23 ms·

Why work has failed us: Because no one can afford to retire anymore

117 points by Impossible 8y ago

grecy 8y ago
In Australia the official retirement age when you can start to receive a pension (or access your own retirement money without penalties) was recently moved up to 67. The new Prime Minister just announced he won't raise it to 70, which was on the table. I think it's clear that's just a sign of things to come.
- boyter 8y ago
  I’m fully expecting that to rise to 75 before I am able to retire. Feels like everything I get old enough to enjoy gets pushed out every time I get there. What annoys me is that those making the decisions claim it’s for the betterment of the country which is fine but are totally unaffected by it.
  - grecy 8y ago
    When I was born in Australia in 1982 my life expectancy was 72. I realize it doesn't work like that.. but I feel a lot like the big old Clydesdale horse in Animal Farm, working until you drop.
- mikestew 8y ago
  or access your own retirement money without penalties My own?! Holy crap, and I'm bitchin' here in the U. S. because I can't touch the 401K until 59.5.
  - dawhizkid 8y ago
    you can, you just pay a 10% penalty. If you really need it, it's not the end of the world. A decent employer match would probably subsidize the penalty for most people.
- yardie 8y ago
  I find it completely ridiculous and totally regressive that you have to live in Australia to receive your state pension. It’s like a final FU to the workers who have spent all their life contributing to it.
  - 1stranger 8y ago
    Meaning you can't retire abroad and receive your pension? How many months out of year do you have to reside in Australia?
    - yardie 8y ago
      If you’re out longer than a few months they cut your payout severely. Some friends sailing with us had to fly back every few months and check in. So any pensioners planning to retire to SE Asia because of the lower cost of living are screwed.
      - Johnythree 8y ago
        This is incorrect. If you are overseas more that a few months, some of the extra's are cut, but not the basic amount. Lots of Australian retirees live in Asia. It's possible your friends had not lived in Australia long enough to fully qualify.
  - ACow_Adonis 8y ago
    Aside from the economic physical reality (that is to say all pensions need to be financed from current stock of capital/labor), in Australia the government pension is generally funded through general revenue as a (kind of) means tested general social safety net. It is not the same system as social security in other countries. You don't notionally "pay into" your account with variations on how much you will then be able to draw out. We also have other employee pensions (though far fewer these days), and now the superannuation system (roughly 9.5% of full time earnings go into a compulsory tax effective defined contribution investment scheme)
- twmb 8y ago
  What is lost in the discussion of retirement ages being bumped is that life expectancy has grown by two decades since the retirement age was introduced in the USA in 1935 [0][1][2]. The retirement age was originally past the point where most people died. [0]: https://www.theatlantic.com/business/archive/2014/10/how-retirement-was-invented/381802/ https://www.theatlantic.com/business/archive/2014/10/how-ret... [1]: http://www.demog.berkeley.edu/~andrew/1918/figure2.html http://www.demog.berkeley.edu/~andrew/1918/figure2.html [2]: https://fred.stlouisfed.org/series/SPDYNLE00INUSA https://fred.stlouisfed.org/series/SPDYNLE00INUSA I don't personally understand the expectation that average people be economically sustainable while jobless for two decades+. It makes sense to me to slowly increase the retirement age.
  - zdragnar 8y ago
    I know several people (i.e. 3 of my grandparents) who lived jobless that long or longer. At least half of their retirement years, they were physically and mentally incapable of holding their previous jobs, or even the most menial unskilled jobs. One had half his body paralyzed by a stroke, and you couldn't really tell how much understanding he had of the world around him when he was alert. The other two had forms of alzheimer's that, eventually, left them occasionally speaking czech instead of english (they moved to the USA as children) and not recognizing their own children. The first sign they needed full-time care was when we caught one of them overdosing on ibuprofin- get a headache, take some, forget, take more, repeat. That, and leaving the gas stove on for hours. I fully agree that the retirement age should start increasing, but there's definitely a point of diminishing returns. We may be living longer as a whole, but our physiology hasn't caught up enough to trust that those extra years can be spent making economically valuable contributions to society.
    - twmb 8y ago
      Agreed, I think that in health cases, there can't be an expectation for people to work. In a better world, our society as a whole would have better end of life support for when people are of ill health. But, not everybody's mind slips. I'm hopeful that we will have better preventative measures for Alzheimer's and other mind or body crippling diseases soon. I do recall seeing some good news on the Alzheimer's front in the last year. My first article mentions what you said: past a certain point, it may be more detrimental for some to work.
dclowd9901 8y ago
It seems to me work gave us exactly what we wanted. My parents both swear to work until they die. They seem to have conflated work with a sense of personal value. In doing so, they agreed to give up the kinds of niceties that would allow them to retire early, including pensions, 401k's and livable wages. All to earn just enough to pay the monthly financing bills. Now it's up to subsequent generations to get the calculus back on track.
- acchow 8y ago
  People used to retire by having a few kids who would take care of them. I prefer shrinking our population, especially as developing countries are rapidly growing.
  - somebodythere 8y ago
    That won't really help the pension issue–pensions are held up by the expectation of a large working-age population to support current retirees. FWIW, I think people tend to overstate the risks of overpopulation; the Earth could support 10x the current population with a comfortable standard of living, if space and energy usage per person was reduced (which could be helped along by increased urbanization, among other things).
    - rabidrat 8y ago
      Human biomass displaces other species. It is no coincidence that the human population has doubled sine 1970...while the number of wild (non-domesticated) animals has halved. So sure, we might be able to support 80 billion (!!) humans...but with a correspondingly devastating loss of biodiversity.
    - NTDF9 8y ago
      No. We can tax corporate profits. More and more profits come from automation and outsourcing. Just tax it.
  - tylerapplebaum 8y ago
    How will this work in a consumption-driven economy?
cryoshon 8y ago
no millennials expect to see a dime of social security income (whether or not this is justified is another question), nor do they have any plans to retire because the prospect of having enough money to do so is simply unrealistic for them. i am not the only one that has put their income, expenses, and savings rate into one of those "financial independence" calculators (http://mustachecalc.com/#/calcs/time-to-fi http://mustachecalc.com/#/calcs/time-to-fi). i found that my predicted retirement age was in my 130s if i was willing to settle for a very modest retirement with a lower standard of living than i currently have. that's right: i'm roughly 100 years from having enough money to retire, even if i save perfectly diligently every single month from now until then, which is extremely unlikely. it doesn't even make sense to plan for because i won't live that long; the calculation doesn't include anything along the lines of medical debt which is sure to accrue in old age if not sooner. the calculator may or may not be accurate to the decade, but it's accurate to the half-century in any event. if it's inaccurate by a half century in my favor, that still puts me as retiring in my late 80s -- hardly much more to look forward to. i am always harping on the same thing: 6.5% interest rate student loans, rising rent, rising living costs, lower income, rising healthcare costs, shrinking benefits, and no social safety net to speak of have totally devastated the economic prospects of a generation. the first plans to be thrown out the window during economic insecurity are the ones which are farthest away timewise. most people haven't had a chance to even plan that far in the first place. by the time they have accumulated enough resources to start saving some each month, they may be forced to take care of their then-elderly parents, or, alternatively, their children -- which most people can't afford anyway. so much for building up savings. to be clear, it isn't "work" that has failed us. it's capitalism.
- jessaustin 8y ago
  It's kind of awesome that the calculator doesn't cut off at e.g. 110.
- lsh 8y ago
  Speak for yourself, friend. You weren't born entitled to anything. I'm in better circumstances than you for my generation but it's unlikely I'll live to retirement age (disease). Grousing about 'capitalism' or the 'corporation' (or The Man, man) isn't going to change a single thing. I envy your clear vision of who to blame and where the problem lies but unless you get into a career in politics you're not changing anything. Easier to become an astronaut.
Mc_Big_G 8y ago
I’ve been so poor my calculated net per month was minus $1000 for about 16 years while supporting a family. I worked and saved my way out of it and know that the inability to save for the vast majority of people is just bullshit. Its an inability to sacrifice and “suffer” in a consumerist society. They won’t make their own coffee or cook their own food or give up cable or Netflix or their cell phone or fix their own plumbing or grow their own food, spend their free time learning and studying, etc ad naseum. I’ll be the first to argue the root of the problem is the rampant abuse of workers rights and wages by our capitalist overlords but the reality is that, baring some medical catostrophy in the USA, it can be done with hard work and sacrifice. Most aren’t willing to do it and though I agree they shouldn’t have to, reality states otherwise.
- Mc_Big_G 8y ago
  Downvotes are cool but counter-arguments are more convincing.
  - the_gastropod 8y ago
    People read these kinds of comments as "pull yourself up by your bootstraps!". There are impoverished people who probably cannot do this. But if you're middle class, and you're healthy, you almost certainly have 0 excuse to not be able to retire.
  - trexpersecond 8y ago
    You sound like my sister. By the way it was not me who downvoted you. I didn't upvote you either though, lol. I grew up around the tone of superiority that you are, knowlingly or not, expressing. It really just sounds like you blame the poor for their own poverty. That's kind of niave. For one, the economic conditions in our country have changed. So managing to save now is a little harder than it was in the past. Another thing is you blame the poor for being too lazy to do this long list of things but if your hatred were actually sincere you would have had enough introspection to realize that growing their own food is not something they are capable of doing. etc. The class gap is widening and it's not pretty.
  - 8y ago
watchdogtimer 8y ago
It's interesting that while people claim they can't afford to retire, more than half of the population begins collecting Social Security in the US at age 62 (https://www.marketwatch.com/story/why-people-who-claim-social-security-early-often-live-to-regret-it-2018-09-04 https://www.marketwatch.com/story/why-people-who-claim-socia...) when those on disability are included.
- Crontab 8y ago
  I know more than a few people who retired at 62 because their bodies gave out, not just because they could afford to.
- poulsbohemian 8y ago
  I have no facts at my disposal, but I'm left to ponder how many of those early collectors do so because they are under-employed, unable to find work, suffer disabilities, perhaps are no longer physically able to do the work for which they were trained, or other causes such that it is a practical decision on their part, recognizing that they have no other form of stable income.
  - quxbar 8y ago
    In poor, rural counties? It's the entire social safety net: https://www.washingtonpost.com/sf/local/2017/06/02/generations-disabled/?noredirect=on&utm_term=.79fb0c15d4a1 https://www.washingtonpost.com/sf/local/2017/06/02/generatio...
programminggeek 8y ago
Plenty of people can afford to retire, but they spend money like fools and then wonder why they don't have any. Read The Millionaire Next Door or listen to Dave Ramsey and you'll quickly learn that you can save plenty on a low income or go broke on a high income. Savings, income, and wealth building are in fact three distinct and also interrelated things.
- maerF0x0 8y ago
  You're getting downvoted because it's a message people dont want to hear. We have advanced our standard of living, but haven't kept up our standard of responsibility. Our parents/grandparents didnt have videogame consoles, laptops, phones, coffee besides cheap store drip, meals out more than 1x per month, tattoos, anything from a spa etc. All of those were likely dumped into home equity (owning your home was the predecessor to diversified assets in retirement savings). Another thing that hasn't helped is the government has been printing money like crazy, playing a mind game that means even though you make 2x when you started your career, you might actually be really earning less. For example, my earnings have gone up about 6x across my career, but my rent has gone up 10x...
  - ryandrake 8y ago
    > Our parents/grandparents didnt have videogame consoles, laptops, phones, coffee besides cheap store drip, meals out more than 1x per month, tattoos, anything from a spa etc. They also didn’t have six figure student loan debt, and their housing costs were not 50-75% of their salary. Video games and cell phones are small potatoes—-not what is keeping the current generation financially insecure, but they are visible “luxuries” that Baby Boomers can point to and try to shame people over.
    - randomdata 8y ago
      > and their housing costs were not 50-75% of their salary But our grandparents did predominately live in rural areas. You can still live quite affordably in rural areas now. Most people just aren't happy with that lifestyle anymore. Additionally, the majority of our grandparents didn't own their homes. If the majority of us were okay with renting like our grandparents were, you wouldn't see the irrational behaviour of buying at any cost that pushes the market beyond what is sensible (i.e. paying 75% of salary for no reason).
the_gastropod 8y ago
C'mooon > The IRA won’t make anyone rich. A calculator on the site estimates that if you’re 22 years old and making $14 an hour–saving around $120 a month–you could end up with around $230,000 by the time you’re 65 1. $14 / hour? The median household (yes, I know, household, but wait) income is the highest it's been since at least 1985 [1] at $59k/year. So $14 is definitely a bit lower than "normal". 2. Saving $120/month on that salary is saving just 5%! Nobody is suggesting saving 5% is appropriate. 10% is the bare minimum anyone recommends. Doing that, an IRA at 65 would be worth > $763,000, enough to spend $30k each year for the rest of their lives. Standard statement I feel like I always need to make: this is in no way a defense of our economic system. We absolutely need to raise taxes on the highest earners. We probably need a wealth tax as well. But we middle classers need to cool it with the defeatist attitudes. The poor have it hard. We, for the most part, do not. We spend too much and save too little. If you've got a car loan, eat anything but rice and beans, drink anything but water, have cable tv, a > $30/month cell phone bill, and complain about being broke, you've got some very obvious improvements you can make to get out of that dilemma. [1] https://en.wikipedia.org/wiki/Household_income_in_the_United_States https://en.wikipedia.org/wiki/Household_income_in_the_United...
- grecy 8y ago
  > 1. $14 / hour? The median household (yes, I know, household, but wait) income is the highest it's been since at least 1985 [1] at $59k/year. So $14 is definitely a bit lower than "normal". If we take that household income to mean it's two earners, they're each earning $14.75/hr ... (assuming a standard 2000 work year), which is 40 hrs/wk for 50 weeks
  - the_gastropod 8y ago
    Some households have two earners. Most do not. The average is 1.3 earners per household. https://www.bls.gov/opub/btn/volume-6/use-with-caution-interpreting-consumer-expenditure-income-group-data.htm https://www.bls.gov/opub/btn/volume-6/use-with-caution-inter...
    - mdorazio 8y ago
russellbeattie 8y ago
My Vanguard 401k home page has this helpful notice in the dead center of the page: "We think you need $7,840 more per month." Sure... That makes two of us. I guess it's extrapolating my current salary out and how much I'll need to save to live with the same income after I retire. That's not going to happen. Here's a helpful article to see how far behind you are in your retirement: https://smartasset.com/retirement/average-401k-balance-by-age https://smartasset.com/retirement/average-401k-balance-by-ag... I'm 46, so I should have about 3x my annual salary in savings (I don't) and be putting in 8% of my salary into a 401k. I'm going to go back to not thinking about this now like I usually do, as there's little I can do about it.
- jdashg 8y ago
  You can either see this as "I can't afford to retire" or as "I've let my spending get out of control, and need to course-correct". If you ever hope to retire, you must reign in your lifestyle creep versus your real post-savings available income. If you're not saving enough, you are living above your means. This is fixable, but it will hurt. That said, most retirement calculators overestimate your retirement expenses. Estimate what your expenses will be and plan for that. (And treat interest as inflation-adjusted so you don't end up down that rabbit-hole)
- asdfasgasdgasdg 8y ago
  If you'd like someone to look at your budget to see if there's some fat you can cut, head on over to forum.mrmoneymustache.com and submit something to the case study forum. People are often surprised by how much they can save without significantly impacting their well-being. (BTW that calculator is awful because it assumes you need to spend a specified fraction of your income during retirement. That's not how this works at all! By that standard, almost anyone is going to be behind the curve.)
- bootsz 8y ago
  Investment companies make money off of your investments, so naturally they have every incentive to convince you to invest as much as possible. That doesn’t discount the reality that most people don’t invest nearly enough, but still the “recommended” contributions they give are definitely over-estimated in many cases.
sfohohoho 8y ago
No one? Buying a larger house than you can afford tomorrow sucks away from real investments. The honest truth on home ownership would help everyone but real estate agents.
bdcravens 8y ago
Work hasn't failed us. Consumerism has. Stop buying brands. Stop buying Starbucks. Stop eating out. Stop buying the newest phone. Don't buy a fancy Macbook if you don't have a use case for one. Stop buying too much car. Stop trading resources for lifestyle. A 25 year old who only puts $300 into a reasonable retirement fund each month will have over $1M at retirement age.
- meguest 8y ago
  I'm mid 20s and am putting just over $1000 a month into retirement, split between a private and workplace pension. I intend to do this for as long as possible! Disclaimer: I don't live or work in the U.S
- jlelonm 8y ago
  What's a reasonable retirement fund to you? (asking out of ignorance, not sarcasm or anything)
  - bdcravens 8y ago
    Varies - how much will you spend in retirement and what do you expect for a return? You need to factor in inflation, since $1 today buys more today than it will when you retire. https://www.nerdwallet.com/investing/retirement-calculator https://www.nerdwallet.com/investing/retirement-calculator is a good calculator for this. (though I'm not a fan of its spending assumptions - if in retirement you have paid for houses and cars you definitely will be spending far less than today)
skookumchuck 8y ago
In other news, the NYT writes about how to retire a millionaire in your 30's: https://www.nytimes.com/2018/09/01/style/fire-financial-independence-retire-early.html https://www.nytimes.com/2018/09/01/style/fire-financial-inde...
DoreenMichele 8y ago
If you turn 65 in 2040 or 2050 or 2060 Some historical perspective: My understanding is that when Social Security was created, the average life expectancy was 67. So offering it for people age 65 was intended as providing for people in extreme old age who had probably worked physically hard their entire lives and were pretty beat up. I'm not saying we don't have genuine problems here, but this article is bellyaching about, basically, a golden era when the world was relatively briefly unusually comfortable and acting like that was the norm throughout all of history. The reality is that money per se only became common place something like 300 years or so ago. So the very concept of retirement and saving for retirement is relatively new. This makes it a little hard for me to take this article seriously, so I confess to not reading it in full. Some of the things it gets right: Pensions are going out of style precisely because people are living longer, so pensions wind up being financially unsustainable. Given that people are living a whole lot longer and are generally in better health at 70 these days than 65 used to be, it isn't really some huge hand-wringing drama that older Americans need to continue working. Instead, it is evidence of how successful we have been in some sense. This is a good problem to have. We need to make adjustments to the system, but people living longer and this requiring cultural adjustments isn't some giant tragedy. Retirement for, say, two decades or whatever is hardly some historical and long standing human norm. It's really rather out of touch with reality to act like it ever was.
- tkjef 8y ago
  Thanks for the perspective. It does help to not feel like we're missing out on something due to us.
- fomojola 8y ago
  This is not emphasized enough: prior to the last 100 years, the concept of retirement as currently visualized simply did not exist. You had kids, and the kids took care of you in your old age (or you just had a terrible old age). A very small number of people had the resource base to survive growing old gracefully: Social Security was an attempt to extend that to all on a consistent basis. That's not to say some form of it can't be made to work, but as much as we may love the core concept of retirement we may need to accept that it isn't broadly economically viable without a meaningful, direct index against increasing life expectancy (with the usual caveats for infirmity, disease, etc). It is (in my opinion) a well meaning, long term social experiment that might be coming to an end. I am quite curious to see what (and how) we get to the other side of that.
netfire 8y ago
Per https://www.valuepenguin.com/average-credit-card-debt#income; https://www.valuepenguin.com/average-credit-card-debt#income... the lower income earners in the US have almost 10% of their income in credit card debt. Per https://www.pewtrusts.org/en/research-and-analysis/fact-sheets/2016/01/payday-loan-facts-and-the-cfpbs-impact https://www.pewtrusts.org/en/research-and-analysis/fact-shee... 12 million people spend $9 billion in payday loan fees and people spend billions of dollars each year playing the lottery. Poor financial decisions and money management is definitely playing a role in this as well. We really need to include suggestions for adding programs and laws for encouraging saving, removing predatory lending, and incentivizing responsible spending in articles like these. There is too much focus on consumer spending and not enough on household stability and having money in the bank for emergencies.
- mmirate 8y ago
  > payday loan fees ... playing the lottery ... poor financial decisions and money management ... predatory lending ... consumer spending Those are all basically taxes on idiocy and innumeracy. Idiocy and innumeracy are arguably vices whose prevalence in society should be counteracted. In the absence of the abject and horrifying immorality/aggression/violence of state eugenics, isn't taxation the next most effective thing?
  - netfire 8y ago
    Several states already ban payday loans and some don’t allow lotteries (let alone state sponsored lotteries that are used to fund things like education). Personally, I think setting an effective interest rate cap (including loan fees) at around 15-20% a year would be very effective at preventing the kind of lending that can lead someone to multiple years of high-interest debt repayment or eventual bankruptcy. More education in high school about how to manage your finances wisely could also prove beneficial.
    - mmirate 8y ago
      > beneficial. For certain people, in the short term, until their inherent stupidity allows them to commit further mistakes that actually impact others...
mixmastamyk 8y ago
The war on the middle-class continues: - Nimbys—scarce expensive housing - Higher-education costs skyrocketing. - Negative wage growth for positions without degree requirements. - Article mentions no more pensions. Article subject not entirely unexpected. :-/
codeddesign 8y ago
Ultimately it has nothing to do with being able to afford but rather people are increasingly bad with their finances. The high majority of America today is in debt at will and much rather use a card over hard cash. Savings? Ha..nope. It’s all the rage to have a nicer house, car, possessions than to be financially safe. It’s not work that has failed people, it’s the parents that failed to teach their children how to conduct themselves in a fiscally responsible way.
bob_theslob646 8y ago
The better question is, how many Americans are there who cannot afford to save for retirement due to student debt?

117 points by Impossible 8y ago

In Australia the official retirement age when you can start to receive a pension (or access your own retirement money without penalties) was recently moved up to 67. The new Prime Minister just announced he won't raise it to 70, which was on the table. I think it's clear that's just a sign of things to come.

boyter 8y ago
I’m fully expecting that to rise to 75 before I am able to retire. Feels like everything I get old enough to enjoy gets pushed out every time I get there. What annoys me is that those making the decisions claim it’s for the betterment of the country which is fine but are totally unaffected by it.
- grecy 8y ago
  When I was born in Australia in 1982 my life expectancy was 72. I realize it doesn't work like that.. but I feel a lot like the big old Clydesdale horse in Animal Farm, working until you drop.
mikestew 8y ago
or access your own retirement money without penalties My own?! Holy crap, and I'm bitchin' here in the U. S. because I can't touch the 401K until 59.5.
- dawhizkid 8y ago
  you can, you just pay a 10% penalty. If you really need it, it's not the end of the world. A decent employer match would probably subsidize the penalty for most people.
yardie 8y ago
I find it completely ridiculous and totally regressive that you have to live in Australia to receive your state pension. It’s like a final FU to the workers who have spent all their life contributing to it.
- 1stranger 8y ago
  Meaning you can't retire abroad and receive your pension? How many months out of year do you have to reside in Australia?
  - yardie 8y ago
    If you’re out longer than a few months they cut your payout severely. Some friends sailing with us had to fly back every few months and check in. So any pensioners planning to retire to SE Asia because of the lower cost of living are screwed.
    - Johnythree 8y ago
      This is incorrect. If you are overseas more that a few months, some of the extra's are cut, but not the basic amount. Lots of Australian retirees live in Asia. It's possible your friends had not lived in Australia long enough to fully qualify.
- ACow_Adonis 8y ago
  Aside from the economic physical reality (that is to say all pensions need to be financed from current stock of capital/labor), in Australia the government pension is generally funded through general revenue as a (kind of) means tested general social safety net. It is not the same system as social security in other countries. You don't notionally "pay into" your account with variations on how much you will then be able to draw out. We also have other employee pensions (though far fewer these days), and now the superannuation system (roughly 9.5% of full time earnings go into a compulsory tax effective defined contribution investment scheme)
twmb 8y ago
What is lost in the discussion of retirement ages being bumped is that life expectancy has grown by two decades since the retirement age was introduced in the USA in 1935 [0][1][2]. The retirement age was originally past the point where most people died. [0]: https://www.theatlantic.com/business/archive/2014/10/how-retirement-was-invented/381802/ https://www.theatlantic.com/business/archive/2014/10/how-ret... [1]: http://www.demog.berkeley.edu/~andrew/1918/figure2.html http://www.demog.berkeley.edu/~andrew/1918/figure2.html [2]: https://fred.stlouisfed.org/series/SPDYNLE00INUSA https://fred.stlouisfed.org/series/SPDYNLE00INUSA I don't personally understand the expectation that average people be economically sustainable while jobless for two decades+. It makes sense to me to slowly increase the retirement age.
- zdragnar 8y ago
  I know several people (i.e. 3 of my grandparents) who lived jobless that long or longer. At least half of their retirement years, they were physically and mentally incapable of holding their previous jobs, or even the most menial unskilled jobs. One had half his body paralyzed by a stroke, and you couldn't really tell how much understanding he had of the world around him when he was alert. The other two had forms of alzheimer's that, eventually, left them occasionally speaking czech instead of english (they moved to the USA as children) and not recognizing their own children. The first sign they needed full-time care was when we caught one of them overdosing on ibuprofin- get a headache, take some, forget, take more, repeat. That, and leaving the gas stove on for hours. I fully agree that the retirement age should start increasing, but there's definitely a point of diminishing returns. We may be living longer as a whole, but our physiology hasn't caught up enough to trust that those extra years can be spent making economically valuable contributions to society.
  - twmb 8y ago
    Agreed, I think that in health cases, there can't be an expectation for people to work. In a better world, our society as a whole would have better end of life support for when people are of ill health. But, not everybody's mind slips. I'm hopeful that we will have better preventative measures for Alzheimer's and other mind or body crippling diseases soon. I do recall seeing some good news on the Alzheimer's front in the last year. My first article mentions what you said: past a certain point, it may be more detrimental for some to work.

dclowd9901 8y ago

It seems to me work gave us exactly what we wanted. My parents both swear to work until they die. They seem to have conflated work with a sense of personal value. In doing so, they agreed to give up the kinds of niceties that would allow them to retire early, including pensions, 401k's and livable wages. All to earn just enough to pay the monthly financing bills. Now it's up to subsequent generations to get the calculus back on track.

acchow 8y ago
People used to retire by having a few kids who would take care of them. I prefer shrinking our population, especially as developing countries are rapidly growing.
- somebodythere 8y ago
  That won't really help the pension issue–pensions are held up by the expectation of a large working-age population to support current retirees. FWIW, I think people tend to overstate the risks of overpopulation; the Earth could support 10x the current population with a comfortable standard of living, if space and energy usage per person was reduced (which could be helped along by increased urbanization, among other things).
  - rabidrat 8y ago
    Human biomass displaces other species. It is no coincidence that the human population has doubled sine 1970...while the number of wild (non-domesticated) animals has halved. So sure, we might be able to support 80 billion (!!) humans...but with a correspondingly devastating loss of biodiversity.
  - NTDF9 8y ago
    No. We can tax corporate profits. More and more profits come from automation and outsourcing. Just tax it.
- tylerapplebaum 8y ago
  How will this work in a consumption-driven economy?

cryoshon 8y ago

no millennials expect to see a dime of social security income (whether or not this is justified is another question), nor do they have any plans to retire because the prospect of having enough money to do so is simply unrealistic for them. i am not the only one that has put their income, expenses, and savings rate into one of those "financial independence" calculators (http://mustachecalc.com/#/calcs/time-to-fi http://mustachecalc.com/#/calcs/time-to-fi). i found that my predicted retirement age was in my 130s if i was willing to settle for a very modest retirement with a lower standard of living than i currently have. that's right: i'm roughly 100 years from having enough money to retire, even if i save perfectly diligently every single month from now until then, which is extremely unlikely. it doesn't even make sense to plan for because i won't live that long; the calculation doesn't include anything along the lines of medical debt which is sure to accrue in old age if not sooner. the calculator may or may not be accurate to the decade, but it's accurate to the half-century in any event. if it's inaccurate by a half century in my favor, that still puts me as retiring in my late 80s -- hardly much more to look forward to. i am always harping on the same thing: 6.5% interest rate student loans, rising rent, rising living costs, lower income, rising healthcare costs, shrinking benefits, and no social safety net to speak of have totally devastated the economic prospects of a generation. the first plans to be thrown out the window during economic insecurity are the ones which are farthest away timewise. most people haven't had a chance to even plan that far in the first place. by the time they have accumulated enough resources to start saving some each month, they may be forced to take care of their then-elderly parents, or, alternatively, their children -- which most people can't afford anyway. so much for building up savings. to be clear, it isn't "work" that has failed us. it's capitalism.

jessaustin 8y ago
It's kind of awesome that the calculator doesn't cut off at e.g. 110.
lsh 8y ago
Speak for yourself, friend. You weren't born entitled to anything. I'm in better circumstances than you for my generation but it's unlikely I'll live to retirement age (disease). Grousing about 'capitalism' or the 'corporation' (or The Man, man) isn't going to change a single thing. I envy your clear vision of who to blame and where the problem lies but unless you get into a career in politics you're not changing anything. Easier to become an astronaut.

Mc_Big_G 8y ago

I’ve been so poor my calculated net per month was minus $1000 for about 16 years while supporting a family. I worked and saved my way out of it and know that the inability to save for the vast majority of people is just bullshit. Its an inability to sacrifice and “suffer” in a consumerist society. They won’t make their own coffee or cook their own food or give up cable or Netflix or their cell phone or fix their own plumbing or grow their own food, spend their free time learning and studying, etc ad naseum. I’ll be the first to argue the root of the problem is the rampant abuse of workers rights and wages by our capitalist overlords but the reality is that, baring some medical catostrophy in the USA, it can be done with hard work and sacrifice. Most aren’t willing to do it and though I agree they shouldn’t have to, reality states otherwise.

Mc_Big_G 8y ago
Downvotes are cool but counter-arguments are more convincing.
- the_gastropod 8y ago
  People read these kinds of comments as "pull yourself up by your bootstraps!". There are impoverished people who probably cannot do this. But if you're middle class, and you're healthy, you almost certainly have 0 excuse to not be able to retire.
- trexpersecond 8y ago
  You sound like my sister. By the way it was not me who downvoted you. I didn't upvote you either though, lol. I grew up around the tone of superiority that you are, knowlingly or not, expressing. It really just sounds like you blame the poor for their own poverty. That's kind of niave. For one, the economic conditions in our country have changed. So managing to save now is a little harder than it was in the past. Another thing is you blame the poor for being too lazy to do this long list of things but if your hatred were actually sincere you would have had enough introspection to realize that growing their own food is not something they are capable of doing. etc. The class gap is widening and it's not pretty.
- 8y ago

watchdogtimer 8y ago

It's interesting that while people claim they can't afford to retire, more than half of the population begins collecting Social Security in the US at age 62 (https://www.marketwatch.com/story/why-people-who-claim-social-security-early-often-live-to-regret-it-2018-09-04 https://www.marketwatch.com/story/why-people-who-claim-socia...) when those on disability are included.

Crontab 8y ago
I know more than a few people who retired at 62 because their bodies gave out, not just because they could afford to.
poulsbohemian 8y ago
I have no facts at my disposal, but I'm left to ponder how many of those early collectors do so because they are under-employed, unable to find work, suffer disabilities, perhaps are no longer physically able to do the work for which they were trained, or other causes such that it is a practical decision on their part, recognizing that they have no other form of stable income.
- quxbar 8y ago
  In poor, rural counties? It's the entire social safety net: https://www.washingtonpost.com/sf/local/2017/06/02/generations-disabled/?noredirect=on&utm_term=.79fb0c15d4a1 https://www.washingtonpost.com/sf/local/2017/06/02/generatio...

programminggeek 8y ago

Plenty of people can afford to retire, but they spend money like fools and then wonder why they don't have any. Read The Millionaire Next Door or listen to Dave Ramsey and you'll quickly learn that you can save plenty on a low income or go broke on a high income. Savings, income, and wealth building are in fact three distinct and also interrelated things.

maerF0x0 8y ago
You're getting downvoted because it's a message people dont want to hear. We have advanced our standard of living, but haven't kept up our standard of responsibility. Our parents/grandparents didnt have videogame consoles, laptops, phones, coffee besides cheap store drip, meals out more than 1x per month, tattoos, anything from a spa etc. All of those were likely dumped into home equity (owning your home was the predecessor to diversified assets in retirement savings). Another thing that hasn't helped is the government has been printing money like crazy, playing a mind game that means even though you make 2x when you started your career, you might actually be really earning less. For example, my earnings have gone up about 6x across my career, but my rent has gone up 10x...
- ryandrake 8y ago
  > Our parents/grandparents didnt have videogame consoles, laptops, phones, coffee besides cheap store drip, meals out more than 1x per month, tattoos, anything from a spa etc. They also didn’t have six figure student loan debt, and their housing costs were not 50-75% of their salary. Video games and cell phones are small potatoes—-not what is keeping the current generation financially insecure, but they are visible “luxuries” that Baby Boomers can point to and try to shame people over.
  - randomdata 8y ago
    > and their housing costs were not 50-75% of their salary But our grandparents did predominately live in rural areas. You can still live quite affordably in rural areas now. Most people just aren't happy with that lifestyle anymore. Additionally, the majority of our grandparents didn't own their homes. If the majority of us were okay with renting like our grandparents were, you wouldn't see the irrational behaviour of buying at any cost that pushes the market beyond what is sensible (i.e. paying 75% of salary for no reason).

the_gastropod 8y ago

C'mooon > The IRA won’t make anyone rich. A calculator on the site estimates that if you’re 22 years old and making $14 an hour–saving around $120 a month–you could end up with around $230,000 by the time you’re 65 1. $14 / hour? The median household (yes, I know, household, but wait) income is the highest it's been since at least 1985 [1] at $59k/year. So $14 is definitely a bit lower than "normal". 2. Saving $120/month on that salary is saving just 5%! Nobody is suggesting saving 5% is appropriate. 10% is the bare minimum anyone recommends. Doing that, an IRA at 65 would be worth > $763,000, enough to spend $30k each year for the rest of their lives. Standard statement I feel like I always need to make: this is in no way a defense of our economic system. We absolutely need to raise taxes on the highest earners. We probably need a wealth tax as well. But we middle classers need to cool it with the defeatist attitudes. The poor have it hard. We, for the most part, do not. We spend too much and save too little. If you've got a car loan, eat anything but rice and beans, drink anything but water, have cable tv, a > $30/month cell phone bill, and complain about being broke, you've got some very obvious improvements you can make to get out of that dilemma. [1] https://en.wikipedia.org/wiki/Household_income_in_the_United_States https://en.wikipedia.org/wiki/Household_income_in_the_United...

grecy 8y ago
> 1. $14 / hour? The median household (yes, I know, household, but wait) income is the highest it's been since at least 1985 [1] at $59k/year. So $14 is definitely a bit lower than "normal". If we take that household income to mean it's two earners, they're each earning $14.75/hr ... (assuming a standard 2000 work year), which is 40 hrs/wk for 50 weeks
- the_gastropod 8y ago
  Some households have two earners. Most do not. The average is 1.3 earners per household. https://www.bls.gov/opub/btn/volume-6/use-with-caution-interpreting-consumer-expenditure-income-group-data.htm https://www.bls.gov/opub/btn/volume-6/use-with-caution-inter...
  - mdorazio 8y ago

russellbeattie 8y ago

My Vanguard 401k home page has this helpful notice in the dead center of the page: "We think you need $7,840 more per month." Sure... That makes two of us. I guess it's extrapolating my current salary out and how much I'll need to save to live with the same income after I retire. That's not going to happen. Here's a helpful article to see how far behind you are in your retirement: https://smartasset.com/retirement/average-401k-balance-by-age https://smartasset.com/retirement/average-401k-balance-by-ag... I'm 46, so I should have about 3x my annual salary in savings (I don't) and be putting in 8% of my salary into a 401k. I'm going to go back to not thinking about this now like I usually do, as there's little I can do about it.

jdashg 8y ago
You can either see this as "I can't afford to retire" or as "I've let my spending get out of control, and need to course-correct". If you ever hope to retire, you must reign in your lifestyle creep versus your real post-savings available income. If you're not saving enough, you are living above your means. This is fixable, but it will hurt. That said, most retirement calculators overestimate your retirement expenses. Estimate what your expenses will be and plan for that. (And treat interest as inflation-adjusted so you don't end up down that rabbit-hole)
asdfasgasdgasdg 8y ago
If you'd like someone to look at your budget to see if there's some fat you can cut, head on over to forum.mrmoneymustache.com and submit something to the case study forum. People are often surprised by how much they can save without significantly impacting their well-being. (BTW that calculator is awful because it assumes you need to spend a specified fraction of your income during retirement. That's not how this works at all! By that standard, almost anyone is going to be behind the curve.)
bootsz 8y ago
Investment companies make money off of your investments, so naturally they have every incentive to convince you to invest as much as possible. That doesn’t discount the reality that most people don’t invest nearly enough, but still the “recommended” contributions they give are definitely over-estimated in many cases.

sfohohoho 8y ago

No one? Buying a larger house than you can afford tomorrow sucks away from real investments. The honest truth on home ownership would help everyone but real estate agents.

bdcravens 8y ago

Work hasn't failed us. Consumerism has. Stop buying brands. Stop buying Starbucks. Stop eating out. Stop buying the newest phone. Don't buy a fancy Macbook if you don't have a use case for one. Stop buying too much car. Stop trading resources for lifestyle. A 25 year old who only puts $300 into a reasonable retirement fund each month will have over $1M at retirement age.

meguest 8y ago
I'm mid 20s and am putting just over $1000 a month into retirement, split between a private and workplace pension. I intend to do this for as long as possible! Disclaimer: I don't live or work in the U.S
jlelonm 8y ago
What's a reasonable retirement fund to you? (asking out of ignorance, not sarcasm or anything)
- bdcravens 8y ago
  Varies - how much will you spend in retirement and what do you expect for a return? You need to factor in inflation, since $1 today buys more today than it will when you retire. https://www.nerdwallet.com/investing/retirement-calculator https://www.nerdwallet.com/investing/retirement-calculator is a good calculator for this. (though I'm not a fan of its spending assumptions - if in retirement you have paid for houses and cars you definitely will be spending far less than today)

skookumchuck 8y ago

In other news, the NYT writes about how to retire a millionaire in your 30's: https://www.nytimes.com/2018/09/01/style/fire-financial-independence-retire-early.html https://www.nytimes.com/2018/09/01/style/fire-financial-inde...

DoreenMichele 8y ago

If you turn 65 in 2040 or 2050 or 2060 Some historical perspective: My understanding is that when Social Security was created, the average life expectancy was 67. So offering it for people age 65 was intended as providing for people in extreme old age who had probably worked physically hard their entire lives and were pretty beat up. I'm not saying we don't have genuine problems here, but this article is bellyaching about, basically, a golden era when the world was relatively briefly unusually comfortable and acting like that was the norm throughout all of history. The reality is that money per se only became common place something like 300 years or so ago. So the very concept of retirement and saving for retirement is relatively new. This makes it a little hard for me to take this article seriously, so I confess to not reading it in full. Some of the things it gets right: Pensions are going out of style precisely because people are living longer, so pensions wind up being financially unsustainable. Given that people are living a whole lot longer and are generally in better health at 70 these days than 65 used to be, it isn't really some huge hand-wringing drama that older Americans need to continue working. Instead, it is evidence of how successful we have been in some sense. This is a good problem to have. We need to make adjustments to the system, but people living longer and this requiring cultural adjustments isn't some giant tragedy. Retirement for, say, two decades or whatever is hardly some historical and long standing human norm. It's really rather out of touch with reality to act like it ever was.

tkjef 8y ago
Thanks for the perspective. It does help to not feel like we're missing out on something due to us.
fomojola 8y ago
This is not emphasized enough: prior to the last 100 years, the concept of retirement as currently visualized simply did not exist. You had kids, and the kids took care of you in your old age (or you just had a terrible old age). A very small number of people had the resource base to survive growing old gracefully: Social Security was an attempt to extend that to all on a consistent basis. That's not to say some form of it can't be made to work, but as much as we may love the core concept of retirement we may need to accept that it isn't broadly economically viable without a meaningful, direct index against increasing life expectancy (with the usual caveats for infirmity, disease, etc). It is (in my opinion) a well meaning, long term social experiment that might be coming to an end. I am quite curious to see what (and how) we get to the other side of that.

netfire 8y ago

Per https://www.valuepenguin.com/average-credit-card-debt#income; https://www.valuepenguin.com/average-credit-card-debt#income... the lower income earners in the US have almost 10% of their income in credit card debt. Per https://www.pewtrusts.org/en/research-and-analysis/fact-sheets/2016/01/payday-loan-facts-and-the-cfpbs-impact https://www.pewtrusts.org/en/research-and-analysis/fact-shee... 12 million people spend $9 billion in payday loan fees and people spend billions of dollars each year playing the lottery. Poor financial decisions and money management is definitely playing a role in this as well. We really need to include suggestions for adding programs and laws for encouraging saving, removing predatory lending, and incentivizing responsible spending in articles like these. There is too much focus on consumer spending and not enough on household stability and having money in the bank for emergencies.

mmirate 8y ago
> payday loan fees ... playing the lottery ... poor financial decisions and money management ... predatory lending ... consumer spending Those are all basically taxes on idiocy and innumeracy. Idiocy and innumeracy are arguably vices whose prevalence in society should be counteracted. In the absence of the abject and horrifying immorality/aggression/violence of state eugenics, isn't taxation the next most effective thing?
- netfire 8y ago
  Several states already ban payday loans and some don’t allow lotteries (let alone state sponsored lotteries that are used to fund things like education). Personally, I think setting an effective interest rate cap (including loan fees) at around 15-20% a year would be very effective at preventing the kind of lending that can lead someone to multiple years of high-interest debt repayment or eventual bankruptcy. More education in high school about how to manage your finances wisely could also prove beneficial.
  - mmirate 8y ago
    > beneficial. For certain people, in the short term, until their inherent stupidity allows them to commit further mistakes that actually impact others...

mixmastamyk 8y ago

The war on the middle-class continues: - Nimbys—scarce expensive housing - Higher-education costs skyrocketing. - Negative wage growth for positions without degree requirements. - Article mentions no more pensions. Article subject not entirely unexpected. :-/

codeddesign 8y ago

Ultimately it has nothing to do with being able to afford but rather people are increasingly bad with their finances. The high majority of America today is in debt at will and much rather use a card over hard cash. Savings? Ha..nope. It’s all the rage to have a nicer house, car, possessions than to be financially safe. It’s not work that has failed people, it’s the parents that failed to teach their children how to conduct themselves in a fiscally responsible way.

bob_theslob646 8y ago

The better question is, how many Americans are there who cannot afford to save for retirement due to student debt?