Is retirement even possible for the average joe?

[Umbra]

I've been thinking about inflation, and how one million dollars thirty years from now is two hundred thousand or so. That's with an average inflation of 3.1% per year. So, unless I'm missing something, we need around four million to retire(in a taxable savings account).

Sure you can do that if you can sacrifice ten to fifteen thousand a year, and sock it all away in a 401k or something. If you have a regular taxable account though, then you need around seven million it seems to equal one million thirty years from now. What does everyone think? Am I right? I guess we could always move to a country with a lower cost of living.

PS - I use dinkytown.net for the calculations.

[Winter Storm]

I was just talking to a co-worker about this yesterday, I think the majority of our generation will be royally screwed. Many of us won't be able to put away enough to comfortably live in the years 2040+ and we'll probably live longer, adding more strain. We'll probably be working until we drop dead.

[wordsmith]

I don't anticipate it.

[Kitty]

I think I will be able to..i've done a bunch of those calculators and it looks like I'm ahead of the curve.

Buying a hosue..though..that is what freaks me out.

[analogman]

I suppose that depends on what the average Joe’s finances look like. With the longer life expectancies and rising cost of healthcare, retirement age for our generation is also probably further away, maybe 70 years old.

I agree that it would be much harder to save for retirement without a 401k/403b account though. The contribution limit for IRA is way too low to help save enough for retirement.

Another big variable is the return we get on our investments minus inflation rate. Depending that number I have retirement scenarios ranging from not too comfy to having way too much money. I am planning for the lower end of the spectrum though.

[vxmike]

Retirement won't be possible for most people. The primary factor is inflation which is far greater than 3.1% in reality. After taxes it's really not possible to even beat inflation on a consistent basis, so I look at the situation as if I have to save the actual dollar amount needed for retirement. If I want to retire for ten years and live on $30,000 of today's dollars then I need to save $300,000 and just hope to match inflation. Twenty years at 100k of today's money is two million saved.

Saving 10% of income for 40 years and then hoping to live for another 30 at a similar lifestyle is simply not realistic.

I will retire just fine because I'm a single miser with no kids. For most regular people with kids, spouses and more traditional lives...won't happen.

[pisces2473]

If I had an employer-related retirement account, I think I'd be fine. The fact that I don't have one, and barely put anything into my ROTH, says a lot. I probably won't be able to retire.

[wordsmith]

If I had an employer-related retirement account, I think I'd be fine. The fact that I don't have one, and barely put anything into my ROTH, says a lot. I probably won't be able to retire.

Yep, that would help.

[WorkInProgress]

Barring some unforeseen circumstances, I should be able to.

I don't know what "average" is. For a lot of people, though, I suspect it will not happen.

[AshleyJordan]

If I stay in the same field (and now, I plan to,) retirement should not be a problem-- I get a very nice match from my employer and always have. This is often the case with nonprofits (and also govt and universities, I understand.)
The tradeoff is I'm not getting a hell of a lot of money now, but I think it kind of evens out in the end. . .

[weary]

i have accepted that i'm going to have to live pretty simply in my retirement.

it's either that or work far longer and harder than i want to. and i'm not willing to do that b/c i started far earlier than most and i WILL have some sort of life beyond being a drone so i can collect a paycheck.

[AshleyJordan]

Maybe things will change as I get older, but I also like what I do enough that I'd probably want to work fairly well into my senior years. Now, if I *had* to for economic reasons that would be a different story. . . nothing makes me sadder than seeing really old, frail people in service-sector jobs-- waiting tables, mopping floors, etc.

[jrwilheim]

Retirement won't be possible for most people. The primary factor is inflation which is far greater than 3.1% in reality. After taxes it's really not possible to even beat inflation on a consistent basis, so I look at the situation as if I have to save the actual dollar amount needed for retirement. If I want to retire for ten years and live on $30,000 of today's dollars then I need to save $300,000 and just hope to match inflation. Twenty years at 100k of today's money is two million saved.

Not true. The stock market returns an average of 10% a year, while inflation averages maybe 3-4%. You can easily beat inflation over the long term, provided you invest in stock mutual funds rather than socking it all away in a savings account (which isn't really designed to beat inflation anyway--it's really just designed to keep your money growing at or about the rate of inflation).

Also, you don't invest for retirement in a taxable account! You invest in a 401(k), 403(b), IRA, or Roth IRA, in which you don't pay capital gains taxes when you sell an investment.

[yankeeyosh]

There will be a great divide in the mid Forties, when our generation first reaches retirement age. There will be a large group of supersavers...who saved a large percentage (say, 10% or more) from day one into their 401(k), who shouldn't have a problem, and a large group of superspenders, who have squat, or close to it. The death of the defined benefit plan, plus more job hopping (i.e. fewer will have vested matches) will mean that for many of us, we will have grossly insuffficent funds. Another major issue has to do with Boom parents, who many of us will have to take care of since many of them spent like there was no tomorrow and thus, have little for retirement. This may hamper many of our savings habits later on. I hope by then colleges will curb tuition costs, but that's another issue we will have to contend with, as well. Not to mention healthcare.

I personally don't think I will ever retire...I'd love to, but I just don't see it in the cards. Right now, my 401(k) balanace is perhaps $800.

[WorkInProgress]

nothing makes me sadder than seeing really old, frail people in service-sector jobs-- waiting tables, mopping floors, etc.

I always try to leave a really nice tip when some old lady is waiting on me. And I feel sad when an old person is ringing me up at Target or the grocery store or something.

i have accepted that i'm going to have to live pretty simply in my retirement.

Me too. As much as I'd love to just become a jetsetter, that's most likely beyond my reach. Simple I could handle. Poverty is not something I want to consider.

[WorkInProgress]

There will be a great divide in the mid Forties, when our generation first reaches retirement age. There will be a large group of supersavers...who saved a large percentage (say, 10% or more) from day one into their 401(k), who shouldn't have a problem, and a large group of superspenders, who have squat, or close to it. The death of the defined benefit plan, plus more job hopping (i.e. fewer will have vested matches) will mean that for many of us, we will have grossly insuffficent funds. Another major issue has to do with Boom parents, who many of us will have to take care of since many of them spent like there was no tomorrow and thus, have little for retirement. This may hamper many of our savings habits later on. I hope by then colleges will curb tuition costs, but that's another issue we will have to contend with, as well.

Without trying to sound supercold, I think it'll be interesting to see what happens financially, when a lot of our generations parents and grandparents pass on.

[Winter Storm]

There will be a great divide in the mid Forties, when our generation first reaches retirement age. There will be a large group of supersavers...who saved a large percentage (say, 10% or more) from day one into their 401(k), who shouldn't have a problem, and a large group of superspenders, who have squat, or close to it. The death of the defined benefit plan, plus more job hopping (i.e. fewer will have vested matches) will mean that for many of us, we will have grossly insuffficent funds. Another major issue has to do with Boom parents, who many of us will have to take care of since many of them spent like there was no tomorrow and thus, have little for retirement. This may hamper many of our savings habits later on. I hope by then colleges will curb tuition costs, but that's another issue we will have to contend with, as well.

....But not to pass judgement or anything. Pfff:rolleyes:

Actually, I think many of those "superspenders" Yank speaks of, may be non-afforders as I just know lots of people that just can't afford to save or invest right now. Even when they do, they won't be able to catch up on that missed time.

I also think by 2040, there is a good chance, my mother won't still be alive (at 97) and I don't have plans to totally cover my future children's college tuition. I'll do what I can but I won't be breaking to bank to do it. They can borrow the rest just like the old lady did.

[vxmike]

Not true. The stock market returns an average of 10% a year, while inflation averages maybe 3-4%. You can easily beat inflation over the long term, provided you invest in stock mutual funds rather than socking it all away in a savings account (which isn't really designed to beat inflation anyway--it's really just designed to keep your money growing at or about the rate of inflation).

Also, you don't invest for retirement in a taxable account! You invest in a 401(k), 403(b), IRA, or Roth IRA, in which you don't pay capital gains taxes when you sell an investment.

Disagree on the stock market. It is all dependent on when you get in. It took investors in the late 20s twenty years to break even. Sure there have been long periods of 10% annual averaged gains, but since the market is currently at an alltime high it's not appropriate to calculate longterm gains based on that number. Google at $450 is not a longterm type of valuation, for example.

I max out my 401k, IRA, and 403b. The annual contribution limits are not high enough to accomodate all my savings, so I have to save in taxable accounts too.

[yankeeyosh]

....But not to pass judgement or anything. Pfff:rolleyes:

Actually, I think many of those "superspenders" Yank speaks of, may be non-afforders as I just know lots of people that just can't afford to save or invest right now. Even when they do, they won't be able to catch up on that missed time.

I also think by 2040, there is a good chance, my mother won't still be alive (at 97) and I don't have plans to totally cover my future children's college tuition. I'll do what I can but I won't be breaking to bank to do it. They can borrow the rest just like the old lady did.


I think the Boom will live, on average, to 85 or even greater. Keep in mind that the life expectancies given include people who passed away already. So a 55 or 60 year old probably has another 25 or 30 years left.

[vxmike]

There will be a great divide in the mid Forties, when our generation first reaches retirement age. There will be a large group of supersavers...who saved a large percentage (say, 10% or more) from day one into their 401(k), who shouldn't have a problem, and a large group of superspenders, who have squat, or close to it. The death of the defined benefit plan, plus more job hopping (i.e. fewer will have vested matches) will mean that for many of us, we will have grossly insuffficent funds. Another major issue has to do with Boom parents, who many of us will have to take care of since many of them spent like there was no tomorrow and thus, have little for retirement. This may hamper many of our savings habits later on. I hope by then colleges will curb tuition costs, but that's another issue we will have to contend with, as well. Not to mention healthcare.

I personally don't think I will ever retire...I'd love to, but I just don't see it in the cards. Right now, my 401(k) balanace is perhaps $800.

I think our Grandparents were the last generation to retire comfortably. The boomers have saved too little and live far too lavishly compared to what little they've saved. Their parents were better savers and more frugal having gone through the Depression.

Our generation and future generations don't have a chance outside of the supersavers. Wages are just not keeping pace with expenses.

[SpaceMonkey]

Disagree on the stock market. It is all dependent on when you get in. It took investors in the late 20s twenty years to break even. Sure there have been long periods of 10% annual averaged gains, but since the market is currently at an alltime high it's not appropriate to calculate longterm gains based on that number. Google at $450 is not a longterm type of valuation, for example.

Yeah, I tend to assume my long-term gains will be more like 4-5% after inflation.

[vxmike]

I think the Boom will live, on average, to 85 or even greater. Keep in mind that the life expectancies given include people who passed away already. So a 55 or 60 year old probably has another 25 or 30 years left.

If they do, I feel it will simply be due to advanced medical care keeping them alive. I don't feel the boomers will live longer quality lives than their parents did because the boomers lifestyles (like ours) are not as healthy. People don't exercise as much anymore and diets are much poorer today. They might live longer but the end years will often be bedridden or in hospitals/nursing homes.

This will be a huge drain on social services like Medicare/Medicaid.

[yankeeyosh]

I think our Grandparents were the last generation to retire comfortably. The boomers have saved too little and live far too lavishly compared to what little they've saved. Their parents were better savers and more frugal having gone through the Depression.

Our generation and future generations don't have a chance outside of the supersavers. Wages are just not keeping pace with expenses.

Yes. Although I think today's sixty-somethings born in what I call Generation 'U' are also going to retire comfortably...they were the last generation to have come of age and spent the balance of their working years (or at least their early working years) in a non-materialistic society.

[yankeeyosh]

If they do, I feel it will simply be due to advanced medical care keeping them alive. I don't feel the boomers will live longer quality lives than their parents did because the boomers lifestyles (like ours) are not as healthy. People don't exercise as much anymore and diets are much poorer today. They might live longer but the end years will often be bedridden or in hospitals/nursing homes.

This will be a huge drain on social services like Medicare/Medicaid.

Yes, and that's why it's going to be a problem...instead of ten years of large amounts of healthcare that will be required, it will be twenty or even thirty.

[AshleyJordan]

Maybe I'm just not familiar with how "most" Americans live, and by that I mean those outside of the Blue-State, upper-middle-class Northeast where I've spent my whole life. The Boomers I know (i.e. my folks,) saved a ton-- in my case, forfeiting any tuition or housing assistance to their kids to do so. They also seem to plan to live to be 140-- going on extreme sports vacations, eating organic hippy food, seeing every medical specialist known to man, etc.

[wordsmith]

Me too. As much as I'd love to just become a jetsetter, that's most likely beyond my reach. Simple I could handle. Poverty is not something I want to consider.

My biggest thing is what if I need to be institutionalized for care in my old age. My grandmother has late-stage Alzheimer's, requires constant care in a home. She's in a middle of the road private care facility affiliated with our church, not a county nursing home, which would be slightly less expensive, but not up to par with the specialized care, either. And it is INCREDIBLY expensive. Her modest estate is currently being sold off bit by bit to pay the nursing home, which means nothing will be left for anybody when she's gone, not even the family home that's been in the fam for generations.

I don't have an estate, or a home to sell. What will happen to me if I need more care than can be afforded? Ward of the state? Medicare?

[red]

Not to mention healthcare.

healthcare scares the crap out of me. and i'm probably a supersaver too. but still, my healthcare is tied to my employment which means it's not guaranteed.

[wordsmith]

healthcare scares the crap out of me. and i'm probably a supersaver too. but still, my healthcare is tied to my employment which means it's not guaranteed.

Nothing scares me more than thinking about healthcare. If I needed something major, I'd be sunk. Seriously sunk. My insurance isn't that great.

[vxmike]

I don't have an estate, or a home to sell. What will happen to me if I need more care than can be afforded? Ward of the state? Medicare?

Unless you have family to care for you, a shitty state-run home covered in bedsores. Not being dramatic either...I see people admitted to the hospital all the time after being in these types of homes. That is what happens in America if you don't have enough money.

My advice is to purchase adequate long-term care insurance when you're older.

[analogman]

Disagree on the stock market. It is all dependent on when you get in. It took investors in the late 20s twenty years to break even. Sure there have been long periods of 10% annual averaged gains, but since the market is currently at an alltime high it's not appropriate to calculate longterm gains based on that number. Google at $450 is not a longterm type of valuation, for example.

I max out my 401k, IRA, and 403b. The annual contribution limits are not high enough to accomodate all my savings, so I have to save in taxable accounts too.

I agree with jrwilheim and disagree with vxmike. Even factoring in the great depression, I think the stock market still beats inflation by a few % points annually over the past century (this is estimated without looking up all the numbers). Markets will consistently hit all time highs (after all, the trend is up) with periods of corrections. It is entirely appropriate to expect the market to return positive gains (even including inflation) over the next 40 years. It's not terribly realistic to say the Dow will not exceed today's levels in the next 40 years :eek: Investing in a single stock is a BAD idea when saving for retirement.

If you are maxing out your retirement accounts, that's $19k a year. That's more than 2.1 million in 35 years at 6% annual return. It will be worth an equivalent of 727K in today's dollars or 29k a year forever (assuming withdrawl rates equal return minus inflation). If you earn 10% returns (I think starting after the depression the annual return has been around 12%), you'd have 70K a year forever in today's dollars. So like I mentioned in my post, the rate of return will determine whether you have enough money in retirement or too much. It looks like you are planning on the lower end of returns as well; though I feel maybe you are a bit to pessimistic. Your heirs will appreciate it :D


I agree with jrwilheim and disagree with vxmike. Even factoring in the great depression, I think the stock market still beats inflation by a few % points annually over the past century (this is estimated without looking up all the numbers). Markets will consistently hit all time highs (after all, the trend is up) with periods of corrections. It is entirely appropriate to expect the market to return positive gains (even including inflation) over the next 40 years. It's not terribly realistic to say the Dow will not exceed today's levels in the next 40 years :eek: Investing in a single stock is a BAD idea when saving for retirement.

If you (vxmike) are maxing out your retirement accounts, that's $19k a year. That's more than 2.1 million in 35 years at 6% annual return. It will be worth an equivalent of 727K in today's dollars or 29k a year forever (assuming withdrawal rates equal return minus inflation). If you earn 10% returns (I think starting after the depression the annual return has been around 12%), you'd have 70K a year forever in today's dollars. So like I mentioned in my post, the rate of return will determine whether you have enough money in retirement or too much. It looks like you are planning on the lower end of returns as well; though I feel maybe you are a bit to pessimistic. Your heirs will appreciate it :D

[yankeeyosh]

Maybe I'm just not familiar with how "most" Americans live, and by that I mean those outside of the Blue-State, upper-middle-class Northeast where I've spent my whole life. The Boomers I know (i.e. my folks,) saved a ton-- in my case, forfeiting any tuition or housing assistance to their kids to do so. They also seem to plan to live to be 140-- going on extreme sports vacations, eating organic hippy food, seeing every medical specialist known to man, etc.

Yeah, but keep in mind...you said upper middle class. Not all Boomers are at this level. A lot are struggling (even though they are generally not superspenders). And just because they're healthy now at 50 or 55 doesn't mean they'll be so at 75.

[Syracuse]

Obviously it's very difficult to pay for all of your kids college tuition. But to have kids and not try your damndest to do so is to be a bad parent in my opnion. First of all I have liberal ideas on education in the first place. But I face reality. I hold a grudge on my parents for not helping me pay for my college. Yeah kids are expensive to raise. If you don't like it don't have kids. My kids college expenses will be placed before my retirement. This is something I will have to discuss with my future wife, if I have one. I'm already trying to save for my little brother (8 years old) college education, because my parents are once again not bothering to.

Also I have an employer pension plan, however I am not totally confident it will exist in the future, looking at what happened at Enron, etc. I am contemplating putting a stop to my contributions to it.

[red]

i have chronic health issues, so i feel you on that.

my grandmother is going blind so she won't be able to live in her home with health aides to assist her for very much longer. she is lucky to have some money but she worked well into her 70's.

[analogman]

Yeah, I tend to assume my long-term gains will be more like 4-5% after inflation.

I think that's a reasonable assumption. My assumption is along those lines as well.

[wordsmith]

Unless you have family to care for you, a shitty state-run home covered in bedsores. Not being dramatic either...I see people admitted to the hospital all the time after being in these types of homes. That is what happens in America if you don't have enough money.

Yeah, that'd be exactly my point, except that here it's county and not state. Unlike my grandmother, I don't anticipate having a farm to sell, etc. to pay for such things as basic care.

My advice is to purchase adequate long-term care insurance when you're older.

Which is obviously the way to go if you an afford to, but who knows if that's reality? Just as I don't anticipate being able to retire, I also really don't anticipate having the money to invest in long-term care provisions. What's up, working poor?

[vxmike]

healthcare scares the crap out of me. and i'm probably a supersaver too. but still, my healthcare is tied to my employment which means it's not guaranteed.

Same here as another supersaver. Even the least optimistic projections leave me with plenty of cash to retire but healthcare will still be a huge issue. Even supersavers can't afford $1000+ monthly premiums (and that's todays cost for older people - imagine in 20 years?).

I suppose the best solution is just try to stay healthy.

[AshleyJordan]

Obviously it's very difficult to pay for all of your kids college tuition. But to have kids and not try your damndest to do so is to be a bad parent in my opnion. First of all I have liberal ideas on education in the first place. But I face reality. I hold a grudge on my parents for not helping me pay for my college. Yeah kids are expensive to raise. If you don't like it don't have kids. My kids college expenses will be placed before my retirement.

Conventional financial wisdom would suggest otherwise, but I have to say that, I see your point. Obviously retirement is important but you should also do all you can for your kids. I wish my parents had thought of that, but it's totally out of my hands!

The one "perk" is that, even allowing for very long lives or (God forbid) long, costly illnesses, I won't have to contribute anything to my parent's care, financially. There's definitely enough saved up.

[wordsmith]

I suppose the best solution is just try to stay healthy.

I suppose somebody should have told my grandma that, maybe she'd have tried not to get Alzheimer's...

Sorry, nerve, but you don't have much control over some stuff.

[Winter Storm]

Obviously it's very difficult to pay for all of your kids college tuition. But to have kids and not try your damndest to do so is to be a bad parent in my opnion. First of all I have liberal ideas on education in the first place. But I face reality. I hold a grudge on my parents for not helping me pay for my college. Yeah kids are expensive to raise. If you don't like it don't have kids. My kids college expenses will be placed before my retirement.

Wow, I don't share your views on this. As pertinent as a college degree might be today, I still see it as an option, not something that is mandatory.

I think a parent can still be a damn good one even if they don't put that child through college.

[WorkInProgress]

My biggest thing is what if I need to be institutionalized for care in my old age. My grandmother has late-stage Alzheimer's, requires constant care in a home. She's in a middle of the road private care facility affiliated with our church, not a county nursing home, which would be slightly less expensive, but not up to par with the specialized care, either. And it is INCREDIBLY expensive. Her modest estate is currently being sold off bit by bit to pay the nursing home, which means nothing will be left for anybody when she's gone, not even the family home that's been in the fam for generations.

I don't have an estate, or a home to sell. What will happen to me if I need more care than can be afforded? Ward of the state? Medicare?

I never, ever, ever want to live like that. So I'm going to save what I can. And hope that I die before my money runs out. And man, cynical as it is, I really hope I get married and have some good kids who will be able to help me when I'm old.

[WorkInProgress]

My advice is to purchase adequate long-term care insurance when you're older.

I'm hoping my parents finally take care of this when they go visit their financial planner next. She's been on them to get it done for a few years already.

[wordsmith]

I never, ever, ever want to live like that. So I'm going to save what I can. And hope that I die before my money runs out. And man, cynical as it is, I really hope I get married and have some good kids who will be able to help me when I'm old.

In all honesty, both of my parents have told me that they would rather die with pillows over their faces than be in the position my grandmother's in and have no $$$ to fund care.

And on that cheery note, I'm outtie, because I'm only upsetting myself.

[red]

yeah my parents get reasonable healthcare in their retirement and even though they made less money than we do, it's a huge perk that i'd kill to have.

the healthcare situation in this country is atrocious!

[vxmike]

Yeah, that'd be exactly my point, except that here it's county and not state. Unlike my grandmother, I don't anticipate having a farm to sell, etc. to pay for such things as basic care.


Which is obviously the way to go if you an afford to, but who knows if that's reality? Just as I don't anticipate being able to retire, I also really don't anticipate having the money to invest in long-term care provisions. What's up, working poor?

Sorry, but there are no better options - that is just reality. If one does not have adequate financial resources or family care they will die in a shitty government home. There is no other way unless you want to become a nun or something and then I think the church will take care of you in your final years.

[cheshrcarol]

Another thing to keep in mind when considering retirement is that you'll most likely have less everyday expenses than when you were working. No work clothes to buy, less gas because you don't commute every day, need new cars less often for the same reason, no kids to take care of, etc. Also, it is a really good idea to own a paid off house by the time you retire, since mortgage will also be one less expense.

[Syracuse]

Wow, I don't share your views on this. As pertinent as a college degree might be today, I still see it as an option, not something that is mandatory.

I think a parent can still be a damn good one even if they don't put that child through college.
Like I said my views on that are very liberal. I think actually that a bachelors degree should be free, like a high school degree is. Just makes sense to me, why not make everyone as smart as possible, of course this is a whole other discussion.

[vxmike]

Wow, I don't share your views on this. As pertinent as a college degree might be today, I still see it as an option, not something that is mandatory.

I think a parent can still be a damn good one even if they don't put that child through college.

Agreed. I don't think parents should sacrifice their retirement to put a child through college. Many kids don't even appreciate the gift or make the best choices in college when they aren't footing the bill.

[vxmike]

I never, ever, ever want to live like that. So I'm going to save what I can. And hope that I die before my money runs out. And man, cynical as it is, I really hope I get married and have some good kids who will be able to help me when I'm old.

Agreed except I know I won't have any children or a spouse to care for me.

I also have chronic health issues that will prevent a long life anyways. I plan to stop working at a young age and then retire decently until my money runs out...then I will die. Takes care of the long-term care problem right there since I have no desire to live in a state of terminal sub-standard health.

[AshleyJordan]

Agreed. I don't think parents should sacrifice their retirement to put a child through college. Many kids don't even appreciate the gift or make the best choices in college when they aren't footing the bill.


Like I said, if nothing else I have the peace of mind that they have a good retirement nest egg saved up, good insurance, the house paid off, etc. As much as I do resent that they didn't help with school, I'd probably be more resentful if, at 35, I had to give them money every month for their living expenses. At least this way, all of my liabilities and assets are truly my own.

[vxmike]

Another thing to keep in mind when considering retirement is that you'll most likely have less everyday expenses than when you were working. No work clothes to buy, less gas because you don't commute every day, need new cars less often for the same reason, no kids to take care of, etc. Also, it is a really good idea to own a paid off house by the time you retire, since mortgage will also be one less expense.

True, but unless you want to be one of those old people just sitting around watching The Price is Right all day you'll need money for activities since you'll have a lot more free time.

[WorkInProgress]

Agreed. I don't think parents should sacrifice their retirement to put a child through college.

I totally agree. I do think, though, that saving at least something is a good idea. As much as it would have been great to have no student loan debt, I don't feel angry about it. My parents covered most of my schooling, and I'm paying maybe a third of it, which I think is plenty fair. My education was definitely a financial priority of theirs, but it has always been alongside their retirement plans.

[vxmike]

I totally agree. I do think, though, that saving at least something is a good idea. As much as it would have been great to have no student loan debt, I don't feel angry about it. My parents covered most of my schooling, and I'm paying maybe a third of it, which I think is plenty fair. My education was definitely a financial priority of theirs, but it has always been alongside their retirement plans.

I supported myself in school by working fulltime in addition to going to school 40 hours per week. I wouldn't want to see their retirements negatively impacted for my benefit - they had to work for everything up to this point and there's no reason I couldn't either. It was never even an option in my family that the parents would pay for post high school education.

I've found that people tend to make much wiser education choices and work a lot harder at it when they're footing the bill. I've seen way too many kids waste their parents hard-earned money.

[Syracuse]

Agreed. I don't think parents should sacrifice their retirement to put a child through college. Many kids don't even appreciate the gift or make the best choices in college when they aren't footing the bill.
If they don't appreciate it or work hard enough eventually that comes down to the parent as well, they did a poor job of instilling values on their kid. And if you worked 40 hours a week through school and put yourself through it on your own, you have my respect. I was unable to do that I took out loans. Now I am shackled with them for the rest of my life. Now I can only save for so many things, and taking care of my parents will not be one of them.

I will raise any kids of mine to the best of my potential. If I do the best job possible they will get scholarships and not need the college tuition money I'd saved up for them, that becomes a good problem to have, what to do with that money.

Like I said, I have my own views on this I understand if anyone disagrees.

[CTGirl]

If they don't appreciate it or work hard enough eventually that comes down to the parent as well, they did a poor job of instilling values on their kid.

I agree with this. My parents paid for our undergraduate education, and we were to pay for everything after that. I never slacked off cuz I "wastnt footing the bill" because to me, my parents' money is still family money, and not something to be wasted, just the same as mine shouldnt be. If anything, I am more likely to waste my own money than theirs, out of respect for them.

[yankeeyosh]

'Cuse, I agree with you on 99% of what you said, but I respectfully disagree with you on this...I don't think college is a right. Far too many people assume they "have to" go to college (or grad school) for that matter, and we are creating diploma mills that are to some degree, a joke. Even a master's degree means nothing these days. Yes, a bachelor's degree is a requirement these days for virtually all professional jobs, but just a generation ago, many of these jobs just required a high school diploma. Hell, brilliant people with master's degrees, who may not interview well, might be stuck in these "high school graduate" jobs.

That said, I do think financial aid should be revamped. It is a national embarassment that so many people are indebted to the hilt at age 22. While loans are OK, I think a lot of people went overboard. And I suspect this might be a minor driver in terms of why salary expectations are so high these days in Gen 'Y'.

[jrwilheim]

There will be a great divide in the mid Forties, when our generation first reaches retirement age. There will be a large group of supersavers...who saved a large percentage (say, 10% or more) from day one into their 401(k), who shouldn't have a problem, and a large group of superspenders, who have squat, or close to it. The death of the defined benefit plan, plus more job hopping (i.e. fewer will have vested matches) will mean that for many of us, we will have grossly insuffficent funds. Another major issue has to do with Boom parents, who many of us will have to take care of since many of them spent like there was no tomorrow and thus, have little for retirement. This may hamper many of our savings habits later on. I hope by then colleges will curb tuition costs, but that's another issue we will have to contend with, as well. Not to mention healthcare.

I personally don't think I will ever retire...I'd love to, but I just don't see it in the cards. Right now, my 401(k) balanace is perhaps $800.

How long have you been contributing? And what's your age?

I think it's a little premature for us to be making these conclusions in our twenties. People who aren't able to save much right now might end up in different jobs or situations where they can. And people who've been super-savers may face hard times that force them to draw on their retirement savings.

[Winter Storm]

... I respectfully disagree with you on this...I don't think college is a right.

I agree with you on that one. I still view college as a luxury and a priviledge but not a right owed to every child.

[AshleyJordan]

I agree with you on that one. I still view college as a luxury and a priviledge but not a right owed to every child.
I do think that parents have an obligation to contribute to their children's education to the best of their ability, and barring that, there should be govt. aid to fill the gaps.

[shimma]

....But not to pass judgement or anything. Pfff:rolleyes:

Actually, I think many of those "superspenders" Yank speaks of, may be non-afforders as I just know lots of people that just can't afford to save or invest right now. Even when they do, they won't be able to catch up on that missed time.

Yeah, come on. I don't know about you all, but I put out $300-$700 a month in medical copays... when my health is behaving itself.

I guess my purchased "not being dead" and/or "being able to function like a normal human being" can be considered a luxury, but there's kind of no point in funneling 20% of my salary into my 401K if I'm not even going to live that long because I didn't take care of myself.

[Syracuse]

I guess what I said came off wrong. It's not a right. You see high school is pretty easy to graduate with the minimum of work, really and it is free. I am not saying college should be a right, because then every lazy kid would go to college, slack off, and do that to avoid getting a job. You're right that's not good.

On the other hand I don't think it should be so expensive, and putting people in loan slavery isn't right. It shouldn't be just for the rich, everyone should have the same chance. For example you can be a rich kid who is dumb and lazy and you still get to go to college, meanwhile a poor kid who is merely average can't.

Make it so that if you go to college and get failing grades, you get kicked out. But it shouldn't be so expensive.

I guess I really don't have all the answers, for a perfect solution. In any system I think someone will get screwed. I'd just rather have the rich spoiled kid get screwed instead of the poor kid who did nothing wrong besides being born poor.

[EmberMae]

I think retirement, like so many things are becoming, will be a luxury for the top 10% of earners, and not even some of them due to profligate spending.

I am by our country's standards, a very conservative spender. I own less than 10 pairs of shoes. I don't get new clothes every season. I drive a toyota corrolla. my stereo is over 10 years old, my tv nearly that. I don't have all the latest gadgets. I don't buy new stuff just because it's there. We don't go out to expensive places all that often. I don't get manicures, pedicures, spa treatments, highlights, etc. We save 20% of our net income, which is pretty damn good considering the national savings rate is negative. We bring in a solid middle class income that is well above the median for familes. We live in an area that is relatively low cost of living. And I can tell you right now, I don't see how we can save $10-15,000 a year for retirement AND raise a family. I do the math and it just doesnt' seem posible to me. The whole thing just stresses me out. It's hard to divert so much money to retirement because I have so many goals I want to reach in the near future, not 50 years from now, such as paying off our debts, having children, and buying a home.

Healthcare - honestly it blows my freaking mind. It really does. My fiance's company said they spent $10,000 on his healthcare insurance in one year, and that is with charging us over $200 a month in premiums. We are young and healthy. I really do not understand this.

What is going to happen in 2050 when we have a bunch of old people with bad health and no freaking money? It's really scary.

[Winter Storm]

I do think that parents have an obligation to contribute to their children's education to the best of their ability, and barring that, there should be govt. aid to fill the gaps.

See, I don't think parents should be obligated. It would be nice if they wanted to but obligated?

But when I think of parental obligations, I think of paying the mortgage/rent, making sure there is food, health care, love, support, basic education (required by law) etc. I think anything other than that is at a parent's option.

That's probably just me.

[shimma]

And I can tell you right now, I don't see how we can save $10-15,000 a year for retirement AND raise a family.

Maybe this is just a "my family" thing, but elderly people tend to move in with their adult children, which saves lots of $$.

[wordsmith]

I think it's a little premature for us to be making these conclusions in our twenties. People who aren't able to save much right now might end up in different jobs or situations where they can.

That's a pretty big might. My parents actually struggle far more now than they did when they were young and starting out, due to lots of life circumstances.

While I get what you're saying, I see no evidence in my day to day life of people for whom life gets financially easier as they get older, including both my parents and coworkers, many of whom are at least approaching the age to consider retirement, and will in no way be able to.

It's a nice thought to think that my finances will be way more impressive in the future than they are now, but there are so many variables that enter into that, it's certainly no kind of guarantee.

[Syracuse]

See, I don't think parents should be obligated. It would be nice if they wanted to but obligated?

But when I think of parental obligations, I think of paying the mortgage/rent, making sure there is food, health care, love, support, basic education (required by law) etc. I think anything other than that is at a parent's option.

That's probably just me.
I actually do agree! Now you say basic education required by law. If it wasn't, let's just say it was not required. Would you say that high school education is a luxury then?

See this is why I say make college free, like high school. I know it is a crazy idea!

[Winter Storm]

I actually do agree! Now you say basic education required by law. If it wasn't, let's just say it was not required. Would you say that high school education is a luxury then?


Are you asking if high school weren't required would I call it a luxury? Hard to say, cause I still think what is taught in high school is essential (algebra, biology, physical ed. English) and everyone needs to get that education. But college is different, it is more specialized and tailored for certain careers; life-enriching, but not essential for everyone.

[wordsmith]

Maybe this is just a "my family" thing, but elderly people tend to move in with their adult children, which saves lots of $$.

Def. not the norm in my family...not b/c anybody's opposed to it, just not the way it is. My grandmother lived by herself, in her own home, into her mid eighties, because she wanted to. When her Alzheimer's got too extensive for my family to deal with just checking in on her daily, we got her an inhome nurse who worked for room and board (which was what she had wanted versus nursing home care). She only went to a home when her needs were too great to not have round-the-clock care of a staff. But she never lived with her kids. She did not want to (and didn't have to) leave her home, not for a nursing home, or retirement community, not to live with her kids...she just wanted to live in her home.

My other grandmother, a widow who is of good physical health, also lives in her own house. My grandfather did, too, until he passed away.

I know of families where the grandparents move in, but that's not been the case with mine.

[wordsmith]

I think retirement, like so many things are becoming, will be a luxury for the top 10% of earners, and not even some of them due to profligate spending.

I am by our country's standards, a very conservative spender. I own less than 10 pairs of shoes. I don't get new clothes every season. I drive a toyota corrolla. my stereo is over 10 years old, my tv nearly that. I don't have all the latest gadgets. I don't buy new stuff just because it's there. We don't go out to expensive places all that often. I don't get manicures, pedicures, spa treatments, highlights, etc. We save 20% of our net income, which is pretty damn good considering the national savings rate is negative. We bring in a solid middle class income that is well above the median for familes. We live in an area that is relatively low cost of living. And I can tell you right now, I don't see how we can save $10-15,000 a year for retirement AND raise a family. I do the math and it just doesnt' seem posible to me. The whole thing just stresses me out. It's hard to divert so much money to retirement because I have so many goals I want to reach in the near future, not 50 years from now, such as paying off our debts, having children, and buying a home.

Healthcare - honestly it blows my freaking mind. It really does. My fiance's company said they spent $10,000 on his healthcare insurance in one year, and that is with charging us over $200 a month in premiums. We are young and healthy. I really do not understand this.

What is going to happen in 2050 when we have a bunch of old people with bad health and no freaking money? It's really scary.

Cosign. And there's no way I can save that much for ANYTHING a year, let alone retirement, and I DON'T have a family I'm supporting.

[EmberMae]

Maybe this is just a "my family" thing, but elderly people tend to move in with their adult children, which saves lots of $$.
That's the way it was done in the past, maybe it will be the way it's done in the future. My mom's parents lived on their own until their deaths, but they were pretty well off. My dad's parents still live on their own, but they're only in their early 70s. But if my fiance's parents come live with us, I seriously think I am going to kill myself. :eek: They have 3 other children though, there's hope.

[AshleyJordan]

But if my fiance's parents come live with us, I seriously think I am going to kill myself. :eek: They have 3 other children though, there's hope.

No way my parents could move in-- it would be way too harmful to my own household. If I married someone whose parents were even "OK," I'd probably be fine with them moving in when the time came.

[cache]

I don't know if I could handle my mom moving in with me...I think I would be too tempted to turn things around. "Now listen mom, as long as you're living under my roof, you'll live by my rules.":D

[pisces2473]

Are you asking if high school weren't required would I call it a luxury? Hard to say, cause I still think what is taught in high school is essential (algebra, biology, physical ed. English) and everyone needs to get that education. But college is different, it is more specialized and tailored for certain careers; life-enriching, but not essential for everyone.
It used to be a luxury. My grandfather didn't finish HS. His family needed him on the farm.

[Syracuse]

Are you asking if high school weren't required would I call it a luxury? Hard to say, cause I still think what is taught in high school is essential (algebra, biology, physical ed. English) and everyone needs to get that education. But college is different, it is more specialized and tailored for certain careers; life-enriching, but not essential for everyone.
True there are stories of people never going to college and doing very well for themselves. But it is getting rarer and rarer, and it goes along with what you said about a college degree and even masters becoming a dime a dozen. People should be given the option of going to college is all I am saying. I believe the govt should pay for college, and they used to actually but not it is through loans. I face reality though, the govt isn't going to start doing it again any time soon, that's why I say parents should pay for their kids edcuation, not saying it is right or fair, but you can't expect a kid just getting started with his life to be paying off these mindblowing loans. I know I wouldn't want it for my kid. If I do a good enough job of preparing my kid for the real world, then he will take care of me in my old age. Any old person today who has a grown child taking care of them must have done a good job of parenting.

[Syracuse]

It used to be a luxury. My grandfather didn't finish HS. His family needed him on the farm.
Yes, times are changing, and my opinion is that a parents responsibilities to their kid are changing as well. Back in the day farmers had ten kids minimum, because they needed the kids to help out on the farm. Time has changed that, the economy has changed where 10 kids is hardly affordable. Time has changed to the point where a college degree is necessary. Don't want to pay for your kids college? You decision. I'm just stating my opinion.

[wordsmith]

Time has changed that, the economy has changed where 10 kids is hardly affordable. Time has changed to the point where a college degree is necessary.

Actually, it's not.

Over half my classmates work factory jobs with their HS diplomas, and earn enough doing so to support their families in the blue collar area we live in.

I have a degree, work in a professional field, and couldn't support a family on what I make, I'd make more in a factory. My cousin's a plumber, he learned a trade on the job, not even via trade school. He has a wife and two kids and a beautiful home o na golf course (not where I'd choose to live, but the point is that he can afford it). It's not actually necessary to have a degree to succeed, depending on what you do for a living.

[Winter Storm]

True there are stories of people never going to college and doing very well for themselves. But it is getting rarer and rarer, and it goes along with what you said about a college degree and even masters becoming a dime a dozen. People should be given the option of going to college is all I am saying....

I get what you're saying and all but everybody does have the option of going to college. But I don't think a college degree is essential to life, nor do I think a parent owes it to a child. A person goes because they wanna go, not because they are obligated to. It's a choice.

But I'm just repeating myself again.

[pisces2473]

Yes, times are changing, and my opinion is that a parents responsibilities to their kid are changing as well. Back in the day farmers had ten kids minimum, because they needed the kids to help out on the farm. Time has changed that, the economy has changed where 10 kids is hardly affordable. Time has changed to the point where a college degree is necessary. Don't want to pay for your kids college? You decision. I'm just stating my opinion.
Dude, your post had nothing to do with mine, but you quoted it. I don't get it...

And my grandfather was an only child, FWIW.

[yankeeyosh]

How long have you been contributing? And what's your age?

I have only been contributing since July. Grad school, ineligibility, and low income are the reasons why I havent' contributed in the past. I am 28, and will be 29 in March.

I think it's a little premature for us to be making these conclusions in our twenties. People who aren't able to save much right now might end up in different jobs or situations where they can. And people who've been super-savers may face hard times that force them to draw on their retirement savings.

Well, it's hard to say. Freespenders may become supersavers and vice versa. As we've seen plenty of times, people barely making ends meet one day get a high paying job the next. But I suspect that the vast underclass, which is really a majority of this gen, will be the ones that have problems.

[red]

But if my fiance's parents come live with us, I seriously think I am going to kill myself. :eek: They have 3 other children though, there's hope.

ditto. i'd never be able to live with my in-laws, and they are much older than my own parents, so it's more of a reality. there are alcohol issues and i wouldn't expose my family or myself to that. we won't even stay overnight because it's so bad over there.

wow, that prospect scares me more than no healthcare. *shudder*

[Wolfpack21]

I feel that education is key to retirement. When young people start their first job and are offered a retirement program, many become confused and simply put it off for another day. They do not understand the program at all. Also I've heard this line too "oh I'll start saving next year, I've got a lot of years before I retire." Time flys by very fast now. Yes these are people who could save, but they end up buying another car, more clothes, etc and never save. High schools don't even teach basic finances for graduates and I think this would help out a lot. In a materialistic world, I think it's important to stress saving and investing to young people. Especially when many of the car dealers are filled with new grads signing over for 72mos.

[wordsmith]

I feel that education is key to retirement. When young people start their first job and are offered a retirement program, many become confused and simply put it off for another day. They do not understand the program at all. Also I've heard this line too "oh I'll start saving next year, I've got a lot of years before I retire." Time flys by very fast now. Yes these are people who could save, but they end up buying another car, more clothes, etc and never save. High schools don't even teach basic finances for graduates and I think this would help out a lot. In a materialistic world, I think it's important to stress saving and investing to young people. Especially when many of the car dealers are filled with new grads signing over for 72mos.

I feel that having a viable retirement program offered at all is more the key, and not everyone does have that.

My high school also required basic consumer economics in order to graduate, which everyone hated, but was probably a good thing.

I do think that young people need to be taught good saving and spending practices by example from an early age, though.

[Wolfpack21]

I feel that having a viable retirement program offered at all is more the key, and not everyone does have that.

My high school also required basic consumer economics in order to graduate, which everyone hated, but was probably a good thing.

I do think that young people need to be taught good saving and spending practices by example from an early age, though.

Not all businesses do, but a fair majority of the corporate recruiters on campuses do. Graduates in the "hot" majors will most likely be going to work for a corporate environment. Knowledge of IRAs and other accounts would be useful for graduates who go to work in small to mid size businesses where there is no company backed program. A small to mid size business could offer a retirement program, but they may not be able to offer matching. Many small businesses can't even offer health insurance, let alone the retirement program.

[jrwilheim]

I have only been contributing since July. Grad school, ineligibility, and low income are the reasons why I havent' contributed in the past. I am 28, and will be 29 in March.

I think you've got plenty of time. If you've spent your 20s getting a graduate degree that will help you get a better-paying job down the road, I wouldn't be too worried at this point.

[yankeeyosh]

I feel that education is key to retirement. When young people start their first job and are offered a retirement program, many become confused and simply put it off for another day. They do not understand the program at all. Also I've heard this line too "oh I'll start saving next year, I've got a lot of years before I retire." Time flys by very fast now. Yes these are people who could save, but they end up buying another car, more clothes, etc and never save. High schools don't even teach basic finances for graduates and I think this would help out a lot. In a materialistic world, I think it's important to stress saving and investing to young people. Especially when many of the car dealers are filled with new grads signing over for 72mos.

Exactly. The problem is that this gen has not been taught financial responsibility in the schools, for the most part. Many only received advice from Boom parents...and while many parents may be responsible, others aren't. So we see kids who see nothing wrong with buying high ticket items right off the bat...even though they may not be able to really afford them.

[yankeeyosh]

I think you've got plenty of time. If you've spent your 20s getting a graduate degree that will help you get a better-paying job down the road, I wouldn't be too worried at this point.

Ummmm....I don't see this degree helping me at all. If anything, I've retrograded.

[shimma]

But if my fiance's parents come live with us, I seriously think I am going to kill myself. :eek: They have 3 other children though, there's hope.

See, that's what I'm grateful for with my future inlaws. It's not that they're annoying, it's that they're the AntiChrist. All I would need to do is sprinkle some holy water on them and they'd evaporate. Or hold a crucifix up in front of them and they'd melt. Much easier than my killing myself. I'm not the one who sucks.

[WorkInProgress]

Make it so that if you go to college and get failing grades, you get kicked out. But it shouldn't be so expensive.

Um, isn't this what happens at most schools? I know mine would have zero issues flunking a kid out. I think, though, that most kids (and/or their parents) would withdraw before it got that bad.

[spokes]

i can only speak for myself - and being from canada means that my social safety nets are different - however I fully don't expect to completely retire (i.e. golf 364 days per year) however I do hope to be able to move someplace smaller/more rural where the cost of living is cheaper and i hope to be able to sell my house for some type of profit/additioanl retirmeent funds.

i also hope that the government will continue to provide seniors with some type of health care program and i assume that they will also continue with some type of monthly social security benefit (something that i have paid lots of money into thus far over my working career) - seeing as how it will be a while before i qualify for thse things, i try not to think about it too much.

I also hope that my retirement funds continue to grow - although I know there will be setbacks along the way.

i think that trying to save is a noble goal, but sometimes life and it currents needs, wants, demands gets in teh way - and who knows i may be hit by a bus on the way home tonight.......saving for retirment is a crap shoot for lots of different reasons.

as i am sure many peopel are aware even contributing a small amount to some type of retirement savings vehicle can turn into something over 30 or so years. also don't forget to consider how much money you might be leaving on the table in terms of employer funds that are not vested when you are switching jobs - in the long term it might be worth sticking it out anotehr month if possible.

[yankeeyosh]

Um, isn't this what happens at most schools? I know mine would have zero issues flunking a kid out. I think, though, that most kids (and/or their parents) would withdraw before it got that bad.

Mine did too...but a lot of schools practice grade inflation these days. Take my grad school, where they gave 'F' students 'I' for 'Incomplete', and let them take it over again at the UNDERGRAD level...and if they got an 'A' at the UNDERGRAD level, their 'I' was replaced with an 'A'...even though they had to take it twice, and failed at the academic level they were at.

[wordsmith]

Not all businesses do, but a fair majority of the corporate recruiters on campuses do. Graduates in the "hot" majors will most likely be going to work for a corporate environment. Knowledge of IRAs and other accounts would be useful for graduates who go to work in small to mid size businesses where there is no company backed program. A small to mid size business could offer a retirement program, but they may not be able to offer matching. Many small businesses can't even offer health insurance, let alone the retirement program.

No kidding. My parents run a very small business and have never been able to offer insurance to employees, for the 30 years theyv'e been in business.

I work for a paper owned by a midsize corporation that doesn't match, although they could.

And not every graduate is going to work for a large corp. Many aren't going to.

[WorkInProgress]

I feel that having a viable retirement program offered at all is more the key, and not everyone does have that.

My high school also required basic consumer economics in order to graduate, which everyone hated, but was probably a good thing.

I do think that young people need to be taught good saving and spending practices by example from an early age, though.

I agree, especially with the bolded part. So much about everything in life is learned by parents' (and other close family members') examples. I'm sure I'd be floundering financially without my parents' examples and guidance.

[weary]

See, I don't think parents should be obligated. It would be nice if they wanted to but obligated?

But when I think of parental obligations, I think of paying the mortgage/rent, making sure there is food, health care, love, support, basic education (required by law) etc. I think anything other than that is at a parent's option.

That's probably just me.

hell f*cking no they are not/should not be obligated. all the other things you listed, yes. college. no. college isn't even for everybody.

(says the mother with a child 4 years away from college, or not...)

[WorkInProgress]

See, that's what I'm grateful for with my future inlaws. It's not that they're annoying, it's that they're the AntiChrist. All I would need to do is sprinkle some holy water on them and they'd evaporate. Or hold a crucifix up in front of them and they'd melt. Much easier than my killing myself. I'm not the one who sucks.

Have you tried that yet?

[WorkInProgress]

Mine did too...but a lot of schools practice grade inflation these days. Take my grad school, where they gave 'F' students 'I' for 'Incomplete', and let them take it over again at the UNDERGRAD level...and if they got an 'A' at the UNDERGRAD level, their 'I' was replaced with an 'A'...even though they had to take it twice, and failed at the academic level they were at.

I get why that's icky, but it just prolongs the time spent in college and I fail to see how that's a societal problem. My school had a "graduate in 6 years or not at all" policy, so kids couldn't just do this ad infinitum.

[WorkInProgress]

hell f*cking no they are not/should not be obligated. all the other things you listed, yes. college. no. college isn't even for everybody.

(says the mother with a child 4 years away from college, or not...)

I totally agree that college isn't for everyone, and that parent's aren't and shouldn't be obligated to covery any or all of the cost, especially when they can afford it and if they are claiming the kid on their taxes, which screws them when it comes to financial aid. I do think it's a good thing to do, generally, although unless I had more money that brains (and maybe not even then), I wouldn't cover all my kid's college costs. I think it's fair when the kid has a financial stake in the whole process.

[wordsmith]

Um, isn't this what happens at most schools? I know mine would have zero issues flunking a kid out. I think, though, that most kids (and/or their parents) would withdraw before it got that bad.

Yup, same, here...it was academic probation, and ultimately flunking out or withdrawal if you didn't make it work.

[analogman]

See, that's what I'm grateful for with my future inlaws. It's not that they're annoying, it's that they're the AntiChrist. All I would need to do is sprinkle some holy water on them and they'd evaporate. Or hold a crucifix up in front of them and they'd melt. Much easier than my killing myself. I'm not the one who sucks.

How does your fiancé fee about them. I'd be terrified if my wife felt this way about my parents. She can feel however she wants about her parents as long as I get along with them.

[wordsmith]

I'm pretty sure that they way she feels about her fiance's parents has to do with their treatment of her fiance.

[workaholic?]

i tend to think that the question from the OP depends entirely on your definition of "average joe." i consider myself to be an average joe, and i have confidence that i will be able to retire comfortably if i continue to work for my current company. the company i work for offers a nice pension plan (1.6% of your highest average monthly salary x the number of years of service), plus they have a 401(k) matching program (for a 2% contribution on my part, they put in an additional 8%). right now, i have about $12k in my 401(k)...boyfriend has around $40k. The company's benefits for retirees are also not bad...not terribly different from what i have now.

i think it's all about who you work for. i don't really think i'm a "supersaver" since i only contribute 3% of my salary to my 401(k), but i still think i'll be comfortable in retirement.

[wordsmith]

i tend to think that the question from the OP depends entirely on your definition of "average joe."


Totally...I have no doubt that my interpretation of what's an average joe according to the economy and industry where I live is very different from other people's who live in a different sort of environment.

[spokes]

The company's benefits for retirees are also not bad...not terribly different from what i have now.

as an aside i am assuming that you are referring to healthcare beneifts - but you should be aware that from a coproarte perspective there is typically a large accounting liability associated with offering retiree benefits. In Canada companies are slowly moving out of offering more open ended healthcare plans in favour of a defined benefit plan (i.e. one that only provides for $5,000 of benefits per year). There is no guarantee that your employer will continue to provide you with retiree health benefits - unless perhaps you already have something in writing from them that makes such a promise.

if you were not reffering to healthcare benefits in the above - then please ignore my diatribe.

[workaholic?]

Generally what happens in my company is that what is in place when an employee starts work is what remains through that employee's career. everybody gets grandfathered in as the system changes. our company is one that goes through numerous changes throughout a person's career...mostly through acquiring or partnering with other companies. the grandfathering aspect is in part due to the ever-changing face of the company.

[Syracuse]

Um, isn't this what happens at most schools? I know mine would have zero issues flunking a kid out. I think, though, that most kids (and/or their parents) would withdraw before it got that bad.Sorry I just added that in there to make it clear that a college degree isn't a right, a kid should still have to work their ass off for it and prove themselves worthy.

[Syracuse]

hell f*cking no they are not/should not be obligated. all the other things you listed, yes. college. no. college isn't even for everybody.

(says the mother with a child 4 years away from college, or not...)weary I did not realize you had a child who is close to college age. Sorry if I offended you in any way. I am sure you are a great mother to your child.

[yankeeyosh]

Sorry I just added that in there to make it clear that a college degree isn't a right, a kid should still have to work their ass off for it and prove themselves worthy.

Ah OK...sorry if I misinterpreted you earlier, man.

[Syracuse]

Ah OK...sorry if I misinterpreted you earlier, man.
I admit that I am not good at conveying my meanings, it is my fault, looking back at this thread I look like somewhat of an ass. I take this opportunity to apologize to all! Of course most likely you all don't care too much what a random guy on the internet says but I apologize anyway. You're good people.

[yankeeyosh]

I admit that I am not good at conveying my meanings, it is my fault, looking back at this thread I look like somewhat of an ass. I take this opportunity to apologize to all! Of course most likely you all don't care too much what a random guy on the internet says but I apologize anyway. You're good people.

Thanks...you're a good person too, 'Cuse...hope you stick around.

[yankeeyosh]

plus they have a 401(k) matching program (for a 2% contribution on my part, they put in an additional 8%).

OK...I worked in retirement planning for four years (which is amazing considering I barely have a 401(k) account), and by far, that is the most generous formula I've ever seen...the "best" I've seen was a 100% match up to 6% of compensation deferred...and that was for investment banker types. I don't think I've seen anything above a 100% match...let alone a 400% match.

[vxmike]

I don't know if I could handle my mom moving in with me...I think I would be too tempted to turn things around. "Now listen mom, as long as you're living under my roof, you'll live by my rules.":D

I wouldn't mind living with either of my parents again. In fact I would now if I could earn enough money in the area they live in, but I can't since I must be in a larger city.

As the cost of living continues to rise faster than wages, the American model of one to two people living by themselves in large homes will come to and end and we'll see a return of extended families living together as many ethnicities still commonly do even in the US. It's the primary model in most of the world in fact.

[SpaceMonkey]

OK...I worked in retirement planning for four years (which is amazing considering I barely have a 401(k) account), and by far, that is the most generous formula I've ever seen...the "best" I've seen was a 100% match up to 6% of compensation deferred...and that was for investment banker types. I don't think I've seen anything above a 100% match...let alone a 400% match.

Mine contributes 7%, regardless of the employee contribution. Of course, it doesn't kick in until you've been here for two years...

[yankeeyosh]

Mine contributes 7%, regardless of the employee contribution. Of course, it doesn't kick in until you've been here for two years...

Well, that is a straight profit sharing contribution, most likely. Usually for non-highly compensated employees, you get a 3% safe harbor contribution or perhaps 5% to pass a "gateway" test if the 401(k) contributions for these people are low. Rarely do you see 7% these days for non-highlies.

[vxmike]

i tend to think that the question from the OP depends entirely on your definition of "average joe." i consider myself to be an average joe, and i have confidence that i will be able to retire comfortably if i continue to work for my current company. the company i work for offers a nice pension plan (1.6% of your highest average monthly salary x the number of years of service), plus they have a 401(k) matching program (for a 2% contribution on my part, they put in an additional 8%). right now, i have about $12k in my 401(k)...boyfriend has around $40k. The company's benefits for retirees are also not bad...not terribly different from what i have now.

i think it's all about who you work for. i don't really think i'm a "supersaver" since i only contribute 3% of my salary to my 401(k), but i still think i'll be comfortable in retirement.

Sorry but you are certainly not an "average joe" when it comes to retirement benefits like that. Almost no companies offer what you have anymore...you are very fortunate.

[SpaceMonkey]

Well, that is a straight profit sharing contribution, most likely.

Except I work for a not-for-profit. :p

[yankeeyosh]

Sorry but you are certainly not an "average joe" when it comes to retirement benefits like that. Almost no companies offer what you have anymore...you are very fortunate.

I agree 100% Mike...as I said before, that is incredible. Many people are lucky if they get any kind of fakakta match.

[vxmike]

I agree 100% Mike...as I said before, that is incredible. Many people are lucky if they get any kind of fakakta match.

Indeed. My 401 allows a max contribution of 2% and the company matches 2.5%. Pretty crappy.

[yankeeyosh]

Indeed. My 401 allows a max contribution of 2% and the company matches 2.5%. Pretty crappy.

A max contribution of 2%? Per IRS regulations, I don't think that's allowed unless you are a highly compensated employee (which I think has an income limit of roughly $100,000 in the 2005 plan year)...you can defer as much as $16,000 (I think) in 2006 as long as you are a non-highly compensated employee . If you are over that, you can still defer as long as the non-discrimination testing passes...although at some companies, only owner HCEs defer, while the other HCEs cannot. The reason is that in non-discrimination testing, an average HCE deferral percentage is compared to the average non-HCE deferral percentage. If the avg pctg for HCEs is greater than the max of 2% plus or 1.25 times that of NHCEs, then the test fails.

So...as an example, say the average non-HCE deferral percentage is 3%. In order for the test to pass, the HCE's, on average cannot defer more than the greater of 3 x 1.25 or 3 + 2 or 5% of their eligible compensation. Say there are ten HCEs, and five owners. Each owner defers 8% of eligible comp. Therefore, since the average deferral for HCEs cannot exceed 5%, the average of the non-owners cannot exceed 2% of eligible compensation. If that is the case, then yes, you can be capped at that percentage. Otherwise, you should be able to defer up to the $16K (?) limit.

[Xander]

I wish we could opt out of Social Security. I'd much rather invest that huge amount of my paycheck myself, than put it in some social fund that we will neeeeever see. :mad:

My company does a 100% match for the first 6 or 8% (I forget which) to our 401K, and I can put in 15% max (which I do). We get this on our first day of work. But I may have to stop contributing to pay an insane mortgage. :frustrate

Will I retire? Yes. I'm an optimist. I also plan to move to New Zealand for retirement, which (all things constant) will "double" my retirement power.

[yankeeyosh]

I wish we could opt out of Social Security. I'd much rather invest that huge amount of my paycheck myself, than put it in some social fund that we will neeeeever see. :mad:

No kidding. Talk about a regressive tax.

My company does a 100% match for the first 6 or 8% (I forget which) to our 401K, and I can put in 15% max (which I do). We get this on our first day of work. But I may have to stop contributing to pay an insane mortgage. :frustrate

Man, where are these plans coming from? I must have been dealing with really crappy plans....even the I-banking companies. Still, a lot of companies do not match. I don't know the percentage off hand, but I know it is significant.

Will I retire? Yes. I'm an optimist. I also plan to move to New Zealand for retirement, which (all things constant) will "double" my retirement power.

Well, I don't know if I can stay in America myself.

[workaholic?]

OK...I worked in retirement planning for four years (which is amazing considering I barely have a 401(k) account), and by far, that is the most generous formula I've ever seen...the "best" I've seen was a 100% match up to 6% of compensation deferred...and that was for investment banker types. I don't think I've seen anything above a 100% match...let alone a 400% match.

let me explain that a little better. it's not 400% with no max...if you contribute 1%, they put in 4% to make it 5% total. if you put in 2%, they put in 8% to make it 10% total. 8%, though, is as much as they'll put in. Anything else you put in, you're on your own.

[yankeeyosh]

let me explain that a little better. it's not 400% with no max...if you contribute 1%, they put in 4% to make it 5% total. if you put in 2%, they put in 8% to make it 10% total. 8%, though, is as much as they'll put in. Anything else you put in, you're on your own.

That formula, when written out, is 400% of the first 2% of eligible compensation contributed. That's still the best damn 401(k) plan I've ever seen...as vxmike said, not even close to an "Average Joe" formula.

[EmberMae]

I wish we could opt out of Social Security. I'd much rather invest that huge amount of my paycheck myself, than put it in some social fund that we will neeeeever see. :mad:

DITTO. I don't think Social Security will give me anything in the end, and investing 7.5% of our gross income would be a major solution to our problems. But I just kiss that money goodbye and try to think of it as a gift to my grandparents who have given me a lot over the years.

[red]

Man, where are these plans coming from? I must have been dealing with really crappy plans....even the I-banking companies. Still, a lot of companies do not match. I don't know the percentage off hand, but I know it is significant.

my husband's company doesn't match and he works for a major financial svs co. he does get a profit sharing deposit into his 401k from time to time, but it's not much. maybe 1k.

my company matches 6%, but it's a 1 for 1 match. however, 6% of nothing is still nothing, so i have to put in a larger % of my salary.

and the IRS limit for this year (2006) is $15k. for 2007 it's $15.5k. that is per individual and not per couple if married filing jointly.

[AshleyJordan]

OK...I worked in retirement planning for four years (which is amazing considering I barely have a 401(k) account), and by far, that is the most generous formula I've ever seen...the "best" I've seen was a 100% match up to 6% of compensation deferred...and that was for investment banker types. I don't think I've seen anything above a 100% match...let alone a 400% match.


At my last job, I got 12% (without contributing anything,) at this job, 10% if I contribute 3%. My salary, however, isn't that stellar-- I think it may all even out in the end, though-- I joke that I'll be more comfortable after retirement than I am now!

[yankeeyosh]

At my last job, I got 12% (without contributing anything,) at this job, 10% if I contribute 3%. My salary, however, isn't that stellar-- I think it may all even out in the end, though-- I joke that I'll be more comfortable after retirement than I am now!

It seems like a lot of people here have incredibly good plans. You should consider yourself fortunate, since based my experience, I don't think I ever saw more than a 100% match. Some plans give NHCE's 3 to 5% profit sharing contiributions as well, but in terms of a match, these are by far incredibly generous.

My current match is 33 1/3% of the first 6%.

[AshleyJordan]

It seems like a lot of people here have incredibly good plans. You should consider yourself fortunate, since based my experience, I don't think I ever saw more than a 100% match. .

I do. I have incredible benefits (very cheap, and very good, health insurance, 4 weeks vacay, retirement, etc.) Their monetary value does compensate for my "eh" salary. . . but as I implied before, there are days that I would rather have more money now than for my "Golden years."

[workaholic?]

It seems like a lot of people here have incredibly good plans. You should consider yourself fortunate, since based my experience, I don't think I ever saw more than a 100% match. Some plans give NHCE's 3 to 5% profit sharing contiributions as well, but in terms of a match, these are by far incredibly generous.

My current match is 33 1/3% of the first 6%.


believe me, i do consider myself extremely fortunate in terms of my salary along with benefits, plus our success sharing bonus every year that ranges from about 6.5% to 10%. the crazy thing is even with all of that, my company sees so of the highest attrition rates in our industry. people are leaving for higher salaries and worse benefits, which honestly i think is a little silly. it's not like our salaries are bad by any means, it's just that they're not the highest in the business...but compared to other industries we are very very fortunate to make what we do. i really value the matching program we have plus the pension plan, and i plan to keep it as long as possible.

[redav]

One of the great things about saving, especially in a 401(k)-type account, is that you become accustomed to not having the money. Saving more creates a compound effect--you will have more money saved, AND you won't need as much because you are used to taking home less.

My company just changed their 401(k) program. They decided that retirement healthcare, which they used to provide was going to be too expensive by the time employees my age retire. To compensate us for taking it away, they increased the match on our 401(k). (This act does two things: 1. removes uncertainty by going to defined contribution instead of defined benefit, and 2. it shifts potential blame from the company to the employee--it's our fault if we don't save.) Now we have 100% matching on the first 5% contributed plus an annual contribution based on years of employment. For me, that amount is 2.5%, so the total matching I get from my employer is 7.5%.

I am an above-average Joe, (I don't think that I am in the top quartile, though) and per the definitions thrown around on this post I would definitely be considered a "supersaver" since I save well over 10% of my salary. I want to transition into retirement; I want work because it's rewarding, not because it is necessary for survival. So far, my chances are very good that I will be able to retire the way I want.

[wordsmith]

I live very frugally, but that really doesn't matter a whole lot when you make significantly under 25K a year and have no employer 401k contribution. I HAVE to live frugally just to break even, it's not like it's enabling me to save or anything.

[pisces2473]

I live very frugally, but that really doesn't matter a whole lot when you make significantly under 25K a year and have no employer 401k contribution. I HAVE to live frugally just to break even, it's not like it's enabling me to save or anything.
Yeah, I figured what my take home is...and yeahhhh, no saving off of that. I don't have any employer retirement stuff, either.

[analogman]

Workaholic, what industry do you work in? Is it energy or some sort of precious ore mining? I am not too sure what else is out in West Texas. I am curious what other industries have such good benefits :)

I get a profit sharing contribution from my employer for my 401k. It's been around 8% for the past five years. It takes seven years to fully vest though, so there is definitely incentive to stick around. (I work in the semi-conductor industry).

[workaholic?]

Workaholic, what industry do you work in? Is it energy or some sort of precious ore mining? I am not too sure what else is out in West Texas. I am curious what other industries have such good benefits :)

I get a profit sharing contribution from my employer for my 401k. It's been around 8% for the past five years. It takes seven years to fully vest though, so there is definitely incentive to stick around. (I work in the semi-conductor industry).

i'm in the energy industry

[analogman]

i'm in the energy industry

Thanks! :)

[WorkInProgress]

DITTO. I don't think Social Security will give me anything in the end, and investing 7.5% of our gross income would be a major solution to our problems. But I just kiss that money goodbye and try to think of it as a gift to my grandparents who have given me a lot over the years.

Basically.

[redav]

DITTO. I don't think Social Security will give me anything in the end, and investing 7.5% of our gross income would be a major solution to our problems. But I just kiss that money goodbye and try to think of it as a gift to my grandparents who have given me a lot over the years.

It's worse than that. You only pay half your soc. sec. taxes. Your employer pays the other half which you never see. That means soc. sec. actually gets ~12.4% of your wages. Just think if that were automatically invested!

[WorkInProgress]

I wish we could opt out of Social Security. I'd much rather invest that huge amount of my paycheck myself, than put it in some social fund that we will neeeeever see. :mad:

Yep, me too. But no. It depresses me to see how much of my paycheck leaves that I won't ever see again.

[wordsmith]

Yep, me too. But no. It depresses me to see how much of my paycheck leaves that I won't ever see again.

It depresses me to see how much goes into insurance that doesn't pay for shit.

[vxmike]

It depresses me to see how much goes into insurance that doesn't pay for shit.

I don't even want to add up how much I've spent on auto insurance in the eight years I've been driving. I reckon it's more than the total I've paid for all three cars I've owned in that time period. Despite all that if I get into an accident today they won't give me any kind of fair settlement and my rates will go up even if it isn't my fault. HUGE SCAM.

[wordsmith]

Well, I was referring to my medical insurance through my employer, deducted from my pay, and which doesn't pay for squat ever, for me, due to the deductible.

My car doesn't bother me, it's way lower.

[redav]

I don't even want to add up how much I've spent on auto insurance in the eight years I've been driving. I reckon it's more than the total I've paid for all three cars I've owned in that time period. Despite all that if I get into an accident today they won't give me any kind of fair settlement and my rates will go up even if it isn't my fault. HUGE SCAM.

When I was in college, a guy ran a red light, totaled both our cars, then he sued me. Sure, they didn't give me what my car was worth, but they took care of the lawsuit.

While paying for insurance is unpleasant, it is far better than the alternative.

[wordsmith]

That's just the thing, though...I'm likely to see a benefit to my really reasonably priced auto coverage, and the mishap doesn't even have to be huge. With my health insurance, they take a really shitty amount of my paycheck, and unless I get something God forbid catastrophic, or some hideous accident befalls me, I'm not seeing a penny of that back. It won't pay for ANYthing routine.

[WorkInProgress]

That's just the thing, though...I'm likely to see a benefit to my really reasonably priced auto coverage, and the mishap doesn't even have to be huge. With my health insurance, they take a really shitty amount of my paycheck, and unless I get something God forbid catastrophic, or some hideous accident befalls me, I'm not seeing a penny of that back. It won't pay for ANYthing routine.

Yeah, that sucks hardcore.

[wordsmith]

I mean, if I have a tumor or amputation, I'm golden, I'm sure...but any normal medical care, including preventative care? No way...not unless I pay for thousands of dollars of it first to get past the deductible.

[Xander]

That formula, when written out, is 400% of the first 2% of eligible compensation contributed. That's still the best damn 401(k) plan I've ever seen...as vxmike said, not even close to an "Average Joe" formula.
Yeah, that's a fantastic plan. All things equal, I'd rather work at your company! :D (which is why more and more companies are offering better and better plans)

DITTO. I don't think Social Security will give me anything in the end, and investing 7.5% of our gross income would be a major solution to our problems. But I just kiss that money goodbye and try to think of it as a gift to my grandparents who have given me a lot over the years.
Yep. And we'll be about 20-30 years shy of ever seeing a penny of social security. This is another example of government inefficiency. If a private business saw diminishing returns to the point of advancing costs in the future, they'd stop the damn project and go with something progressive. :rolleyes:

Government: 0
Business: 1
:p

[yankeeyosh]

Yeah, that's a fantastic plan. All things equal, I'd rather work at your company! :D (which is why more and more companies are offering better and better plans)


At MY company? My benefits SUCK!!!! Not to mention every other thing I've discussed since April.

[redav]

That's just the thing, though...I'm likely to see a benefit to my really reasonably priced auto coverage, and the mishap doesn't even have to be huge. With my health insurance, they take a really shitty amount of my paycheck, and unless I get something God forbid catastrophic, or some hideous accident befalls me, I'm not seeing a penny of that back. It won't pay for ANYthing routine.

I know several people who have gone the catastrophic insurance route. Unfortunately, odds are high that something bad will happen. And it doesn't have to be that bad to rack up the bill. One of my coworkers was expecting a child and the pregnancy, which had a few minor complications, ran around $25k.

Since insurance is just the total costs of everyone in the plan divvied up to all the members (plus operating costs), when you pay your premiums, it WILL go toward paying someone's bill.

The sad thing is that we keep hearing about how many people don't have insurance because they can't afford it, but if they were to get insurance, health care would still be just as unaffordable (since more people in the plan increases costs, which then get distributed). The only way to fix the problem is to: 1. not need as much health care, which we can do by being healthier and using preventive treatments prior to worse problems developing; and 2. make treatments cheaper to administer, which we can do by firing the bureaucracy, weeding out the price gouging, and (this one's a downer) not getting the most cutting-edge treatment when older, cheaper methods will work.

[Xander]

At MY company? My benefits SUCK!!!! Not to mention every other thing I've discussed since April.
No, the person whose company gives 400%.

[slimjim]

So I randomly stumbled across this board and could go on forever in my first post:

The problem with most people is that they don't realize where there is a will there is a way.

I came out of college in 1997 with about $35,000 in student loans, $5,000 in credit card bills and a degree in poly sci / economics. I took a job with an insurance company (the first company to make me an offer) for $28,500. Cheapest rent that I could find was $800 a month for something no larger than an outhouse. I struggled at first, but I always contributed to my 401k to at least get the full company match at 4%.

Today I still work for the same company. I am lucky because I can benefit from the fact that the company is public and I get some options, preferred stock, etc. However, these are only added perks that have no real value to me until I cash them in. However, I also have a cash balance pension which this year gets a 6% guaranteed return and is credited with 8.5% of my salary each month. Additionally, I used my companies tuition reimbursement plan to obtain my MBA in finance, going at night after work.

I have been with the same company since then and with my annual bonus make just over 6 figures now (about $110,000). I have always been diligent about increasing my 401 contributions each year and by doing 2% here, another 1% there, there was a time when I was contributing 20% so I would max out at the annual dollar cap.

I bought a $300,000 house 4 years ago and put $100,000 down. I am married and have a 1 year old. I have accumulated $150,000 in my 401 and my wife has an addiitonal $36,000 in hers (she contributes 25% of her salary to her 401k). We also have $40,000 in her Roth, $33,000 in my Roth, $72,000 in her rollover IRA and about $15,000 in taxable account.

The only debt that we carry is the mortgage and HELOC. I pay for practically every purchase on my AMEX and pay it off each month. Even with daycare expenses of $1,200 a month, mortgage + HELCO required payments of $2,500 a month and all other expenses, we still do everything we can to both contribute $15,000 to our 401ks and $4,000 to our Roths.

The reason that I write all of this is to show that anything is possible. It takes time, diligence and determination. Retirement is very obtainable but it takes a plan and commitment.

[capella]

That's really wonderful for you.

But I think you forget that not everyone is going to see a six-figure salary in their lifetime. Nevermind 9-10 years out in their career. I certainly won't see that big of an increase in my current line of work. In ten years, if I stay where I am, I might be making 45K. Possibly. I make about another 1,000 each year. That's if they decide to keep giving raises. If I depend solely on salary steps... it's about 300-500 a year more. And sure, yeah, I have a "pension" but that's really just a door prize for reaching retirement and still being in the classroom. Hey, you lasted 30 years! Here's your 1500 a month pension. Enjoy!

I am not saying it's impossible if you're going to chase the money. But there are a great many people, most I would think, who aren't going for the gold. They work hard and do a decent job, and I think many of us aren't going to retire comfortably.

[slimjim]

That's really wonderful for you.

But I think you forget that not everyone is going to see a six-figure salary in their lifetime. Nevermind 9-10 years out in their career. I certainly won't see that big of an increase in my current line of work. In ten years, if I stay where I am, I might be making 45K. Possibly.

I wasn't even going to mention my current salary for fear of this exact reaction. The curve of my salary wasn't stright up and it only really started to grow in the last 4 years. I was making in the 50-60K range for a good portion of my time.

I was committed to saving. So I would increase my 401 by 1% every so often. You honestly do not feel it. Once you see your money growing it starts to become a game and you want to put more in.

The power of positive thinking can be a wonderful thing. If you are predispositioned to fail (and it seems that you have that idea in your head) you will. If you are committed, it might not happen over night, but you will get there. Continue to increase your contributions and invest in stocks. you will see good results.

[nikorock28]

I wasn't even going to mention my current salary for fear of this exact reaction. The curve of my salary wasn't stright up and it only really started to grow in the last 4 years. I was making in the 50-60K range for a good portion of my time.

I was committed to saving. So I would increase my 401 by 1% every so often. You honestly do not feel it. Once you see your money growing it starts to become a game and you want to put more in.

The power of positive thinking can be a wonderful thing. If you are predispositioned to fail (and it seems that you have that idea in your head) you will. If you are committed, it might not happen over night, but you will get there. Continue to increase your contributions and invest in stocks. you will see good results.

congratulations in your saving accomplishments slimjim. however, i agree with the poster above. the reality is that most people don't go from 28k jobs to 50-60k jobs to 110k jobs... it is just not possible in most places of employment. i am not taking away from your hard work and discipline of saving, but you were hired by a company that allowed you to work your way up to achieve the income you now bring in. other posters on this board have degrees and cannot even get a job for the 28k that you started out with... and, actually, 28k in 1996 was not a very bad income at all before the unbelievable skyrocket in housing prices. it is just harder to get ahead if you are starting today as opposed to the 90's, whether people want to admit it or not.

[vxmike]

Hey, you lasted 30 years! Here's your 1500 a month pension. Enjoy!


Hey, that's better than you think in addition to the healthcare teachers get in retirement. Most people would kill for a $1500/month pension compared to the typical pension of zero.

Do you realize how much capital would be required to generate $1500/month income after inflation? Not to mention hoping you are able to maintain this capital and grow your income from it throughout your whole retirement. No such worries with the pension...you get it guaranteed and with a COLA.

[nikorock28]

back to the original question... i believe that most young people who are starting out today will probably not be able to retire. they are just saddled with huge student loan debt, incredibly high cost of living, ridiculous insurance costs, etc etc. it is vey clear that incomes have not kept pace with living expenses. because of this, naturally, people will not be able to save any money. this has led to many young people holding of marriage, having children, and inevitably, even being able to retire.

[capella]

The power of positive thinking can be a wonderful thing. If you are predispositioned to fail (and it seems that you have that idea in your head) you will. If you are committed, it might not happen over night, but you will get there. Continue to increase your contributions and invest in stocks. you will see good results.
I am a teacher. The power of positive thinking isn't going to be making huge deposits in my bank account. I *might* see modest 3% salary increases each year. I make 33,853 now. I don't have a hope of seeing 6 figures in my current career and no amount of saving or happy thoughts are going to make me a millionaire. It's not a matter of being predispositioned to fail. It's a matter of the monetary prospects I will see in this field. Increase my contribution to stocks? Ha! That's a laugh. Where in my 2K take home should I be investing this money in stocks? With my mortgage payment of 1400 or should I just not eat?

Really, I am happy that you've done so well. Congrats. But it really isn't a possibility for most people. Not everyone is made for the corporate world. Those of us in helping professions won't see lots of money unless we win the lotto or get out of our careers.

[nikorock28]

That's really wonderful for you.

But I think you forget that not everyone is going to see a six-figure salary in their lifetime. Nevermind 9-10 years out in their career. I certainly won't see that big of an increase in my current line of work. In ten years, if I stay where I am, I might be making 45K. Possibly. I make about another 1,000 each year. That's if they decide to keep giving raises. If I depend solely on salary steps... it's about 300-500 a year more. And sure, yeah, I have a "pension" but that's really just a door prize for reaching retirement and still being in the classroom. Hey, you lasted 30 years! Here's your 1500 a month pension. Enjoy!

I am not saying it's impossible if you're going to chase the money. But there are a great many people, most I would think, who aren't going for the gold. They work hard and do a decent job, and I think many of us aren't going to retire comfortably.

i think people forget that one has to PAY INTO their pension. a certain percentage is deducted from your paycheck every month, and, often times, it takes a number of years (say 10) to be fully vested to recieve the full match. often times, the 8% or whatever it is that is deducted from your paycheck is not invested very wisely and does not grow. you could probably do better for yourself in a 401(k) that only matches 2 or 3%.

[capella]

Hey, that's better than you think in addition to the healthcare teachers get in retirement. Most people would kill for a $1500/month pension compared to the typical pension of zero.

Do you realize how much capital would be required to generate $1500/month income after inflation? Not to mention hoping you are able to maintain this capital and grow your income from it throughout your whole retirement. No such worries with the pension...you get it guaranteed and with a COLA.
First, it's not necessarily guaranteed. It's the same as SS in my view. Who knows if I'll actually see that or not.

Second, I'm pulling that figure out of the air. I don't know how much I may or may not see. I was estimating that if my grandma can get 800 or so a month from SS in retirement without ever making more than 26K and not saving a penny (no, she is not doing very well financially), then I ought to expect something a little more. In reality, I don't know what I'll get... if anything.

That's not really the point though is it. I hate how the teacher pension is held over our heads. You've got such great benefits! Actually, no I don't. I have horrid healthcare. I don't make enough to put any money away and even when I start to make more... I'll just have a family to take care of. I guess I'd be sitting pretty if I just never had kids. I don't have a lot of control over that pension money either. It's there for me once I vest (6 years). But I don't get to say how much or where. I would much prefer to be paid a decent wage now and to be allowed to do what I wish with my money.

[nikorock28]

First, it's not necessarily guaranteed. It's the same as SS in my view. Who knows if I'll actually see that or not.

Second, I'm pulling that figure out of the air. I don't know how much I may or may not see. I was estimating that if my grandma can get 800 or so a month from SS in retirement without ever making more than 26K and not saving a penny (no, she is not doing very well financially), then I ought to expect something a little more. In reality, I don't know what I'll get... if anything.

That's not really the point though is it. I hate how the teacher pension is held over our heads. You've got such great benefits! Actually, no I don't. I have horrid healthcare. I don't make enough to put any money away and even when I start to make more... I'll just have a family to take care of. I guess I'd be sitting pretty if I just never had kids. I don't have a lot of control over that pension money either. It's there for me once I vest (6 years). But I don't get to say how much or where. I would much prefer to be paid a decent wage now and to be allowed to do what I wish with my money.

i totally agree with you amy. a pension is not guaranteed money. it would be much safer if you took the money that is invested in your "retirement" plan and put it into FDIC insured CD's or money market accounts.

[slimjim]

back to the original question... i believe that most young people who are starting out today will probably not be able to retire. they are just saddled with huge student loan debt, incredibly high cost of living, ridiculous insurance costs, etc etc. it is vey clear that incomes have not kept pace with living expenses. because of this, naturally, people will not be able to save any money. this has led to many young people holding of marriage, having children, and inevitably, even being able to retire.

I'd argue that a large part of this is because we are a credit happy-need it now, society.

Also, if you spend $120,000 to go to college only to take a $20,000 a year teaching job, you need to recoginize the cost trade off. Was the initial investment worth it? In this type of job you are sacrificing money today for free benefits (paid by those of us who own a home) and a pension (again, paid by those of us who own a home).

You either study something with real world applications and secure a decent job or you study history and art and have no choice but to take a $20,000 a year job.

[nikorock28]

I'd argue that a large part of this is because we are a credit happy-need it now, society.

Also, if you spend $120,000 to go to college only to take a $20,000 a year teaching job, you need to recoginize the cost trade off. Was the initial investment worth it? In this type of job you are sacrificing money today for free benefits (paid by those of us who own a home) and a pension (again, paid by those of us who own a home).

You either study something with real world applications and secure a decent job or you study history and art and have no choice but to take a $20,000 a year job.

it may be true that we are a credit happy, need it now society, but you can't just discredit that wages HAVE NOT INCREASED as much as cost of living has. take, for example, that my parents purchased a home in CA in 1984 for 132k. They sold it last year for 632k. This is a 479% increase. Has the average salary increased 479% in the same time span?... I think not. so, naturally, people will have to rely on their credit cards more than the past. also, i believe the consumer spending is going to stop in the coming years as people can no longer splurge on home equity gains like they have been in the past 5 years.

i totally agree with you in the cost trade off thing. i think more young people have to be educated about what they are getting themselves into when they decide to go to college and take out a huge loan. sadly, not many parents teach their children this. our generation has been ingrained that "you have to go to college", but, financially speaking, this is not always the best option.

how, exactly, is it free benefits paid by those who own a home? how is a pension paid by those who own a home? how does owning a home even factor into this? i was unaware that "home owners" paid the percentage portion that comes out of someones paycheck. Good job in offending other posters buddy and sounding entirely righteous. I'll let other posters rip into you for this =)

i studied engineering because i knew it would give me a better chance to secure a good future, but not everyone can or wants to study something in the technology/engineering/business/science/medical/law etc. etc. field. some people actually like history and art, and they don't chase money as you appear to do.

[redav]

how, exactly, is it free benefits paid by those who own a home? how is a pension paid by those who own a home? how does owning a home even factor into this? i was unaware that "home owners" paid the percentage portion that comes out of someones paycheck. Good job in offending other posters buddy and sounding entirely righteous. I'll let other posters rip into you for this =)


He's referring to school property taxes. That's typically where the bulk of a school's budget comes from. However, the statement is not correct. Apt complexes & rental homes are taxed, too, and your share is built into your rent.

The way I see it, if a comment doesn't offer anything of use, then it's the same as not being there at all. And if it's the same as not being there, then there's nothing to be missed by ignoring it. Consequently, it's very easy to not get offended.

[nikorock28]

He's referring to school property taxes. That's typically where the bulk of a school's budget comes from. However, the statement is not correct. Apt complexes & rental homes are taxed, too, and your share is built into your rent.

The way I see it, if a comment doesn't offer anything of use, then it's the same as not being there at all. And if it's the same as not being there, then there's nothing to be missed by ignoring it. Consequently, it's very easy to not get offended.

thanks redav for explaining it to me. you have a lot of knowledge and are very helpful.
i think i was slightly offended at the "free benefits" comment... like the poster was inferring that workers don't deserve it or haven't worked for it, which is simply and obviously false.

[Xander]

...you can't just discredit that wages HAVE NOT INCREASED as much as cost of living has. take, for example, that my parents purchased a home in CA in 1984 for 132k. They sold it last year for 632k. This is a 479% increase. Has the average salary increased 479% in the same time span?... I think not.
I somewhat disagree, but don't have the sobriety at the moment to offer anything worthwhile. :p But to note, you're calculating the increase of your parent's home relative to wage increase incorrectly. First you have to factor in inflation. I wont go into detail about that, but it's something like 94% since '84, meaning your parents bought the house for $256K in 2005 dollars, meaning they "made" $376K, which is good, but that means the property only increased 68%, which is a terrible "investment" over 21 years... but um... the average wage has increased about 220% since '84.... and.... fireworks... and now I forgot my point.... sleepy time. Happy New Years!

[nikorock28]

I somewhat disagree, but don't have the sobriety at the moment to offer anything worthwhile. :p But to note, you're calculating the increase of your parent's home relative to wage increase incorrectly. First you have to factor in inflation. I wont go into detail about that, but it's something like 94% since '84, meaning your parents bought the house for $256K in 2005 dollars, meaning they "made" $376K, which is good, but that means the property only increased 68%, which is a terrible "investment" over 21 years... but um... the average wage has increased about 220% since '84.... and.... fireworks... and now I forgot my point.... sleepy time. Happy New Years!

why do i have to factor in inflation? inflation is irrevelant, unless you also factor inflation to salaries as well.

[redav]

why do i have to factor in inflation? inflation is irrevelant, unless you also factor inflation to salaries as well.
I basically think you are correct.

When you look at the price change of the house, assuming nothing really changed with it, you are calculating housing inflation. (The same object now costs more.) With salaries, people generally get raises higher than general inflation, because with experience/promotions you are no longer doing the same work. The govt uses two different stats when tracking costs inflation and wage inflation. But that points to your original point, the cost of some things is going up faster than wages (housing, education, medicine, cars, etc). For housing, I think the median house price compared to the median salary is a good indicator.

I do not know if it is accurate to say the overall COL is going up faster than wages for the entire country. Certainly, it is true in some places.

[capella]

I'd argue that a large part of this is because we are a credit happy-need it now, society.

Also, if you spend $120,000 to go to college only to take a $20,000 a year teaching job, you need to recoginize the cost trade off. Was the initial investment worth it? In this type of job you are sacrificing money today for free benefits (paid by those of us who own a home) and a pension (again, paid by those of us who own a home).

You either study something with real world applications and secure a decent job or you study history and art and have no choice but to take a $20,000 a year job.
I hope that wasn't directed at me. I don't think it is, however....

I didn't spend 120K to go to college. That's quite a laugh. I went to a community college my first year to save money. Then I went to a public 4-year university. I have 15K in student loans. I have a degree in mass communication, not art or history (though I don't think there's necessarily anything better or worse about any degree listed). I was poor, my family is poor, and worked my ass off to get through college. And yes, the investment was worth it.

How is teaching something without "real world applications"? I'd venture to say that my job requires me to do more problem solving, independent work, managing, planning, implementing, data analysis, presentations, schmoozing, and is more physically and emotionally demanding (or just more demanding overall) than *most* corporate jobs.

If more people "recognized the cost trade off" and decided not to teach (or do social work, or any other helping profession) then we'd be left with a bunch of high school graduates teaching our kids. Is that what our world should be like?

And what about people who didn't come from a middle class background? Do I not get to retire because I was poor growing up... despite having busted my ass to raise my situation in life? (Which is raised no matter how much I complain sometimes).

And I do own a home. I pay property taxes too. And most of the older teachers I know do too. I doubt many of the younger ones will be able to afford the homes, unless they marry well. So it's not a "free benefit" at all. That's really quite condescending. Do you think that you pay for all those welfare mommas too? Indirectly yes, but you are not single handedly paying for social ills. Give me a break. And if you're a part of society then you have to do your part to help society run. That means paying taxes.

That's just my experience and opinion. I do think that retirement will be virtually impossible for the "average joe". Congrats on not being average. I suppose you'll want to clap yourself on the back now. :rolleyes:

Happy New Year everyone.

[hotdog36]

To the OP's question, I think most people will be able to retire, but many will probably have to wait until their parents pass on, at which time they will be able to inherit money. This sounds terrible, but I believe that for many people in our generation, it will be true. In general, the baby boomers who were financially responsible are an affluent bunch.

[nikorock28]

To the OP's question, I think most people will be able to retire, but many will probably have to wait until their parents pass on, at which time they will be able to inherit money. This sounds terrible, but I believe that for many people in our generation, it will be true. In general, the baby boomers who were financially responsible are an affluent bunch.

i agree with you hotdog, though, many people also have no inheritance to receive as well.