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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

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.
- the_gastropod 3y ago
  I think it’s still perfectly relevant. Retirees who own their homes have lower expenses than those that must pay rent. If your net worth is 100% equity in your wholly owned home, social security will go a much longer way than someone with $71k in a 401k who must still pay rent. I don’t know what point you’re trying to make here. Is US retirement a mess? Yes. But I don’t think the magnitude of bleakness is quite as high as you’re describing. While hardship exists, and I think we’d probably agree that there needs to be a much better safety net in place for people, I think it’s also true that many capable people neglect to save enough for the future. And, to be honest, I think often it’s because of rhetoric like yours. People are hopeless, and just give up trying. Reality is not that grim. Saving even $1M in a 401k over 40 years has been attainable for most people by following the boring “save 10%” strategy.
  - danaris 3y ago
    But a higher net worth due to having equity in a home is not the same as having fully paid off your home. There's just not enough information in such statistics to make such a determination one way or another. You're welcome to assume that retirees have paid off their mortgages, but it's a wholly unsupported assumption, given just the information in this thread. If you want anyone else to give it credence, cite some sources for it.
    - the_gastropod 3y ago
      https://fivethirtyeight.com/features/how-many-homeowners-have-paid-off-their-mortgages/ https://fivethirtyeight.com/features/how-many-homeowners-hav... Most Americans over 65 own their homes outright without mortgages.
    - nradov 3y ago
      Equity is equity. It's net worth that matters regardless of any mortgages. If a retiree has a mortgage payment then that's just one more housing expense to factor into retirement planning along with property taxes, maintenance, etc. For retirees with low interest mortgage it would be foolish to pay those off. And retirees who have substantial equity but need cash for living expenses can always take out a reverse mortgage.
      - danaris 3y ago
        That's completely backwards. In order to determine whether you can afford to retire, you need to be looking at recurring expenses, not illiquid assets. If you have an expected monthly income from your 401k of, say, $1200, but your mortgage payment is $800/month, it doesn't matter that you've got $150k already paid into it and only another 10 years left to go; you can't afford to retire now![0] Yes, it's theoretically possible (depending on how much equity you actually have, and your credit score) to take out a home equity loan to provide you with money to live on in your retirement, but a) there's interest payments to think of, which put you right back at the top of this post looking at monthly expenses, and b) if this is a significant part of your net worth (which, for many of these people, it absolutely will be), this means that at best you're leaving your heirs with a bunch of debt and no house, and at worst the bank just won't let you do it in the first place. And while there is certainly a perfectly reasonable discussion to be had of whether it's better to use the money for yourself now, and not care about your family, making that selfish choice is far from universal. [0] No actual numbers were harmed in the making of this post. All numbers are entirely made up.

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.

the_gastropod 3y ago
I think it’s still perfectly relevant. Retirees who own their homes have lower expenses than those that must pay rent. If your net worth is 100% equity in your wholly owned home, social security will go a much longer way than someone with $71k in a 401k who must still pay rent. I don’t know what point you’re trying to make here. Is US retirement a mess? Yes. But I don’t think the magnitude of bleakness is quite as high as you’re describing. While hardship exists, and I think we’d probably agree that there needs to be a much better safety net in place for people, I think it’s also true that many capable people neglect to save enough for the future. And, to be honest, I think often it’s because of rhetoric like yours. People are hopeless, and just give up trying. Reality is not that grim. Saving even $1M in a 401k over 40 years has been attainable for most people by following the boring “save 10%” strategy.
- danaris 3y ago
  But a higher net worth due to having equity in a home is not the same as having fully paid off your home. There's just not enough information in such statistics to make such a determination one way or another. You're welcome to assume that retirees have paid off their mortgages, but it's a wholly unsupported assumption, given just the information in this thread. If you want anyone else to give it credence, cite some sources for it.
  - the_gastropod 3y ago
    https://fivethirtyeight.com/features/how-many-homeowners-have-paid-off-their-mortgages/ https://fivethirtyeight.com/features/how-many-homeowners-hav... Most Americans over 65 own their homes outright without mortgages.
  - nradov 3y ago
    Equity is equity. It's net worth that matters regardless of any mortgages. If a retiree has a mortgage payment then that's just one more housing expense to factor into retirement planning along with property taxes, maintenance, etc. For retirees with low interest mortgage it would be foolish to pay those off. And retirees who have substantial equity but need cash for living expenses can always take out a reverse mortgage.
    - danaris 3y ago
      That's completely backwards. In order to determine whether you can afford to retire, you need to be looking at recurring expenses, not illiquid assets. If you have an expected monthly income from your 401k of, say, $1200, but your mortgage payment is $800/month, it doesn't matter that you've got $150k already paid into it and only another 10 years left to go; you can't afford to retire now![0] Yes, it's theoretically possible (depending on how much equity you actually have, and your credit score) to take out a home equity loan to provide you with money to live on in your retirement, but a) there's interest payments to think of, which put you right back at the top of this post looking at monthly expenses, and b) if this is a significant part of your net worth (which, for many of these people, it absolutely will be), this means that at best you're leaving your heirs with a bunch of debt and no house, and at worst the bank just won't let you do it in the first place. And while there is certainly a perfectly reasonable discussion to be had of whether it's better to use the money for yourself now, and not care about your family, making that selfish choice is far from universal. [0] No actual numbers were harmed in the making of this post. All numbers are entirely made up.