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Thanks for this pile of links... I don't believe what you're saying that 401k's are somehow not going to be enough to retire. Unless you meant retire where ho

Thanks for this pile of links... I don't believe what you're saying that 401k's are somehow not going to be enough to retire. Unless you meant retire where housing prices are rising the fastest.

toomuchtodo 3y ago
You didn't read the links then. Median 401k balance is no more than $71k across all age cohorts. Assuming a 4% perpetual withdrawal rate (Trinity study), that is ~$2840/year in income. Per the GAO: > Even for those who do have access, traditional defined benefit pensions have become much less common as defined contribution plans, such as 401(k)s, have become the primary type of retirement plan. This shift has increased the risks and responsibilities for individuals in planning and managing their retirement. Yet research shows that many households are ill-equipped for this task and have little or no retirement savings. As of 2016, about half of households with a worker age 55 and older had no retirement savings, and 29% had no retirement savings or a defined benefit plan. Policymakers will need to consider how to best encourage expanded pension coverage, adequate and secure pension benefits, and more effective use of tax preferences to foster workers’ retirement security. 40% of Social Security recipients have no other income. https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf https://web.archive.org/web/20231028173718/https://www.nirsonline.org/2020/01/new-report-40-of-older-americans-rely-solely-on-social-security-for-retirement-income/ https://web.archive.org/web/20231028173718/https://www.nirso...
- flashback2199 3y ago
  I'm not following your reasoning Regardless of whether and how much private equity is affecting growth in prices of stocks for public companies, the S&P in which people's 401ks are invested has grown a lot, and will probably continue to Low balances in 401k's are therefore due to insufficient contributions and not insufficient growth in S&P prices
- the_gastropod 3y ago
  This thread started as a response to: > The 401k generation will begin think about retiring in the next few years. Most will discover that their 401K, despite maximum contributions, will be insufficient to retire on. The maximum individual contribution—not counting employer contributions—is $22,500. Or if you’re over 50, it’s $30,000. If You’re maxing out your 401k, you’ll pass $71k after working just a few years. To retire with just $71k after working a typical career of 40 years, you’d have to save less than ~$600/year. In other words, saving $600/year—~4% of a minimum wage salary—is enough to surpass this median $71k number after a 40 year career and a conservative 5% avg return. I suspect most of these people have other savings.
  - toomuchtodo 3y ago
    > I suspect most of these people have other savings. Please show me the data, because all available public sources indicate this is not the case, and in my travels, the data confirms my conversations with these cohorts (because I am very curious). If they have other savings not showing up in the data, what and where is it? We cannot simply assume it exists. Hope is not a strategy.
    - the_gastropod 3y ago
      Well, for starters, we can look at the median net worth of Americans, which in 2019 was between $250k and $310k for the age groups we’re talking about here. Is that enough? Still probably not, but it’s a heck of a lot more than just $71k. https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Net_Worth;demographic:agecl;population:all;units:median;range:1989,2019 https://www.federalreserve.gov/econres/scf/dataviz/scf/chart...
      - toomuchtodo 3y ago
        If your net worth includes your primary residence, and you can't live off the equity, it is not retirement savings. It is dead capital, as you must live somewhere. Certainly, we can include it in your estate and net worth, but that's more pertinent to whomever is next of kin, not the person who needs cashflow for groceries, fuel, utilities, healthcare expenses, and so on. What the metrics represent is important, otherwise we are blinded to ground truth. I must strongly emphasize that vehicle equity is not retirement savings if you must keep the car for mobility. Home equity is not retirement savings if you must have a place to live and there is nowhere to downsize to, unless we are expecting 55+ to sell their homes and live in a van down by the river, burning through their housing proceeds and hopefully dying before it is exhausted.
- commandlinefan 3y ago
  > no more than $71k Don't worry, I'm sure they'll get together and vote to distribute everybody's 401(k) balances equally among all retirees so that they people who did save will also end up with nothing.
- ebiester 3y ago
  I always wonder about this 401k balance. How many people don't roll over their 401(k)s?
- jandrewrogers 3y ago
  The term "retirement savings" is too narrowly defined here, since it only includes things like 401k, savings accounts, and pensions. Many people have their retirement savings entirely in rental real estate (I know several like this). Many people have small retirement accounts but millions of dollars in ordinary taxable investment accounts due to the myriad restrictions that the government places on what you can put into retirement accounts. All of these are outside the definition of "retirement savings", despite being actual retirement savings, but none of them are rare.
  - ska 3y ago
    > Many people have small retirement accounts but millions of dollars in ordinary taxable Certainly not many people, at least not many in the context of retirement population. Any people with access to millions of dollars of assets in retirement are rare.

Thanks for this pile of links... I don't believe what you're saying that 401k's are somehow not going to be enough to retire. Unless you meant retire where housing prices are rising the fastest.

toomuchtodo 3y ago

You didn't read the links then. Median 401k balance is no more than $71k across all age cohorts. Assuming a 4% perpetual withdrawal rate (Trinity study), that is ~$2840/year in income. Per the GAO: > Even for those who do have access, traditional defined benefit pensions have become much less common as defined contribution plans, such as 401(k)s, have become the primary type of retirement plan. This shift has increased the risks and responsibilities for individuals in planning and managing their retirement. Yet research shows that many households are ill-equipped for this task and have little or no retirement savings. As of 2016, about half of households with a worker age 55 and older had no retirement savings, and 29% had no retirement savings or a defined benefit plan. Policymakers will need to consider how to best encourage expanded pension coverage, adequate and secure pension benefits, and more effective use of tax preferences to foster workers’ retirement security. 40% of Social Security recipients have no other income. https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf https://web.archive.org/web/20231028173718/https://www.nirsonline.org/2020/01/new-report-40-of-older-americans-rely-solely-on-social-security-for-retirement-income/ https://web.archive.org/web/20231028173718/https://www.nirso...

flashback2199 3y ago
I'm not following your reasoning Regardless of whether and how much private equity is affecting growth in prices of stocks for public companies, the S&P in which people's 401ks are invested has grown a lot, and will probably continue to Low balances in 401k's are therefore due to insufficient contributions and not insufficient growth in S&P prices
the_gastropod 3y ago
This thread started as a response to: > The 401k generation will begin think about retiring in the next few years. Most will discover that their 401K, despite maximum contributions, will be insufficient to retire on. The maximum individual contribution—not counting employer contributions—is $22,500. Or if you’re over 50, it’s $30,000. If You’re maxing out your 401k, you’ll pass $71k after working just a few years. To retire with just $71k after working a typical career of 40 years, you’d have to save less than ~$600/year. In other words, saving $600/year—~4% of a minimum wage salary—is enough to surpass this median $71k number after a 40 year career and a conservative 5% avg return. I suspect most of these people have other savings.
- toomuchtodo 3y ago
  > I suspect most of these people have other savings. Please show me the data, because all available public sources indicate this is not the case, and in my travels, the data confirms my conversations with these cohorts (because I am very curious). If they have other savings not showing up in the data, what and where is it? We cannot simply assume it exists. Hope is not a strategy.
  - the_gastropod 3y ago
    Well, for starters, we can look at the median net worth of Americans, which in 2019 was between $250k and $310k for the age groups we’re talking about here. Is that enough? Still probably not, but it’s a heck of a lot more than just $71k. https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Net_Worth;demographic:agecl;population:all;units:median;range:1989,2019 https://www.federalreserve.gov/econres/scf/dataviz/scf/chart...
    - toomuchtodo 3y ago
      If your net worth includes your primary residence, and you can't live off the equity, it is not retirement savings. It is dead capital, as you must live somewhere. Certainly, we can include it in your estate and net worth, but that's more pertinent to whomever is next of kin, not the person who needs cashflow for groceries, fuel, utilities, healthcare expenses, and so on. What the metrics represent is important, otherwise we are blinded to ground truth. I must strongly emphasize that vehicle equity is not retirement savings if you must keep the car for mobility. Home equity is not retirement savings if you must have a place to live and there is nowhere to downsize to, unless we are expecting 55+ to sell their homes and live in a van down by the river, burning through their housing proceeds and hopefully dying before it is exhausted.
commandlinefan 3y ago
> no more than $71k Don't worry, I'm sure they'll get together and vote to distribute everybody's 401(k) balances equally among all retirees so that they people who did save will also end up with nothing.
ebiester 3y ago
I always wonder about this 401k balance. How many people don't roll over their 401(k)s?
jandrewrogers 3y ago
The term "retirement savings" is too narrowly defined here, since it only includes things like 401k, savings accounts, and pensions. Many people have their retirement savings entirely in rental real estate (I know several like this). Many people have small retirement accounts but millions of dollars in ordinary taxable investment accounts due to the myriad restrictions that the government places on what you can put into retirement accounts. All of these are outside the definition of "retirement savings", despite being actual retirement savings, but none of them are rare.
- ska 3y ago
  > Many people have small retirement accounts but millions of dollars in ordinary taxable Certainly not many people, at least not many in the context of retirement population. Any people with access to millions of dollars of assets in retirement are rare.