49% of Americans saving zilch for retirement
Posted: Thu May 10, 2012 9:12 am
Investing Advice Inspired by Jack Bogle
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It should come to no one's surprise given the depressed economic enviornment we continue to experience.kenyan wrote:I was going to spout my mouth off on this topic, until I saw the statistic about Americans aged 18 to 34 not saving in retirement plans at a 57% clip. Well...I was in school until 26, and didn't save in retirement plans until I was 27. Guess I can't say too much.
For older people, those statistics are pretty sad, though.
Yup, it was a measly $2K.mptfan wrote:I didn't start saving for retirement until I was 27, and even then it was small amounts. I think the IRA annual limit at that time was $2k. I didn't get serious until I was in my 30's.
It was $2K in 1982. $2K in 1982 = $4754 today. If $2K was measly then, $5K is measly now.GRT2BOUTDOORS wrote:Yup, it was a measly $2K.mptfan wrote:I didn't start saving for retirement until I was 27, and even then it was small amounts. I think the IRA annual limit at that time was $2k. I didn't get serious until I was in my 30's.
Same for me, I've been in school virtually full-time the past 12yrs. I had plenty of income, enough to pay out of pocket for the education of both me and my wife, but there wasn't exactly a lot left over for retirement savings. Just started at 27 and got serious about it at 29...2 years into it.mptfan wrote:I didn't start saving for retirement until I was 27, and even then it was small amounts. I didn't get serious until I was in my 30's.
It is kind of measly if you compare it to what someone with a 401(k) or similar can do. $17K straight up + $5K since you get the IRA, too. And if you do tricks with post-tax money rolled into an IRA, and count employer match, you can get (theoretically) around $55K/year total, unless I'm mis-remembering some numbers.nisiprius wrote:It was $2K in 1982. $2K in 1982 = $4754 today. If $2K was measly then, $5K is measly now.GRT2BOUTDOORS wrote:Yup, it was a measly $2K.mptfan wrote:I didn't start saving for retirement until I was 27, and even then it was small amounts. I think the IRA annual limit at that time was $2k. I didn't get serious until I was in my 30's.
It was also 2K in 1996. What was $2K then valued at today?nisiprius wrote:It was $2K in 1982. $2K in 1982 = $4754 today. If $2K was measly then, $5K is measly now.GRT2BOUTDOORS wrote:Yup, it was a measly $2K.mptfan wrote:I didn't start saving for retirement until I was 27, and even then it was small amounts. I think the IRA annual limit at that time was $2k. I didn't get serious until I was in my 30's.
My point exactly - the survey is misleading. One other thing I find about these "industry" surveys - they are totally self-serving, they want to create even more panic as to rake in assets that can then be fleeced with all kinds of fees and commissions.ProfessorX wrote:I don't know how many of the 2,697 Americans surveyed are working, but keep this in mind.
According to Wiki-pedia the employment population ratio is currently about 70%. So 30% of American's currently don't work. How can you "save for retirement" when you don't "work"? That leaves 19% who work and don't save for retirement. Then how many of those 19% are in their 20's? Just saying that this 49% number thrown around "out of the blue" can be quite misleading.
As someone else already pointed out, it was only $2k all the way up until the mid 1990's, so your analysis is flawed. $2k in 1996 is about $3k today.nisiprius wrote:It was $2K in 1982. $2K in 1982 = $4754 today. If $2K was measly then, $5K is measly now.GRT2BOUTDOORS wrote:Yup, it was a measly $2K.mptfan wrote:I didn't start saving for retirement until I was 27, and even then it was small amounts. I think the IRA annual limit at that time was $2k. I didn't get serious until I was in my 30's.
If they surveyed children, or retired people, and asked them how much they were saving for retirement, I agree that would be a silly and worthless poll. Something tells me they didn't do that, unless you think the pollsters are really stupid. Maybe they are, but I will give them the benefit of the doubt.ProfessorX wrote:I don't know how many of the 2,697 Americans surveyed are working, but keep this in mind.
You should have looked up "employment-to-population ratio" before posting that:mptfan wrote:If they surveyed children, or retired people, and asked them how much they were saving for retirement, I agree that would be a silly and worthless poll. Something tells me they didn't do that, unless you think the pollsters are really stupid. Maybe they are, but I will give them the benefit of the doubt.ProfessorX wrote:I don't know how many of the 2,697 Americans surveyed are working, but keep this in mind.
I respectfully disagree. I think a 15 year old is a child (and I happen to be the parent of one right now, I can assure you that in no way shape or form would I consider her to be an adult). Second, are you suggesting that there are no retired 64 year olds? 63 year olds? How low do you want me to go? Seriously?ProfessorX wrote:You should have looked up "employment-to-population ratio" before posting that:mptfan wrote:If they surveyed children, or retired people, and asked them how much they were saving for retirement, I agree that would be a silly and worthless poll. Something tells me they didn't do that, unless you think the pollsters are really stupid. Maybe they are, but I will give them the benefit of the doubt.ProfessorX wrote:I don't know how many of the 2,697 Americans surveyed are working, but keep this in mind.
"The Organization for Economic Co-operation and Development defines the employment rate as the employment-to-population ratio. This is a statistical ratio that measures the proportion of the country's working-age population (ages 15 to 64 in most OECD countries) that is employed."
http://en.wikipedia.org/wiki/Employment ... tion_ratio
No "children or retired people" included in it.
I am not suggesting any of the things that you mention. I'm just pointing out that the "employment population ratio" does not include the entire population, and it is not a terrible measure. What I'm mainly suggesting is that we have no indication that the "pollsters" thought about any of these finer points that we are discussing at all. When you take into account the number of worthless "polls" which come out, I don't think it is smart to give them the "benefit of the doubt".mptfan wrote:I respectfully disagree. I think a 15 year old is a child (and I happen to be the parent of one right now, I can assure you that in no way shape or form would I consider her to be an adult). Second, are you suggesting that there are no retired 64 year olds? 63 year olds? How low do you want me to go? Seriously?ProfessorX wrote:You should have looked up "employment-to-population ratio" before posting that:mptfan wrote:If they surveyed children, or retired people, and asked them how much they were saving for retirement, I agree that would be a silly and worthless poll. Something tells me they didn't do that, unless you think the pollsters are really stupid. Maybe they are, but I will give them the benefit of the doubt.ProfessorX wrote:I don't know how many of the 2,697 Americans surveyed are working, but keep this in mind.
"The Organization for Economic Co-operation and Development defines the employment rate as the ≈. This is a statistical ratio that measures the proportion of the country's working-age population (ages 15 to 64 in most OECD countries) that is employed."
http://en.wikipedia.org/wiki/Employment ... tion_ratio
No "children or retired people" included in it.
I didn't start working full time until I was 27, more than 12 years after your 15 year old "working age population" child. And I know lots of people like me.
You are engaging in what is called a "straw man argument." I didn't suggest, and I didn't hear anyone else suggest, that the "employment population ratio" includes the entire population. I certainly haven't seen anything to suggest that the pollsters did that. So you are setting up a proposition that was not advanced by anyone else but you, and then arguing about it.ProfessorX wrote: I am not suggesting any of the things that you mention. I'm just pointing out that the "employment population ratio" does not include the entire population, and it is not a terrible measure. What I'm mainly suggesting is that we have no indication that the "pollsters" thought about any of these finer points that we are discussing at all. When you take into account the number of worthless "polls" which come out, I don't think it is smart to give them the "benefit of the doubt".
I didn't start saving for my retirement until after I paid off my house. But I was living below my means and building my net worth. Then I was building savings for a while before I discovered tax-sheltered retirement vehicles. (And I was a student long after age 18.) So I've been `saving zilch for retirement' about 75% of my adult life. But I have a paid off house, no debt, and about 8 years salary in savings.campy2010 wrote:`The survey only asked if people were contributing to IRAs and 401ks. So, they are excluding savings in pensions, taxable accounts, CDs, savings accounts, under the mattress, under the table and the list could go on.'
Completely inaccurate. The article about the poll, which is all we had says:mptfan wrote:You are engaging in what is called a "straw man argument." I didn't suggest, and I didn't hear anyone else suggest, that the "employment population ratio" includes the entire population. I certainly haven't seen anything to suggest that the pollsters did that. So you are setting up a proposition that was not advanced by anyone else but you, and then arguing about it.
A childhood friend of mine once told me what his father did to convince them to study hard, go to college and then onto medical or law school - he packed the kids up in a car and drove them to one of the poorest neighborhoods in NYC. He asked his kids to note the difference between where they lived, how they dressed and what vehicle they were in versus the types of people they saw on the street, the condition of the property and the amount of "street art". I know this sounds quite discriminatory, but the point was basically made that if you don't put effort in now, you will or could be in a similar situation at some point.meowcat wrote:Not surprising, really, But how do you convince a young person to save for retirement, 30-40 years down the road? I was young once and there was nothing anybody could have told me to save for a rainy day. It was the furthest thing from my mind. Unfortunately, most people don't start to think about it until they're older, which explains this dire statistic. When I was in my early 20's I had to go down to the Social Security office to replace my SS card. Talk about an experience. Three words: WAKE UP CALL!! looking at all those people trying to survive on SS scared the living daylights out of me. This will not be me and I refuse to be part of that statistic.
Interesting thing about bank customers, you never truly know if they are poor or not. I say that because as you may realize, many people transact with more than one bank. My take was he was recently retired at the time, was well-versed in investments and had a comfortable retirement.Easy Rhino wrote:wait, was it one of the poorer customers who suggested Wellington? That would be unexpected, and impressive.
I just don't agree with this. I think almost everyone has the ability to put some money aside for the future, not overspend on the basics, and avoid totally stupid decisions. Even the poorest kid in town can finish high school, join the military, spend 20 years in, then get a great pension, along with getting some higher education along the way. It happens all the time, just not enough of the time.Rodc wrote:Something very much like 49% don't make enough to trigger federal income tax. I expect most of them are not saving for retirement. Not sure they really can in any significant fashion.
There are lots of people barely scraping by while in working years and they will live on SS only in retirement.
Lots of people simply do not live the sorts of lives we do and it is easy to lose track of that.
Don't forget to account for the fact that this number includes people who are already retired, college kids with low incomes, people who work under the table, illegal immigrants who want to minimize their taxable income, trust fund folks who live off investments but aren't employed, and the list could go on. Somehow, I don't think the picture is as bad as the statistic would lead you to believe.Rodc wrote:Something very much like 49% don't make enough to trigger federal income tax. I expect most of them are not saving for retirement. Not sure they really can in any significant fashion.
There are lots of people barely scraping by while in working years and they will live on SS only in retirement.
Lots of people simply do not live the sorts of lives we do and it is easy to lose track of that.
Having lived overseas, seeing what real poverty, real lack of upward mobility looks like, seeing non-native English speaking immigrants scrimp and save to put their next generation on a meaningful track and themselves into a better later life, I have to agree with ResNullius.ResNullius wrote:I just don't agree with this.Rodc wrote:Lots of people simply do not live the sorts of lives we do and it is easy to lose track of that.
My effective tax rate was negative last year, but I maxed out my 403b, Roth IRA, and had another $4k put into TRS. Tax-deferred accounts and education credits are lovely. It isn't as simple as saying those 49% can not afford to put any money into retirement, I am part of that 49% and put $25k+/yr into retirement. For a lot of people it isn't possible, this is certainly true, but for a lot of people also it is an excuse. I think a major issue is simply knowledge; I'd be willing to bet that 1/2 of my co-workers do not know what a 401k is and more than that have no clue what a Roth IRA is.ResNullius wrote:I just don't agree with this. I think almost everyone has the ability to put some money aside for the future, not overspend on the basics, and avoid totally stupid decisions. Even the poorest kid in town can finish high school, join the military, spend 20 years in, then get a great pension, along with getting some higher education along the way. It happens all the time, just not enough of the time.Rodc wrote:Something very much like 49% don't make enough to trigger federal income tax. I expect most of them are not saving for retirement. Not sure they really can in any significant fashion.
There are lots of people barely scraping by while in working years and they will live on SS only in retirement.
Lots of people simply do not live the sorts of lives we do and it is easy to lose track of that.
You are disagreeing with something I never said.ResNullius wrote:I just don't agree with this. I think almost everyone has the ability to put some money aside for the future, not overspend on the basics, and avoid totally stupid decisions. Even the poorest kid in town can finish high school, join the military, spend 20 years in, then get a great pension, along with getting some higher education along the way. It happens all the time, just not enough of the time.Rodc wrote:Something very much like 49% don't make enough to trigger federal income tax. I expect most of them are not saving for retirement. Not sure they really can in any significant fashion.
There are lots of people barely scraping by while in working years and they will live on SS only in retirement.
Lots of people simply do not live the sorts of lives we do and it is easy to lose track of that.
Right.Rodc wrote: ...Lots of people simply do not live the sorts of lives we do and it is easy to lose track of that.
Agree with this completely. Not everyone has the mental capability to be a top 50% earner , no matter how much fortitude and ambition. That's not even counting those who maybe have the capabilities and have had medical or personal catastrophes that have been financially crippling.Rodc wrote: Lots of people simply do not live the sorts of lives we do and it is easy to lose track of that.
Admirable, but I'd bet it's not the norm, even here. There's a poll question, "Do you have, or did you have at retirement, the first dollar you invested for it?"scouter wrote:Dang, I must be really weird. I was saving and investing $2k a year at age 17. In 1973 dollars. And those investments are still part of our retirement plan.
Ditto this. Throw in the crummy investment returns of the time period that followed, too. It seems very difficult for the average person not covered by a pension to have saved an adequate amount in tax-deferred accounts. Certainly, I haven't. Most with sufficient savings and no pension will have a large portion, if not the lion's share, in taxable accounts. Someone with a pension to look forward to has an "off-books" asset that may be worth $millions, while the person with the on-books asset of similar size is vulnerable to and potentially the target of changes in tax policy.GRT2BOUTDOORS wrote:It was also 2K in 1996. What was $2K then valued at today?nisiprius wrote:It was $2K in 1982. $2K in 1982 = $4754 today. If $2K was measly then, $5K is measly now.GRT2BOUTDOORS wrote:Yup, it was a measly $2K.mptfan wrote:I didn't start saving for retirement until I was 27, and even then it was small amounts. I think the IRA annual limit at that time was $2k. I didn't get serious until I was in my 30's.
My point is for folks who have no access to a defined benefit or defined contribution plan such as myself in those early years, there is discrimination in allowing a measly $5K maximum contribution prior to age 50, and even then an additional $1K deferred after age 50 surely is not enough to retire on unless you expect their level of compounded returns to far exceed the general population.
Would probably have to gather some data to know for sure, but this statement is far from obvious. It does seem to me that people can save on virtually any income, and that very many people who save "only what's left" have trouble no matter what their income.ElJay wrote:Isn't it primarily a factor of income?
I have the first dollar invested in a traditional IRA, the first dollar invested in a Roth IRA, and the first dollar invested in a 401(k) -- so yes.SteveB3005 wrote:"Do you have, or did you have at retirement, the first dollar you invested for it?"
$2K invested in 1982 compounded annually at 7% through 2012 would accumulate to $15,224 ; at 9% compounded annually accumulates to $26,535.nisiprius wrote:It was $2K in 1982. $2K in 1982 = $4754 today. If $2K was measly then, $5K is measly now.GRT2BOUTDOORS wrote:Yup, it was a measly $2K.mptfan wrote:I didn't start saving for retirement until I was 27, and even then it was small amounts. I think the IRA annual limit at that time was $2k. I didn't get serious until I was in my 30's.
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