Average retirement savings

[MrsCobraBubbles]

I assume the average takes into account people like me, who have $0

 

[disneychrista]

What one actually has in retirement vs what one SHOULD have or actually will need are very different things.

I’m lucky. I have an employer sponsored retirement plan now. But I didn’t get that until I was forced to change jobs at 46. I’d have to continue working until 76 to get full benefits. I also started contributing to 457B (government version of 401k) and put half of all annual raises I put toward that.

 

[_19disnA]

Back to the OP's question, I am not sure the average of what other people's retirement funds balances are should have any bearing in deciding when YOU start to claim Social Security. How long you plan to work, your financial situation and overall health are probably the main factors in making retirement decisions. Cost of living can also vary significantly depending upon where you live.

 

[disneychrista]

Hughes pointed out that not too long ago, “middle class meant that you could live a good life and only have one spouse working. Today, to be middle class, it really takes two working spouses.”

Which makes it really tough on those who don’t have a spouse. I’ve always been either lower middle class or maybe even upper lower class. I’ve struggled at times, no doubt. I also go without a lot of things others may see as necessity. But I see others who make twice as much as I do and have a working spouse seem to struggle more, not have any or only limited savings. In the end it is all about priorities.

 

[barkley]

The pandemic has magnified the problem. Have you seen the lines at food distributions. Many people who already struggled in low wage jobs will need years to climb out of this. And you think they “say they can’t” save for retirement.

people in decent paying jobs are getting hit hard too-and i fear for many of my contemporaries.

i'm 59 and know a number of people who have worked in decent paying professional jobs for most of their adult (post college) lives. for the most part they benefited from attending college at a point in time where costs were such that if they had much in student loans they were able to pay them off relatively quickly so they were able to start putting some retirement savings aside early in their careers. they like many figured that once their kids aged out of daycare the savings to their budgets would allow them to put more aside, and as their incomes went up, even moderately, they could continue to contribute more and more. then the financial crisis hit in '08 and while most recovered what they had lost in retirement savings w/in about 5 years, that was 5 years of growth they lost out on that now 8 years later has them still struggling to catch up on. the recession hit them hard as well with many losing jobs (so no retirement savings at that point), and now they are in the position with the current employment climate that they are back to financially supporting not only their now well into adulthood children but young grandchildren as well.

i think the lines at food banks are just the tip of the iceberg. there are many who are running through their savings, home equity and other 'nest eggs' at a frightening pace. unless/until something dramatic changes-these households will be the next wave that will be lining up.

 

[wdw&sonny]

If you have the means, wait until age 70 to start drawing SS, to receive the full benefit. Plan to use other sources of retirement income at a greater rate until 70.

And, to add to the cost of living discussions about middle class in NJ vs MS, when I was young, I was told to live in a low cost of living city. I now believe the opposite advice should be followed. IF you can save 10% of your $150,000 middle class income a year in NJ, you'll have a lot more at retirement than will the middle class person in MS saving 10% of half as much.

 

[tex1989]

Interesting topic. The numbers reported in the first post are actually higher that what I have read in independent studies. Those all seem to be based on the numbers for people of that age with money at each of those firms rather than a national average. So many things have contributed to declining retirement savings and one of the triggering events was in 1986 when 401(k)'s were rolled out. The burden of retirement savings shifted from the company to the individual. I mean with the old traditional plans, there was no borrowing against it or early withdrawals as there is today with 401's. Certainly inflation and rising costs have made it difficult as well. I know friends who have never made a lot in terms of income who are well situated for retirement but that's because they were extremely frugal with their money. On the other hand I know folks who made lots of money and will need to continue to work for years into retirement because they have no savings and lived more lavish lifestyles. Much of that I attribute to keeping up with the Jones' and enjoying life. I like to think there is a balance and we have tried to find it. Key to any retirement is entering it with no debt. Beyond that it is all about how much you have saved. I find the statistics on the number of Americans that depend on Social Security income alone in retirement alarming as that program was never intended to be anything other than supplemental. Even at full retirement age that would only provide 35% of my income prior to retirement. So the idea of having that as my only funds would be alarming.

Both my son and daughter are aware of what it takes to get to a good retirement and are saving towards that and I am happy about that. We are about 3/4 of the way to 10x salary for retirement and so we feel okay at this point. The real key though is understanding what your expenses will be and again no debt.

 

[barkley]

And, to add to the cost of living discussions about middle class in NJ vs MS, when I was young, I was told to live in a low cost of living city. I now believe the opposite advice should be followed. IF you can save 10% of your $150,000 middle class income a year in NJ, you'll have a lot more at retirement than will the middle class person in MS saving 10% of half as much.

this was the reasoning behind so many commuting so far where we lived in northern california. the wages for identical jobs were MUCH higher in the high cost of living areas so people would move insane commute times away.

now-with the number of well paying jobs that are offering the ability to work from home we are seeing a massive influx of people into our lost cost of living region of washington state. home prices are skyrocketing in rural communities (bare ready to build on land is going for insane prices-talking hundreds of percent increases in value vs. what they were selling for a year ago).

 

[PollyannaMom]

Yes, there are exemptions. And a $1 million dollar home in New Jersey would cost about $100,000 in a place like Laurel, Mississippi.

Totally off topic, but does that reference mean you’re watching Home Town? DH and I love it!

I like to think there is a balance and we have tried to find it.

Balance is indeed the key to life!

 

[Turn the Page]

DH and I are in our late 30's. We bought a house in a neighboring town for half the cost of a similar home in the town our kids go to school in and it will be paid off in 15 years. We have no desire to upgrade as an investment. I'm hoping to add a garage but that's it.

We are super lucky in that DH has worked for a company that provided a pension since he was 21. The pension fund was rolled over into a 401k a few years ago and we currently have about 2 years of income in retirement savings. We had a bunch of medical expenses and expensive home main tenancy things the last few years but we will get those paid off in the next few months. Just in time to purchase DVC. We will finance about half of that but given our overall financial situation and the cumulative interest is less than a cash stay for our next trip I don't feel bad about it.

Once we get closer to retirement and are empty nesters, with a paid off nest, we hope our largest expenditure each year will be travel.

Like others have said our income is pretty decent but not $150,000. We live more frugally than some of our peers but we are also very cognizant of the fact that we have been lucky and enjoy a certain amount of privilege.

 

[tvguy]

Totally off topic, but does that reference mean you’re watching Home Town? DH and I love it!

Yes my wife DVRs Home Town. But it really isn't off topic because it does illustrate the vast differences in cost of living as do many of the shows on HGTV. You can actually still buy a house for $15,000 in the U.S., do a complete top to bottom remodel for $60,000 and have a nice house for $75,000. A house that might cost $350,000 where I live, and $750,000 in New Jersey

 

[littlejimmy]

DH and I are in our late 30's. We bought a house in a neighboring town for half the cost of a similar home in the town our kids go to school in and it will be paid off in 15 years. We have no desire to upgrade as an investment. I'm hoping to add a garage but that's it.

We are super lucky in that DH has worked for a company that provided a pension since he was 21. The pension fund was rolled over into a 401k a few years ago and we currently have about 2 years of income in retirement savings. We had a bunch of medical expenses and expensive home main tenancy things the last few years but we will get those paid off in the next few months. Just in time to purchase DVC. We will finance about half of that but given our overall financial situation and the cumulative interest is less than a cash stay for our next trip I don't feel bad about it.

Once we get closer to retirement and are empty nesters, with a paid off nest, we hope our largest expenditure each year will be travel.

Like others have said our income is pretty decent but not $150,000. We live more frugally than some of our peers but we are also very cognizant of the fact that we have been lucky and enjoy a certain amount of privilege.

What is this privilege of which you speak? I have seen it in a couple other posts.

 

[tvguy]

DH and I are in our late 30's. We bought a house in a neighboring town for half the cost of a similar home in the town our kids go to school in and it will be paid off in 15 years. We have no desire to upgrade as an investment. I'm hoping to add a garage but that's it.

We are super lucky in that DH has worked for a company that provided a pension since he was 21. The pension fund was rolled over into a 401k a few years ago and we currently have about 2 years of income in retirement savings. We had a bunch of medical expenses and expensive home main tenancy things the last few years but we will get those paid off in the next few months. Just in time to purchase DVC. We will finance about half of that but given our overall financial situation and the cumulative interest is less than a cash stay for our next trip I don't feel bad about it.

Once we get closer to retirement and are empty nesters, with a paid off nest, we hope our largest expenditure each year will be travel.

Like others have said our income is pretty decent but not $150,000. We live more frugally than some of our peers but we are also very cognizant of the fact that we have been lucky and enjoy a certain amount of privilege.

Yes, life style is a huge factor. We've been in our starter home for 37 years, retired our family car 2 years ago after owning it 31 years, and retired my wife's car after 20 years. So yes, I am CHEAP. Also kept my first cell phone 14 years.

 

[mrodgers]

What one actually has in retirement vs what one SHOULD have or actually will need are very different things.

I’m lucky. I have an employer sponsored retirement plan now. But I didn’t get that until I was forced to change jobs at 46. I’d have to continue working until 76 to get full benefits. I also started contributing to 457B (government version of 401k) and put half of all annual raises I put toward that.

This statement will show the discrepancy of what people such as this board thinks vs. normal average American workers. If I was to put half of my annual raise in retirement, it would only be $250 for the year. My annual raise amounts to about $500. I'm the highest paid non-salary employee with almost the longest time (25 years, 7th in seniority).

Finances are always discussed with strong talk of middle class. But what is middle class? What is the line because household median income for the US is $67k I think? That doesn't get you very much when the high cost of utilities, insurances, (was) gas prices, housing costs, etc.

Another discrepancy I think is how people view that median income number. It's a household number and I think a lot of people think they are median income because they make $60k and their spouse makes around the same. People don't look at the median income number as a combination of 2 people working or 1 person working making that number. It's a household median income which is all income in a household whether both work or only 1 works. If both of you make that number, you are twice the household median income.

 

[AlohaNow]

i suspect there are a good number of dis board participants that are in the same boat retirement savings wise. it only takes reading threads on the dis budget board to realize that many of the vacations people post about are not paid for with disposable income but done either with credit cards they consider the monthly payments for years on end as a normal budget item, or paid for with 'vacation savings' which are significant chunks of money they set aside each month at the expense of shortchanging funding emergency savings, retirement and other vital expenses (when someone is posting of their concern on how they will pay for a less than $1000 emergency household expense and then shares that their normal monthly budget includes several hundreds of dollars earmarked as 'vacations' it's evident that people have different priorities with their spending that may end up biting them in the butt come retirement).

I agree. I've read the threads that you are referring to and there are some real head-scratchers! My overarching point in saying DISBoarders was essentially, exit your own circle and see what some people in America are dealing with on a daily basis. The struggle to pay rent and buy food trumps any thought of planning for the future. I did volunteer tax prep for a few seasons and many of my clients were homeless. People who qualify for the EITC are not concerned with backdoor Roth conversions. They don't even understand how retirement vehicles work, because they have never been educated on basic financial literacy.

Interesting topic. The numbers reported in the first post are actually higher that what I have read in independent studies. Those all seem to be based on the numbers for people of that age with money at each of those firms rather than a national average.

Agreed - the national average is even lower than the numbers in post #1.

 

[DLgal]

If you have the means, wait until age 70 to start drawing SS, to receive the full benefit. Plan to use other sources of retirement income at a greater rate until 70.

And, to add to the cost of living discussions about middle class in NJ vs MS, when I was young, I was told to live in a low cost of living city. I now believe the opposite advice should be followed. IF you can save 10% of your $150,000 middle class income a year in NJ, you'll have a lot more at retirement than will the middle class person in MS saving 10% of half as much.

Someone living in NJ on $150,000 salary probably can't afford to put 10% towards retirement. That's kind of the whole point of this discussion. We have people who seemingly make a good income unable to save as much as they should due to high housing costs. In NJ, the average property tax is something like $15k per year.

 

[Turn the Page]

Yes my wife DVRs Home Town. But it really isn't off topic because it does illustrate the vast differences in cost of living as do many of the shows on HGTV. You can actually still buy a house for $15,000 in the U.S., do a complete top to bottom remodel for $60,000 and have a nice house for $75,000. A house that might cost $350,000 where I live, and $750,000 in New Jersey

Well, we're not THAT cheap.

We drive a Ford Flex and Ranger respectively rather than a Suburban and F250. We get a grocery delivery and make most of our meals in the room rather than eating out every meal while at Disney World. We spend about $400 per child for Christmas rather than $2000 like a lot of our peers seem to do. We buy used skis rather than brand new. We very rarely eat out as a family and DH and I have dinner out maybe once a month tops, this year has been much less of course. We don't all have the latest iPhone with unlimited data.

Just different strokes and all that.

 

[sk!mom]

i think the lines at food banks are just the tip of the iceberg. there are many who are running through their savings, home equity and other 'nest eggs' at a frightening pace. unless/until something dramatic changes-these households will be the next wave that will be lining up.

Completely agree. This will take years to recover from.

 

[Turn the Page]

What is this privilege of which you speak? I have seen it in a couple other posts.

It means we were lucky enough to grow up in households where we weren't going to bed hungry, we're able to get a decent education, and that in an age when pensions are almost entirely a thing of the past DH, at 21 when most people our age were graduating college thirty grand in debt and getting jobs making less that a year he got a job with employer sponsored retirement benefits. All things not everyone gets to take advantage of.

 

[fortwildernessishome]

Totally agree! I remember one poster, who was very upset about the shut downs in March and April, repeatedly posted about needing to work to feed her family! She has since posted about a trip to Florida with a second one coming up!

Honestly, if your worried about feeding your family after one missed paycheck, then go to Florida 3-4 months later........well.....makes you stratch your head!

whoops meant to quote a previous poster!!