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> despite maximum contributions The people with insufficient 401k balances aren't making the max. They're doing the minimum, starting too late, or selecting th

> despite maximum contributions The people with insufficient 401k balances aren't making the max. They're doing the minimum, starting too late, or selecting the most conservative investments such as bond funds (NAVs have collapsed) or cash. Many plans don't have good low cost index funds, so people are forced into actively managed funds some of which are complete garbage in terms of fees and returns. Workers living paycheck to paycheck (61% of the population, see https://www.cnbc.com/2023/07/31/61percent-of-americans-live-paycheck-to-paycheck-even-as-inflation-cools.html https://www.cnbc.com/2023/07/31/61percent-of-americans-live-...) means that contributions aren't realistic for millions of people. Further, a lot of people don't understand how they work, and never contribute, even if they could. Even with matching contributions. Or, they don't trust them after the 2008 collapse or a vague suspicion that the system is rigged against them. This is what I hear from my spouse; many of her colleagues won't touch the solid 401k investments offered by their employer. Some employers have made changes that makes it easier to get started, but many never will, assuming (wrongly) that social security is their retirement solution. Your predictions about older workers working longer is correct. You can see it now, seniors working at grocery stores into their 70s and even older.

jandrewrogers 3y ago
> Workers living paycheck to paycheck (61% of the population According to US BLS and Federal Reserve studies, only about 15% of the population necessarily lives paycheck-to-paycheck. The median US household has a ~$12,000 surplus per year after all ordinary expenses. Note that "ordinary expenses" includes car payments on a BMW, the latest iPhone, and other by-no-means-necessary expenditures, and also includes all healthcare costs. If 61% of the US population is living paycheck-to-paycheck, it isn't because they need to. Americans have very high income surpluses compared to the rest of the developed world. 15% of the population necessarily living paycheck-to-paycheck is still a lot of people, but it implies 85% are not.
- ilamont 3y ago
  > If 61% of the US population is living paycheck-to-paycheck, it isn't because they need to. Consumers can share blame for not living below their means, needless wealth signaling, and financial illiteracy. But predatory entities are part of the problem, too - car dealers obscuring true costs of borrowing ("how much do you want to pay per month?"), credit card issuers jacking up rates to 37%, and real estate "investors" jacking up rents after buying mom & pop mobile homes and senior rental units knowing that tenants have nowhere else to go. Here's one example from Montana: “I can’t tell you how many calls I got from folks that were older, like older than 55 or 60, that had lived in their same house for decades, had the same owner for decades who never raised the rent,” Huey said. “Then all of a sudden they lost their housing.” Huey and other providers across the state have heard countless stories of homeowners turning their rental property into Air-BnBs or evicting their long-term tenants in order to house their own children in increasingly affluent communities. https://billingsgazette.com/news/state-regional/montana-seniors-newly-homeless-long-term-care/article_0edbdcd4-330a-11ee-ae9e-d369414779d0.html https://billingsgazette.com/news/state-regional/montana-seni...
  - clbrmbr 3y ago
    Re: predatory landlords: if they are not breaking the law, are they really blameworthy? Seems like the previous landlord was naïve, or at least operating on an outdated worldview where local reputation mattered. (Hard to show up at the local Chamber or Elks or church when you are getting old folks kicked out of their homes). How to solve… I’d like to find a model to apply in my HOA to slow or reverse the corporate takeover of my community…
    - renonce 3y ago
      They are blameworthy for not getting public and sharing profits with regular people, rigging regular people by inflation
    - inkcapmushroom 3y ago
      >Seems like the previous landlord was naïve, or at least operating on an outdated worldview where local reputation mattered Or maybe was an individual with a conscience who didn't want the old couple that had been in their property for 30 years living on the street. I guess you could call that naivety though.
      - clbrmbr 3y ago
        “Conscience”, there’s a word I haven’t heard in a while. If an act is “unconscionable” well then it’s legally indefensible. But the broader idea of “having a conscience” seems to have receded, to the point I don’t really know what it means.
        sanderjd 3y ago
        This doesn't strike me as true at all. Honestly, it sounds like an excuse for a personal unwillingness to develop your own moral center. Even if you were right - which I don't think you are! - that other people "having a conscience" has receded, who cares what they're doing?, you're not them, make your own, better choices.
      - clbrmbr 3y ago
- nemothekid 3y ago
  >"includes car payments on a BMW, the latest iPhone, and other by-no-means-necessary expenditures "The latest iPhone" is the new "Avocado toast and starbucks". Inflation wise, the iPhone 3GS is only marginally more expensive than the iPhone 15, while delivering far more value. I struggle to understand how ~$75/mo for someone making 100k/year is a deliberating expense for the purpose of wealth signaling especially when that purchase likely delivers far more than $75/mo of actual economic value. Conversely, those 100k/year earners are likely concentrated in some of the highest CoL areas in the country and simply wouldn't be 100k/yr earners in lower CoL areas. Rent and housing has continue to explode but the idea that these 100k/yr earners are hedonists is starting to feel like a thought terminating cliche to me. The price of an iPhone has been pretty much constant for 15 years when adjusted for inflation, but 1bdr Rent (adjusted for inflation) in San Francisco is up 60% in that same time period. Lets say a 100k earner in 2009 did the responsible 30% of income on rent, and spent 2,500/mo. A 100k/yr earner in 2023 would be spending 4,000/mo on a comparable apartment. They might need a roommate, or almost HALF of their income would go to rent. If Earner 1 was saving 10% of their income every month, that would be completely eaten by rent in earner (2) scenario, making them paycheck-to-paycheck. No "iPhones or BMWs" required; and I haven't yet touched the other non-luxury cost of living increases.
  - missedthecue 3y ago
    His point wasn't that iphones are the breaking point for american's personal finance situation. It's that the BLS and Fed study estimates weren't thrifty subsistance level living standards. They included luxuries like new iphones and premium vehicles.
  - RhysU 3y ago
    > The price of an iPhone has been pretty much constant for 15 years when adjusted for inflation... Yes, the luxury item has remained a constant cost luxury item.
- charlie0 3y ago
  Anecdotally, this has been my experience as well. The few people who have money troubles put themselves there through frequent outings, buying expensive items. If they got a 20% raise tomorrow, they would just increase their spending and squander most of it away. I don't doubt there are people out there struggling because of medical conditions or just plain bad luck, but that's not the most common case I've seen.
tunesmith 3y ago
> The people with insufficient 401k balances aren't making the max. That may be true, but even maxing out probably isn't sufficient anymore for most people. It's not just starting to be broken now; it's been broken for a long time. The 7% average stock market return is completely irrelevant to how people actually invest. And I'm not even talking about irresponsible investing. I'm talking about allocation models (put x% of your portfolio in bonds; more when closer to retirement), and I'm especially talking about how people tend to have less money to invest when times are bad and prices are low, and more money to invest when times are good and prices are high. What use is stocks being on sale if you've been laid off at the same time? I think if everyone had a practice of tracking the dates and amounts of all their retirement contributions, and calculated APY from their balances, we'd be a lot closer to exposing the huge lies that are at the root of the investment advice communities. If anyone here is deeply embarrassed about barely beating inflation after 20-25 years of investing, you shouldn't be.
- defensivedepth 3y ago
  Any suggestions for recommended reading for someone in their mid-30s, really only focused on 401k for retirement? Should I be doing something else?
  - tunesmith 3y ago
    My favorite resource lately is earlyretirementnow.com, particularly the Safe Withdrawal Rate series and their spreadsheet. It basically either expands upon or rebuts every other commonly-recommended financial advice resource people tend to suggest. The basic mindset is you have to understand your expenses ie spend rate. People flush with income tend to forget that, thinking it's just for people living paycheck-to-paycheck and needing a budget. But it's essential for being able to project retirement reliably. And of the income/performance/expense triumvirate, it's the one that you have the most control over (assuming you're already investing responsibly).
WalterBright 3y ago
> Workers living paycheck to paycheck (61% of the population, ... means that contributions aren't realistic for millions of people. This doesn't mean they are poor. From your cite: "Of those earning $100,000 or more, only 45% reported living paycheck to paycheck" It just means they see-money-spend-money.
akira2501 3y ago
> or a vague suspicion I see the people who caused the crisis walking around freely having paid no price for their actions whatsoever. There's nothing "vague" about my suspicion. The government has a responsibility to maintain confidence in markets. They utterly failed in my view so myself and anyone else holding this suspicion are completely correct to do so. I also get the feeling that insiders front run the market, stealing gains from us, I also get the feeling that most of the volume in the market is driven by people who are not "in it" with me to "earn a retirement" but are instead in a mad dash to grab every lose cent and percentage point on a transaction fee that they can get their hands on. Uncritically moving the average American over to a 401k was never a smart move as this entire sordid disaster was an obvious outcome given the lax regulatory environment in which the decision was made.

jandrewrogers 3y ago

> Workers living paycheck to paycheck (61% of the population According to US BLS and Federal Reserve studies, only about 15% of the population necessarily lives paycheck-to-paycheck. The median US household has a ~$12,000 surplus per year after all ordinary expenses. Note that "ordinary expenses" includes car payments on a BMW, the latest iPhone, and other by-no-means-necessary expenditures, and also includes all healthcare costs. If 61% of the US population is living paycheck-to-paycheck, it isn't because they need to. Americans have very high income surpluses compared to the rest of the developed world. 15% of the population necessarily living paycheck-to-paycheck is still a lot of people, but it implies 85% are not.

ilamont 3y ago
> If 61% of the US population is living paycheck-to-paycheck, it isn't because they need to. Consumers can share blame for not living below their means, needless wealth signaling, and financial illiteracy. But predatory entities are part of the problem, too - car dealers obscuring true costs of borrowing ("how much do you want to pay per month?"), credit card issuers jacking up rates to 37%, and real estate "investors" jacking up rents after buying mom & pop mobile homes and senior rental units knowing that tenants have nowhere else to go. Here's one example from Montana: “I can’t tell you how many calls I got from folks that were older, like older than 55 or 60, that had lived in their same house for decades, had the same owner for decades who never raised the rent,” Huey said. “Then all of a sudden they lost their housing.” Huey and other providers across the state have heard countless stories of homeowners turning their rental property into Air-BnBs or evicting their long-term tenants in order to house their own children in increasingly affluent communities. https://billingsgazette.com/news/state-regional/montana-seniors-newly-homeless-long-term-care/article_0edbdcd4-330a-11ee-ae9e-d369414779d0.html https://billingsgazette.com/news/state-regional/montana-seni...
- clbrmbr 3y ago
  Re: predatory landlords: if they are not breaking the law, are they really blameworthy? Seems like the previous landlord was naïve, or at least operating on an outdated worldview where local reputation mattered. (Hard to show up at the local Chamber or Elks or church when you are getting old folks kicked out of their homes). How to solve… I’d like to find a model to apply in my HOA to slow or reverse the corporate takeover of my community…
  - renonce 3y ago
    They are blameworthy for not getting public and sharing profits with regular people, rigging regular people by inflation
  - inkcapmushroom 3y ago
    >Seems like the previous landlord was naïve, or at least operating on an outdated worldview where local reputation mattered Or maybe was an individual with a conscience who didn't want the old couple that had been in their property for 30 years living on the street. I guess you could call that naivety though.
    - clbrmbr 3y ago
      “Conscience”, there’s a word I haven’t heard in a while. If an act is “unconscionable” well then it’s legally indefensible. But the broader idea of “having a conscience” seems to have receded, to the point I don’t really know what it means.
      - sanderjd 3y ago
        This doesn't strike me as true at all. Honestly, it sounds like an excuse for a personal unwillingness to develop your own moral center. Even if you were right - which I don't think you are! - that other people "having a conscience" has receded, who cares what they're doing?, you're not them, make your own, better choices.
    - clbrmbr 3y ago
nemothekid 3y ago
>"includes car payments on a BMW, the latest iPhone, and other by-no-means-necessary expenditures "The latest iPhone" is the new "Avocado toast and starbucks". Inflation wise, the iPhone 3GS is only marginally more expensive than the iPhone 15, while delivering far more value. I struggle to understand how ~$75/mo for someone making 100k/year is a deliberating expense for the purpose of wealth signaling especially when that purchase likely delivers far more than $75/mo of actual economic value. Conversely, those 100k/year earners are likely concentrated in some of the highest CoL areas in the country and simply wouldn't be 100k/yr earners in lower CoL areas. Rent and housing has continue to explode but the idea that these 100k/yr earners are hedonists is starting to feel like a thought terminating cliche to me. The price of an iPhone has been pretty much constant for 15 years when adjusted for inflation, but 1bdr Rent (adjusted for inflation) in San Francisco is up 60% in that same time period. Lets say a 100k earner in 2009 did the responsible 30% of income on rent, and spent 2,500/mo. A 100k/yr earner in 2023 would be spending 4,000/mo on a comparable apartment. They might need a roommate, or almost HALF of their income would go to rent. If Earner 1 was saving 10% of their income every month, that would be completely eaten by rent in earner (2) scenario, making them paycheck-to-paycheck. No "iPhones or BMWs" required; and I haven't yet touched the other non-luxury cost of living increases.
- missedthecue 3y ago
  His point wasn't that iphones are the breaking point for american's personal finance situation. It's that the BLS and Fed study estimates weren't thrifty subsistance level living standards. They included luxuries like new iphones and premium vehicles.
- RhysU 3y ago
  > The price of an iPhone has been pretty much constant for 15 years when adjusted for inflation... Yes, the luxury item has remained a constant cost luxury item.
charlie0 3y ago
Anecdotally, this has been my experience as well. The few people who have money troubles put themselves there through frequent outings, buying expensive items. If they got a 20% raise tomorrow, they would just increase their spending and squander most of it away. I don't doubt there are people out there struggling because of medical conditions or just plain bad luck, but that's not the most common case I've seen.

tunesmith 3y ago

> The people with insufficient 401k balances aren't making the max. That may be true, but even maxing out probably isn't sufficient anymore for most people. It's not just starting to be broken now; it's been broken for a long time. The 7% average stock market return is completely irrelevant to how people actually invest. And I'm not even talking about irresponsible investing. I'm talking about allocation models (put x% of your portfolio in bonds; more when closer to retirement), and I'm especially talking about how people tend to have less money to invest when times are bad and prices are low, and more money to invest when times are good and prices are high. What use is stocks being on sale if you've been laid off at the same time? I think if everyone had a practice of tracking the dates and amounts of all their retirement contributions, and calculated APY from their balances, we'd be a lot closer to exposing the huge lies that are at the root of the investment advice communities. If anyone here is deeply embarrassed about barely beating inflation after 20-25 years of investing, you shouldn't be.

defensivedepth 3y ago
Any suggestions for recommended reading for someone in their mid-30s, really only focused on 401k for retirement? Should I be doing something else?
- tunesmith 3y ago
  My favorite resource lately is earlyretirementnow.com, particularly the Safe Withdrawal Rate series and their spreadsheet. It basically either expands upon or rebuts every other commonly-recommended financial advice resource people tend to suggest. The basic mindset is you have to understand your expenses ie spend rate. People flush with income tend to forget that, thinking it's just for people living paycheck-to-paycheck and needing a budget. But it's essential for being able to project retirement reliably. And of the income/performance/expense triumvirate, it's the one that you have the most control over (assuming you're already investing responsibly).

WalterBright 3y ago

> Workers living paycheck to paycheck (61% of the population, ... means that contributions aren't realistic for millions of people. This doesn't mean they are poor. From your cite: "Of those earning $100,000 or more, only 45% reported living paycheck to paycheck" It just means they see-money-spend-money.

akira2501 3y ago

> or a vague suspicion I see the people who caused the crisis walking around freely having paid no price for their actions whatsoever. There's nothing "vague" about my suspicion. The government has a responsibility to maintain confidence in markets. They utterly failed in my view so myself and anyone else holding this suspicion are completely correct to do so. I also get the feeling that insiders front run the market, stealing gains from us, I also get the feeling that most of the volume in the market is driven by people who are not "in it" with me to "earn a retirement" but are instead in a mad dash to grab every lose cent and percentage point on a transaction fee that they can get their hands on. Uncritically moving the average American over to a 401k was never a smart move as this entire sordid disaster was an obvious outcome given the lax regulatory environment in which the decision was made.