Four in 10 Americans don't see retirement ever happening | Hacker News Reader

Four in 10 Americans don't see retirement ever happening

bnnbloomberg.ca

I don't mean to sound mean but it seems to me as a European that Americans value comfort and convenience over being prudent and thrifty. I hear stories from people on massive salaries yet struggling to make ends meet due to a lifestyle of extravagant food choices, car purchases and other material junk which is not necessary. The saving grace of all of this is the recent trend on the topic of FIRE- people who realise they don't need all that junk and prefer financial freedom over a life of servitude.

As an American, I'd say your observations are astute.

Americans that live a bit below their means and invest can easily retire in comfort. (Even on a modest salary.) Those that spend every penny they make (and more) are doomed to a later life of financial worry.

As an American, I'd say your statements have a grain of truth to them but you're probably not looking at the right demographic. The people with "massive salaries" barely make a dent in those statistics. Those numbers come from people in the middle and working class. I have a lot of sympathy for them, having been there myself a long time ago. It might not be their fault that their means are more limited, and being poor shouldn't have to mean a lifetime of unceasing self-denial. I don't begrudge anyone their occasional moment of (relative) luxury. On the other hand, going into massive persistent credit-card debt for the sake of having the latest phone or TV is just crazy and it's a common syndrome. There's something very sick about a society that pushes that lifestyle on people who never got a good enough education to realize that there are better alternatives. It's predatory. So your criticism (if it was even that) is justified, but IMO misses the real point of how we came to be that way.

Nah it's definitely a thing. Generalisations are borne out of truth. Just look at all the waste ... Living far from work, driving alone in an Escalade or huge pickup 30 miles to work, cooling entire houses to 18C etc. It's in your face everywhere you look. Even the toilets are wasteful!

I'm not saying those things don't happen. I'm just saying they're the tip of the iceberg. The part below the waterline - the part that does the real damage - is the vastly greater numbers of middle-class and poor people, and the reasons why they behave the way they do. The glittery ice on top barely matters. The real problems are the advertising and finance industries which were way oversized since long before tech came along, an educational system that leaves most people vulnerable to their manipulation, and politicians who make the whole situation worse with their misguided (or venal) policy making. Maybe callous condescension makes some people feel better about themselves, but it's really not very helpful.

I’m one of the four, unfortunately. I fully expect to be working until I die or at the very least until I am physically and/or mentally unable. I’m starting to resign myself to that future and can only hope I continue to enjoy the work that I do.

Personally I think the younger generation will rethink the entire notion of what retirement is. The stereotype of counting the days til 65 and then all of a sudden you’re playing golf every day for the rest of your life is just comical.

That version of retirement is extremely modern (postwar-Great Society ish). A return to working life or poverty for seniors would be a return to form.

Until Social Security and Medicare happened most seniors lived in abject poverty. https://www.nasi.org/discuss/2015/08/social-security%E2%80%9...

The majority of the remaining 6/10 have inadequate retirement savings. I believe the average 401k balance of 45-50 YO is between $96k to $108k.

I think we are roughly down from 40% of americans with a pension to 10%...the 401(k) was a experiment to replace pensions, of course when the pension disappeared wages never increased to supplement workers. Combined with The addition of student loans and healthcare cost increases, the 401(k) has pretty much been a failure, but they do make up the difference in pensions almost perfectly with about 30% of Americans at least having a 401(k) account.

Not disagreeing with you, but I don't actually know the answer to this question: what's the proportion of retirement savings that's in a 401k? I'd expect that someone with 108k in a 401k has a pretty substantial amount outside of it too, right?

Hah. You've gotta be rich to be poor.

Massive savings are unlikely in a government or other public role where you can get tremendous matching (14% on 6% investment) in 401k.

I would have been starving myself for a mediocre payoff in a few decades if I'd stayed in research. $40-odd-k with a $2000/mo take-home after insurance and taxes made it hard to save for a down payment in an area with a $250k median home price while trying to keep up my IRA. Not to mention you lose money every year because the state doesn't always grant COL increases.

I lived off of $20/mo 6Mbit DSL that I had to cancel for a month every half year and then renew so I didn't have to pay $60/mo, drove a 10 year old car, didn't own a smartphone, never took a vacation, and cooked all of my meals while shopping only at Costco and the local ethnic markets. It still cost $18,000 to afford a year of life.

Oh yeah, student loans. It's like forgetting you have cancer. After a while it becomes part of your identity.

108k at retirement is nothing. You can lose that in one trip to the hospital, one unlucky year in whatever overvalued market you invested in, a few years of predatory rent agreements or having to help raise your grandkids. To someone with the kind of wealth you're thinking of, that's like the $25/mo I send to my checking so my bank doesn't close the account.

Probably not. 45-50 YO are still to young to have pensions. The fact of having a 401k pretty much means no pension. Everyone I know with a traditional pension is 60+.

I’m lucky to come in on the tail end with a 401k and employer funded annuity, but any hires at my employer in the 21st century just have a 401k.

Right, I didn't assume pensions (tbh I'm young enough that defined-benefit pensions sound like a strange anachronism to me). I wasn't asking about retirement flows but rather retirement stock: I would have imagined that someone with that level of 401k savings would also have retirement savings that didn't live in a tax-advantaged account. My parents never had enough money to put in their 401k, and I've always maxed it out, so I don't have a good model of how partial-contribution decisions are made, but I would've thought that some level of liquid savings would (on average) come before locking up money in a 401k

> I would've thought that some level of liquid savings would (on average) come before locking up money in a 401k

This is correct. But most personal finance wisdom advises keeping no more than 6 months - 1 year of expenses in liquid savings. After that, funding your 401k to get the maximum company match, then your IRA and Roth IRA, and maxing out 401k, is preferred. If there's still money left over after that, it goes into post-tax investments.

Problem is you can’t fund a 401k and traditional IRA at the same time. Then you can’t fund a Roth IRA if you make too much (and it’s only $3k/year anyway). The government has rigged it so they are getting a cut of your retirement savings, one way or the other.

You can fund a traditional IRA and 401k up to a certain MAGI.[2] If your spouse doesn't work, or their work doesn't offer a 401k, you can fund a traditional IRA for them as well. Roth IRA is $5.5k/year.[0] If your 401k plan allows in-plan conversions you can also do mega backdoor Roth IRA contributions up to something like $37k. [1]

0. https://www.nerdwallet.com/blog/investing/roth-ira-contribut...

1. https://thecollegeinvestor.com/17561/understanding-the-mega-...

2. https://www.quickanddirtytips.com/money-finance/retirement/c...

> most personal finance wisdom advises keeping no more than 6 months - 1 year of expenses in liquid savings

I was unclear: by "liquid" I didn't mean in cash equivalents like an emergency fund. I just meant "not locked away until retirement, under threat of penalty" the way tax-advantaged retirement accts are.

At the very least, I'd expect that most people with a 401k have a ton of assets tied up in houses that are often to big for them after eg their children move out: downsizing and unlocking those assets is a pretty common sense move in the context of "not having enough saved for retirement".

I think the high level point I'm going for here is that I'm not sure that 401k balance is a good proxy for overall retirement savings, as implied by the comment I originally replied to. I don't have the data on this though

But only one in 2 numbers in the title were in number form.

Frankly, the American Dream of retirement and ‘golden years’ has long passed. The 2008 crisis wiped out everything people I know had for retirement. I’d rather save my cash than put it into another person’s hands hoping for modest interest returns at the risk of knowing we’re just around the corner from another 2008-like crisis. I’m working to make something for my wife after I’m gone. I’d be a horrible retiree anyway. Still to much of a kid at heart.

My 401k is now worth about 5x what it was in 2008, mostly due to compounding, which is why I don’t understand “people losing everything”. They would of had to sell it all at the bottom of the market.

> They would of had to sell it all at the bottom of the market.

Yup, that's pretty much it. Unfortunately many people don't have the stomach for the market and end up selling at the worst possible time trying to avoid additional losses.

After all, if everyone was totally rational and held through downturns then market crashes would largely be eliminated.

2008 to today is eleven years. Please look at the immediately previous eleven-year period. The 2008 crisis left the S&P down compared to where it had been in 1997. How cheerful would you be about retirement if your own 401(k) returns had been negative over the last eleven years. What if a 2008-like event happened just before you had planned to retire, or just before/after other major financial events such as buying/selling a house or kids hitting college or someone getting sick?

It's great that your prime savings years have coincided with an exceptional run-up. I also have been fortunate. The difference seems to be that I don't look down my nose people who lacked perfect flexibility wrt when to enter or leave the market. I have reasons to believe I've been pretty smart about my savings and investments, but I still admit the role that pure luck has played.

> . I’d rather save my cash than put it into another person’s hands hoping for modest interest returns at the risk of knowing we’re just around the corner from another 2008-like crisis.

I'm not sure I understand; if you had a basic passive portfolio during the 2008 financial crisis, you did pretty well for yourself: crashing rates meant that your bond-heavy portfolio increased in value. On top of that, rebalancing the longer-term portion of your allocation into stocks at the nadir means you got a ground floor ticket to a historically good bull market. All of this is with the most conservative, mechanical, low-touch investing strategy possible.

I might be misunderstanding something about the above, but failing that: what is your actual concern about another 2008-crisis-like event?

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