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And of the ones that do there is a lot of leakage with people taking loans or cashing out accounts when they change employers. This is specifically what I am w

by wj 7y ago

And of the ones that do there is a lot of leakage with people taking loans or cashing out accounts when they change employers. This is specifically what I am working on but taking the angle of helping people break the paycheck-to-paycheck cycle and make some progress towards their goals. If someone can save up enough to establish a small emergency fund then they are less likely to raid their retirement savings when their car breaks down or they get a medical bill they cannot afford. Further, when one feels like they have their financial life in order they are more willing to make 401(k) contributions beyond their matching amount. It is difficult though. The default action for people and their personal finances is inaction. Working through some ideas to help that but there is no silver bullet.

mcfunk 7y ago
In order to even consider the problem in terms of savings though, we first have to get to a place where 78% of American workers are not living paycheck to paycheck. https://www.forbes.com/sites/zackfriedman/2019/01/11/live-paycheck-to-paycheck-government-shutdown/#18a39dc84f10 https://www.forbes.com/sites/zackfriedman/2019/01/11/live-pa...
- wj 7y ago
  Yup, budgeting really is step one in building up enough of a cushion to break that cycle. And budgeting is a change of mindset that is hard for people to adopt. Going from looking at "how much is in my account" to "how much do I have left in my grocery budget" takes time but, when fully bought into, is a powerful way to take charge of your finances and drive the changes needed to build an emergency fund, get out of debt, save for retirement, etc. Of course a budget doesn't always work. Sometimes one can only reduce their spending so much but still not reach a balanced budget let alone save a few dollars. In those cases the income side of the equation needs to be focused on. I suspect, but don't have data to back this up, that the job market isn't as strong as the official numbers would lead us to believe so there might not be a higher paying opportunity waiting down the street. Certainly wage growth is lagging. There is definitely a disconnect between the macro economy and Main St. in a lot of towns. This is a huge problem that is only getting bigger as health care costs continue to rise, particularly for people stuck in the Medigap in retirement. But there are no easy answers or short cuts. I think we continue to do what we can to chip away at the problem and, like with budgeting, small improvements can have outsized results over the long term.
ok_coo 7y ago
My personal anecdata is that I started saving more money and contributing more to my 401K after I got a substantial raise from switching jobs. Before that? The majority of my income went to expenses and keeping my head above water. There are plenty of people who are irresponsible, yes. But I'm guessing there are many more who are just trying to pay the rent, bills, etc. to stay off the street.
- juZDM6 7y ago
  This. I think it would be very hard to have substantial retirement savings on the bottom 25th quartile of American wages. Especially when most Americans are living paycheck to paycheck. Want people to save more? Pay them more.

by wj 7y ago

mcfunk 7y ago

In order to even consider the problem in terms of savings though, we first have to get to a place where 78% of American workers are not living paycheck to paycheck. https://www.forbes.com/sites/zackfriedman/2019/01/11/live-paycheck-to-paycheck-government-shutdown/#18a39dc84f10 https://www.forbes.com/sites/zackfriedman/2019/01/11/live-pa...

wj 7y ago
Yup, budgeting really is step one in building up enough of a cushion to break that cycle. And budgeting is a change of mindset that is hard for people to adopt. Going from looking at "how much is in my account" to "how much do I have left in my grocery budget" takes time but, when fully bought into, is a powerful way to take charge of your finances and drive the changes needed to build an emergency fund, get out of debt, save for retirement, etc. Of course a budget doesn't always work. Sometimes one can only reduce their spending so much but still not reach a balanced budget let alone save a few dollars. In those cases the income side of the equation needs to be focused on. I suspect, but don't have data to back this up, that the job market isn't as strong as the official numbers would lead us to believe so there might not be a higher paying opportunity waiting down the street. Certainly wage growth is lagging. There is definitely a disconnect between the macro economy and Main St. in a lot of towns. This is a huge problem that is only getting bigger as health care costs continue to rise, particularly for people stuck in the Medigap in retirement. But there are no easy answers or short cuts. I think we continue to do what we can to chip away at the problem and, like with budgeting, small improvements can have outsized results over the long term.

ok_coo 7y ago

My personal anecdata is that I started saving more money and contributing more to my 401K after I got a substantial raise from switching jobs. Before that? The majority of my income went to expenses and keeping my head above water. There are plenty of people who are irresponsible, yes. But I'm guessing there are many more who are just trying to pay the rent, bills, etc. to stay off the street.

juZDM6 7y ago
This. I think it would be very hard to have substantial retirement savings on the bottom 25th quartile of American wages. Especially when most Americans are living paycheck to paycheck. Want people to save more? Pay them more.