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Something most people don't seem to understand... to retire comfortably (in the US at least) you need to consistently save some percentage of your income all o

Something most people don't seem to understand... to retire comfortably (in the US at least) you need to consistently save some percentage of your income all of your life, or a significant portion of your income most of your life. I don't know if their parents or education system is failing these people, but something needs to change.

ThalesX 2y ago
Eh, one alternative as in my shithole in Eastern Europe is that they take 25% out of every pay you get throughout your life and when you do retire, you get some shit money for the 5 years of life expectancy you have left.
paulpauper 2y ago
I think a lot of these people get caught in the loop of renting and bad luck and healthcare spending and never have much left over. plus, kids. They just never seem to get it together. Half the population has an IQ below 100. I imagine these people will naturally struggle at saving compared to the other half.
- azemetre 2y ago
  Yes, saving 20% when you have $20 left over your paycheck (or sometimes even negative dollars) might net you a solid $100k when you’re retirement age but I doubt you’ll be able to stretch it very fair since it’ll be likely you’re still renting and still have debts dragging you down. I think what we will see is a return to generational housing in America. More out of a necessity, like how divorced couples still lived together during economic strifes across the world.
  - jillieco84 2y ago
    However, there is 55 and up communities across the country, and they offer affordable housing options. You can get a new trailer for 80k or a camper and live comfortably until you die. I am not buying a house but saving at least 100k for retirement. I’d prefer a million but will see. I’m going to start saving a 500 to a 1000 a month in a high interest account whether it is stocks, bonds, or a CD
- jillieco84 2y ago
  Having a low IQ makes no difference in whether a person can save or not. Your answer was in your comment, it’s all based on luck. I know some people who are brilliant but have an alcohol addiction and literally don’t care about anything.
thomascgalvin 2y ago
I kind of think we have proven that most people are not, and cannot be, capably responsible for their own retirement. The 401k was an experiment, and that experiment has largely failed. The answer is probably a more generous and better funded Social Security, except that fund keeps getting raided for other purposes.
- koolba 2y ago
  > I kind of think we have proven that most people are not, and cannot be, capably responsible for their own retirement. This is one of the reasons I suggest people buy a house rather than renting. The financials may not always make sense, but it forces savings in a way that many people would not otherwise do. How many people do you think would manually pay a large chunk of their paycheck into a savings account every months before deciding whether they can afford an extra order of curly fries? Rent eats first and having a mortgage lets you actually save some of that (once you get past the substantial interest heavy starting year). > The 401k was an experiment, and that experiment has largely failed. Retirement accounts are not the problem. It’s a general lack of financial education. People can barely calculate simple interest. Compound interest is even less natural. Calculating the present value of a fixed payment annuity in 25 years? We’re a slim minority that can do that from scratch. Some of the best savers are the ones that do not even understand the financial constructs, but take the savings rates and methods as gospel. Faithfully putting away percentages of their salaries that are orders of magnitude higher than the rest. > The answer is probably a more generous and better funded Social Security, except that fund keeps getting raided for other purposes. Social security is claimed to be “money you paid into”. But that cannot be true if the net amount grossly exceeds what you paid in. That system simply would not work without another revenue source. People have to pay massively more into it over their entire working lives. And if someone wants a pension the financial product exists. Except nobody wants to actually pay for it because an inflation adjusted guaranteed annuity for life is incredibly expensive! So the present value of it divided out would be more than people are willing to actually pay.
  - techbro92 2y ago
    A lot of people struggle with regular literacy despite being educated on it for their entire life. I don’t think more education will help these people.
nly 2y ago
Yep. 20% is about right for a 35-40 year career. The auto enrollment private pension minimum contribution in the UK is 8% (3% from the employer and 5% from the employee)...and its widely known that this is pathetically inadequate. It needs to be doubled. Nobody is taught about this stuff in British schools either. Most people don't start worrying about funding retirement until they hit 50
pan69 2y ago
The vast majority of people aren't even taught how money works. There also seems to be as assumption with certain people that everyone has an interest in it because they do. From an anecdotal point of view, I have never cared for money in the sense that I have not been busy maximizing my money whether it be salary, retirement, etc. not to mention "investments". I could not care to play the game of money/investments, I want to do other things with my time and headspace. However, in our Western society I'm forced to play the money game and to "be on top of it" otherwise later in life I am f*ked. "Money" seems to be mostly an "interest" of some people and somehow we seem to have pivoted our entire society around that.
antisthenes 2y ago
> Something most people don't seem to understand... to retire comfortably (in the US at least) you need to consistently save some percentage of your income all of your life, or a significant portion of your income most of your life. The reason most people don't understand this is because retirement has historically been a pipe dream for 99% of the population. You worked until you were no longer able to get up physically (from illness or general deterioration). Nowadays people don't just want to retire, but retire "comfortably", whatever that means. Presumably living in your paid off suburban home, while travelling and owning multiple cars? It's not sustainable and will revert back to the mean, unfortunately.
lapcat 2y ago
> I don't know if their parents or education system is failing these people, but something needs to change. Is there any evidence or reason to think that people were just more financially literate in the past and somehow regressed? This theory seems to ignore broad societal trends such as increasing wealth inequality, increasing housing costs, increasing health care costs, stagnation of wages, decreasing employment stability and security over time, and the elimination of employer pensions.
- koolba 2y ago
  The classic retirement plan was to have a bunch of kids, raise them right, and one of them would take you in your later years. The other half of that bargain was that you’d help take care of the grand kids, teach them, and maybe prepare dinner. The more kids you had, the more of a buck shot approach it was.
outside1234 2y ago
And start when you are 22 not 55
chank 2y ago
Technically, it's both. Parents don't teach their kids because they didn't/don't really know. Financial literacy isn't in the curiculum at all pre-college level. Even then it's not a "core" competency in any degree that isn't finance related. Even just ~10-15 years ago I wouldn't say the topic itself had as wide of discussion as it does today.
marssaxman 2y ago
Simply knowing how it would have to work doesn't magically grant you the capacity to do it. Life is full of unexpected surprises, and they can be very expensive.
mikewarot 2y ago
After the collapse in 2008, they decided to drop the effective interest rate to 0.0% on personal savings accounts, like the one my parents were counting on. The 5-8% per annum, which everyone older expected to live off of, was stolen to prop up the banks which got us into the mess in the first place. It's not their lack of planning, not their generations fault. They they shouldn't be the ones to pay for the crash of 2008. There should be thousands of former bankers starting their second decade behind bars... but there are NONE.
- jillieco84 2y ago
  [flagged]
jmclnx 2y ago
The big thing that happened to these people was the pension crisis. They were told, while working they would get a decent pension early in their career Plus when most started, it was expected you would be with the company your full lives. Then the 70s and 80s happened, people did not realize there would be a paradigm shift in the work force. So here we are, and back then IRAs were limited on what you could save and I think there were no 401k's at all.

ThalesX 2y ago

Eh, one alternative as in my shithole in Eastern Europe is that they take 25% out of every pay you get throughout your life and when you do retire, you get some shit money for the 5 years of life expectancy you have left.

paulpauper 2y ago

I think a lot of these people get caught in the loop of renting and bad luck and healthcare spending and never have much left over. plus, kids. They just never seem to get it together. Half the population has an IQ below 100. I imagine these people will naturally struggle at saving compared to the other half.

azemetre 2y ago
Yes, saving 20% when you have $20 left over your paycheck (or sometimes even negative dollars) might net you a solid $100k when you’re retirement age but I doubt you’ll be able to stretch it very fair since it’ll be likely you’re still renting and still have debts dragging you down. I think what we will see is a return to generational housing in America. More out of a necessity, like how divorced couples still lived together during economic strifes across the world.
- jillieco84 2y ago
  However, there is 55 and up communities across the country, and they offer affordable housing options. You can get a new trailer for 80k or a camper and live comfortably until you die. I am not buying a house but saving at least 100k for retirement. I’d prefer a million but will see. I’m going to start saving a 500 to a 1000 a month in a high interest account whether it is stocks, bonds, or a CD
jillieco84 2y ago
Having a low IQ makes no difference in whether a person can save or not. Your answer was in your comment, it’s all based on luck. I know some people who are brilliant but have an alcohol addiction and literally don’t care about anything.

thomascgalvin 2y ago

I kind of think we have proven that most people are not, and cannot be, capably responsible for their own retirement. The 401k was an experiment, and that experiment has largely failed. The answer is probably a more generous and better funded Social Security, except that fund keeps getting raided for other purposes.

koolba 2y ago
> I kind of think we have proven that most people are not, and cannot be, capably responsible for their own retirement. This is one of the reasons I suggest people buy a house rather than renting. The financials may not always make sense, but it forces savings in a way that many people would not otherwise do. How many people do you think would manually pay a large chunk of their paycheck into a savings account every months before deciding whether they can afford an extra order of curly fries? Rent eats first and having a mortgage lets you actually save some of that (once you get past the substantial interest heavy starting year). > The 401k was an experiment, and that experiment has largely failed. Retirement accounts are not the problem. It’s a general lack of financial education. People can barely calculate simple interest. Compound interest is even less natural. Calculating the present value of a fixed payment annuity in 25 years? We’re a slim minority that can do that from scratch. Some of the best savers are the ones that do not even understand the financial constructs, but take the savings rates and methods as gospel. Faithfully putting away percentages of their salaries that are orders of magnitude higher than the rest. > The answer is probably a more generous and better funded Social Security, except that fund keeps getting raided for other purposes. Social security is claimed to be “money you paid into”. But that cannot be true if the net amount grossly exceeds what you paid in. That system simply would not work without another revenue source. People have to pay massively more into it over their entire working lives. And if someone wants a pension the financial product exists. Except nobody wants to actually pay for it because an inflation adjusted guaranteed annuity for life is incredibly expensive! So the present value of it divided out would be more than people are willing to actually pay.
- techbro92 2y ago
  A lot of people struggle with regular literacy despite being educated on it for their entire life. I don’t think more education will help these people.

nly 2y ago

Yep. 20% is about right for a 35-40 year career. The auto enrollment private pension minimum contribution in the UK is 8% (3% from the employer and 5% from the employee)...and its widely known that this is pathetically inadequate. It needs to be doubled. Nobody is taught about this stuff in British schools either. Most people don't start worrying about funding retirement until they hit 50

pan69 2y ago

The vast majority of people aren't even taught how money works. There also seems to be as assumption with certain people that everyone has an interest in it because they do. From an anecdotal point of view, I have never cared for money in the sense that I have not been busy maximizing my money whether it be salary, retirement, etc. not to mention "investments". I could not care to play the game of money/investments, I want to do other things with my time and headspace. However, in our Western society I'm forced to play the money game and to "be on top of it" otherwise later in life I am f*ked. "Money" seems to be mostly an "interest" of some people and somehow we seem to have pivoted our entire society around that.

antisthenes 2y ago

> Something most people don't seem to understand... to retire comfortably (in the US at least) you need to consistently save some percentage of your income all of your life, or a significant portion of your income most of your life. The reason most people don't understand this is because retirement has historically been a pipe dream for 99% of the population. You worked until you were no longer able to get up physically (from illness or general deterioration). Nowadays people don't just want to retire, but retire "comfortably", whatever that means. Presumably living in your paid off suburban home, while travelling and owning multiple cars? It's not sustainable and will revert back to the mean, unfortunately.

lapcat 2y ago

> I don't know if their parents or education system is failing these people, but something needs to change. Is there any evidence or reason to think that people were just more financially literate in the past and somehow regressed? This theory seems to ignore broad societal trends such as increasing wealth inequality, increasing housing costs, increasing health care costs, stagnation of wages, decreasing employment stability and security over time, and the elimination of employer pensions.

koolba 2y ago
The classic retirement plan was to have a bunch of kids, raise them right, and one of them would take you in your later years. The other half of that bargain was that you’d help take care of the grand kids, teach them, and maybe prepare dinner. The more kids you had, the more of a buck shot approach it was.

outside1234 2y ago

And start when you are 22 not 55

chank 2y ago

Technically, it's both. Parents don't teach their kids because they didn't/don't really know. Financial literacy isn't in the curiculum at all pre-college level. Even then it's not a "core" competency in any degree that isn't finance related. Even just ~10-15 years ago I wouldn't say the topic itself had as wide of discussion as it does today.

marssaxman 2y ago

Simply knowing how it would have to work doesn't magically grant you the capacity to do it. Life is full of unexpected surprises, and they can be very expensive.

mikewarot 2y ago

After the collapse in 2008, they decided to drop the effective interest rate to 0.0% on personal savings accounts, like the one my parents were counting on. The 5-8% per annum, which everyone older expected to live off of, was stolen to prop up the banks which got us into the mess in the first place. It's not their lack of planning, not their generations fault. They they shouldn't be the ones to pay for the crash of 2008. There should be thousands of former bankers starting their second decade behind bars... but there are NONE.

jillieco84 2y ago
[flagged]

jmclnx 2y ago

The big thing that happened to these people was the pension crisis. They were told, while working they would get a decent pension early in their career Plus when most started, it was expected you would be with the company your full lives. Then the 70s and 80s happened, people did not realize there would be a paradigm shift in the work force. So here we are, and back then IRAs were limited on what you could save and I think there were no 401k's at all.