Average retirement savings

[tex1989]

https://247wallst.com/special-report/2019/10/11/every-states-pension-crisis-ranked/
See where your state ranks in the Pension shortfall for State workers.

 

[tex1989]

https://www.nytimes.com/2020/04/02/...lic-pension.html?auth=link-dismiss-google1tap
Bankruptcy as folks have pointed out is not something governments can do but as the article points out to meet their obligations they will just tax their way to solvency. I used the term simply because it is the classic definition of bankruptcy when your debt far exceeds your assets and future income. Call it what you will but a rose by any other name is still a rose...

 

[MillauFr]

https://www.nytimes.com/2020/04/02/...lic-pension.html?auth=link-dismiss-google1tap
Bankruptcy as folks have pointed out is not something governments can do but as the article points out to meet their obligations they will just tax their way to solvency. I used the term simply because it is the classic definition of bankruptcy when your debt far exceeds your assets and future income. Call it what you will but a rose by any other name is still a rose...

But how do states like Kentucky, Illinois, and New Jersey attract any new state employees? They know they are going to pay into a pension system where they are going to have to take a huge haircut. I am lucky to live in Washington where the system is close to fully funded.

 

[MillauFr]

in the 90's when orange county california filed for bankruptcy there was a wave of their staff that moved up to northern california in search of new jobs. i don't know what was ultimately decided in that county's bankruptcy proceedings but the staff that came to work for the county i worked for were very forthcoming that from all they had been told by their former county, their former union and other sources was that their best case scenario at the time was to receive a fraction of their pension when they hit retirement age.

Orange County is lucky though. They are one of the wealthiest counties in the United States. I'm sure they recovered quite nicely.

 

[kymom99]

But how do states like Kentucky, Illinois, and New Jersey attract any new state employees? They know they are going to pay into a pension system where they are going to have to take a huge haircut. I am lucky to live in Washington where the system is close to fully funded.

Yep people in my area can go right across the river to Ohio and get paid a lot more. That’s why I’m retired and back to work full time. There are not a lot of teachers snd even fewer subs.

my husband works at a job that doesn’t pay great but the benefits used to be great. They have been stripped to nearly nothing and as a result they can’t find good workers.

 

[dclpluto]

But how do states like Kentucky, Illinois, and New Jersey attract any new state employees? They know they are going to pay into a pension system where they are going to have to take a huge haircut. I am lucky to live in Washington where the system is close to fully funded.

i already cut my hair pretty close so it wouldn’t bother me. Lol. I know you meant paycut. Still it wouldn’t be any problem for them to attract new workers.

 

[barkley]

Bankruptcy as folks have pointed out is not something governments can do

they can and do. municipalities which are broadly defined as a town, city, county or other subdivision of a state, like a school district or independent authority — have been allowed to declare bankruptcy since 1937. in a state like california where those municipalities may choose to administer their own pension plans or contract outside (calpers most often) a bankruptcy can allow for total pension obligation restructuring (read-massive payment cuts/reductions in benefits) to current and future retirees or a write off of millions of dollars unpaid and owed to contractors like calpers (which could ultimately impact retirees within that system totally unrelated to the bankrupt municipality if overall solvency is impacted). it can really be a house of cards scenario.

 

[sk!mom]

I think it’s important to keep everything in perspective. Higher incomes obviously have higher bills.

Higher incomes obviously have higher bills? Why would that be obvious?

I agree that one pitfall to a secure financial future/retirement is to upgrade your lifestyle with every raise. I disagree that it’s obvious that a higher income means higher bills. No one has to keep up with the Jonses.

 

[tex1989]

they can and do. municipalities which are broadly defined as a town, city, county or other subdivision of a state, like a school district or independent authority — have been allowed to declare bankruptcy since 1937. in a state like california where those municipalities may choose to administer their own pension plans or contract outside (calpers most often) a bankruptcy can allow for total pension obligation restructuring (read-massive payment cuts/reductions in benefits) to current and future retirees or a write off of millions of dollars unpaid and owed to contractors like calpers (which could ultimately impact retirees within that system totally unrelated to the bankrupt municipality if overall solvency is impacted). it can really be a house of cards scenario.

I am really using the term bankruptcy loosely to say these entities are running out of money. Call it bankrupt, out of money, etc. The reality is there are multiple levels of government agencies that have commitments to retiree's and and a lot of them don't have enough money to cover their obligations. The commitments are at the municipal level, county level, state, and federal. The county next to mine opted out of Social Security years ago and set up their own retirement system years ago and the employees have faired really well over the years.

 

[barkley]

Higher incomes obviously have higher bills? Why would that be obvious?

I agree that one pitfall to a secure financial future/retirement is to upgrade your lifestyle with every raise. I disagree that it’s obvious that a higher income means higher bills. No one has to keep up with the Jonses.

i agree with you on this, and to take it a step further-in my experience our expenses went DOWN as our incomes went UP. we were able to purchase a home which was less expensive vs. prevailing rents where we lived, when we were able to increase the extra we paid on mortgage each month it initially resulted in even lower housing costs b/c we eliminated p.m.i. but ultimately resulted in very little entirely (once paid off decades ahead of time), when we were able to pay off our cars and ultimately cash flow their replacement purchases we saw our insurance rates decrease b/c what the lien holder wanted for coverage wasn't nesc. what we felt was necessary.

with the exception of potentially higher income taxes (and with some employers a higher share of cost for health insurance premiums) i can't think of any other bill that automatically increases with increased income (except maybe an income driven student loan repayment?).

 

[GreatLakes]

I think it’s important to keep everything in perspective. Higher incomes obviously have higher bills.

Higher tax bills maybe. I still live in the same house I bought when I was making a fraction of what I make now. Outside of taxes any higher bills that come with higher income are a choice, not inevitability. The people that upgrade their house or car with every pay bump are making a conscious choice to do so.

 

[mjkacmom]

Lol

https://247wallst.com/special-report/2019/10/11/every-states-pension-crisis-ranked/
See where your state ranks in the Pension shortfall for State workers.

No need for me to scroll, started at the end, NJ #2.

 

[mjkacmom]

Higher tax bills maybe. I still live in the same house I bought when I was making a fraction of what I make now. Outside of taxes any higher bills that come with higher income are a choice, not inevitability. The people that upgrade their house or car with every pay bump are making a conscious choice to do so.

We bought our home 22 years ago, added a half bath (it only had 1 bathroom). Our property taxes were $4000 a year, are now $12,000+. We are planning a major first floor renovation but will not add any square footage due to taxes.

 

[crjack]

We bought our home 22 years ago, added a half bath (it only had 1 bathroom). Our property taxes were $4000 a year, are now $12,000+. We are planning a major first floor renovation but will not add any square footage due to taxes.

We are also in our same house. Our taxes haven't gone up nearly as high as yours but our health insurance has changed dramatically. DH used to have great insurance but it changed each year with higher premiums and less coverage.

Now the only option we have is a high deductible plan that kicks in after $6,000. Good benefits can change quickly in the private sector and I anticipate another premium increase and higher deductible next year. We do have an HSA though but it took a while to fund it and we continue to fund it so less disposable income.

 

[spiders]

Higher incomes obviously have higher bills? Why would that be obvious?

I agree that one pitfall to a secure financial future/retirement is to upgrade your lifestyle with every raise. I disagree that it’s obvious that a higher income means higher bills. No one has to keep up with the Jonses.

Higher tax bills maybe. I still live in the same house I bought when I was making a fraction of what I make now. Outside of taxes any higher bills that come with higher income are a choice, not inevitability. The people that upgrade their house or car with every pay bump are making a conscious choice to do so.

You both conveniently deleted my part where I said that higher incomes doesn't mean you can't be irresponsible in the process. I'm not talking about upgrading your lifestyle or car with every pay bump. It's not about keeping up with the Jonses. Would you consider it irresponsible for someone to buy a $400k house with 20% down to be irresponsible? I wouldn't. But would you consider it irresponsible for someone to buy a $400k house with 5% down when there were similarly sized, lower priced houses that would have allowed him to put 20% and avoid PMI? Yeah, I think that's probably not a good move. This guy I work with still drives the same car he had 15 years ago when he was making a lot less money. It's a real beater. He drives it to work and back and that's it. It was probably a $15k car when it was new. Well, now he makes $160k and he really wants a 4Runner. The 4Runner he wants is $50k. Is that irresponsible that he wants such a giant upgrade? Should he really only be looking at the cheapest Kia's even though he can clearly afford something much nicer?

You may not be able to make the same life choices today as you once were able to 20-30 years ago. That's great that you bought a house early on and are still living in to this day. Most people starting off aren't buying houses and that's not because they're irresponsible. If anything, to me, that makes them more responsible. 20% down is a lot of money and trying to avoid PMI is always a smart decision. Is the average 24 year old really going to put down 20% on something and then if so, what? Is some $100k starter home really going to meet their needs 20 years from now? Heck, screw 20 years -- how about in just 5 years when they might be married and pop out a few kids?

People get caught up with the Jonses because some of them think that the Jonses are being irresponsible. Yes, some of them are but some of them just flat out make more money and have different priorities with how they choose to spend their disposable income.

 

[mjkacmom]

We are also in our same house. Our taxes haven't gone up nearly as high as yours but our health insurance has changed dramatically. DH used to have great insurance but it changed each year with higher premiums and less coverage.

Now the only option we have is a high deductible plan that kicks in after $6,000. Good benefits can change quickly in the private sector and I anticipate another premium increase and higher deductible next year. We do have an HSA though but it took a while to fund it and we continue to fund it so less disposable income.

Same, DH used to have great health insurance ($5 copays), we also opt for the $6000 deductible (reminds me to remind my kids to get their visits/prescriptions done this month).

 

[AlohaNow]

I think it’s important to keep everything in perspective. Higher incomes obviously have higher bills.

This can certainly be true if we're going the 'it's a regional thing' route. I went to college in NYC and many of my friends are still there. They make tons more money than I do. And just because of where they live, what I need to set aside semi-annually for property taxes, they need to set aside monthly. Daycare is astronomically more expensive, as are groceries, and daily commuting expenses such as gas, tolls or the train. They stayed in the NYC area for the higher salaries, and they also get the attendant higher expenses. I recall an article a few years back about the starting salary for teachers being the highest in Scarsdale or Bronxville, someplace in Westchester County anyway, and the crazy number of people who apply there. Yeah, good luck living in Scarsdale as a single person on a teacher's salary. It sounds like a lot of money if you're sitting in Iowa, but it's just not realistic for where you're going.

I generally agree with spiders here. Like I've always said, more zeros, more problems.

 

[Starport Seven-Five]

People get caught up with the Jonses because some of them think that the Jonses are being irresponsible. Yes, some of them are but some of them just flat out make more money and have different priorities with how they choose to spend their disposable income.

There is also a frog in boiling water aspect to this. When you make 6 figures and are surrounded by people buying BMWs, buying a new Accord seems like a modest purchase. When you're surrounded by people making 30k, that new Accord looks like an extravagant splurge.

I agree that people need to live their own lives but it's tough when your social groups are generally at a similar economic level.

 

[mi*vida*loca]

I hear it from my “older” friends (5-10 years older). They had starter homes, they eventually moved up in their careers and bought bigger fancier houses and nicer cars. Now every once in a while you’ll hear them say “if we stayed in our first house we’d be rich.” None of them are doing badly abd they love their homes. They all live within their means and will most likely retire early but they look at how much more they could’ve saved. They all say they have no regrets. But it’s easy to have higher bills with a higher income if you choose too. It’s not always forced.

I plan on staying in my starter home forever. Once the kids leave it’ll be the perfect size for just us two.

 

[Traveling on cc points]

If you are dipping into an "emergency fund" often your budget has missing line items. Water heaters break, roofs need replacing, and car insurance is due every 6 months. Those aremergencies.

Car insurance should definitely be budgeted and not taken out of an emergency fund

Lol

No need for me to scroll, started at the end, NJ #2.

Haha. I did the same. CT. #4