12 ms·

Half of Older Americans Have Nothing in Retirement Savings

16 points by sahin-boydas 8y ago

nabla9 8y ago
Does America has Social Security where the elderly get something?
- cimmanom 8y ago
  Yes. But how much you get depends on how much you paid in during your working years, as well as what age you retire at.
  - nabla9 8y ago
    I think that's pension. What I mean is when person don't have eugh pension to live with, do they beg on the street corner?
    - barneygumble742 8y ago
      It's not pension. Everyone with an income pays into social security and how much is stated on your pay statement. Companies opted to replace pensions with a 401k so once the worker leaves the company, they are no longer required to pay more into it (correct me on this if I'm wrong). The 401k is market based so there's risk involved whereas a pension was guaranteed but even that is now based on the market so during the 2008 market issues, even pensions saw a dip in value (pension funds).
      - jeffbax 8y ago
        Pensions are not always guaranteed if the company goes under, they're also often incredibly mismanaged. Everyone should be moved to 401k, particularly the public sector which is wreaking havoc across state budgets
        dragontamer 8y ago
        401k plans have huge society inefficiencies. If someone dies early, the 2 or 3 million they save up in a 401k plan is wasted. Pension plans can capture that inefficiency and provide superior value over 401k plans as a result. Annuities try to bridge the gap. But I admit that I don't know too much about them. Stocks and stuff are nice. But what happens if you die early or outlive your savings? At an individual level, you cannot plan such a thing. But a decent annuity company can provide value by smoothing out that kind of variance. Pensions were a combination of stock plans + annuities. The main issue with Pensions is that people live a LOT longer today than they used to 40 years ago: medicine has gotten much better. So most pension plans (including Social Security) have underestimated how much they need to pay out. "Fortunately", the American life expectancy is dropping due to the opioid crisis. So maybe things will be a bit better for pensions / annuities / Social Security than we expected just 5 years ago.
        berberous 8y ago
        The 2 or 3 million? I think I read recently that less than 10% have a million, 2 or 3 million is 1% territory. And if someone does save that and dies early, how is that 'wasted' if it goes to support their family? Annuities can 100% bridge the gap. The problem is most Americans are financially illiterate, this stuff (401ks, annuities, how much to save) is too complicated for them and most people are too impulsive and consumerist to save enough. So 401ks/annuities are better on a societal level assuming prudent savvy employees, which is a completely false assumption.
        dragontamer 8y ago
        > The 2 or 3 million? I think I read recently that less than 10% have a million, 2 or 3 million is 1% territory. And if someone does save that and dies early, how is that 'wasted' if it goes to support their family? In particular, it could have gone back to their family sooner. IE: Leaving money in your 401k plan means NOT paying for your kid's college tuition with that money (or their house, or their first car, or their wedding) Sure, maybe the kid will get a giant payout when they're 30 or 40 years old. But by then, their lives are probably established and they don't really need the windfall. And they only get that windfall if you die. > Annuities can 100% bridge the gap. Annuities have the same failure mode as pension plans: if they fail, then no one gets the money they were promised. When comparing 401k plans vs Pension Plans, its definitely a factor to consider.
    - mnm1 8y ago
      Yeah, unless they continue to work into their seventies and eighties, have kids who can support them, or start stealing or other crime (begging is actually a crime in much of the US). It's close to impossible to live off of social security even if you had a high paying job ($120k+) in most of America. While Medicare covers some health costs, for preventative and prescription costs, one needs additional healthcare insurance. My mom pays almost $300 a month for that. Then there are property taxes or rent depending if you own a home or not, costs which in most places are constantly going up. And I haven't even gotten to food, electricity, heat, garbage, sewer, or Internet bills. None of those are optional. Car insurance, maintenance, taxes, and gas are also not optional in most of America. It's a shite state of affairs, one that's beyond frightening even as a young person, but most people either don't realize it, or work paycheck to paycheck without any 401k option (tax deferred savings account invested in the market) and can't save anything meaningful.
dev_north_east 8y ago
So... what are they going to do?
- pardonmyfrench 8y ago
  They will overdose on drugs, or commit suicide. It’s the American way.
thiago_fm 8y ago
It is clear to me that 2020 or later there will be a more socialist America, whether the Americans like it or not. And that could be good for America.
- wildmindwriting 8y ago
  > It is clear to me that 2020 or later there will be a more socialist America, whether the Americans like it or not. And that could be good for America. I'm not entirely sure. We (I'm American) have an attitude of what befalls a person is because of the decisions they made. We have a very "pull yourself up by your bootstraps" and anything that costs one person money to help another is a non-starter. Look at the Affordable Care Act right now. America is an individualistic society.
  - krapp 8y ago
    > We have a very "pull yourself up by your bootstraps" and anything that costs one person money to help another is a non-starter. And yet there seems to be actual political risk and difficulty to simply repealing the ACA in its entirety without a replacement... because as bad as the ACA is in practice, in theory many Americans want it, or something like it, and do not in fact want healthcare to be left entirely to the free market. The attitude and outlook you describe certainly exists, but don't conflate the ideology of a single political party to the status of general American culture. We're not all libertarian minarchists and cowboys. And for such an "individualistic" society, we sure do have a lot of socialism already, such as food stamps, school lunches (hell, public schools themselves) federal student loans, Medicare, Medicaid and Social Security, the GI bill, farm subsidies, public libraries, etc. I don't think it's as unlikely as you do. The system is starting to fail for a lot of people. We've already seen the regressive populist shift, in response, and a progressive socialist shift is inevitable. Trump won but don't discount how popular Bernie Sanders actually was.
    - wildmindwriting 8y ago
      Personally, I do hope you are right and that the direction this country is moving toward a more egalitarian society where a pre-existing condition doesn't mean a death sentence and that we have social programs in place in order to support a base level of retirement. Yet I also fear that me living in a liberal, leftist bubble (living in Boston, working with Democratic candidates, working in tech) prevents me from seeing what other people feel and think. Watching Fox News or Tucker Carlson opens one's eyes about what kind of "news" other people are ingesting.
RickJWagner 8y ago
There is a strong need for financial education. There is a small minority of Americans who won't have any retirement savings due to catastrophic illness, or a lifetime of inability to get a good paying job, or some other factor. But this number should be very small. Everybody else should be able to accumlate money for retirement. To save for retirement takes discipline and means forgoing things today to save for tomorrow. The benefits of saving for retirement must be indelibly impressed into people's minds for this to happen.
- barneygumble742 8y ago
  Is it really more education or a lack of impulse control to go out and buy the latest greatest phone every two years?!
  - qpotlpus 8y ago
    Do you have a family Barney? I find the run rate costs of raising a family are astounding even with a very healthy two incomes. It doesn’t shock me that most households barely scrape by at the end of the month without any reserves to save.
    - berberous 8y ago
      Out of curiosity, and I don't have a family, what are your costs? I suspect you can support a family pretty cheapily. The problem is everyone wants to "do everything possible" for their kids -- pay for the best child care, the best schools (or housing in a good school district), clothes and phones to keep up with the Jones' kids, $500k to bribe your way into USC, college tuition, etc. Yes, that all adds up, but I suspect you can also allocate an appropriate percentage of your income to retirement and just pay less for some of those things.
      - thehoff 8y ago
        Adding our kid to our health insurance (through employer) added $300 a month. Trying to be responsible and saving for college adds $100 a month. Kid is too young to stay at home by himself and we don't live by family. So we pay for before/after care (school hours are from 9-3:30). This is astonishingly $600 a month, a relatively cheap option around here (there's cheaper but not by much).

16 points by sahin-boydas 8y ago

nabla9 8y ago

Does America has Social Security where the elderly get something?

cimmanom 8y ago
Yes. But how much you get depends on how much you paid in during your working years, as well as what age you retire at.
- nabla9 8y ago
  I think that's pension. What I mean is when person don't have eugh pension to live with, do they beg on the street corner?
  - barneygumble742 8y ago
    It's not pension. Everyone with an income pays into social security and how much is stated on your pay statement. Companies opted to replace pensions with a 401k so once the worker leaves the company, they are no longer required to pay more into it (correct me on this if I'm wrong). The 401k is market based so there's risk involved whereas a pension was guaranteed but even that is now based on the market so during the 2008 market issues, even pensions saw a dip in value (pension funds).
    - jeffbax 8y ago
      Pensions are not always guaranteed if the company goes under, they're also often incredibly mismanaged. Everyone should be moved to 401k, particularly the public sector which is wreaking havoc across state budgets
      - dragontamer 8y ago
        401k plans have huge society inefficiencies. If someone dies early, the 2 or 3 million they save up in a 401k plan is wasted. Pension plans can capture that inefficiency and provide superior value over 401k plans as a result. Annuities try to bridge the gap. But I admit that I don't know too much about them. Stocks and stuff are nice. But what happens if you die early or outlive your savings? At an individual level, you cannot plan such a thing. But a decent annuity company can provide value by smoothing out that kind of variance. Pensions were a combination of stock plans + annuities. The main issue with Pensions is that people live a LOT longer today than they used to 40 years ago: medicine has gotten much better. So most pension plans (including Social Security) have underestimated how much they need to pay out. "Fortunately", the American life expectancy is dropping due to the opioid crisis. So maybe things will be a bit better for pensions / annuities / Social Security than we expected just 5 years ago.
        berberous 8y ago
        The 2 or 3 million? I think I read recently that less than 10% have a million, 2 or 3 million is 1% territory. And if someone does save that and dies early, how is that 'wasted' if it goes to support their family? Annuities can 100% bridge the gap. The problem is most Americans are financially illiterate, this stuff (401ks, annuities, how much to save) is too complicated for them and most people are too impulsive and consumerist to save enough. So 401ks/annuities are better on a societal level assuming prudent savvy employees, which is a completely false assumption.
        dragontamer 8y ago
        > The 2 or 3 million? I think I read recently that less than 10% have a million, 2 or 3 million is 1% territory. And if someone does save that and dies early, how is that 'wasted' if it goes to support their family? In particular, it could have gone back to their family sooner. IE: Leaving money in your 401k plan means NOT paying for your kid's college tuition with that money (or their house, or their first car, or their wedding) Sure, maybe the kid will get a giant payout when they're 30 or 40 years old. But by then, their lives are probably established and they don't really need the windfall. And they only get that windfall if you die. > Annuities can 100% bridge the gap. Annuities have the same failure mode as pension plans: if they fail, then no one gets the money they were promised. When comparing 401k plans vs Pension Plans, its definitely a factor to consider.
  - mnm1 8y ago
    Yeah, unless they continue to work into their seventies and eighties, have kids who can support them, or start stealing or other crime (begging is actually a crime in much of the US). It's close to impossible to live off of social security even if you had a high paying job ($120k+) in most of America. While Medicare covers some health costs, for preventative and prescription costs, one needs additional healthcare insurance. My mom pays almost $300 a month for that. Then there are property taxes or rent depending if you own a home or not, costs which in most places are constantly going up. And I haven't even gotten to food, electricity, heat, garbage, sewer, or Internet bills. None of those are optional. Car insurance, maintenance, taxes, and gas are also not optional in most of America. It's a shite state of affairs, one that's beyond frightening even as a young person, but most people either don't realize it, or work paycheck to paycheck without any 401k option (tax deferred savings account invested in the market) and can't save anything meaningful.

dev_north_east 8y ago

So... what are they going to do?

pardonmyfrench 8y ago
They will overdose on drugs, or commit suicide. It’s the American way.

thiago_fm 8y ago

It is clear to me that 2020 or later there will be a more socialist America, whether the Americans like it or not. And that could be good for America.

wildmindwriting 8y ago
> It is clear to me that 2020 or later there will be a more socialist America, whether the Americans like it or not. And that could be good for America. I'm not entirely sure. We (I'm American) have an attitude of what befalls a person is because of the decisions they made. We have a very "pull yourself up by your bootstraps" and anything that costs one person money to help another is a non-starter. Look at the Affordable Care Act right now. America is an individualistic society.
- krapp 8y ago
  > We have a very "pull yourself up by your bootstraps" and anything that costs one person money to help another is a non-starter. And yet there seems to be actual political risk and difficulty to simply repealing the ACA in its entirety without a replacement... because as bad as the ACA is in practice, in theory many Americans want it, or something like it, and do not in fact want healthcare to be left entirely to the free market. The attitude and outlook you describe certainly exists, but don't conflate the ideology of a single political party to the status of general American culture. We're not all libertarian minarchists and cowboys. And for such an "individualistic" society, we sure do have a lot of socialism already, such as food stamps, school lunches (hell, public schools themselves) federal student loans, Medicare, Medicaid and Social Security, the GI bill, farm subsidies, public libraries, etc. I don't think it's as unlikely as you do. The system is starting to fail for a lot of people. We've already seen the regressive populist shift, in response, and a progressive socialist shift is inevitable. Trump won but don't discount how popular Bernie Sanders actually was.
  - wildmindwriting 8y ago
    Personally, I do hope you are right and that the direction this country is moving toward a more egalitarian society where a pre-existing condition doesn't mean a death sentence and that we have social programs in place in order to support a base level of retirement. Yet I also fear that me living in a liberal, leftist bubble (living in Boston, working with Democratic candidates, working in tech) prevents me from seeing what other people feel and think. Watching Fox News or Tucker Carlson opens one's eyes about what kind of "news" other people are ingesting.

RickJWagner 8y ago

There is a strong need for financial education. There is a small minority of Americans who won't have any retirement savings due to catastrophic illness, or a lifetime of inability to get a good paying job, or some other factor. But this number should be very small. Everybody else should be able to accumlate money for retirement. To save for retirement takes discipline and means forgoing things today to save for tomorrow. The benefits of saving for retirement must be indelibly impressed into people's minds for this to happen.

barneygumble742 8y ago
Is it really more education or a lack of impulse control to go out and buy the latest greatest phone every two years?!
- qpotlpus 8y ago
  Do you have a family Barney? I find the run rate costs of raising a family are astounding even with a very healthy two incomes. It doesn’t shock me that most households barely scrape by at the end of the month without any reserves to save.
  - berberous 8y ago
    Out of curiosity, and I don't have a family, what are your costs? I suspect you can support a family pretty cheapily. The problem is everyone wants to "do everything possible" for their kids -- pay for the best child care, the best schools (or housing in a good school district), clothes and phones to keep up with the Jones' kids, $500k to bribe your way into USC, college tuition, etc. Yes, that all adds up, but I suspect you can also allocate an appropriate percentage of your income to retirement and just pay less for some of those things.
    - thehoff 8y ago
      Adding our kid to our health insurance (through employer) added $300 a month. Trying to be responsible and saving for college adds $100 a month. Kid is too young to stay at home by himself and we don't live by family. So we pay for before/after care (school hours are from 9-3:30). This is astonishingly $600 a month, a relatively cheap option around here (there's cheaper but not by much).