[How do I lead a discussion about saving for retirement?]
[How do I lead a discussion about saving for retirement?]
[Original thread title was: "1/3 of those SAVING for retirement have less than $1000", see my post below. --admin LadyGeek]
I did not see this posted yet, but it is concerning that of those who save for retirement (Not including those without savings), one third have less than $1,000 saved according to this article:
http://www.breitbart.com/big-government ... etirement/
The actual number is around 28%, but that is scary.
I have for a while thought about trying to lead a discussion about saving for retirement at a local college to do whatever small part I can to help today's youth start to prepare. My question would be, are there specific requirements to do such a talk? Am I taking on liability talking to a group, or does this require any special training. The idea would be to give more information and resources than to help with specifics. Examples of the growth of money and whatnot. For the record, I am in a field of work wherein I would receive zero personal or professional benefit from doing this. Thoughts?
I did not see this posted yet, but it is concerning that of those who save for retirement (Not including those without savings), one third have less than $1,000 saved according to this article:
http://www.breitbart.com/big-government ... etirement/
The actual number is around 28%, but that is scary.
I have for a while thought about trying to lead a discussion about saving for retirement at a local college to do whatever small part I can to help today's youth start to prepare. My question would be, are there specific requirements to do such a talk? Am I taking on liability talking to a group, or does this require any special training. The idea would be to give more information and resources than to help with specifics. Examples of the growth of money and whatnot. For the record, I am in a field of work wherein I would receive zero personal or professional benefit from doing this. Thoughts?
I'm not a financial professional. Post is info only & not legal advice. No attorney-client relationship exists with reader. Scrutinize my ideas as if you spoke with a guy at a bar. I may be wrong.
Re: 1/3 of those SAVING for retirement have less than $1000
I think anyone can give financial "advice". You aren't selling anything to these kids.
However, I think those numbers are pretty skewed. When a kid graduates college and gets his first job that kid is the American middle class. It was tough for me to understand, but there are a lot of people in this country who work paycheck to paycheck and even if you gave them all the knowledge in the world they wouldn't be able to save for retirement.
However, I think those numbers are pretty skewed. When a kid graduates college and gets his first job that kid is the American middle class. It was tough for me to understand, but there are a lot of people in this country who work paycheck to paycheck and even if you gave them all the knowledge in the world they wouldn't be able to save for retirement.
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Re: 1/3 of those SAVING for retirement have less than $1000
Many people in my family do not have any or have very little in retirement. We don't like risk therefore we don't put anything in 401K or IRA. But that doesn't mean we don't have anything. We have them in CDs though. My family members have hundred of thousands in savings. I found this site and read all the Wiki pages and learned so much. I just didn't know about 401k, stocks, or IRA before.
I don't think it is uncommon
for people under 30 to have little or no savings for retirement. I am more concerned with the percentage people at 40 who haven't started. When I read these statistics you have to watch how the numbers can be manipulated. If they are looking at a population from birth to 90, that is one set of statistics, If they look at working age, that is different. We did not even start savings until I was 29. The wife had just got out of law school. I think we are just "average" people with an average life experience. Once someone gets established, then I think we start to worry if they ignore saving. My sister is 60 (single) and has a crappy teachers pension after 35 years (I mean crappy). She has not saved, pension and SS are it for her. She will work until she drops.
Marty....don't go to the year 2020....Dr. Emmett Brown
Re: 1/3 of those SAVING for retirement have less than $1000
I can remember back in the mid 80's in my early twenties and opened my first IRA, one of my buddies was befuddled on why I would worry about retirement at such a young age. He is currently a teacher with a pension that is under 70% funded currently.
Re: 1/3 of those SAVING for retirement have less than $1000
To which the proper response is a compound-interest graph with two curves and two vertical lines.MaddMaxx wrote:I can remember back in the mid 80's in my early twenties and opened my first IRA, one of my buddies was befuddled on why I would worry about retirement at such a young age. He is currently a teacher with a pension that is under 70% funded currently.
(So says someone who didn't start into a 401k until his late 20s - I regarded the stock market as little more than a risky gamble, since the only "investing" I'd been exposed to was the stock market games in high school where you'd try to pick some stock based on hot tips you could find. So, yeah...gambling.)
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Re: 1/3 of those SAVING for retirement have less than $1000
to put it bluntly Someone is telling you absolute screaming nonsense.yellowgirl wrote:Many people in my family do not have any or have very little in retirement. We don't like risk therefore we don't put anything in 401K or IRA. But that doesn't mean we don't have anything. We have them in CDs though. My family members have hundred of thousands in savings. I found this site and read all the Wiki pages and learned so much. I just didn't know about 401k, stocks, or IRA before.
your CDS are at risk to every creditor who comes down the pike THEY ARE TOTALLY EXPOSED
Retirement funds are protected by law. You can invest retirement funds in CDs to protect against financial risk but outside of teh IRA or 401 k they have no protection against creditor risk. they are in fact big fat targets with a bulls eye painted on them
I'm a lawyer. Unprotected CDs are wonderful shark bait.
Last edited by Professor Emeritus on Fri Apr 24, 2015 9:22 am, edited 1 time in total.
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Re: 1/3 of those SAVING for retirement have less than $1000
I think you are confusing saving for retirement with having money in 401Ks and/or IRAs. If someone is stocking up savings for their future, they are saving for retirement.yellowgirl wrote:Many people in my family do not have any or have very little in retirement. We don't like risk therefore we don't put anything in 401K or IRA. But that doesn't mean we don't have anything. We have them in CDs though. My family members have hundred of thousands in savings. I found this site and read all the Wiki pages and learned so much. I just didn't know about 401k, stocks, or IRA before.
An IRA is not inherently risky. You can get IRA CDs, as opposed to having an IRA invested in the stock market or banana futures
Re: 1/3 of those SAVING for retirement have less than $1000
OP, regarding your specific actionable question about qualifications for doing a talk, I think you can just go for it.
But remember that the alarmist report was published by a group with a board that's a who's-who of financial institutions with a vested interest in increasing funds under management. I am personally not so sure that it's an impending catastrophe. After all these folks who supposedly have less than $1000 saved almost all are making significant SS contributions, and many of them are building home equity. Millions of people live a comfortable retirement with SS plus a paid-off home ... so many individuals in this "less than $1000" bucket may be behaving entirely rationally. Including fully understanding that their chosen path will necessitate in a glide path of downwards consumption later in life, which could itself be considered *more* rational than the Bogleheads S.O.P. of saving to allow full consumption smoothing or even preparing to spend more in retirement (despite study after study indicating that, regardless of net worth, people tend to spend less as they age). That being said I personally think that "opt out" rather than "opt in" for 401K contributions etc. should be the rule, that annuitization should be the default for retirement plans, that we should make it harder to tap retirement accounts pre-retirement, etc. But such things veer into political discussions which we cannot have on this forum.
But remember that the alarmist report was published by a group with a board that's a who's-who of financial institutions with a vested interest in increasing funds under management. I am personally not so sure that it's an impending catastrophe. After all these folks who supposedly have less than $1000 saved almost all are making significant SS contributions, and many of them are building home equity. Millions of people live a comfortable retirement with SS plus a paid-off home ... so many individuals in this "less than $1000" bucket may be behaving entirely rationally. Including fully understanding that their chosen path will necessitate in a glide path of downwards consumption later in life, which could itself be considered *more* rational than the Bogleheads S.O.P. of saving to allow full consumption smoothing or even preparing to spend more in retirement (despite study after study indicating that, regardless of net worth, people tend to spend less as they age). That being said I personally think that "opt out" rather than "opt in" for 401K contributions etc. should be the rule, that annuitization should be the default for retirement plans, that we should make it harder to tap retirement accounts pre-retirement, etc. But such things veer into political discussions which we cannot have on this forum.
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Re: 1/3 of those SAVING for retirement have less than $1000
The main requirement would be that you can find some kind of group on campus willing to invite you and sponsor a program. In order for that to happen, you are going to have to have some credentials and experience relevant enough for someone to invite you, and you have to be able to contact a person or organization on campus that would be interested in the topic. I suppose you could just show up in the quad with a bullhorn and a bunch of pamphlets, but I'm guessing that's not what you had in mind.Dulocracy wrote:
I have for a while thought about trying to lead a discussion about saving for retirement at a local college to do whatever small part I can to help today's youth start to prepare. My question would be, are there specific requirements to do such a talk?
ETA: Important things to keep in mind - this is a survey of 1000 people, which is a relatively small sample. The majority of those with little or no savings for retirement are not likely college grads, so they probably aren't the best audience for this information.
Re: 1/3 of those SAVING for retirement have less than $1000
Who cares. This has always been the case and always will be the case. Society will continue on and every generation will be a little wealthier than the last.
Re: 1/3 of those SAVING for retirement have less than $1000
Although that report may show bias, the underlying fact is still a fact. Even John Bogle cited this in recent Congressional Testimonyfreebeer wrote:OP, regarding your specific actionable question about qualifications for doing a talk, I think you can just go for it.
But remember that the alarmist report was published by a group with a board that's a who's-who of financial institutions with a vested interest in increasing funds under management. I am personally not so sure that it's an impending catastrophe. After all these folks who supposedly have less than $1000 saved almost all are making significant SS contributions, and many of them are building home equity. Millions of people live a comfortable retirement with SS plus a paid-off home ... so many individuals in this "less than $1000" bucket may be behaving entirely rationally. Including fully understanding that their chosen path will necessitate in a glide path of downwards consumption later in life, which could itself be considered *more* rational than the Bogleheads S.O.P. of saving to allow full consumption smoothing or even preparing to spend more in retirement (despite study after study indicating that, regardless of net worth, people tend to spend less as they age). That being said I personally think that "opt out" rather than "opt in" for 401K contributions etc. should be the rule, that annuitization should be the default for retirement plans, that we should make it harder to tap retirement accounts pre-retirement, etc. But such things veer into political discussions which we cannot have on this forum.
"First of all, full one-third of our 122.5 million US households have NO retirement plan except Social Security -- that's 40 million families. Second, most of the rest of us who have IRAs or corporate DC plans (or both) have accumulated savings that, truth told, are grossly inadequate to the task. In fact, according to the Center for Retirement Research at Boston College, the average balances of those of us nearing retirement (age 55-64) come to just $120,000."
Source: Testimony of John C. Bogle before the Finance Committee of the United States Senate, September 16, 2014
Re: 1/3 of those SAVING for retirement have less than $1000
If you're not convinced that there's an impending retirement crisis, read the transcript of John Bogle's Senate Finance Committee testimony. It's pretty scary.
http://www.finance.senate.gov/imo/media ... 0Bogle.pdf
http://www.finance.senate.gov/imo/media ... 0Bogle.pdf
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Re: 1/3 of those SAVING for retirement have less than $1000
Fixed:
"1/3 of those not SAVING for retirement have less than $1000"
"1/3 of those not SAVING for retirement have less than $1000"
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Re: 1/3 of those SAVING for retirement have less than $1000
Actually, no longer, although they used to. For some time in the U.S. only a certain class, unnamed to save this from the mods, has had its wealth increasing over time. Everyone else in the U.S. is now financially declining from generation to generation.Rainier wrote:Who cares. This has always been the case and always will be the case. Society will continue on and every generation will be a little wealthier than the last.
Re: [How do I lead a discussion about saving for retirement?
This thread is now in the Personal Finance (Not Investing) forum (retirement planning). I also changed the thread title.
Please stay on-topic, as the intent is to help the OP understand how to teach about saving for retirement. (It is not about the article.)
Please stay on-topic, as the intent is to help the OP understand how to teach about saving for retirement. (It is not about the article.)
Re: [How do I lead a discussion about saving for retirement?
For starters, check the wiki: Bogleheads® financial literacy project
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Re: [How do I lead a discussion about saving for retirement?
Don't overwhelm them, but give them enough info to understand the importance of saving early and often as well as a basic idea of how to do it.
My freshman year of college a guy from Morgan Stanley came to talk to a student group I was part of. In 20 minutes, he had convinced me of the miracle of compound interest (and why I should save at 20 instead of waiting until 35), and explained what a Roth IRA is and who could open one. He wrapped up by basic info on accessibility of investing (i.e., $100 deposits until fund minimums were hit, etc.) and that was it. By the end of the year, about 40% of my friends had Roth IRAs opened with summer money and the seeds were planted. By the time first jobs came around with "real" money, saving was old hat.
Arranging that speaker is probably the greatest thing anyone - other than my parents - has ever done for me financially.
My freshman year of college a guy from Morgan Stanley came to talk to a student group I was part of. In 20 minutes, he had convinced me of the miracle of compound interest (and why I should save at 20 instead of waiting until 35), and explained what a Roth IRA is and who could open one. He wrapped up by basic info on accessibility of investing (i.e., $100 deposits until fund minimums were hit, etc.) and that was it. By the end of the year, about 40% of my friends had Roth IRAs opened with summer money and the seeds were planted. By the time first jobs came around with "real" money, saving was old hat.
Arranging that speaker is probably the greatest thing anyone - other than my parents - has ever done for me financially.
Re: I don't think it is uncommon
I have looked at some of these studies and realized there are huge issues with the data. Here are a couple of examples off the top of my head:Marmot wrote:for people under 30 to have little or no savings for retirement. I am more concerned with the percentage people at 40 who haven't started. When I read these statistics you have to watch how the numbers can be manipulated. If they are looking at a population from birth to 90, that is one set of statistics, If they look at working age, that is different. We did not even start savings until I was 29. The wife had just got out of law school. I think we are just "average" people with an average life experience. Once someone gets established, then I think we start to worry if they ignore saving. My sister is 60 (single) and has a crappy teachers pension after 35 years (I mean crappy). She has not saved, pension and SS are it for her. She will work until she drops.
1) study that looked at 401k savings by age group (25 - 35, 35 - 45, etc.)
- they included ONLY 401k balances and totally overlooked the possibility of a rollover IRA from a former job
- they ignored how many years participants had been in their plan; by using age as a proxy for years in plan they shortchanged older workers who had switched jobs
- many people have atrocious plans with high fees leading to many participants only putting in enough to get a match (if that much) and saving for retirement elsewhere
[ I am actually a good example here having started my current job at over 50; my 401k balance is in the range of 10 - 12 % of my total retirement portfolio]
2) study looked at balances in 401k and IRAs
- they failed to account for whether anyone had access to a pension
- they didn't account for whether or not someone had access to a 401k or only an IRA
- someone without a 401k might have been socking money away in taxable accounts and earmarking it for retirement, but only their IRA money got counted as going towards retirement
Re: [How do I lead a discussion about saving for retirement?
+1 whatusername?
I started saving for retirement the first month the IRAs were created. I was just finished with my BS and heading to graduate school, but maxed out the IRA every year since then. Along the way, I discovered that MOST of my peers had no or poor habits of saving. It just wasn't impressed upon us, grandchildren of the depression. Our parents had heard the stories about the depression but they lived in a very prosperous time, and generally the mood was that saving was passé.
With weak savings habits, and a not nearly so prosperous few decades, most of my peers are unprepared for retirement. Social Security better be enough to live on, because that is all most of them will have. I know they didn't teach their children to save each payday because they never acquired the habit. I find nothing odd about the statistics in that article.
No one entering the workforce today should assume they will have any pension provided by their employer. That's foolhardy IMHO.
- College Finance 101: First lecture every semester was on compound interest and the value of time in a savings scheme. The professor was famous for this lecture, and the room was standing room only, with many extra folks there for just that first lecture. We were amazed to hear that we all could be millionaires by retirement if we only accumulated $26,000 by the time we were a few years out of school (age 28+/-) and had no other contributions.
The Bachelor of Science students will probably have the grace of a few years if they don't start saving, because they'll have a higher income. But the liberal arts students probably need the news most. They can only make up for a lower income by saving earlier. The ones who start early are golden no matter what life throws at them.
I also wish 401K contributions were mandated and opt-out was required instead of opt-in. In the workplace, I had a heck of a time getting women to sign up. I finally would sit them down in my office and refuse to let them leave until they had signed up. The guys were an easier sell. Hopefully that is changing. The pitch that amazingly worked on single women was the story about men liking women who had themselves together and had started saving for retirement. My little sister used her 401K balance like bait for guys she was interested in. Worked for her.
Good luck!
I started saving for retirement the first month the IRAs were created. I was just finished with my BS and heading to graduate school, but maxed out the IRA every year since then. Along the way, I discovered that MOST of my peers had no or poor habits of saving. It just wasn't impressed upon us, grandchildren of the depression. Our parents had heard the stories about the depression but they lived in a very prosperous time, and generally the mood was that saving was passé.
With weak savings habits, and a not nearly so prosperous few decades, most of my peers are unprepared for retirement. Social Security better be enough to live on, because that is all most of them will have. I know they didn't teach their children to save each payday because they never acquired the habit. I find nothing odd about the statistics in that article.
No one entering the workforce today should assume they will have any pension provided by their employer. That's foolhardy IMHO.
- College Finance 101: First lecture every semester was on compound interest and the value of time in a savings scheme. The professor was famous for this lecture, and the room was standing room only, with many extra folks there for just that first lecture. We were amazed to hear that we all could be millionaires by retirement if we only accumulated $26,000 by the time we were a few years out of school (age 28+/-) and had no other contributions.
The Bachelor of Science students will probably have the grace of a few years if they don't start saving, because they'll have a higher income. But the liberal arts students probably need the news most. They can only make up for a lower income by saving earlier. The ones who start early are golden no matter what life throws at them.
I also wish 401K contributions were mandated and opt-out was required instead of opt-in. In the workplace, I had a heck of a time getting women to sign up. I finally would sit them down in my office and refuse to let them leave until they had signed up. The guys were an easier sell. Hopefully that is changing. The pitch that amazingly worked on single women was the story about men liking women who had themselves together and had started saving for retirement. My little sister used her 401K balance like bait for guys she was interested in. Worked for her.
Good luck!
The mightiest Oak is just a nut who stayed the course.
Re: [How do I lead a discussion about saving for retirement?
College students should have no money to invest. They should be flat broke. Then when they graduate, they have other things to do with their money besides saving for retirement. They need to pay for transportation (cars), phones, health insurance, rent, save for down payments, weddings, job searches, mate searches, moving to a new location, graduate school, education loans, etc.
In reality, they do not need to start saving for retirement until about age 30 despite all the admonishment to start early. If they get a job with a 401(k), then they will probably get signed up and start saving a little bit, but not really enough to get started.
If the student is not willing to learn, then the teacher will have a very difficult time. Perhaps a better discussion to lead is how to avoid buying insurance from your college friends who can only get jobs selling insurance. Also how to avoid paying too much for car loans, school loans, and to stay out of debt like credit card debt. Also a little tax prep help would not hurt either.
In reality, they do not need to start saving for retirement until about age 30 despite all the admonishment to start early. If they get a job with a 401(k), then they will probably get signed up and start saving a little bit, but not really enough to get started.
If the student is not willing to learn, then the teacher will have a very difficult time. Perhaps a better discussion to lead is how to avoid buying insurance from your college friends who can only get jobs selling insurance. Also how to avoid paying too much for car loans, school loans, and to stay out of debt like credit card debt. Also a little tax prep help would not hurt either.
Re: [How do I lead a discussion about saving for retirement?
(1) If you are talking to young people, keep it simple to get the discussion started. They have limited experience and do not need too many details.
(2) Consider having them watch this video in which Jonathan Clements and Jason Zweig (both of whom contribute to WSJ's personal finance section) give a talk and answer some questions. I watched it in anticipation of sharing it with some 20-somethings and I was surprised at how many BH themes are included. It's a good conversation starter.
10 Tips to Get Your Finances Off to a Strong Start
https://www.youtube.com/watch?v=8KgY1-C ... hare_email
(3) Keep them focused on simple straightforward steps.
(2) Consider having them watch this video in which Jonathan Clements and Jason Zweig (both of whom contribute to WSJ's personal finance section) give a talk and answer some questions. I watched it in anticipation of sharing it with some 20-somethings and I was surprised at how many BH themes are included. It's a good conversation starter.
10 Tips to Get Your Finances Off to a Strong Start
https://www.youtube.com/watch?v=8KgY1-C ... hare_email
(3) Keep them focused on simple straightforward steps.
Re: [How do I lead a discussion about saving for retirement?
A group from Milwaukee Bogleheads had a training session at our local Fidelity office on their Retirement Income Planner and their new Social Security tool.
The financial advisors commented that the majority of new folks coming to Fidelity were too close to retirement, and had way too little saved for Fidelity to be able to do any good.
Please realize this group is pretty elite among investors. We ain't the norm.
When I talk to friends and relatives, I get 3 versions of what "ready for retirement" looks like:
- they didn't save much and think they will work until they die. They plan to spend down to use medicaid for nursing care. The folks whose firms defaulted on their pensions tend to be in this group. It was too late when they discovered the pension was gone, so I can't fault folks when this happened. They'll manage on social security, I hope.
- they saved something, and the financial advisor told them that their low six figure savings will "be enough" or that they will help them "catch up" so they think they are good.
- they saved a decent sum, and will probably be fine. If comfortable managing things themselves, I try to interest them in Bogleheads.
The financial advisors commented that the majority of new folks coming to Fidelity were too close to retirement, and had way too little saved for Fidelity to be able to do any good.
Please realize this group is pretty elite among investors. We ain't the norm.
When I talk to friends and relatives, I get 3 versions of what "ready for retirement" looks like:
- they didn't save much and think they will work until they die. They plan to spend down to use medicaid for nursing care. The folks whose firms defaulted on their pensions tend to be in this group. It was too late when they discovered the pension was gone, so I can't fault folks when this happened. They'll manage on social security, I hope.
- they saved something, and the financial advisor told them that their low six figure savings will "be enough" or that they will help them "catch up" so they think they are good.
- they saved a decent sum, and will probably be fine. If comfortable managing things themselves, I try to interest them in Bogleheads.
Last edited by LeeMKE on Fri Apr 24, 2015 5:52 pm, edited 1 time in total.
The mightiest Oak is just a nut who stayed the course.
Re: [How do I lead a discussion about saving for retirement?
Thanks for posting this link. I will spring it on my youngsters when they are least suspecting it.Matahari wrote:10 Tips to Get Your Finances Off to a Strong Start
https://www.youtube.com/watch?v=8KgY1-C ... hare_email
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Re: [How do I lead a discussion about saving for retirement?
+1livesoft wrote:College students should have no money to invest. They should be flat broke. Then when they graduate, they have other things to do with their money besides saving for retirement. They need to pay for transportation (cars), phones, health insurance, rent, save for down payments, weddings, job searches, mate searches, moving to a new location, graduate school, education loans, etc.
In reality, they do not need to start saving for retirement until about age 30 despite all the admonishment to start early. If they get a job with a 401(k), then they will probably get signed up and start saving a little bit, but not really enough to get started.
If the student is not willing to learn, then the teacher will have a very difficult time. Perhaps a better discussion to lead is how to avoid buying insurance from your college friends who can only get jobs selling insurance. Also how to avoid paying too much for car loans, school loans, and to stay out of debt like credit card debt. Also a little tax prep help would not hurt either.
In the early years after graduation, saving anything is an achievement, and financial literacy is mostly about juggling income and expenses and doing enough budgeting and planning that you can handle the medium-sized surprises (sudden end-of-life for car) and expenses that recur annually rather than monthly.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Re: [How do I lead a discussion about saving for retirement?
livesoft,
You are most welcome!
OP,
"Starting early" means more than just saving for retirement, which cannot be considered in isolation for young people. Young people have many financial challenges, all of which we faced and can look back on in hindsight. The point in starting the conversation early is to help them establish financial "literacy" so that they won't make big mistakes and do stupid things in ignorance or desperation when they start too late.
You are most welcome!
OP,
"Starting early" means more than just saving for retirement, which cannot be considered in isolation for young people. Young people have many financial challenges, all of which we faced and can look back on in hindsight. The point in starting the conversation early is to help them establish financial "literacy" so that they won't make big mistakes and do stupid things in ignorance or desperation when they start too late.
Re: [How do I lead a discussion about saving for retirement?
OP, whatever you do, be sure to tell your discussion group about the Saver's Credit!
http://www.irs.gov/Retirement-Plans/Pla ... 9s-Credit)
I don't know why I didn't know about this back when my salary was within that range, but surely it would have pushed me to start saving earlier. Wow.
http://www.irs.gov/Retirement-Plans/Pla ... 9s-Credit)
I don't know why I didn't know about this back when my salary was within that range, but surely it would have pushed me to start saving earlier. Wow.
Re: [How do I lead a discussion about saving for retirement?
TS,
The goal is to survive financially. And, if a person survive long enough, a person may retire. For a young people, they are not looking at retirement. They are looking at financial freedom. It comes at one step at a time.
1) Living paycheck to paycheck
2) Have an emergency fund. Can survive without a paycheck for a few months...
3) Money to invest. Freedom to choose a different career / job if needed...
So, maybe instead of talking about saving for retirement. How about talk about saving for Financial Freedom??
KlangFool
The goal is to survive financially. And, if a person survive long enough, a person may retire. For a young people, they are not looking at retirement. They are looking at financial freedom. It comes at one step at a time.
1) Living paycheck to paycheck
2) Have an emergency fund. Can survive without a paycheck for a few months...
3) Money to invest. Freedom to choose a different career / job if needed...
So, maybe instead of talking about saving for retirement. How about talk about saving for Financial Freedom??
KlangFool
30% VWENX | 16% VFWAX/VTIAX | 14.5% VTSAX | 19.5% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 30% Wellington 50% 3-funds 20% Mini-Larry
Re: 1/3 of those SAVING for retirement have less than $1000
Are you kidding? With a pension they are laughing all the way to the bank. Pensions receive gigantic infusions of cash, not just from employer, but also from the rest of society in the form of other people paying higher taxes, getting lower wages, or losing their jobs so that funds are available to subsidize the pensions so that "obligations" can be met. So the employee with pension receives an unbelievably good deal. It's virtually impossible for DC to beat DB due to these stratospheric subsidies. If you have a pension you are set for life, and can safely spend every penny you earn.MaddMaxx wrote:I can remember back in the mid 80's in my early twenties and opened my first IRA, one of my buddies was befuddled on why I would worry about retirement at such a young age. He is currently a teacher with a pension that is under 70% funded currently.
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OP, the message should be: just live beneath your means and save*. Pay down debt and save for short term and long term needs. It doesn't necessarily have to be specifically be for retirement at the start, but a chunk of your salary should be unspent and increasing you net worth. (E.g. when young I paid off my mortgage rather than retirement saving, mainly due to ignorance of the latter, but it turned out to be a reasonable action to take.)
* If someone's income is genuinely so low that "live beneath your means and save" is unachievable, then their income will typically be almost fully covered by Social Security.
Re: [How do I lead a discussion about saving for retirement?
http://tinyurl.com/klpzddw Can't provide a direct link URL for the saver's credit. (Evidently the IRS website breaks these URLs: you'll have to type in savers credit on the landing page search bar to reach the page)
This credit, which is for lower income folks who still manage to contribute to a retirement savings account, is fairly new. I noticed it 11 years ago.
Ideal to get young folks started saving:
50% of your contribution when your AGI is not more than $18,250 (single) up to $2,000.
This savers credit makes a huge difference in getting people to save. I did the taxes for someone this year who made less than $18,000. Turbo tax popped up offering the savers credit, and I hesitated to suggest an IRA under the circumstances (grim). But it turned out to be the sliver of good news this year. It just about wiped out their tax liability, and put money in their own IRA instead. They went to their bank, opened an IRA for the first time, put their squirreled away money into an account and we filed for the credit.
This credit, which is for lower income folks who still manage to contribute to a retirement savings account, is fairly new. I noticed it 11 years ago.
Ideal to get young folks started saving:
50% of your contribution when your AGI is not more than $18,250 (single) up to $2,000.
This savers credit makes a huge difference in getting people to save. I did the taxes for someone this year who made less than $18,000. Turbo tax popped up offering the savers credit, and I hesitated to suggest an IRA under the circumstances (grim). But it turned out to be the sliver of good news this year. It just about wiped out their tax liability, and put money in their own IRA instead. They went to their bank, opened an IRA for the first time, put their squirreled away money into an account and we filed for the credit.
The mightiest Oak is just a nut who stayed the course.
Re: [How do I lead a discussion about saving for retirement?
Unfortunately retirement savers credit is non-refundable, so a lot of people get no benefit from it.
Re: [How do I lead a discussion about saving for retirement?
Thanks, I used the search engine to get this: Retirement Savings Contributions Credit (Saver's Credit) at a GlanceLeeMKE wrote:http://tinyurl.com/klpzddw Can't provide a direct link URL for the saver's credit. (Evidently the IRS website breaks these URLs: you'll have to type in savers credit on the landing page search bar to reach the page)
Re: [How do I lead a discussion about saving for retirement?
Thank you all for the great insight. Apologies to LadyGeek for adding work... my post was not well titled. I appreciate the links, resources, and thoughts people put forward here. I am supposed to talk to a group of college students in the Fall, it would seem. If only one of them listens, it will be worth it.
I'm not a financial professional. Post is info only & not legal advice. No attorney-client relationship exists with reader. Scrutinize my ideas as if you spoke with a guy at a bar. I may be wrong.
Re: [How do I lead a discussion about saving for retirement?
College students? That's easy. "Free food!" will pack the house. (It also does wonders at work...) Partner the food with free downloads; I suggest:
- Did you know that the wiki can create PDF files? Check the left-side menu, look for "Create a book" and make yourself a book on an introduction to investing.
- Provide a link to Bill Bernstein's free download: If You Can
-- Linked from the wiki: Books: recommendations and reviews
- Show this wiki video: Video: Start with a Sound Financial Lifestyle
-- If there's time, show the rest of the videos: Video:Bogleheads® investment philosophy
- Did you know that the wiki can create PDF files? Check the left-side menu, look for "Create a book" and make yourself a book on an introduction to investing.
- Provide a link to Bill Bernstein's free download: If You Can
-- Linked from the wiki: Books: recommendations and reviews
- Show this wiki video: Video: Start with a Sound Financial Lifestyle
-- If there's time, show the rest of the videos: Video:Bogleheads® investment philosophy
Re: [How do I lead a discussion about saving for retirement?
Audience: Young, impressionable adults.
Topic: Boring, personal finance and retirement planning.
I'm sorry but you're going to have to bring some serious fun into this group. Make it funny. Make it memorable. Be witty and charming. Yell, cry, scream. Motivate these guys, don't Ben Stein them to death, they need excitement.
Topic: Boring, personal finance and retirement planning.
I'm sorry but you're going to have to bring some serious fun into this group. Make it funny. Make it memorable. Be witty and charming. Yell, cry, scream. Motivate these guys, don't Ben Stein them to death, they need excitement.
What the bold print givith, the fine print taketh away. |
-meowcat
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Re: [How do I lead a discussion about saving for retirement?
Many, many years ago back in the late 1970s, NBC launched a radio talk network that included Bruce Williams who talked about personal finance issues. As I worked until 3 am many nights, I had the opportunity to listen to him and to meet him a few years later for breakfast.
He came up with a line that honestly, brought a great visual image. He was always threatening to publish a book, "49 Ways to Prepare Alpo ... and Enjoy It" for those who refused to prepare for retirement. That tied in with the media reports in the 1970s that "many" people were eating dog food to survive.
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By the way, most college students tend to be receptive to financial planning topics. There parents are generally less receptive.
He came up with a line that honestly, brought a great visual image. He was always threatening to publish a book, "49 Ways to Prepare Alpo ... and Enjoy It" for those who refused to prepare for retirement. That tied in with the media reports in the 1970s that "many" people were eating dog food to survive.
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By the way, most college students tend to be receptive to financial planning topics. There parents are generally less receptive.
- M_to_the_G
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Re: 1/3 of those SAVING for retirement have less than $1000
Ha! This reminds me of a coworker in my office. You see, I occasionally send retirement-related information to the other folks in my office, most of whom express appreciation for the information. Not this guy, though. He's a hard worker and very smart, but he seems to believe that thinking about retirement in your 30’s amounts to deviant behavior and has made pronouncements such as, "I don't want to even think about retirement. That's depressing!"MaddMaxx wrote:I can remember back in the mid 80's in my early twenties and opened my first IRA, one of my buddies was befuddled on why I would worry about retirement at such a young age. He is currently a teacher with a pension that is under 70% funded currently.
Oh, well.
Last edited by M_to_the_G on Mon May 04, 2015 5:46 pm, edited 1 time in total.
- M_to_the_G
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Re: [How do I lead a discussion about saving for retirement?
I agree that college students are likely not going to receive the message fully, but I strongly disagree with any assertion that it isn't worth talking to them about it -- "planting a seed," as it were. Here below is a great article that talks about the self-reinforcing nature of delaying retirement savings. First, in your 20's, you say you don’t make enough, or that retirement is too far away, or that you want to enjoy your first real salary. Then, in your 30's, you say you have other obligations, you have a mortgage and/or kids, etc. Then, in your 40's or 50's, etc.livesoft wrote:College students should have no money to invest. They should be flat broke. Then when they graduate, they have other things to do with their money besides saving for retirement. They need to pay for transportation (cars), phones, health insurance, rent, save for down payments, weddings, job searches, mate searches, moving to a new location, graduate school, education loans, etc.
In reality, they do not need to start saving for retirement until about age 30 despite all the admonishment to start early. If they get a job with a 401(k), then they will probably get signed up and start saving a little bit, but not really enough to get started.
If the student is not willing to learn, then the teacher will have a very difficult time. Perhaps a better discussion to lead is how to avoid buying insurance from your college friends who can only get jobs selling insurance. Also how to avoid paying too much for car loans, school loans, and to stay out of debt like credit card debt. Also a little tax prep help would not hurt either.
If you can just get young people thinking about it and taking baby steps, you can help them break this vicious cycle that has destroyed the retirement prospects of so many Americans.
I talk to our two 20-something interns in my office all the time about this stuff. They sometimes listen, they sometimes laugh it off. I'm not expecting them to fixate on my every word in rapturous attention and go out and read all the books I recommend. I'm just trying to plant a seed, so that when they get their first real job and get their first 401(k) prospectus, they think back to our talks and say, “Hey, I remember MG talking about this stuff. What was that book he told me to read?”
http://www.foxbusiness.com/personal-fin ... retirement
Re: [How do I lead a discussion about saving for retirement?
I thought there was a federal law change that leaves the mandatory opt-in/opt-out decision to the 401k sponsoring employer, for all new hirees after XYZ date?LeeMKE wrote:I also wish 401K contributions were mandated and opt-out was required instead of opt-in.