“Majority of working-age Americans have no retirement savings”

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jehovasfitness
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Re: “Majority of working-age Americans have no retirement savings”

Post by jehovasfitness » Wed Sep 19, 2018 12:40 pm

livesoft wrote:
Wed Sep 19, 2018 10:22 am
So where do all these retired people that I see all over the US come from? I suspect people do not tell pollsters the truth about their savings.
generation plays a role. I'd assume boomers who took it all for themselves are doing just fine while the younger generation saddled with student loan debt which essentially makes them lose a decade or more aren't going to do so well.

Add on that the rising cost of housing, healthcare compared to those that made their main living during the 70s/80s and made out like bandits before housing prices went crazy

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Re: “Majority of working-age Americans have no retirement savings”

Post by annielouise » Wed Sep 19, 2018 12:44 pm

Maverick3320 wrote:
Wed Sep 19, 2018 11:25 am
willthrill81 wrote:
Wed Sep 19, 2018 10:49 am
Sasquatch wrote:
Wed Sep 19, 2018 10:46 am
livesoft wrote:
Wed Sep 19, 2018 10:22 am
So where do all these retired people that I see all over the US come from? I suspect people do not tell pollsters the truth about their savings.
+1

Why in the world would I want to reveal my financial status to a government agency?
You don't have to. Since all of your bank and investment accounts are linked to your Social Security number, they can easily determine the level of assets you have with a few keystrokes.
Then why do we spend so much time doing taxes?
Oh, didn't you know - it's a math test. The IRS already knows the right answer. They just want to see if you can figure it out yourself. :wink:

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rocket354
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Re: “Majority of working-age Americans have no retirement savings”

Post by rocket354 » Wed Sep 19, 2018 12:45 pm

From the article:
Using U.S. Census Bureau data, the institute also found 57% of working-age Americans — more than 100 million people — don't have retirement assets in an employer-sponsored defined contribution plan, pension plan or individual retirement account.
and:
The NIRS report noted that even among retirement account savers, the typical worker had a balance of just $40,000.
To the first quote, what is the definition of "working age?" I didn't see it in the article. Google gives it as 15-64. Even if it's, say, 18-64 then there's a lot of people close to either endpoint with justifiable explanations. People under 25 are often in school without ever having much of a job. A lot of people 50+ probably still were in a one-income household, where one person works (and has the retirement accounts) and the other raises the kids.

I really don't like the methodology of giving statistics about all types of people of all ages and backgrounds (how about new immigrants, how much of a 401k should they have)? This brings us to the second quoted portion. There are a lot of millenials. Someone under 30 years old with $40,000 in a retirement account is actually doing pretty well. And, since it's now "retirement account savers," people 55+ often had pensions. Anecdote alert, but I have a buddy who recently retired with $16,000 in a checking account. How? He made it to 20 years as a state government employee and gets a $50k annual pension. He and anyone in a similar situation would probably actually show up in the 0 category if we're going by retirement account savers.

Then, as others have mentioned, people can have multiple retirement accounts. Using their methodology, would someone with three $40k accounts show up as one $120k, or as three $40k data points?

There are definitely people out there who will have a tough time in retirement. And there are others who will be ok. But statistics like these do not really shed any light on the relative frequency of either.
Last edited by rocket354 on Wed Sep 19, 2018 12:46 pm, edited 1 time in total.

The Wizard
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Re: “Majority of working-age Americans have no retirement savings”

Post by The Wizard » Wed Sep 19, 2018 12:45 pm

livesoft wrote:
Wed Sep 19, 2018 11:14 am
I, for one, am not wondering where all the poor retirees are. They are everywhere. I see them all the time.
How can you tell they are "poor"?
Is there a field guide to help ID this sort of thing?
Attempted new signature...

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celia
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Re: “Majority of working-age Americans have no retirement savings”

Post by celia » Wed Sep 19, 2018 12:47 pm

The median retirement account balance among working-age Americans is zero, according to a research report by the National Institute on Retirement Security, a non-profit research group based in Washington.
The first sentence is a non-starter for me. How can you possibly get a median of 0 when looking at a group of accounts? A median is when you arrange all the accounts by account balance going from low to high and the account in the middle (the median) is valued at 0. That means over half of the accounts are empty, ie, they were closed or not yet funded.
The NIRS report noted that even among retirement account savers, the typical worker had a balance of just $40,000.
But how many retirement accounts does this worker have? How many past employer plans still have money in them? How many custodians does this worker use? I have at least 10 "retirement accounts" but retired once, not 10 times. (Some of my accounts are now empty so that takes me back to the first half of my post!)

I'd cross this writer (and website) off my reading list.
Last edited by celia on Wed Sep 19, 2018 12:52 pm, edited 1 time in total.

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Re: “Majority of working-age Americans have no retirement savings”

Post by stoptothink » Wed Sep 19, 2018 12:52 pm

Broken Man 1999 wrote:
Wed Sep 19, 2018 11:18 am
stoptothink wrote:
Wed Sep 19, 2018 10:33 am
willthrill81 wrote:
Wed Sep 19, 2018 10:24 am
The saving grace for many of these people is that they still have some sort of pension.

But for many, perhaps most, they will have little choice but to keep working until they are physically incapable of doing so. At that point, they'll have to make do with Social Security benefits, which are low since most claim benefits at age 62, or rely on family.

Boomerang parents are already a real phenomenon and one that is likely to grow significantly in coming years.
In-laws have already made plans to move (back) in with us, permanently this time, within the next 3 years. FIL is very close to being physically incapable of working anymore and they have a 6-figure negative networth, $0 in retirement, and what little he has coming in the way of social security will be partially garnished due to student loan debt. Mother and stepfather have zero in retirement as well, but at least my stepfather is a teacher (pension) and my mother intends to work until the day she dies; she tearfully told me just a few weeks ago that she will do anything not to put me in the same position that the in-laws have. We have no siblings on either side of the family capable of helping.

I don't know of any of my peers in a similar position, but I can't be alone in having to figure out this inevitable "boomerang" parent situation.
Wow!

Is your FIL's student loan debt for HIS education expenses, or is it on behalf of another member of the family?

MIL lived with us the last few years of her life, My parents and DW's father passed before her. We helped her, but her SS covered all her needs, especially after paying back people for all the borrowing she did around her home town, all the while telling all her children she was doing fine!

Turns out she wasn't honest, she wanted to convince everyone she could live on a SS payment of around $1000/month. Nope. At least not independently.

The TV show The Golden Girls showed a way to pool resources, it surprises me that more people don't do that. Especially those who have no relatives nearby. I would think sharing a large home would also reduce isolation and loneliness amongst those who are perhaps homebound.

Broken Man 1999
My FIL decided to go to chiropractic school in his early 30's, already with 4 children. From what I have gathered, he graduated with somewhere near $75k in student loans. In the past 25yrs, it has now ballooned to ~$230k and he has not even attempted to pay it down despite having finally begun earning a decent living (thanks to my wife getting him a job after he closed his chiropractic practice). He also took out some parent plus loans to help put my SIL through undergrad and she hasn't worked a day in her life since graduating and now lives with her in-laws with her husband and 3 children. I love my in-laws, they treat my family well, but it is getting to the point where I can't even be in the same room with them. The complete lack of financial responsibility and dependence on others is almost unbelievable.

jehovasfitness
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Re: “Majority of working-age Americans have no retirement savings”

Post by jehovasfitness » Wed Sep 19, 2018 12:52 pm

Also, is this that surprising?

Sure, people near large cities can have high-paying jobs, but look at middle america. Look at teachers in many states needing to work several jobs to make ends meet.

Americans with jobs making even $60k/yr have a skewed perception of just how many low paying jobs are out there that are filled. Living wages are not so common, let alone wages that allow ample retirement savings

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Re: “Majority of working-age Americans have no retirement savings”

Post by AnonJohn » Wed Sep 19, 2018 12:55 pm

djpeteski wrote:
Wed Sep 19, 2018 11:39 am
HEDGEFUNDIE wrote:
Wed Sep 19, 2018 10:17 am
The median retirement account balance among working-age Americans is zero, according to a research report by the National Institute on Retirement Security, a non-profit research group based in Washington.
...
The report found about 80% of working Americans have less than one year's income saved in retirement accounts. "Also, 77% of Americans fall short of conservative retirement savings targets for their age based on working until age 67, even after counting an individual's entire net worth — a generous measure of retirement savings," the news release said.

The NIRS report noted that even among retirement account savers, the typical worker had a balance of just $40,000.
...
Its weird how so many working age American have really nice cars. What if they saved 250 every month, drove a used corolla with a car payment half of the average one? They would have a healthy amount to retire on. Its all behaviorally based.
I play a game walking home from work, estimating the cost of the cars parked on the side of the road and adding them up to see how many blocks it takes to pay for my house.

Though part of the reason I can play this game is because I've been looking at new cars to replace our 90's Elantra. I can't quite tell if I'm humblebragging or knocking myself off of my soapbox with this post ... :oops:

But I share your observation ...

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Re: “Majority of working-age Americans have no retirement savings”

Post by daheld » Wed Sep 19, 2018 12:57 pm

jehovasfitness wrote:
Wed Sep 19, 2018 12:52 pm
Also, is this that surprising?

Sure, people near large cities can have high-paying jobs, but look at middle america. Look at teachers in many states needing to work several jobs to make ends meet.

Americans with jobs making even $60k/yr have a skewed perception of just how many low paying jobs are out there that are filled. Living wages are not so common, let alone wages that allow ample retirement savings
THIS. I love this forum. It's been a real fountain of knowledge for me and I appreciate it immensely. That said, it is not a place that is generally very understanding of how most people in America live.

I am in complete agreement that a majority of those who earn a living wage do not save responsibly. But to me, the larger issue is that there's an enormous amount of people who don't earn a living wage. You can't save what you literally do not earn.

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Re: “Majority of working-age Americans have no retirement savings”

Post by MichCPA » Wed Sep 19, 2018 1:02 pm

My general impression is that many people are 'behind' because the goals put up by the financial industry are based on linear savings. Most people (not Bogleheads) spend a ton of time in their 20s and 30s paying down student loans and saving a down payment on a house. They don't really attempt to catch-up on retirement until about the last 10 years of work. It makes the retirement process more painful than it has to be, but most can make it by just fine. The idea of being 'on-track' is often based on a 4% withdrawal rule, which is a good but conservative target.

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Re: “Majority of working-age Americans have no retirement savings”

Post by tennisplyr » Wed Sep 19, 2018 1:03 pm

Take me for instance, when I was "working age" I had pretty close to zero net worth because I was busy raising a family/home owning. Fast forward to me in my early sixties, no mortgage, empty nest, and living nicely in retirement. I'm sure I represent a good chunk of people out there, as long as you stay hopeful and keep working at it, you can make!
Those who move forward with a happy spirit will find that things always work out.

bhsince87
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Re: “Majority of working-age Americans have no retirement savings”

Post by bhsince87 » Wed Sep 19, 2018 1:11 pm

Keep in mind the largest population cohort in the US is now the millenials. They are going to skew these stats hugely to the down side.
Retirement: When you reach a point where you have enough. Or when you've had enough.

HEDGEFUNDIE
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Re: “Majority of working-age Americans have no retirement savings”

Post by HEDGEFUNDIE » Wed Sep 19, 2018 1:21 pm

bottlecap wrote:
Wed Sep 19, 2018 12:17 pm
Everyone was trolled by a naked link with no comment or follow up.

Well done.

JT
Not sure why you think my intention was to troll. P&I is a well-respected industry news site, and now we have a lively discussion with 60+ comments.

If you want my opinion, it’s that we BHs should all be more aware of the “real world” out there. Especially as we respond to the “do I have enough / how am I doing” questions that pop up daily. Just to keep some perspective.

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Will do good
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Re: “Majority of working-age Americans have no retirement savings”

Post by Will do good » Wed Sep 19, 2018 1:24 pm

SevenBridgesRoad wrote:
Wed Sep 19, 2018 11:20 am
It's often interesting to look behind the curtain at the organizations publishing such information. A quick glance at the National Institute on Retirement Security shows they are a Washington D.C. lobbying group funded mostly by state government retirement systems. I would view their published study results with an understanding they may have an agenda.
+1000

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Re: “Majority of working-age Americans have no retirement savings”

Post by LateStarter1975 » Wed Sep 19, 2018 1:31 pm

nisiprius wrote:
Wed Sep 19, 2018 10:54 am
I'm not going to be the one to report this, since it's a grey area and particularly since the discussion has stayed civil, but I'd like to remind everyone of forum policy, particularly the section on "unacceptable topics" that includes:
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.
As an example of a stupid financial thing I did, at age 29 I had zero retirement savings, due to a long stint as a grad student, and ultimately ended up working in a different field and derived no money from my graduate degree. (However, I had a great time doing intrinsically worthwhile things, and that is where I met the person who became my spouse).

Thank you Nisi. I did a similar stupid financial thing of having zero retirement savings at age 36. I'm still trying to catch up since then....and I'm 43 now
Debt is dangerous...simple is beautiful

jehovasfitness
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Re: “Majority of working-age Americans have no retirement savings”

Post by jehovasfitness » Wed Sep 19, 2018 2:13 pm

MichCPA wrote:
Wed Sep 19, 2018 1:02 pm
My general impression is that many people are 'behind' because the goals put up by the financial industry are based on linear savings. Most people (not Bogleheads) spend a ton of time in their 20s and 30s paying down student loans and saving a down payment on a house. They don't really attempt to catch-up on retirement until about the last 10 years of work. It makes the retirement process more painful than it has to be, but most can make it by just fine. The idea of being 'on-track' is often based on a 4% withdrawal rule, which is a good but conservative target.
Yep.

Graduated in 2005, didn't pay off student loans until 2016 or 2017... Wife graduated in 2008, paid off student loans in 2017.

We lived in a room for rent for our first 4 yrs dating/married (2007-2011) that was only $200-600/mo with utilities included.

Did we make financial mistakes during that time? Sure. Could we have lived like poor people to pay off our student loans in 6 yrs instead of 10? Sure.

Now at ages 36/33 we've finally been able to max out retirement accounts, but we are way behind where we should be.

And we don't even have kids.

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Re: “Majority of working-age Americans have no retirement savings”

Post by livesoft » Wed Sep 19, 2018 2:14 pm

^Same story for us shifted by 20 years. Back then. Except we did live well below our means (a euphemism for "like poor people"?) until long afterwards since we've been alive.
Last edited by livesoft on Wed Sep 19, 2018 2:17 pm, edited 2 times in total.
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Re: “Majority of working-age Americans have no retirement savings”

Post by randomguy » Wed Sep 19, 2018 2:14 pm

celia wrote:
Wed Sep 19, 2018 12:47 pm
The median retirement account balance among working-age Americans is zero, according to a research report by the National Institute on Retirement Security, a non-profit research group based in Washington.
The first sentence is a non-starter for me. How can you possibly get a median of 0 when looking at a group of accounts? A median is when you arrange all the accounts by account balance going from low to high and the account in the middle (the median) is valued at 0. That means over half of the accounts are empty, ie, they were closed or not yet funded.
They are looking at people not accounts. They are saying 50% of americans don't have retirement accounts.

https://www.nerdwallet.com/article/the- ... -need-more gives out account balances (mean and median) for different age ranges.

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Re: “Majority of working-age Americans have no retirement savings”

Post by H-Town » Wed Sep 19, 2018 2:24 pm

HEDGEFUNDIE wrote:
Wed Sep 19, 2018 10:17 am
http://www.pionline.com/article/2018091 ... e=20180918
The median retirement account balance among working-age Americans is zero, according to a research report by the National Institute on Retirement Security, a non-profit research group based in Washington.
...
The report found about 80% of working Americans have less than one year's income saved in retirement accounts. "Also, 77% of Americans fall short of conservative retirement savings targets for their age based on working until age 67, even after counting an individual's entire net worth — a generous measure of retirement savings," the news release said.

The NIRS report noted that even among retirement account savers, the typical worker had a balance of just $40,000.
...
The report added 68% of individuals ages 55 to 64 have retirement savings "equal to less than one time their annual income, which is far below what they will need to maintain their standard of living over their expected years in retirement."
Here we are... thinking we might get by with $5M portfolio when we retire. :oops:

It's another perspective that we should not worry about money, or lack thereof. People will survive, one way or the other. Money is nice to have, but it's not like you'll drop dead if you don't have >$1M to retire.

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Re: “Majority of working-age Americans have no retirement savings”

Post by Larry2623 » Wed Sep 19, 2018 2:25 pm

The Wizard wrote:
Wed Sep 19, 2018 12:45 pm
livesoft wrote:
Wed Sep 19, 2018 11:14 am
I, for one, am not wondering where all the poor retirees are. They are everywhere. I see them all the time.
How can you tell they are "poor"?
Is there a field guide to help ID this sort of thing?
If people saw me walking around in shorts and flip flops from walmart and driving my 14 yo truck they might think I was poor...

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Re: “Majority of working-age Americans have no retirement savings”

Post by Larry2623 » Wed Sep 19, 2018 2:28 pm

daheld wrote:
Wed Sep 19, 2018 12:57 pm
jehovasfitness wrote:
Wed Sep 19, 2018 12:52 pm
Also, is this that surprising?

Sure, people near large cities can have high-paying jobs, but look at middle america. Look at teachers in many states needing to work several jobs to make ends meet.

Americans with jobs making even $60k/yr have a skewed perception of just how many low paying jobs are out there that are filled. Living wages are not so common, let alone wages that allow ample retirement savings
THIS. I love this forum. It's been a real fountain of knowledge for me and I appreciate it immensely. That said, it is not a place that is generally very understanding of how most people in America live.

I am in complete agreement that a majority of those who earn a living wage do not save responsibly. But to me, the larger issue is that there's an enormous amount of people who don't earn a living wage. You can't save what you literally do not earn.
What is a "living wage" and if you have no education or skills how do you expect to earn one?

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Re: “Majority of working-age Americans have no retirement savings”

Post by delamer » Wed Sep 19, 2018 2:32 pm

livesoft wrote:
Wed Sep 19, 2018 10:39 am
Is is safe to say that "The majority of retirement-age Americans are retired" ?
Majority, yes.

This is from a report based on 2016 data from BLS:

“In May, 18.8% of Americans ages 65 and older, or nearly 9 million people, reported being employed full- or part-time, continuing a steady increase that dates to at least 2000 (which is as far back as we took our analysis). In May of that year, just 12.8% of 65-and-older Americans, or about 4 million people, said they were working.”

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Re: “Majority of working-age Americans have no retirement savings”

Post by jharkin » Wed Sep 19, 2018 2:39 pm

smitcat wrote:
Wed Sep 19, 2018 10:30 am
willthrill81 wrote:
Wed Sep 19, 2018 10:24 am
The saving grace for many of these people is that they still have some sort of pension.

But for many, perhaps most, they will have little choice but to keep working until they are physically incapable of doing so. At that point, they'll have to make do with Social Security benefits, which are low since most claim benefits at age 62, or rely on family.

Boomerang parents are already a real phenomenon and one that is likely to grow significantly in coming years.

"The saving grace for many of these people is that they still have some sort of pension."
About 30% and dropping I am afraid...
https://www.newretirement.com/retiremen ... u-compare/
Correct.. Many of hte currently retired - folks my parents age and older (70s, 80s, 90s) still had pensoins avalable for at least some of hteir working lives.

The danger is the generations who entered the workforce after 401ks because the defacto standard (i.e. 90s and later). Great idea but as a society we never educated people on how to use them so people just continued to go through life clueless as before. Clueless was *OK* when your employer planned your retirement for you. not anymore...

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Re: “Majority of working-age Americans have no retirement savings”

Post by LadyGeek » Wed Sep 19, 2018 2:47 pm

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