Tuesday, February 25, 2014

This Should Scare You Into Taking Action



I think this piece was done to try to scare the hell out of those in our society who are NOT, for whatever reason, saving for retirement.
And it should scare you if you have made some of the choices these folks have.

http://finance.yahoo.com/news/-i-m-never-going-to-be-able-to-retire--134736593.html?vp=1

Go on and watch it and then come back.
Also read some of the volumes of comments after the article.

The maker of this segment throws out these statistics during this film......

1/3 of the workforce is saving nothing for retirement.
40% of 55-65 year olds do not own retirement assets.
15% don't think they will ever be able to retire.
Women outlive men(by about 5 years on average), but save less.

I haven't researched these numbers but I'll take it at face value that they are fairly ballpark.
While these statistics don't shock me, they do give me pause.

I love how the one woman in this article says she just can't save any money for retirement.
I say bull to that.  Unless she's supporting a bevy of folks and flipping burgers for a living, and/or has a medically fragile child and no health insurance for them, she can save something for her old age.  She, like many people, just doesn't want to reduce her standard of living in the now, to afford something more than eating Alpo in her last years.

Now I'm not talking about folks who get very sick in their 50's and 60's and have inadequate insurance coverage and end up losing everything to medical debt.  These seem like fairly healthy older people in this piece.
Do folks not understand that at some point, their health will not ALLOW them to work, if they can even hold/get a job in their 60's?

And the 60 year old woman who had to "reinvent herself", went to college at 60 and is living off of student loans.
WTF?!?!
What idiot loan officer said giving someone this age with no prospects $200K in student loans she can't possible pay off in her lifetime was a prudent financial move?
And that woman admits she'll never pay them back and sits there, grinning like a Cheshire Cat about it?!

Then there's the one who says everyone she knows is struggling to pay their bills and cant' save and they joke about living communally to survive their Golden years.
So why joke about this?  They may joke about it, but banding together with others in a similar situation and living communally is a GREAT financial move!
How the heck do you think families survived generations before when money was tight?
They would live together, many generations of a family cohabitating.
Heck, in Pawtucket RI, where I've visited, there are neighborhoods of HUGE houses built in the 1800's, built for the express purpose of holding multiple generations of a single family(along with cousins, aunts and uncles too sometimes).

This reminds me of a conversation I overheard in an IHOP restaurant at the height of the housing crisis a few years back.  A guy sitting at an adjoining table was chatting with the gregarious waiter, bemoaning the fact that he couldn't pay his mortgage for some reason and he was going to lose the house he loved.  The guy was resigned to this loss.  The waiter, who shared he was in a similar situation, couldn't pay his mortgage fully now that his ARM had adjusted, was waiting tables here, besides holding down his fulltime job to be able to afford his home, as he really didn't want to sell it.  The waiter told the guy additionally that he was renting out bedrooms in his home to bring in more money to pay the mortgage and he should consider doing that as well.
The customer gave him a look like he had just told him he had peed into his coffee cup and went on sputtering how he could NEVER consider that and have strange people in his house while he was living there.  "What a preposterous idea!", he barked.  The waiter shrugged his shoulders and walked away saying, "Hey, you do what you have to...."

The biggest mistake some people make in life is to remain inflexible and not consider solutions they find ghastly like cohabitation.  I guess he thinks it's better to lose the home and live on the streets?

But I digress.....

While I don't know the whole story with most of those presented in this clip,  I'll point out that some of these folks have made some really bad choices in life from the little bit they have said.

Unless you are destitute and have no health left, there are always ways to get out of the hole you've dug for yourself and change your outlook.
It's all about making better choices in your life and everyone has room for improvement there.
If you are so inflexible to not consider changing things that don't lead you toward where you want to be, you might as well dig a hole and go lay down in it now.

The mistake with retirement is that most people don't even think about sitting down before retirement time comes, and doing some math to see how much they will need when they retire compared to how much they have now set aside, if they have anything set aside for their old age.

That's their first mistake when choosing when and if to retire.
Of course, if you are too far out from retirement, it's hard to figure out exactly how much you will need, as that number continues to climb as inflation climbs.
But by the time you are in your late 40's(and still in good health, earlier if your health is questionable), you should get cozy with your asset numbers and start laying out a specific plan and timeline.

Once into your mid 50's sitting down with a financial calculator to project what level of income you'll be able to sustain in your retirement at your current savings levels is necessary so you can adjust how much you are putting away if you are falling short of your goal.
Also, take a real hard look at how much you will need to generate each month in retirement to cover the expenses the lifestyle you are planning will require.
Go into this expecting to need more than you think you will need.

Ok, I am not a financial planner, nor do I play one on the internet, so I'll stop here.

Nobody is going to look out for you in your old age but YOU! 
It will be nice if SS is still around to supplement your savings when you receive your gold watch(do companies even do that anymore when you retire?)and head off into your Golden years.

Stop spending all your wealth in the here and now!
You will need it more when you are old and sick.
Don't expect the government to take care of you then.

Change your spending and savings habits NOW before it's too late!
And don't go and take out massive student loans at age 60 either, if you can find an idiot who will give them to you...... ;-)

Sluggy


 

15 comments:

  1. Wow-scary stuff, people well into their adulthood careers aren't saving and don't really have a plan and retirement is looming on the horizon? While I don't get SS, as I work in the public sector, I do have a healthy retirement fund, which I have contributed to since I started out at 23 y.o. Considered an asset in CT, I fought my now X, and fortunately was able to hang on to all of my retirement during my recent divorce. Phew! At this point in life, I have another 15 years of work before I am eligible for full retirement and Medicare, which I do pay into. Meanwhile, I continue to live well below my means, usually saving 20-25% of my take home pay. I am frantically saving for a huge down payment on my next forever (modest) home. While I intend to take out a mortgage, I also intend to pay it off years ahead, so as to retire without a mortgage. At least that is the plan. Recent years have brought some medical issues, and since I am vested in my retirement, and have worked more than 20 years in my field, I am eligible for early retirement through disability, if it came down to it. I am resourceful, and wouldn't hesitate to rent out a room in my home to improve cash flow. : )

    ReplyDelete
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    1. You "get it" Carol.
      And everyone like you and I will be ok and will live the life we can afford....and luckily(well not luckily), we'll be ok. 8-)

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  2. Den is 40 and I'm 42(yes, I'm a cougar) and we have been saving since he was 21. Will we have enough? I don't know. My plan is to continue to save as much as we can and then live as frugally as we can in retirement. Not much of a plan but its better than doing nothing.

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    Replies
    1. As a general rule of thumb and not going into the actual numbers, "save as much and then live frugally off of savings" is what everyone should strive for.
      It just all comes down to how much you save and for how long, how you invest it(or don't)and how much you spend over the course of your golden years.

      And while what you are doing IS a plan, anything is better than nothing.

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  3. I try not to think about my parents and their retirement... my dad has less than 15k in his 401k. That's it. My mother has no income and no money saved. They barely make it week to week. I have no idea what they will do.

    As for myself, I know I should be saving more. It's something I will reconsider once all my debts are paid; to increase my 401k deduction and/or bump my IRA contributions. Anything would really help.

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    1. You can't get al caught up in your parents situation but since they are your parents and you know they will probably turn to you at some point, you should think about what they are doing(or not doing).
      They will probably do what generations of families have done before....live with their kids for starters. All the more reason for you to move further away.... ;-)
      Savings early is key but not at the expense of not paying off debt first. If I was young and had debt I'd do a bit of both rather than put one off to do the other.

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    2. My gift to my children is to fund my own retirement. While I can HELP with college, there is no way that I can fully fund it, and they were told that years ago. If they truly WANT an education, they will earn one. I worked myself through college, and while I did graduate with school loans, they only equaled 1 year' starting pay as a teacher circa 1986-so really nothing as horrible as what is common practice now. : ( More like a car loan.

      It helped me to establish credit, which is a good thing.

      Delete
  4. I too read that article or I should say watched it and I was ready to slap the 200,000 social worker. Now how is a Social Worker going to make enough money to repay that loan? Who gave her the money so she could continue her life style? I don't get it.. I just don't get it!.

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    1. I think someone like this didn't even turn her brain on most mornings. lolz Either that or she saw dollar signs when the loan officer told her she qualified for this much and she told her brain who cares about what happens later!?!
      Another Ostrich sticking their head in the sand.....

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    2. Sluggy,
      I got "pre approved" at the bank for my next home. I discussed my plan, of putting a huge downpayment on my next home to qualify as a single wage earner and to avoid PMI . Bank loan officer was impressed and told me that actually, I qualify for a home $150,000 more than my personal max (I keep the monthly out the door mortgage plus taxes figure as my bottom line for my budget). So thanks, but no thanks. I want LESS than you are willing to give to me. : )

      Delete
  5. I know a couple people who think like that woman did.. SCARY!! Neither of them work, nor want to. Nor want to get up in time to go to classes that they got govt money in order to enroll! What a sick and sorry world we live in...
    And this coming from a woman who is looking at her husbands life insurance policy as a tidy retirement fund... ;P

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  6. What a bunch of nimrods! I love how that lady said she was living on student loans and gave a big giggle like she was doing something funny. Obviously, with my blog called Life begins at Retirement I've been thinking about retirement for a long time and have been preparing for it for years! And for most of those years I was a single parent and didn't make much but I always contributed the max to my rrsp even if I had to borrow the money and pay it back. If there's a will there's a way. Unless you're a nimrod.

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  7. I actually have retirement on my mind, even before reading this post and viewing the clip. Good Lord, were some of those people for real? i work with a woman just like them...oh poor me, I can't save anything....

    She makes a good salary, and clearly COULD save something. She smokes and drinks and has no health insurance. She is waiting for her husband to go on disability when she will then quit her job and move. Nice plan, right?
    We will end up paying the taxes on that one.
    Having said that, there is always room to save more.

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  8. I always saved for retirement. My husband never did. He connects retirement to death. He thinks once you retire you die. Ridiculous. And guess what? In his late 50's and continually either getting laid off or not having work he finally had to face himself and the realization that retirement is his only life option (plus health issues, but that's another comment).
    Thanks to my preparedness (and yes! I am patting myself on the back) we downsized 13 years ago and I forced us to live on a pre-retirement bare bones budget. We have a paid off 'forever home' and no debt and a modest savings. With DH's 'forced' retirement, we also have a modest pension and 1 social security (mine, I'm older) coming in. Yes, it's very tight but because we have mastered the art of living at modest means, it's doable. Eventually DH will get his own social security (it'll still be there!) and our retirement will only improve.
    I also have a Plan B, if all else fails, we can do a reverse mortgage later on in life. The point I am making is that I planned long and hard for this time of our lives. DH nary gave it a thought. Because of that, it could have been better. Now? He is sorry he didn't. But too late. Life goes by quickly folks and time is limited. DH thought he had all the time in the world. He didn't and neither does any one else.
    Any amount you can put away is good. I started at $5 a week. I used to put the cash in my sock draw. When I accumulated $25 bucks, I bought a savings bond. At the end of my first year of savings, I had $12K worth of savings bonds. Just keep squirelling as much money away as you can. Every dollar helps and live as modest as you comfortably can. Trust me. In the end, it'll be worth it.
    Great post, Sluggy. Thanks for enlightening us. It's so important!

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  9. Saving is important but so is marrying well. Divorce can take all of your savings in the blink of an eye.

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