I have no idea how some of the people I see every day are going to save up the $1.5 million (in today's money) they'll need to retire. Half of 'em can't even pay off their credit card bills every month.
This whole model of slaving away your healthy years in the hope you'll still have the savings and the strength to enjoy life after 70 seems like a scam to me. My plan is to work less each year but keep on working. This isn't so bad if you do work you enjoy.
He could be the Astor of Curaçao!
In the south of Brazil you won't find many bargains left, but I've read that lots os europeans are buying houses in the northeast (the infrastructure is a lot worse there, but it's 3.000km closer to Europe).
Please look at Europe and Canada. They have their problems, sure, but they take care of their old and sick. And they do it with less money!
You will get the medical care you need, and won't go without food, shelter and basic care.
No offense really, but some people can't extrapolate their own personality even 5 years ahead. Trust me, you will change with age, everybody does. Hopefully it won't be too late to start saving then...
My present self is cursing my 20s self for having spent a load of time traveling and running up lifestyle inflation debts, basically boozing it up non-stop.
On the other hand, I have some really good experiences and memories.
But I've been incredibly focused on reducing debt and building equity for the past year or so, and I don't see that changing.
I'm just glad I woke up while I still have 35 years to repair the damage, I have my health, live in a country with affordable healthcare, etc.
First: Social security is solvent, it will be solvent for years, and to fix it will require a minor tax increase decades from now. Quit believing propaganda.
Second: Our future budgetary problems are nonetheless real. But they are all about health care. If you really want to worry about balancing budgets in 2040, worry about that. Social Security is fine and will continue to be fine unless somebody deliberately fucks it up. (By talking like a fatalist, as you do, you inadvertently help the cause of the people who are trying to fuck it up; that is why we are having this little chat.)
Third: The major problem in the USA today is that we have a massive excess of productive capacity. Not only can the country afford to feed, clothe, house, and entertain you quite nicely, but our biggest problem is that after we did this we might still have too much capacity. The economy is not well designed for such a situation, and it needs fixing.
(Aside: The fix is called "stimulus", literally known as "printing money". People won't spend money? Make them spend it now. Create new money and give it away; make the old money move by threatening to inflate it away in the future. That nobody in power understands this, or that they pretend not to, is an epic failure of education and/or governance; the consequence will be millions of impoverishments and, likely, early deaths, perhaps even your own. Tragedy sucks.)
To the extent that the country does not choose to feed, clothe, house, and entertain you and everyone around you, it is a problem of government, economics, and politics. It is not that we are physically incapable. It is that we are not so organized.
The solution is to organize.
Where will "the money" come from? Money is not a physical thing, like platinum. It's some numbers in a spreadsheet by which we keep score: If your number is higher, you get to control more about what the economy does.
If you wake up and discover that all the money belongs to a handful of people who have gamed the ruleset by which money is distributed, and that they are failing to use their giant pile of money to direct the economy to keep everyone else fed, clothed, housed, and entertained to the correct extent: You change the rules, or you stop playing the game.
By many orders of magnitude, the best option is to change the rules. Or, rather, to change one rule, to turn one knob that was designed to be turned: Raise taxes on the people with the money.
That anyone contemplates suicide rather than go down fighting for this simple rule change is a triumph of modern propaganda.
Get up out of the fetal position and be an American, for the love of all that is holy.
Do you think that every rich person has simply gamed the system and that none of them have actually earned their money? To make a blanket accusation against every rich person and simply say that their taxation is the cure is nowhere close to being an American.
Solvent in the sense that next month's check won't bounce? Or solvent in the sense that if it were an independent entity entitled to its current revenue streams, and nothing else, you'd happily buy someone's future SS income at 100 cents on the dollar?
Or, wait, solvent in the sense that if I had a balance sheet that looked like theirs, and I made the promises they make, I wouldn't be going to jail?
http://www.brookings.edu/multimedia/video/2009/0514_social_s...
It's dangerous to have entities for which the clock is running out. What we should aim for is the opposite: a social security system that's gradually accumulating assets, and can eventually use that to offload its risks (by, for example, paying a life insurance company to assume some of its obligations).
That way, 1) we know how much things cost, and 2) our problems are gradually getting solved. Now, we have the opposite situation.
And that's assuming zero contribution from social security. Even if social security gets chopped at some point, I don't expect it to go all the way to $0; people working today and paying in will probably get some payout. Even if it's only $10k/yr, that reduces the needed savings to $600k.
Granted, most people don't have anywhere near $600k either, so it might be arguing between whether they need to save infinity or 2*infinity more than they currently are.
As someone whose friends are predominantly in their 20s I can tell you people generally give 2 excuses...
1. "One of these startups will eventually work and I know I'll cash out on at least 1 big IPO before I retire so it doesn't matter"
2. "I don't know anyone whose saved for retirement and the average american household owes 20% more than they make. So the Government will have to do something and even if I don't have enough money I'll be taken care of"
So the bottom line is people are in denial and you can print this article up and tape it to their heads and it still isn't going to fix that problem
Here in the UK, the last government started levying a tax on the pension funds, and the present government hasn't revoked it. So people who have guaranteed pensions paid for by the taxpayer, out of tax revenues, are doing so off the backs of those in the private sector who save for their retirement. It disgusts me.
then the economy collapses for lack of consumption, no!?
something seems deeply wrong here.
When you "save" money, it's essentially a claim check against someone else's income. It's a way of recording that you contributed more than your fair share to the economy this time, so at some time in the future, you have the right to consume more than your fair share.
If everybody contributes more than their fair share, who's using up the excess? And then if they all go to cash in their claim checks at the same time - say, when the baby boomers retire - who'll produce the goods and services needed to satisfy those claim checks?
The real solution is to store value in resources that increase the productive capacity tomorrow, so that when everyone tries to cash out their claim checks tomorrow, there will still be enough goods to satisfy them all. In other words, investment. The problem is that an investment is only a good investment when it increases the productive capacity for something that people actually want tomorrow. It does no good for everyone to invest in houses when they really need health care upon cashing out those claim checks.
And there are often technological barriers that prevent dollar investments from being productive. You can pump all the money into biotech research that you want, but you're still not going to get a cure for cancer until someone actually cures cancer. Innovation has a random element that isn't always amenable to throwing money at the problem.
People often wonder why the U.S. economy did so well after WW2, compared to the Depression before and the 1970s malaise afterwards. IMHO, it was because the large amount of pure scientific research undertaken during the war created a large stockpile of fundamental scientific breakthroughs that were ready to be exploited. All the hard, risky parts of innovation were already done, funded by the War Department, and so companies could readily transform surplus cash into innovations that made people's lives better in the future.
I'd say that especially the types of people who hang out here would get completely bored stiff if they did ever retire.
The work we do (programming etc) can be done into your 80s,90s,etc. Sure, people will probably want to slow down a bit, and when sight starts failing etc but it's not like we're sportsmen or builders or anything strenuous.
I do still agree some significant savings are needed, e.g. for the case where your mind is still reasonably good, but you need physical assistance. But this article is talking about thirty years of living off savings! I definitely do not want to live thirty years of my life in which I'm completely unable to do anything but sit in a nursing home living off my savings.
For that matter, unless you are a true believer in an afterlife, for most of us, every day above ground beats the alternative.
I think everyone I know over 65 has given whatever do-not-resuscitate/no-life-support/etc. directives they can, and would give more if it were allowed. The single most common fear I've heard people of that age express is not a fear of dying, but a fear of living too long past the point where their health runs out.
Annecdotally, my grandfather, 102 years old, is a bit senile at this point yet still chases women, sings whenever he likes, and is generally an upbeat fellow. My wife has late stage Huntington's Disease and yet still enjoys simple pleasures. I share a dread future with my wife yet I am still here as well.
Happiness can be found in the most desperate of conditions.
Despite DNRs and such, there are many and simple ways to end our own lives. And, yet, the vast majority live them to the end.
Take this conversation, set it aside for 20 years, then tell me how you feel. I suspect the combination of marriage and children will change your outlook.
Rather than retiring at a specific fixed age, it makes more sense to me to retire at a specific time-til-death or health status: say, when you're down to 10 years of life expectancy, or too sick to work, whichever comes first. Actually I think 65 was probably chosen because it was once roughly the age where those things were true.