise or promotion or new job, I don't spend the new cash flow, I save it. A couple years from now I'll probably be living on 30% of my take-home, but the amount I spend every month will probably have gone up slightly. The question you should be asking is how much do you sacrifice by not saving? I could get fired tomorrow and my bills would still all be paid for years. When I retire it's going to be in a big house with kids and grandkids that have their college paid for. I can retire at 45 if I really want to. Knowing all that is incredibly comforting and peaceful. Just the feeling is worth it. I used to spend my entire paycheck on bills and put the next month's spending on a credit card. My net worth was negative. That way sucks. This way is better. People probably thought I had more money before because of all the useless flashy crap I bought. Fuck those people, I'm doing way better than all of them now and I know it. I used to drive a really nice car thinking it made me seem important or something. Now I know only idiots are fooled by that trick, and to everyone else the car just made me look broke and stupid.
- sgberlin 9y ago
  For me the only part that is a sacrifice, I guess that would be a "feature" for people who like cooking, is that I basically don't eat out when I'm at home. On the other hand I travel about 2 months a year and I just do that then.
- icelancer 9y ago
  >how much do you sacrifice to be able to live on roughly half your income ? Unless the person has a very high salary, the sacrifice is that they don't have kids.
  - hycaria 9y ago
    But why would anyone need expensive offspring that will experience the downfall of our planet (and have its share participating in draining the last ressources), let alone numerous copies of it ? All jokes aside, tbh I doubt that people start living frugal on half an income and then go on living paycheck to paycheck because of kids. Because living frugal often means questioning your decisions and I doubt the motivation for parenthood withstands this easily, and also because I guess one can be frugal in a familial setting too, if you have a partner who shares your interest. All the kids I see have way much more shit than their attention span could ever care for, parents want gardens even though it's expensive and unnecessary, buy new when they outgrow everything so fast anyways... They don't need all this stuff, exactly like we don't need most of it.
- czechdeveloper 9y ago
  This really depends on your income and where you live. I sacrifice nothing as half of my income is enough to cover lifestyle I want.
- lemondrops 9y ago
  I live on ~30% of my income, which I would consider a modest "upper entry level developer" in my country. I don't feel like I sacrifice anything, though it is true that I'm lucky to share an already cheap apartment with my SO. (But we also only have heating in two of our rooms, and not even a sink in the bathroom - we brush our teeth in the kitchen. I guess this would already be inacceptable for many...) I don't own a car because I can bike or walk everywhere. I only use prepaid cards for my mobile phone, no data plan, because I always found the idea of paying for mobile internet ridiculous when there is wifi all around us. (Plus, I don't like how being online all the times makes me check my phone so often.) I don't need a new shiny phone every two years and will use my Fairphone 2 until it dies on me. I do eat out 3-4 times a week for lunch at work, but when at home I cook 99% of the time. Sometimes I eat out with friends, go to the cinema etc. I buy clothes maybe once or twice a year but avoid expensive brands like the plague, except for things like running shoes or other "long term equipment". When it comes to my hobbies, I don't sacrifice anything, but I naturally like to do things that are inexpensive or for free like excercising and spending time outdoors, reading, watching movies... My most expensive hobby is probably indoor rock-climbing, which I don't do that often sadly, and the subscription to the martial arts club that I train at weekly. I just spent almost 500€ to attend PyCon this year, and nearly three times that much for my yearly holiday. For me it's not even a concious act of saving, I just naturally live this way and don't need much. I don't like owning too many things, they feel like a burden. The money keeps accumulating (I saved 30K€ the last two years, living as described above), and I honestly don't know what to do with it or how to use it wisely in regards of the future... Real estate seems like a good investment, but comes with its own problems.
sgberlin 9y ago
Yes! I save roughly half. I don't plan to live on where I am right now in the future, so basically every month of working means 2-3 months of "not working" in a cheaper location.
onion2k 9y ago
Money won't help very much if society collapses.
- splike 9y ago
  How do you propose we save for the future then? Gold? Bottle caps?
  - onion2k 9y ago
    I propose that we change society to be fairer rather than have people suggest living on half your income is a viable retirement plan. Failing that, 5.56mm rounds and canned goods.
    - loco5niner 9y ago
      > change society to be fairer I hope by this you mean "Rewards come from hard work and delayed gratification" rather than "take from the rich, give to the poor".
SimonPStevens 9y ago
Do plans like this ever take family and children into account though. As a single person it's all very well saving half your income if you are reasonably well paid. But if you have children I just don't think that's practical. I saved a fair bit before kids. Then me and my partner made the decision that we wanted one of us at home to bring up the kids, and not have them raised by daycare workers. So now we have one income, and more expenses than before. I'm reasonably well paid, drive older small cars, don't have any particularly expensive hobbies or holidays. I still save, and contribute to a private pension, but the idea of saving 50% of my income is unachievable. Now that's fine if you don't want kids, but I often think these lifestyle philosophies promote themselves as fantastic and obvious, and why doesn't everyone do it. But forget to balance them with the hidden sacrifices you have to make that they never seem to mention.
- maaaats 9y ago
  I want kids some day, and I know saving 50% at that time might lead to sacrifices I don't want to make. But until then, I would probably have had a professional career anywhere from 7-13 years. Those savings can then accumulate rents for a long time, even though I wont be able to contribute any new significant amounts.
- MaurizioPz 9y ago
  I have 2 kids (5yo and 2yo) and right now no problem at following this plan (started when my first born was born). It can be done, you need to make sacrifices but the sooner you start the better you will be later on
  - SimonPStevens 9y ago
    Can I ask, do you and your partner both work? What sacrifices are you making to get to 50% savings?
splike 9y ago
Thanks for sharing, that's pretty interesting. My question is how do you typically invest your savings? Do you invest it into stocks, or something like Lending Club?
- maaaats 9y ago
  Index funds, mostly.
billf1953 9y ago
You realize that saving half your income is actually living on a sixth. The government always get a third.

will_brown 9y ago

I wonder what these figure would be in countries like Russia or China. I would also say American's are simply bad at planning for the future, and highlight the fact that 75% of Americans die intestate (or without a Will). But, I think the truth is that is only part of the explanation. While a Will would benefit and be applicable to everyone, not just people with assets, retirement is purely for people who have some type of financial surplus and lets get real. Most Americans are debt financed, from housing, to transportation, to schooling, to even putting food on the table. It would be very interesting to see how many of those 2/3's who are saving for retirement are actually debt financing their retirement funds (which admittedly makes sense with employer matching), meaning they are living off credit and going (further) into debt while simultaneously saving for retirement. I would venture to guess the numbers are much worse than this article even concludes.

TheAdamAndChe 9y ago
It's not so much that Americans are bad at planning, it's just that they're not taught to do it. It's not taught in schools, and because their parents didn't need to plan so much when the economy was much better, it wasn't a skill that has been passed down. I bet a much of those "millennial trends" killing off overpriced businesses like Applebees and whatnot is due to the internet spreading financial literacy to the younger generations. That and they're too poor to eat there, but I bet the internet is having an effect too.
- obstacle1 9y ago
  Not being taught a thing and being bad the thing are not mutually exclusive.
- icelancer 9y ago
  >It's not so much that Americans are bad at planning, it's just that they're not taught to do it. It's not taught in schools, and because their parents didn't need to plan so much when the economy was much better, it wasn't a skill that has been passed down. This is simply not that true. It was taught in my public school and taught to most of my friends that went to public schools near me. Also taught in college. It didn't help. The power of compounding interest is taught to almost everyone and even fake quotes from Einstein used to hammer it home. My generation (mid-30s) faced a post-graduate nightmare of a job market after 9/11 and then the 2007 credit decoupling in combination with a massive run-up in real estate values in the largest cities in America. No one had money to save. I have managed to save starting in my 30s but I have quite a few friends who work paycheck to paycheck. The education was there. The ability is lacking.

lsiebert 9y ago

Health care, education and other costs keep rising, (even when adjusting for inflation). Wages have been stagnant when adjusting for inflation. And hey, it's almost time for the census to report. September 12, 2017. https://www.census.gov/newsroom/press-releases/2017/advisory-income-poverty.html https://www.census.gov/newsroom/press-releases/2017/advisory...

l5870uoo9y 9y ago
If we are to realise the great potential that lies ahead with mass automatisation and AI, we must ensure that whole of society benefits from this. There must be more focus on sectors such as logistics which are being hit first by mass automation. We need to define a new social contract between employees, workers and technology to make this work.
- throwawaywonk 9y ago
  Also you could just have unions and corporations could stop dicking people over. :)
- lsiebert 9y ago
  Hmm... Contracts tend to favor those with more power. I worry that the wealthy will see those less fortunate not as a potential engine to accelerate overall growth, but as a burden, and, with the weakening of workers rights and unions accelerated by the trends you mention, the new social contract may be less beneficial then even current circumstances. In which case I'm sure there will be those who blame immigrants, people of color, the government, unions, etc. Certainly it won't be the wealthy who are blamed, they will be instead admired for their supposed acumen, despite the fact that the majority of the wealthy inherit their wealth, and that majority has been rising. https://www.economist.com/blogs/buttonwood/2014/03/inequality https://www.economist.com/blogs/buttonwood/2014/03/inequalit...

fastbeef 9y ago

This is really scary. The whole western world is in for a rude awakaning in the coming years with regards to retirement. Retirement is the golden carrot dangled in front of us for all our working lives, an embodiment of Protestant work ethic - "work hard and you will be rewarded in the end". However, very much has changed since retirement and pensions were designed. I can't find a good source, but (in Sweden) when pensions were introduced after WW2 people worked from their late teens until they died (40+ years of productivity), produced 3 or more children per woman (good population age distribution, the classic "pyramid") and the average lifespan was 64 years (1 year before retirement). Nowadays, many of my peers don't get a "real" job until their early/mid-thirties (work for 30 years of producitivty), produce 1.7 children per woman if they reproduce at all (leading to a top-heavy population where fewer and fewer young people must support more and more old people) and life expectancy is much, much higher. Now, these things are in of themselves good, but they break the original design horribly. I really, _really_ hope that we can cross the chasm to a robot-centric/base-income society before it all breaks down. EDIT: Found this after posting: https://en.wikipedia.org/wiki/Pensions_crisis https://en.wikipedia.org/wiki/Pensions_crisis

deleted 9y ago
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morecoffee 9y ago
> The whole western world is in for a rude awakening in the coming years with regards to retirement. No kidding. Who will pay for all the people who didn't save? The people who did. I have very little expectation of keeping most of my money as I get older.
- frisco 9y ago
  > I have very little expectation of keeping most of my money as I get older. Welcome to the world of Bitcoin and Monero.
  - googletazer 9y ago
    Incredible that you are so heavily downvoted. Just shows the level of fear and disdain that even technical people have towards cryptocurrency.

lwhalen 9y ago

I have accepted a long time ago that I will be unable to 'retire' in the traditional sense. I fully expect to be working pretty close to 40+ hours a week when I keel over (hopefully quickly, and without a prolonged illness). "Die old, happy, and fast".

gasof 9y ago

What incentives do people under 30 have left to build a pension? Is it a better deal than schemes like putting 80% of your extra money on the bank and 20% in riskier investments?

gehsty 9y ago
In the UK the benefits of paying into a pension are tax based, you don't pay tax on what you put in, and you then take it out at a lower tax threshold on retirement (compared to what you would pay to have it in your pay packet). If you are a higher rate tax payer this is a huge benefit - you can take up £40k before it becomes taxable, tax for high earners can be 40% - but it doesn't really help people on lower incomes who are at most risk of not having any savings.
- anonymousDan 9y ago
  Aren't you at risk though of the government shifting the goalposts (e.g. wrt retirement age)?
  - danielmg 9y ago
    Not really. They are moving the state pension age out but the private pension age stays static at 55. They have also given more freedom on how to use the private pension funds come retirement. THe idea is to reduce the burden of the state pension. It would be counter productive to do anything counter to that. However - the left keep wanting to take away higher tax relief on pensions. Which sounds great unless you are a nuclear family where 2 people will rely on one person's pension (like my wife will - we also have other compounding circumstances). If they cut this relief I'll leave the country or go self-employed and play the system, as it will push my marginal tax rate to a stupid rate.
  - lmm 9y ago
    Yes, but the old are a key voting demographic, so governments tend to be very cautious about anything that might be seen as anti-pension.
  - 9y ago

godzillabrennus 9y ago

The wealth imbalance taking shape over the last 40 years is likely why. Everything in our modern world feels like it's about to pop. Too much change too quickly for our establishment to adapt.

WalterBright 9y ago
Don't overlook the massive increases in government spending at all levels. That money has to come from somewhere.
- RobertoG 9y ago
  Government spending could be called also government investment. Money is only a number. Real resources is what have to come from somewhere.

meirdavis 9y ago

I don't think this study paints a complete picture. It asked about specific retirement funds, rather than wealth in general. If someone aged 50 has 20k in an earmarked retirement fund but a net worth of 1.5m, that person is fine, but considered by this study to be unprepared for retirement.

systematical 9y ago
Okay, but how many Americans have that kind of networth?

jldugger 9y ago

Well, that's not super surprising, for a variety of reasons. 1. Young people don't save. The survey defines millienals as age 18-34. I figure half of that group is working low skill jobs and can't afford to "save" (more on that later), or attending college and is not eligible to 'save'. And many of those graduated at age 22 should spend the next 10 years focusing on student loan debt repayment -- very few investments pay off better than 6.8 percent fixed! 2. Social Security covers spouses. Stay at home moms who divorce at year 11 after a midlife crisis gone wrong are eligible for 50 percent of their spouse's eventual benefit. More if they're dead. 3. Social Security does alright by low income workers. Reuters estimates a hypothetical 'return' of 6.79 for a very low income couple born in 1943. https://www.reuters.com/article/us-column-miller-socialsecurity-idUSBRE89H0YG20121018 https://www.reuters.com/article/us-column-miller-socialsecur... 4. A lot of Americans live paycheck to paycheck. There was that Federal Reserve study that said something like half of americans surveyed couldn't come up with 400 dollars to pay for an emergency. I don't anyone actually thought 'maybe it's because their savings are all locked up age 59 & 1/2'.

JumpCrisscross 9y ago
> Young people don't save Balancing that equation, however, one can expect--ceteris paribus--those people to have some combination of lower (a) taxes to fund education for the next generation or (b) costs associated with having to pay for their respective kids' college costs (since those kids will also take on debt to finance education). Blowing a hole in this model is the increasingly-glaring reality that today's generation will have received no support from the last one, thus being forced to finance its education and have to pay for the next generations' educations.
- icelancer 9y ago
  The best fix for this - which is in the works - is destroying the higher education model through MOOCs and alternative credentialing programs. The education bubble can't be long for this world.
  - kamaal 9y ago

foxfired 9y ago

This is a direct testament to: > Socialism never took root in America because the poor see themselves not as an exploited proletariat, but as temporarily embarrassed millionaires.

patrickaljord 9y ago
This is assuming that socialism helps the poor, which is something anyone who has even very basic knowledge of 20th century history knows could not be farther from true.
- bhaak 9y ago
  I think you and the OP have a clash of definition and are looking at different models of socialism. You look at the socialism how it was conducted in the USSR and Eastern Europe where OP is probably looking at Western Europe. Socialism isn't well defined and ranges from far left to Democratic socialism. Discussions with an American POV often neglect to acknowledge that in Europe lots of governments in Europe have socialist parties in them.
  - patrickaljord 9y ago
    I'm French, I use the definition of socialism other French thinkers have such as Tocqueville, Jean-Baptiste Say or Bastiat. This definition includes all the kinds of socialism you described and as these thinkers say they are all bad and since the 20th century we also know they are criminal the more they are enforced.
    - bhaak 9y ago
      Whereas we already know since the 19th century that capitalism is criminal the more it is enforced? If your government is criminal it doesn't matter if you're living in a capitalist, socialist, communist, or pastafarian state. I fail to see how the mixture of socialism and capitalism as it was implemented in most of Western Europe in the second half of the last century could be used as an argument for the hypothesis that "all kinds of socialism are bad".

mjevans 9y ago

I don't believe the stock market is a stable or good place to invest (anymore). I think the historic performance figures of the US stock market related to the unusually positive world position of the country after the last world war. There was a baby boom, there was a space race, there was a 'cold war' and lots of planned spending and many tech advances. I've seen an unending series of bubbles (and suspect they were happening even when I was a kid); the baby boomers looking for places to invest for a quick return, only to have their nest eggs smashed by the greedy sales people who (I at least hope) believed those were actually sound investments even though they should have known better. Thus, I see the stock market as almost a casino; with odds rigged for the rich with not-quite insider trading. My 'retirement plan' is to keep working, and to keep working, and to maybe live long enough that real socialism can happen after automation eats every job I don't want.

kobeya 9y ago
> I don't believe the stock market is a stable or good place to invest (anymore). The facts have consistently shown otherwise...
sddfd 9y ago
What about exchange traded funds? The general trend is still upwards and the Bubbles don't change that. Of course if you get in just before a bubble bursts, you lose at first and may have to wait a long time to break even. But judging from history (data since 1900) you will break even eventually.
- IanCal 9y ago
  There's a good story of the worst market timer, who invests only at peaks: http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/ http://awealthofcommonsense.com/2014/02/worlds-worst-market-...
- blubb-fish 9y ago
  That's my strategy. I invest in 1000+ Euro batches in ETFs. By now I covered half of the world or more. Nonetheless it is a bit frustrating to see ETFs bouncing up and down - everytime Mr Trump says something stupid you can expect the MSCI World to drop and with it everything else, too. Even a globally diversified ETF seems to be indirectly highly US centric. The DJ drops - then also ETFs focusing on Asian EMs drop. It's a bit ridiculous. And sometimes I am sceptical if the average market growth of up to 10% per year can be expected for the future.

peterburkimsher 9y ago

I don't expect to live in the same country 5 years from now. I currently live in Taiwan, and hope to move to New Zealand at the end of the year. My dad told me I should think about retirement, but I see no reason to save for retirement when I can barely pay for the visa application. I've already made the lifestyle sacrifices - I don't even have a driving license, I can't afford to marry, and I travel once or twice a year only to visit parents. Once, I had money that I thought I didn't need for a year. It was a scholarship from university, awarded simply because I studied engineering. I decided to invest it. I bought $1000 of gold, and $1000 of shares. I wanted to buy Apple shares, but the banker at UBS told me that I would have to pay huge fees simply to get the shares - unless I bought shares in the bank, which had no fees. But that was 2008. The bank shares went down to $300. The gold went up to $1070. It was a terrible investment. I lost all trust in bankers. During that year, I went on exchange programme to California and some situations in life meant that I desperately needed the money. But it was locked up in shares and gold, and I couldn't get to it. So now I just keep a current account. Major life problems happen to me quite regularly, and I can't have my resources locked away when I need them. Maybe I'll be able to save after I settle down somewhere. But I also wonder whether just giving it all away to friends would provide a better investment. Social capital is resistant to inflation, war, banking crises, environmental disasters, and everything else I expect to happen during my lifetime.

tehlike 9y ago
giving it all away to friends? terrible idea. Most often in life, you are on your own.
- saiya-jin 9y ago
  you won't get better relationships just by giving wealth to people, more like the opposite. that's not how people work
Al-Khwarizmi 9y ago
Friends are of course very important, but you make it sound as in a Civilization game: throw some gold at them so their friendliness towards you will increase by X points. It doesn't work like that!

robertlagrant 9y ago

The graphs showing what different ages groups have saved for retirement seem to forget that older people have had more time to save.

dredmorbius 9y ago
Analysis will generally look at what cohorts had at the equivalent stages of their lives.

michaelbrooks 9y ago

I'm from the UK and have little to no savings. What has helped me to save is using a Messenger bot called Plum. It looks at my income and outgoings and will save little bits of money when it thinks is the best time to take it out. It also knows exactly what amount to take out at the time as well and is super clever. I have managed to save just over £200 over the period of 5 months which may not seem like a lot, but it's the most I've saved and has helped me a lot. Imagine how much I can save in 5 years if I don't take anything out and this is without having to lift a finger or even think about what I need to do in order to start saving. If America has anything like this, then I recommend you try it out.

iuguy 9y ago
If you want a good place to go to look into getting more for your financial future that's UK relevant, the /r/ukpersonalfinance reddit has a really amazing flowchart and they're really helpful.
- dan1234 9y ago
  The flowchart is greate, but nothing compared the encyclopaedia that is /u/pflurklurk, who hangs out there.
  - iuguy 9y ago
    At first I thought it was weird that I built a shrine to his divine wisdom, but after praying to it for a few nights I realised there's nothing wrong with it at all... I just hope he doesn't ask for human sacrifices...
- michaelbrooks 9y ago
  That is definitely a great subreddit. I have also created my own site to help people in the UK save and manage their money through the use of apps and bots [0]. http://aisaver.co.uk http://aisaver.co.uk
  - iuguy 9y ago

edison85 9y ago

Luckily social Security is there and spouses that don't work receive 50% of the benifits so there's a big chunk of the 1 in 3. Add up all your yearly earnings capped at $110k today's dollars, convert to today's dollars, divide by 420. Take 90% of first 850, 33% of 850-5200, and 16% of the rest. If you've worked minimum wage for your entire life and your spouse stays at home, that's still 95% of your yearly income. If you have home equity that means no mortgage payments or even a potential reverse mortgage. If you are Middle class, can move to lower CoL too. It's really not that big of a problem if we increase age/decrease benifits for extremely high earners

Aoyagi 9y ago

But they do have a new iPhone the week it comes out, right?

kobeya 9y ago
The 1 in 3 that don't have any savings? Probably not.
- dan1234 9y ago
  Not having savings doesn't necessarily mean they don't have access to easy credit. Apple even run their iPhone Upgrade Programme[1] to get people paying monthly for their new phone (+ Applecare). [1]https://www.apple.com/uk/shop/iphone/iphone-upgrade-program https://www.apple.com/uk/shop/iphone/iphone-upgrade-program
- Sholmesy 9y ago
  I would say they probably do. I think the OP's point is that those that save often spend or debt-finance a lot of things like phones & cars. I feel slightly jaded when I see people with $1k phones who clearly can't afford it, when I'm rocking an iPhone 5. Probably not a healthy psychological state and I feel a bit like a "financial puritan" at times, but it irks me for some reason. I understand debt and having access to capital is useful in a lot of ways (expansion, plant & asset purchase etc), but I feel like being able to buy a rapidly depreciating asset on credit, at extortionate rates, that provides no additional utility to capture value (a $200 and $1k phone have similar utility) is a bit of a ridiculous scenario.
- loco5niner 9y ago
  More likely the ones without savings got the latest iPhone than the ones with savings. How do you think each group got where they are now?

thinkMOAR 9y ago

slightly joking, but still semi serious i wonder if the 1 in 3 that are obese are the same group. Spend it all, eat it all, i guess it is comparable.

scrps 9y ago
The cheapest food is among the nutritionally worst food you can buy. That is of course just one of the causes. http://seriecientifica.org/sites/default/files/povertyobesity.pdf http://seriecientifica.org/sites/default/files/povertyobesit... https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3198075/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3198075/ http://news.nationalgeographic.com/news/2014/09/140901-american-diet-obesity-poor-food-health/ http://news.nationalgeographic.com/news/2014/09/140901-ameri...
- thinkMOAR 9y ago
  Yes, which allows people to buy even more crap food. Though that doesn't answer my curiosity if financial planning and 'food' planning have some sort of relation.

StanislavPetrov 9y ago

What makes this even worse is that a lot of "savings" that people DO have put away for retirement are in the form of pensions, bonds, and other financial obligations that are underfunded and mostly illusory. You need look no farther than the state of Illinois to see just how bad the situation can get. A lot of people who think they have pensions and other payments coming from the state of Illinois (and soon, many other states, cities, and municipalities) are going to be very, very disappointed. We are drowning in debt on every level, both personal and governmental, and the FED and other central banks are running out of ways to make it seems like it isn't a big problem.

kamaal 9y ago
Pensions have long been a mess because of shady union practices. They generously award over time to retirees in the last 3-4 years of service, this often sends up their average compensation by a factor of 3 to 4. Then you also have other benefits. No pension fund can pay for something like this. So you have to take money from the tax payer to pay for these people. The day tax payers decide to call it quits, it will all collapse. Plus this still doesn't say anything about people in non-govt sectors.

NicoJuicy 9y ago

This is actually depressing, i save over 1500 € / month in Belgium... But, i need to invest more. And then again, i don't spend money on stupid things ( perhaps reason #1 why people can't save money.. I don't need the latest iphone or anything. My car is used from 2008, some people just want to buy a new one and spend 5x as much for a vehicle) Only 2 ways to get rich: Invest or save more than someone else.

aidenn0 9y ago
In the US, if you don't have health insurance, than having savings is arguably unwise. A single illness or injury that requires an ER visit can easily total $250k which would completely wipe out the savings of someone making 2x the minimum wage ($7.50/hr) and saving at a rate of 10%[1]. If you don't have the assets, then the hospital is limited in how much it can recoup from you, and they usually write it off rather than garnishing your wages. Might as well live large until that happens. 1: Also as a note, this person making double minimum wage and working 40 hours per week is making ~2150€ / month. There are vast numbers of people doing much worse than this. In fact it's fairly close to the 33rd percentile of household (not individual) income in the US (~$30k/year which works out to 2121 € / month).
- nicky0 9y ago
  As someone from a country with a state care system. This is fascinating, I never heard that perspective. Why save, when they'll just come and take it from you when you get sick! It's pretty tragic but it makes perfect sense.
- anarazel 9y ago
  Using 401ks/IRAs/etc protects you against that to some degree.
- NicoJuicy 9y ago
  I am very disgusted by this system, coming from Belgium. I think America is far below Europe's health system

sametmax 9y ago

Not just in America. I don't have any saving at all, and a lot of people around me neither, and I'm in France. Now theoretically, we all pay regularly to the state for that. But in practice, none of us believe we will see the color of it when we grow old. Last week a dear and poor friend of us said she wanted to go to school again, but that the one she wanted in cost 5000€/year and she didn't have the money. We secretly discussed to create a common money pot to pay the tuition for her. I suggested that we all put 500 € each and solve the problem. All the participants were all above 30, none of them had children, all of them were working. Half of them don't even own a car, as in my city it's a useless expense. Yet it was a rude awakening: most of the people at the table could not afford such an amount. Even once in their life for a very old friend. So we discussed a bit, and it turns out most of us don't have any saving and just live by the day. Comfortably, granted. They are not poor, they eat well, they have clothes and can afford pleasures. But if anything happen to any of us, we are screwed. We have no buffer of any kind. The cost of life is, of course, part of the cause of this. But also the fact that our lives are very instable : breakups, job changes, moving in/out, make it hard to save. It's also a cultural problem: enjoying ourself have been more important that savings. But there is also another issue: individualism. The thing is, most of us could probably find 500 € to give away. But the solidarity is not strong enough for this effort. So if friends won't get out of their way to do that, I have little hope that society will solve the retirement puzzle. People care about _their_ retirement, not about everybody's retirement, not how society will find a balance or how their neighbor is going to survive.

oskarth 9y ago
> So we discussed a bit, and it turns out most of us don't have any saving and just live by the day. Comfortably, granted. They are not poor, they eat well, they have clothes and can afford pleasures. But if anything happen to any of us, we are screwed. We have no buffer of any kind. The solution to this largely a matter of a shift in attitude. Start saving 10% of your salary right now and stop buying new clothes, eating out etc. Having a buffer is way more important. There are plenty of resources for learning how to live frugally. The benefits of having a cushion, however small, are enormous. Of course, that doesn't take away from the other points you mention. But it's by no means an unsolvable problem for the average comfortably-living individual.

headmelted 9y ago

Maybe you shouldn't save for a retirement then. Maybe no-one should. I think about this quite a bit. I'm quite frugal in my personal life (although certainly I could be more so), so I actively save for the future as a matter of course. I'm also aware of the statistics around personal debt levels and net assets in the public at large and while it's clear there's a rude awakening to be had, I'm less and less convinced over time that the "awakening" is going to be of those who have no savings in place when they need them. It seems pretty apparent to me that if the majority of people have no assets in a couple of years/decades (regardless of why that might be) and wealth inequality peaks to such extremes, then it's very likely the first political candidate to offer hard socialism (debt-driven basic income guarantee coupled with ultra taxation of higher net worth individuals) will sweep in an election, and the money problem will correct itself at an individual level. Of course this isn't a solution to the living-beyond-your-means problem, and causes it's own problems (inflate the currency with QE, capital flight of high net worth individuals to friendlier jurisdictions), but I don't think that will matter in this scenario. If the nature of people now is to be relatively short-sighted with regards to money, then what reason is there to expect that people in general are going to be any different in the future? I fully expect it will be people who are saving their income that will pay to fund those who are not in the future if the latter is the majority.

icelancer 9y ago
>I fully expect it will be people who are saving their income that will pay to fund those who are not in the future if the latter is the majority. Absolutely. I expect the government to renege on most tax-advantaged programs for retirement they instituted in the 1960s and on (Roth IRA etc). I expect Social Security to stop being paid to higher net-worth individuals or for them to be pushed into a later age where they can collect it. The crisis we face isn't one that is going to be fixed easily. Government receipt shortfalls project to be massive in a few decades.
kamaal 9y ago
>>it's very likely the first political candidate to offer hard socialism (debt-driven basic income guarantee coupled with ultra taxation of higher net worth individuals) will sweep in an election, and the money problem will correct itself at an individual level. As someone who has had experience living in that system let me tell you the moment something like that can even happen. Most rich people from whom you could take significant for your socialist schemes will leave the country. Leaving behind a very very small part of usable money for your schemes. It will be over before it begins. You have also now scared away almost every single economic prime mover individual from the economy to a point almost any body smart will only have one option for a good future- To leave the country and immigrate to else where. And there will always be some capitalist heaven which will welcome all this smart people with open arms. With this set up your common pool of money from which you wished to pay for your Basic income will shrink year after year, until bankruptcy and total investor loss stares you in the face. >>I fully expect it will be people who are saving their income that will pay to fund those who are not in the future if the latter is the majority. They won't(rightly so) and that is what will be the biggest problem in the times to come. The only way in the future is to make good decisions for the future or suffer.

oliyoung 9y ago

All of this is thankfully foreign to the average Australian, an employer in mandated to pay +9% of an employee's salary into a superannuation account that cannot be withdrawn from unless you retire (or suffer “severe financial hardship"). The average 39 year old man will retire with AU$300k, while Women retire on AU$180k. https://en.wikipedia.org/wiki/Superannuation_in_Australia https://en.wikipedia.org/wiki/Superannuation_in_Australia

apexalpha 9y ago
Same here in the Netherlands. Everyone has to pay into a pension fund (entrepeneurs and some fields excluded). In total, the Dutch pension system now has almost 2 trillion USD saved up and invested for 17 million people. This was implemented to prevent the dystopia that the article predicts: people who save money having to pay for people who didn't.
xxxxxxxx 9y ago
Unless you get divorced and lose half. Divorce twice? Now you 're in really big trouble. What if you die before retirement? You have made the mandatory payments, but got nothing for it. What if the stock market crashes the day you retire? The Australian system is not perfect - it's a compromise.
- oliyoung 9y ago
  I've been divorced, it's not included, if I die, it's my estate, and it survived 2007's crash

maruhan2 9y ago

ok so if we assume that the average life expectancy is 90 years old with equal distribution. 1/3 of Americans are 30 years and younger. Most people saving starting then. Looking at it that way, 1/3 seems like a high number.

askvictor 9y ago

Clickbait-y title, or at the very least a sensationalist and simplistic interpretation of the data. That 1 in 3 is mostly young people; they have neither the ability to save (due to low wages, student debt, being priced out of the market) nor the incentive (retirement is too far away, perhaps also concerns the stock market is not a safe place). Probably not much trust in the system overall either, given how the older folks seem to keep pulling the levers to maintain things for their own benefit.

mschuster91 9y ago

Doesn't surprise me, and the problem exists also in countries like Germany. Common point seems to be that "millennials" (and low-earning people) in cities suffer from extremely high rents which take away their ability to save anything, especially for downpayments on an owned flat/house, and those on the countryside have low costs of living but often enough nothing more than Social Security to pay the bills. Trump didn't get elected in the flyover states without reason, and the AfD in Germany has their stronghold in the poorer parts of Germany. In addition, in the US you can go bankrupt from being injured. Your medical system is... unimaginably bad from German POV.

chank 9y ago

It's way worse than that. Less than half of respondents even have more than 10K saved. It's likely that most still won't have enough at retirement age to do so.

throwaway2016a 9y ago

To relate this to Hacker News even more... We are constantly told that we should risk our financial freedom to start a company. Go without pay take massive credit card debt to fund our company, etc. and we glorify people who have done that successfully and write off people who failed. Or worse, told to go without pay / deferred pay / less pay to work at someone else's company with less than 5% equity. Often less than 0.5% When someone tells me they felt a $4000+ booth at a conference was so critical to their company that they maxed out their personal cards I cringe. What this survey doesn't seem to have is how many of those people have negative savings (aka, debt). Also, it is unclear to me if homeowner equity is in the mix. Where I am the average house is $250k. In my neighborhood that is $400k. If I pay my mortgage diligently for the next 25 years and do basic upkeep (new roof, new furnace, etc) I will be in the $300k+ bracket too. I know for a huge number of people home ownership isn't an option but I'd point out it could very well explain why a large portion of people sit at $300k+.

ge96 9y ago

I know everybody gets old but this idea of "saving for retirement" rather be limber and free than old and free. I realize it would also suck flipping burgers at 70. So I don't really have an argument, chasing the dream, maybe not see the age of retirement.

scarface74 9y ago

I come from a middle class background and I haven't personally seen what retirement based on your own savings looks like. My grandparents lived off of social security, my parents are living off of a combination of pensions, social security, my mom sort of working as a consultant when she gets bored and generous company stock benefits from when my dad was working as are most of my relatives of that generation. Because of a lot of dumb decisions made earlier in life, my retirement savings are relatively meager. But on the other hand, I don't dream of the day that I can retire. My job as a software developer is not physically demanding and my job was my hobby for 10 years before I started working professionally. In 20 years of working, I've never hated my career. I imagine retirement for me to be doing contracting/consulting/ teaching part of the year instead of working for a full year. I wouldn't need to retire to enjoy my hobbies -- I enjoy my hobbies everyday and get paid for it. My only other hobby is exercise and I don't need to retire to enjoy that.

codingmyway 9y ago

Bring back 'long life' insurance, the one where the money of those 'lucky' enough to not run out of money before they die goes to the survivors who need it. It became taboo and phased out or banned because of obvious conflicts of interest and incentives but if managed well to not enable those incentives it could make a come back.

micheljansen 9y ago

A few months ago, someone gave me a simple piece of financial planning advice that completely changed the way I think about retirement. Most financial planning advice focuses on regularly putting money away for some returns. Returns are important, but they are only part of the story. Much more important is that putting a portion of your income away every month creates habits that stick by making you get used to having less money available, while at the same time ensuring that in the future, you will have more available. It cuts both ways! Think of it like this: say you have an income of 5.000 per month. You don't put away anything away and when you retire, you receive a state pension of 1.000, so your income drops by a staggering 3.000 per month. Or you could pretend that your income is only 4.000 per month and put away the rest. You live a bit more frugally, but now when you retire, your pension is 3.000 per month, so the difference is much smaller. Of course there are also other ways besides saving for pension that address the amount of money you need in the future, rather than increasing the money that you have available from a pension. Buying a house and paying it off is a good example. The principle is the same: reduce the gap between your income/expenses now and your future income/expenses. Disclaimer: I am not a financial advisor, so please do not base major life decisions on this.

cbanek 9y ago

I also imagine that some of the people with $0 saved toward retirement also have it even worse than that, and may have a negative net worth, especially after the housing crisis. Things like credit card debt and payday loans will bleed you dry before you can even think about retirement as well.