
Half of Older Americans Have Nothing in Retirement Savings - sahin-boydas
https://www.bloomberg.com/news/articles/2019-03-26/almost-half-of-older-americans-have-zero-in-retirement-savings
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RickJWagner
There is a strong need for financial education.

There is a small minority of Americans who won't have any retirement savings
due to catastrophic illness, or a lifetime of inability to get a good paying
job, or some other factor. But this number should be very small. Everybody
else should be able to accumlate money for retirement.

To save for retirement takes discipline and means forgoing things today to
save for tomorrow. The benefits of saving for retirement must be indelibly
impressed into people's minds for this to happen.

~~~
barneygumble742
Is it really more education or a lack of impulse control to go out and buy the
latest greatest phone every two years?!

~~~
qpotlpus
Do you have a family Barney? I find the run rate costs of raising a family are
astounding even with a very healthy two incomes. It doesn’t shock me that most
households barely scrape by at the end of the month without any reserves to
save.

~~~
berberous
Out of curiosity, and I don't have a family, what are your costs?

I suspect you can support a family pretty cheapily. The problem is everyone
wants to "do everything possible" for their kids -- pay for the best child
care, the best schools (or housing in a good school district), clothes and
phones to keep up with the Jones' kids, $500k to bribe your way into USC,
college tuition, etc. Yes, that all adds up, but I suspect you can also
allocate an appropriate percentage of your income to retirement and just pay
less for some of those things.

~~~
thehoff
Adding our kid to our health insurance (through employer) added $300 a month.
Trying to be responsible and saving for college adds $100 a month.

Kid is too young to stay at home by himself and we don't live by family. So we
pay for before/after care (school hours are from 9-3:30). This is
astonishingly $600 a month, a relatively cheap option around here (there's
cheaper but not by much).

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nabla9
Does America has Social Security where the elderly get something?

~~~
cimmanom
Yes. But how much you get depends on how much you paid in during your working
years, as well as what age you retire at.

~~~
nabla9
I think that's pension.

What I mean is when person don't have eugh pension to live with, do they beg
on the street corner?

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barneygumble742
It's not pension. Everyone with an income pays into social security and how
much is stated on your pay statement. Companies opted to replace pensions with
a 401k so once the worker leaves the company, they are no longer required to
pay more into it (correct me on this if I'm wrong). The 401k is market based
so there's risk involved whereas a pension was guaranteed but even that is now
based on the market so during the 2008 market issues, even pensions saw a dip
in value (pension funds).

~~~
jeffbax
Pensions are not always guaranteed if the company goes under, they're also
often incredibly mismanaged. Everyone should be moved to 401k, particularly
the public sector which is wreaking havoc across state budgets

~~~
dragontamer
401k plans have huge society inefficiencies. If someone dies early, the 2 or 3
million they save up in a 401k plan is wasted. Pension plans can capture that
inefficiency and provide superior value over 401k plans as a result.

Annuities try to bridge the gap. But I admit that I don't know too much about
them.

Stocks and stuff are nice. But what happens if you die early or outlive your
savings? At an individual level, you cannot plan such a thing. But a decent
annuity company can provide value by smoothing out that kind of variance.

Pensions were a combination of stock plans + annuities. The main issue with
Pensions is that people live a LOT longer today than they used to 40 years
ago: medicine has gotten much better. So most pension plans (including Social
Security) have underestimated how much they need to pay out.

"Fortunately", the American life expectancy is dropping due to the opioid
crisis. So maybe things will be a bit better for pensions / annuities / Social
Security than we expected just 5 years ago.

~~~
berberous
The 2 or 3 million? I think I read recently that less than 10% have a million,
2 or 3 million is 1% territory. And if someone does save that and dies early,
how is that 'wasted' if it goes to support their family?

Annuities can 100% bridge the gap. The problem is most Americans are
financially illiterate, this stuff (401ks, annuities, how much to save) is too
complicated for them and most people are too impulsive and consumerist to save
enough.

So 401ks/annuities are better on a societal level assuming prudent savvy
employees, which is a completely false assumption.

~~~
dragontamer
> The 2 or 3 million? I think I read recently that less than 10% have a
> million, 2 or 3 million is 1% territory. And if someone does save that and
> dies early, how is that 'wasted' if it goes to support their family?

In particular, it could have gone back to their family sooner. IE: Leaving
money in your 401k plan means NOT paying for your kid's college tuition with
that money (or their house, or their first car, or their wedding)

Sure, maybe the kid will get a giant payout when they're 30 or 40 years old.
But by then, their lives are probably established and they don't really need
the windfall. And they only get that windfall if you die.

> Annuities can 100% bridge the gap.

Annuities have the same failure mode as pension plans: if they fail, then no
one gets the money they were promised. When comparing 401k plans vs Pension
Plans, its definitely a factor to consider.

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dev_north_east
So... what are they going to do?

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thiago_fm
It is clear to me that 2020 or later there will be a more socialist America,
whether the Americans like it or not. And that could be good for America.

~~~
wildmindwriting
> It is clear to me that 2020 or later there will be a more socialist America,
> whether the Americans like it or not. And that could be good for America.

I'm not entirely sure. We (I'm American) have an attitude of what befalls a
person is because of the decisions they made. We have a very "pull yourself up
by your bootstraps" and anything that costs one person money to help another
is a non-starter. Look at the Affordable Care Act right now. America is an
individualistic society.

~~~
krapp
> We have a very "pull yourself up by your bootstraps" and anything that costs
> one person money to help another is a non-starter.

And yet there seems to be actual political risk and difficulty to simply
repealing the ACA in its entirety without a replacement... because as bad as
the ACA is in practice, in _theory_ many Americans want it, or something like
it, and do not in fact want healthcare to be left entirely to the free market.

The attitude and outlook you describe certainly exists, but don't conflate the
ideology of a single political party to the status of general American
culture. We're not all libertarian minarchists and cowboys.

And for such an "individualistic" society, we sure do have a lot of socialism
already, such as food stamps, school lunches (hell, public schools themselves)
federal student loans, Medicare, Medicaid and Social Security, the GI bill,
farm subsidies, public libraries, etc.

I don't think it's as unlikely as you do. The system is starting to fail for a
lot of people. We've already seen the regressive populist shift, in response,
and a progressive socialist shift is inevitable. Trump _won_ but don't
discount how popular Bernie Sanders actually was.

~~~
wildmindwriting
Personally, I do hope you are right and that the direction this country is
moving toward a more egalitarian society where a pre-existing condition
doesn't mean a death sentence and that we have social programs in place in
order to support a base level of retirement. Yet I also fear that me living in
a liberal, leftist bubble (living in Boston, working with Democratic
candidates, working in tech) prevents me from seeing what other people feel
and think. Watching Fox News or Tucker Carlson opens one's eyes about what
kind of "news" other people are ingesting.

~~~
krapp
Trump may have won the election, but a lot of people supported Bernie Sanders
as well. And the blowback the Republicans got from their own constituents
after trying and failing to sell a repeal of the ACA happened, mostly, because
no one but the independently wealthy and corporate interests wants to see it
replaced with nothing but the free market.

And when Republicans don't even trust Republicans with healthcare, it suggests
a massive failure of messaging on their part.

