49% of Americans saving zilch for retirement

[bru]

Not the Bogleheads of course.

http://money.cnn.com/2012/05/10/retirem ... hoo_hosted

[Cut-Throat]

I could have also answered zilch when I was 30 years old. In Debt and didn't start saving until 32.

Retired at 50.

[kenyan]

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.

[mptfan]

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.

[Grt2bOutdoors]

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.

It should come to no one's surprise given the depressed economic enviornment we continue to experience.
How many 18-34 are finding continued and sustained full time employment? The other thing about these survey's is the level of accuracy, I believe they are not painting a true picture.

[Grt2bOutdoors]

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.

Yup, it was a measly $2K.

[nisiprius]

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.

Yup, it was a measly $2K.

It was $2K in 1982. $2K in 1982 = $4754 today. If $2K was measly then, $5K is measly now.

[stoptothink]

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.

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.

[dolio]

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.

Yup, it was a measly $2K.

It was $2K in 1982. $2K in 1982 = $4754 today. If $2K was measly then, $5K is measly now.

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.

I suppose it's unlikely that someone able to contribute that much wouldn't have access to a 401(k), though.

[ProfessorX]

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.

[Grt2bOutdoors]

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.

Yup, it was a measly $2K.

It was $2K in 1982. $2K in 1982 = $4754 today. If $2K was measly then, $5K is measly now.

It was also 2K in 1996. What was $2K then valued at today?
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.

[Grt2bOutdoors]

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.

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.

[mptfan]

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.

Yup, it was a measly $2K.

It was $2K in 1982. $2K in 1982 = $4754 today. If $2K was measly then, $5K is measly now.

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.

[mptfan]

I don't know how many of the 2,697 Americans surveyed are working, but keep this in mind.

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]

I don't know how many of the 2,697 Americans surveyed are working, but keep this in mind.

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.

You should have looked up "employment-to-population ratio" before posting that:

"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.

[mptfan]

I don't know how many of the 2,697 Americans surveyed are working, but keep this in mind.

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.

You should have looked up "employment-to-population ratio" before posting that:

"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 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?

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.

If the pollsters were stupid enough to ask 15 or 16 year olds whether they were saving for retirement, or ask 63 or 64 year olds whether they were saving for retirement without regard to whether they were actually retired, then I am with you that this poll is useless. Again, I will give them the benefit of the doubt that they did not engage in such a useless exercise.

[ProfessorX]

I don't know how many of the 2,697 Americans surveyed are working, but keep this in mind.

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.

You should have looked up "employment-to-population ratio" before posting that:

"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 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?

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.

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]

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".

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.

I agree I have not analyzed the data behind the poll. The difference between you and me is I am giving the pollsters the benefit of the doubt that they were not so stupid to ask children or retired people if they were saving for retirement, or to fail to take that into account when designing their poll. I am comfortable with that assumption, and you are not. Fair enough.

[campy2010]

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. Given this, I'm not sure if the number is very informative.

[555]

`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.'

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.

Stupid poll. A better poll may still show low savings rates but would go into much more detail. (Maybe the original poll

[meowcat]

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.

[ProfessorX]

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.

Completely inaccurate. The article about the poll, which is all we had says:

"49% of Americans saving zilch for retirement"

The population they consider is "Americans" which is an undefined term. Strictly speaking that term would include a much larger population than just the "employment population ratio". Thus I was being generous by using the "employment population ratio". If you want to assume that the poll meant whatever you think is the most suitable definition of the "American population" then go right ahead. Anyhow I have no more time to talk here for now.

[Grt2bOutdoors]

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.

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.

Personally, I used to work in a small retail bank - if you want to see all walks of life, work in a retail financial enviornment. Similar to your story above, it scared the living daylights out of me to see people living on $10 a week after paying for rent,utilities and food including additonal assistance from the USDA and the SSI supplement - scary is an understatement. I could probably write a book on it, but just about 1/2 the customers were under moderate to severe financial stress and that was twenty years ago. A piece of advice from one of our customers (can still picture his face), I don't know why he said it to me, but he offered this "$5 a week, put in in the Wellington fund and leave it alone". I never bought that specific fund because I lacked the $3K back then necessary to open it, but have bought other Vanguard funds over time.

[Easy Rhino]

wait, was it one of the poorer customers who suggested Wellington? That would be unexpected, and impressive.

[Grt2bOutdoors]

wait, was it one of the poorer customers who suggested Wellington? That would be unexpected, and impressive.

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.

[tphp99]

It makes sense for that group. I thought I heard on NPR that half of college grads are not working full time. Sad.

[Rodc]

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.

[ResNullius]

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.

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.

[campy2010]

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.

ETA: I just did a quick Google search and the US underground economy was estimated to be valued at about $1 trillion and growing as of 2009. That's a lot of unpaid/underpaid taxes.

[wshang]

Lots of people simply do not live the sorts of lives we do and it is easy to lose track of that.

I just don't agree with this.

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.

[stoptothink]

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.

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.

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.

[Rodc]

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.

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.

You are disagreeing with something I never said.

I never said they had no ability.

Please reread.

[The Wizard]

...Lots of people simply do not live the sorts of lives we do and it is easy to lose track of that.

Right.
I got in trouble here some time ago when I suggested that $40K per year gross income for a retired couple was insufficient to live on.
So I don't say that anymore...

[SteveB3005]

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.

[Nukeboilermaker]

I'm 25, a college graduate, working full time. Because I plan and put a lot of time and effort into my personal finances I am debt free but a mortgage and max out a 401k and IRAs. I know many other people who make reasonable money and simply CHOOSE to not forfeight increased spending and lifestyle. A friend that is older and a recent med school graduate has a very large amount of school loans and is starting residency. I have spoken to him quite a bit and referenced him to this forum and whitecoatinvestor and suggested he not buy a home until he is earning more money and reduces his loans. Instead he purchased a new construction condo and then posted on Facebook about planning to use a company to help manage student loans at a cost of $500/yr... He wants to be Dr. Jones' apparently, little does he realize how much these choices will reduce his time on the autocross track. I even specifically commented how the $500 savings could be used directly for hobbies.

Well i could continue the ranting... But I need to go to bed since I need to get up at 1 am since I'm working 12+ hrs tomorrow... Apparently I'm not paying my fair share according to some. Of course I don't need sympathy from all the hard workers on this forum!

Thanks to all of you that contribute to the forum as it helps us young folk stay the course

[auntie]

I never saved "for retirement."

But somehow I seem to be retired and living off my savings. I just always lived frugally and put what I didn't spend in one investment or another.

[GregLee]

I wonder what they counted as retirement savings. I started paying Social Security tax when I was about 15. I started paying a state retirement system payroll deduction when I was 24. I didn't start an IRA until I was 40, since before then, you couldn't have an IRA if you had a retirement system at work (as I did).

[breakintheweb]

I started saving at 18 (via roth). I worked at a company that offered a sarsep (later converting to a 401k) but i wasn't eligible since I was too young (under 21).

I don't understand why there would be a lower age limit for retirement plans. If anything, allowing younger employees an opportunity to start a retirement plan may give the employer some idea of an employees responsibility.

[scouter]

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.

[ElJay]

Isn't it primarily a factor of income? It wasn't until my late 20s that I earned enough to actually save a decent amount of money every year and earmark some/most of it for "retirement." When I was living on $35k a year (age 25) there wasn't a lot of saving going on. What I did save went into a savings account.

I was also quite clueless about investing in general. Most of my education came from my grandfather, who was and is very much an individual stocks guy. I didn't like the idea of putting lots of money into single companies so I figured there must be a way to spread it out. My parents are total anti-equities so they weren't any help in this regard.

Another thing that had been discouraging me from saving in some sort of non-cash form was fees. Even if I did follow in my granddad's footsteps and invest in individual stocks, opening up a brokerage account and paying fees each time I wanted to make a transaction seemed ridiculous to me. If I want to save my money and have it grow, why not have it start at $X instead of $X less fees. (I did eventually invest in a couple of DRIPs before finding index funds.)

Right as I was starting to get to a point where I could consider earmarking money for "retirement," my boss handed my name to an Edward Jones salesman. I didn't know any better and I went in and opened up an IRA with him. Of course 5.75% of my $2500 opening deposit evaporated into a load, and he explained it to me as if it was something that everybody had to pay to play. The fund he put me in was a proper allocation but really terrible beyond that. "I'd put my mom in this fund," he told me, a fund of funds that essentially zapped me for two ERs. On top of that there was some ridiculous annual account fee and they were so backwards that I couldn't even invest new money online if I wanted to.

Shortly after this I figured there must be a better, cheaper, more self-directed way to do it. I started looking online, and I found Vanguard and this forum via a discussion on the Fatwallet.com forums. I don't think a lot of people aged 18-34 are too interested in putting this amount of time into figuring out what they should be doing. At best their employer has auto-enrolled them in a 401k plan with a target date fund. Add in kids, a house, a new car, and school debt: The idea of saving money quickly seems out of range.

[SteveB3005]

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.

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?"

I got started early, but was set back twice with withdrawing the whole investment. Things got a lot better after thirty.

[dmcmahon]

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.

Yup, it was a measly $2K.

It was $2K in 1982. $2K in 1982 = $4754 today. If $2K was measly then, $5K is measly now.

It was also 2K in 1996. What was $2K then valued at today?
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.

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.

[Harold]

Isn't it primarily a factor of income?

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.

"Do you have, or did you have at retirement, the first dollar you invested for it?"

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.

[nolabogle]

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.

Yup, it was a measly $2K.

It was $2K in 1982. $2K in 1982 = $4754 today. If $2K was measly then, $5K is measly now.

$2K invested in 1982 compounded annually at 7% through 2012 would accumulate to $15,224 ; at 9% compounded annually accumulates to $26,535.

[Alex Frakt]

Non-actionable (Trolling) Topics

If readers can't do anything with the content of a topic other than argue about it, it does not belong here. Examples include:

• US or world economic, political, tax, health care and climate policies
• conspiracy theories of any type including oil price manipulation
• discussions of the crimes, shortcomings or stupidity of other people, whether they be political figures, celebrities, CEOs, Fed chairmen, subprime mortgage borrowers, lottery winners, federal "bailout" recipients, poor people, rich people, etc. Of course, you are welcome to talk about the stupid financial things you have done.