65 % of americans not preparing for retirement.
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kennyp2339
Minister of Fire
I often wonder were I fit in in the whole scheme of things, I have been a natural born saver and come from a very thrifty home. I remember when I was first hired at my job 12 years ago an old timer physically grabbed me by the arm and marched me to the credit union pamphlets and told me to start an account with them, automatically deducting $100.00 a week from my pay check. As time went on and I got raises I adjusted my automatic deposits. I'm also in 2 pensions (union and company) I have a 401k which I contribute 10% of my gross income to, the company has a pretty decent matching program and it seems that my balance is growing at a decent rate.
When I went to purchase my home, I was pre-approved for a 350g mortgage, my realtor insisted that I looked at these huge 4 bedroom colonials that were on the top end of my pre-approved loan. I was firm and stayed at my 225g budget, I even told the lady that I would be looking for a different realtor if she didn't listen to me, I obviously purchased a home, it took my about 7 years into the mortgage but I now try to pay between 10-15k extra a year to reduce my principle.
Through out the years (remember I'm only 32) I have continually pondered my finances and have personally wondered if I was doing everything correctly, do I have the appropriate savings, am I truly on the right path with retirement, am I wasting money, or do I feel like I'm wasting money because I'm fairly frugal with my purchases.
I don't know what the right answer is. I bought a new diesel truck in 2011, paid it off by 2015, plan on keeping it until the wheels fall off; I bought that big tractor (mainly as a toy, but I use the thing a lot with project I never thought I would do) the scag walk behind mower (went big figuring it will last for 20 years minimum) The BK woodstove, again high end, but worth it with wood usage and heat production, the grizzly atv (got to have fun) but hardly ride anymore. The question is did I really need all these things? Am I a wasteful spender? I don't know, I use the stuff so its not like a frivolous waste, with the exception of the truck, everything else was paid in full with cash.
I'm being open here, not to gloat or tout my whistle, but to get input, am I balanced here, or is there work needed to be done.
When I went to purchase my home, I was pre-approved for a 350g mortgage, my realtor insisted that I looked at these huge 4 bedroom colonials that were on the top end of my pre-approved loan. I was firm and stayed at my 225g budget, I even told the lady that I would be looking for a different realtor if she didn't listen to me, I obviously purchased a home, it took my about 7 years into the mortgage but I now try to pay between 10-15k extra a year to reduce my principle.
Through out the years (remember I'm only 32) I have continually pondered my finances and have personally wondered if I was doing everything correctly, do I have the appropriate savings, am I truly on the right path with retirement, am I wasting money, or do I feel like I'm wasting money because I'm fairly frugal with my purchases.
I don't know what the right answer is. I bought a new diesel truck in 2011, paid it off by 2015, plan on keeping it until the wheels fall off; I bought that big tractor (mainly as a toy, but I use the thing a lot with project I never thought I would do) the scag walk behind mower (went big figuring it will last for 20 years minimum) The BK woodstove, again high end, but worth it with wood usage and heat production, the grizzly atv (got to have fun) but hardly ride anymore. The question is did I really need all these things? Am I a wasteful spender? I don't know, I use the stuff so its not like a frivolous waste, with the exception of the truck, everything else was paid in full with cash.
I'm being open here, not to gloat or tout my whistle, but to get input, am I balanced here, or is there work needed to be done.
Sounds like your in the smaller % of the population that have fully funded your retirement and also you life. Other than that the only question is are you (and family) happy with your decisions. That's really the only thing that matters. I believe in living life to the fullest.The finances are only a tool ,but a necessary tool.
I agree with Randy. You're saving. Good on ya! But you're enjoying life too. You have to find a balance and it sounds like you have.
As far as ranking against peers, The Millionaire Next Door is probably at your local library. There are some formulas in there to help you figure out how you rank vs others in savings.
As far as ranking against peers, The Millionaire Next Door is probably at your local library. There are some formulas in there to help you figure out how you rank vs others in savings.
RobbieB
Feeling the Heat
Yes, the most important thing is to live below your means so you can save and invest. That doesn't mean you can't celebrate and splurge, just not all the time and on everything. Live for what you want and not to impress the neighbors.
We have brought up the Millionaire Next Door before and I highly recommend getting a copy.
The problem is the marketing based economy is very effective at convincing most people that they need more to keep up with the jones and the way to do that is borrow money now to buy toys now and pay later. Nothing wrong with making car payments, the trick is once the car is paid off, keep making payments into a reserve account so when the wheels do fall off, you can write a check for the next one. The interesting part about writing a check (or paying cash) for a new car is its more real. Car dealers are very good at divorcing the parts of the transaction, first they get the buyer to pick the car of their dreams and get emotionally fixed on buying a particular vehicle and then they hand the buyer over to the business manager to figure out a way to pay for it. They rely on that instant gratification usually trumps the delayed pain of writing checks every month for as long as 6 or 7 years.
I think most folks get burned once of twice getting pulled into that racket. That's why car dealers really don't like cash shoppers, its a lot harder to get someone to buy more vehicle than they need when they only have so much in the checking account.
Once a person gets loan free, the key is keep putting the payments into savings instead of paying the loan. Eventually once the get ahead and invested then if they want to buy toys they can use cash.
The problem is the marketing based economy is very effective at convincing most people that they need more to keep up with the jones and the way to do that is borrow money now to buy toys now and pay later. Nothing wrong with making car payments, the trick is once the car is paid off, keep making payments into a reserve account so when the wheels do fall off, you can write a check for the next one. The interesting part about writing a check (or paying cash) for a new car is its more real. Car dealers are very good at divorcing the parts of the transaction, first they get the buyer to pick the car of their dreams and get emotionally fixed on buying a particular vehicle and then they hand the buyer over to the business manager to figure out a way to pay for it. They rely on that instant gratification usually trumps the delayed pain of writing checks every month for as long as 6 or 7 years.
I think most folks get burned once of twice getting pulled into that racket. That's why car dealers really don't like cash shoppers, its a lot harder to get someone to buy more vehicle than they need when they only have so much in the checking account.
Once a person gets loan free, the key is keep putting the payments into savings instead of paying the loan. Eventually once the get ahead and invested then if they want to buy toys they can use cash.
Although i can afford a new truck and would like one, i just cant seem to get around the fact that the 2 20+ yr old Silverado trucks i drive now fulfill every possible need i have for truck. A new truck would do NOTHING more for me than im already doing now. Plus another benefit is im not too particular about taking them out on muddy mountain roads or loading them up with wood.
100% agree! My truck is an 04. Previous was a 92, and only left because I needed to fit a child's car seat!
A few years ago the wife got rid of her 1st car, purchased new in '98. She wanted a CRV this time. Purchased cash, but some moved a little slower than the sales process, so financed $5k for a week.
A few years ago the wife got rid of her 1st car, purchased new in '98. She wanted a CRV this time. Purchased cash, but some moved a little slower than the sales process, so financed $5k for a week.
sportbikerider78
Minister of Fire
I always hated paying for cars, even though I love cars. Solution? Get a sales job that pays for gas, insurance and payments.
Now I reallllllyyyy enjoy my car.
I have noticed a syndrome where my right foot gets heavier now that someone else is paying for the 91 premium.
Now I reallllllyyyy enjoy my car.
I have noticed a syndrome where my right foot gets heavier now that someone else is paying for the 91 premium.
In my 20s was adamant that i would do something different than the average person. I kind of succeeded in that in my 30s i was lounging on a beach and exploring islands in the south pacific for 3 to 4 months every winter. Then came marriage and a family and i had to wake up from that dream. Now in my 60s, the tools that helped me do that will also support me in retirement. Being self employed in itself does not always translate into a great retirement but ill at least be self sustaining,unless i happen to live too long.
sportbikerider78
Minister of Fire
Yup. If if wasn't for family, I'd be working a lower wage job, spending more time on my own, and likely living out west in Montana somewhere.
But....kids..they're amazing.
My adventure is coming back as soon as the oldest is over the age of 7. That's when we start riding motorcycles together and backpacking.
But....kids..they're amazing.
My adventure is coming back as soon as the oldest is over the age of 7. That's when we start riding motorcycles together and backpacking.
Mine is 8 and more fun every year! The wife wishes she was still changing daipers. I'm ok with not doing that!
Recently had to look at this hard.. my wife retired at 62, and we lost her great, cover all, insurance.. health care for her is ~$500/month or $6000/year. I'm still working, but when I don't, between medicare part b, and med medicare supplemental the cost will be similar
That makes ~$12K/year.. how do you get it up to $ 30k?
Re the whole money thing.. I never worried about it until I was past thirty. I was in school all the time and lived like a monk ( well a monk with a live in girlfriend, and lots of friends) Fun was studying in the Boston Public library for a change, or hiking the AT, of feeding a bunch of ravenous grad students at a communal dinner, or the study itself.. which was like a meditation back in the day
Once I did break away from school and started working in the open world, I didn't need all that I made and just tucked it away. Somewhere around the crash of 89 I figured it was time to learn a bit about investing, not go crazy, just enough to not make the simple mistakes ( e.g. chasing last years gain at Fidelity). Hulbert, Malkiel, Jane Bryant Quinn, John Bogle, and Fama and French were my guides... that helped a lot
Mine and my wife combined is About $2350 a month. Add to that all the Co-pays and deductibles out of pocket. Insurance keeps going up and what they cover keeps going down. Her eye drops had a small co pay last year,this year its $500 (co-pay) just for one very small bottle. My insurance is about 50% higher than hers probably because im older,and had a heart attack in the past. I was self employed so no help from any job related insurance ,its all on the open market. I think obama care may have destroyed the private market because before it we only paid $300 a month for her on the private market and i was self pay as you go. Im now disabled but cant get disability because i listed my wife on our income tax form first for 2 of the last 5 years(so she could get her 40 credits) so my only saving grace is ill be 62 in a few months and can get early retirement. A bit puzzling cuz I see people all the time that never worked at all on disability. Iv only been working for 48Yrs.
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I wont be doing any backpacking anymore as i wear a leg brace to walk now, but I just bought my 11 Yr old a trailbike. Plan to pick up one for myself soon,i cant walk too good anymore But i can ride like hell
!
Wage stagnation has affected savings. The reality in America today is that real wages have been stagnant for a long time while real costs of living (not the seriously hedonized official CoLI) have skyrocketed. In the Seattle area it's ridiculous how far behind the CPI is from reality. Nationwide the cost of healthcare, insurance, housing, food, higher education, etc. have all increased steadily.
This means a lot less money left over at the end of the day for middle to lower income wage earners to put into savings. Low wage earners have been hit the hardest. They can barely pay their bills these days. In the meantime the growth for the very top income bracket has risen dramatically. This disparity is neither healthy nor sustainable.
![[Hearth.com] 65 % of americans not preparing for retirement.](https://www.hearth.com/talk/data/attachments/225/225353-f3b277ba9eee89d4b04dccbaabf549c1.jpg?hash=QugHfEKKQL "[Hearth.com] 65 % of americans not preparing for retirement.")
![[Hearth.com] 65 % of americans not preparing for retirement.](https://www.hearth.com/talk/data/attachments/225/225354-3421a0f69e51e92afd188fb1d40541c3.jpg?hash=F4X5HLYSme "[Hearth.com] 65 % of americans not preparing for retirement.")
https://www.epi.org/publication/charting-wage-stagnation/
This means a lot less money left over at the end of the day for middle to lower income wage earners to put into savings. Low wage earners have been hit the hardest. They can barely pay their bills these days. In the meantime the growth for the very top income bracket has risen dramatically. This disparity is neither healthy nor sustainable.
https://www.epi.org/publication/charting-wage-stagnation/
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Jan Pijpelink
Minister of Fire
I must be very fortunate. The company I work at is 100% employee owned. What I put in my 401K (12%), the company puts in in company shares (8% which is max. allowed). Shares go up 10-12% every year. My wife and I are insured for everything through the company, including life insurance, dental, health, vision, STD, LTD, etc. Company pays 85-90% of the premiums.
sportbikerider78
Minister of Fire
No doubt about it. Much of it is because our dollar is worth much less than it has been. Inflation is a killer. Real inflation as seen by the CPI not just the value of a dollar because the federal reserve prints trillions in cahoots with congress/banks.
I'm very fortunate with healthcare. My company is WAY more generous than previous companies I have worked for. For my family I used to pay about $750/month, now I pay less than $300 per month. The coverage is good and the annual deductible is around $1500.
Healthcare cost affects everyone thats for sure.. Plus paying property taxes now going up every year now to pay for public service employees HC,Pensions,Raises ect. Ripples through the economy. Makes it that much harder to be self employed and still save for retirement at the same time.
Pension here . . . I pay part and the City pays part. I also pay into a 457 plan, which is like a 401K plan as I do not believe the pension alone will be enough to support us when I "retire" (although the truth of it is I hope to not retire and it will be my wife's retirement plan.) A lot of the guys on the line can retire after 25 years, but a fair share of them do not due to the costs of healthcare. As it is, our City's healthcare plans are relatively expensive -- I'm paying $125 or so each week for my wife and I -- and it isn't even that good of a plan.
Here is a visual representation of how Americans in 2012 thought wealth was distributed about how it was in reality. This was in 2012. It has gotten worse. This is why savings are low.