FREE NEWSLETTER
Go to main Forum page »
From what I read, many if not the great majority, of HD readers are the exception to much of this dilemma.
The responsibility for retirement income has steadily shifted to individuals and away from employers (unless you work for government), but far too few workers have accepted that responsibility. Longterm thinking does not seem a widespread skill. I find this information a bit depressing. How do we change the situation?
Frankly I don’t know, but if we don’t make changes- if individuals don’t make changes in their financial behavior and if we don’t do better for those with inadequate means to fend for themselves, there will be adverse economic consequences as society continues to age. In my view anyway.
Hey, we need more Americans reading HumbleDollar and the reality it’s writers bring to personal finance. 🤑
Fact: most workers don’t stay with one employer long enough to get any value from a pension plan. The median job tenure is about 4 years, a bit longer in the public sector.
Fact: the peak for workers pensions in the private sector was about 50% in the 1970s. However, far less actually received a pension because they left the job before vesting or the receive a minimal deferred annuity at age 65 if they were vested. Today about 15% of private sector workers have a defined benefit pension, but short job tenure still means they most receive little value.
Fact: Today more workers have an employer-based retirement plan than ever before, just not a defined benefit pension. About 65–70% of private-sector workers have access to a retirement plan (401k and the like), the bad news, roughly 50–55% actually participate.
Fact: workers in their 50s have an average 401k balance of $246,700 – $270,000 and a median of $85,000 – $95,000.
Workers in their 60s have an average of $269,100 – $280,000 and median of $88,000 – $90,000.
Neither are going to provide much of a retirement.
Fact: 40% of retirees get 50% or more of their income from Social Security 15–20% of retirees rely on it for 90% or more of their income.
Unfortunately, for decades we haven’t been able to come to grips with changes necessary to keep Social Security sustainable.
Yes, agree completely that Individuals need to take responsibility and not depend on institutions to think about them. I am appalled by the lack of fiscal discipline and the waste that is going on in our Federal, State and County run organizations. Individuals can do better with some discipline and following Humble Dollar writers suggestions.
I agree that personal responsibility matters, but it’s incomplete to say waste exists only in government. Corporate greed and private‑sector failures also impose enormous costs on taxpayers and communities.
We’ve all seen examples: corporations taking subsidies, bailouts and tax breaks while delivering little in return, companies offloading environmental cleanup costs onto the public, or private contractors charging inflated rates for basic services. Those are forms of waste too.
Yes, individuals need to be more proactive in retirement savings, and government agencies absolutely need stronger fiscal discipline. But we can’t pretend the private sector is automatically efficient or virtuous. Waste, mismanagement, and lack of accountability exist in both arenas, and taxpayers end up paying for failures on either side.
What do you mean by corporate greed? If corporations take (legal) actions to maximize profits who benefits?
The answer is shareholders which includes pension funds, IRAs, 401k and individual investors.
If corporations did not have increasing revenues and profits nobody would be able to retire.
A few examples of greed come to mind. Wells Fargo, about a decade ago, pushed employees into an aggressive sales culture that led to millions of unauthorized accounts, forged signatures, and inflated performance numbers. Enron—unforgettable—used fraudulent accounting to hide massive losses, triggering one of the largest corporate collapses in U.S. history. Theranos, Lehman Brothers, Bernie Madoff’s investment firm… the list is long.
My point is simply this:both government and
private enterprise are made up of people cut from the same fabric—good and bad.
Neither sector has a monopoly on integrity or failure. And when things go wrong
in either place, it’s the people in
the middle who end up paying for the mistakes.
We just can’t point the finger at local governments when failures exist in both private and government arenas.
You are talking about the actions of individuals committing fraud and other illegal acts. And there were consequences not only to the individuals, but the shareholders as well.
I see those instances quite differently than a broad condemnation of corporate greed.
Labels like “Government Waste” and “Corporate Greed” paint with a very broad brush. Of course it’s individual humans within these entities that cause problems. It’s the same way within small business and charitable organizations. It’s the vast variety of human nature; one guy I pass on the street might be a future saint, the next guy might be a pickpocket. Not everyone in these entities are guilty of the allegations leveled against them, but some of them sure are.
Very true
Maybe she means the huge salaries paid to the top executives compared to what their employees make. Maybe the huge tax breaks they get compared to the average citizen. Also, the increasing revenues and profits you mention that help investors retire go mostly to the top 10%. That doesn’t help the others as much: ‘The top 10% of American households own approximately 87% to 93% of all U.S. stock market wealth, according to recent data. This high level of concentration has increased, with the top 1% alone holding over half of all shares, while the bottom 50% of households own roughly 1% of the total market.‘ yahoo finance
The huge salaries are not significant because what is called pay in reality total compensation 60% or more of which is stock not cash. Take the pay of a CEO and divide it by the number of employees and see the impact.
Millions of average Americans have IRAs 401k, etc. their investments are relative to their incomes and the performance of their investments are even more important than the wealthy.
While only 15% or so of workers in the private section have a pension far more retirees do as do nearly 90% of government workers. They all depend on stock market performance.
Also, all those 529 plans out there. Around 17.4 million accounts with $588 billion in assets. Also dependent on stock performance. I doubt they are mostly held by the top 1%.
The corporate tax breaks are designed to promote investment and other growth strategies. Needless to say profits and growth are what keep people employed.
Corporate America is not the enemy.
“About 65–70% of private-sector workers have access to a retirement plan (401k and the like), the bad news, roughly 50–55% actually participate. “
In other words, we are free to make bad choices. Nothing new here, and I won’t spend much time thinking, writing or worrying about the bad choices made by others.
I will note that the bail-outs may begin very early in life.
Maybe because they need the money to live on.
Yet there are HD Forum posts active right now that speak of layoffs, the state of retirement in America, and the influence of luck (or lack of same). There are times when it’s not because of a choice, but rather situations with outcomes that negatively impact random folks.
As has been said here on HD before, we exist in rarified air. For the most part we’ve grabbed the brass ring and are reaping the benefits. Everyone else (90%? 95%?) is breaking even or struggling. In times like these I like to think of the Golden Rule and wish it was more uniformly applied.
I think the 90-95% is a bit, a big bit overstated. More like 20-30% in my opinion.
What is so different now from twenty, thirty years ago or past times of truly high inflation or unemployment that would cause such level of struggling?
There is so much misinformation and lies floating around these days it hard to know what to believe and I suspect our perceptions are being influenced.
Lots of things are different. Those who are considered high income earners have to pay close to $3,000 a month for daycare in many states. Mortgage payments and home prices are so much higher now, relatively speaking. Jobs are being lost at a rapid pace now. The top 10% are doing very well, but those in the middle are struggling.
Some of those bad choices may end up costing you money in the long run.
There may actually be some light at the end of the retirement tunnel, and there are studies to back this up. It seems that the two youngest generations of workers show signs of improvement. The fear of a diminished Social Security, along with auto-enrollment in an employer’s defined contribution plan is getting young workers off to a better start on saving. It is also making them (as a group) more aware of financial things than we older folks.
Of course, this does little for the baby boomers not sufficiently prepared for retirement. Many times we hear that ‘it’s never too late’, but I don’t really believe it.
I think, in the second paragraph, it should say “… but far too few workers have accepted that responsibility.”
Good point.
I’ve been thinking about this issue a lot while doing tax prep at Goodwill this year. We can talk all we want about saving, but I see people for whom that just isn’t possible. They earn far too little. And a lot of us, who have solid retirements, are benefitting from underpaid workers. Think health care aids for example. The agency that places them gets a high per dollar payment, but the worker winds up with appallingly little — and no benefits like health care or a retirement plan. NITHING! HI can whip through a tax return for these folks in a matter of minutes; there’s nothing to report,
i have no idea where this all finally ends up. I don’t like the quasi socialist answers to the current situation. But this afternoon, I Zelled some money to my daughter. She uses a dog walker, who is the sole support of her family of four. The woman’s husband is disabled, and she has to limit her income so he qualifies for Medicaid. The woman drives a beatup car to her dog gigs. I want my daughter to give the woman some extra cash each week— and it must be direct cash— to cover the rising gas costs. Maybe this is a guilt payment on my part, but I feel like I have to start somewhere.
That’s why I said “ do better for those with inadequate means to fend for themselves,” However, the lowest income level generally have many services available to supplement their retirement. It’s the middle 60% I think is the issue.
Except at this time, city and state budgets have been DRASTICALLY cut back since the Feds have severely cut back the dollar help, so cities and state are having a hard time helping people in need.
Dick, many of the “services available to supplement” the retirement of low-income seniors have been cut or made less accessible.
Again I urge you to get out into your community and converse with the folks at senior centers and elder housing facilities. I think you still have an unrealistic view of just how difficult it is out there in America.
The problem is that lowest group is likely to increase very rapidly. Health care is the fastest growing area of the economy— and that isn’t doctors and nurses. It’s the low paid jobs like working in a memory care facility, home health care. CCRCs, etc. Then consider the current impact of AI on young people. Recent college grads have among the highest unemployment rates. And I don’t see a lot of support for people living totally on Social Security. They can go to food banks, but what else? Help with rent or
property tax is minimal.
Marilyn, I agree that health care is the fastest growing area of the economy and as a result, entry level pay may not be as low as you think. I serve on the Board of Trustees for a local Non-Profit Nursing Home. Our entry level pay for a CNA (Certified Nursing Assistant) is $45,000-50,000. You can get your CNA in as little as 8 weeks, and our organization will pay you to take the class in exchange for a long term commitment. It may not sound like a huge salary, but it is equivalent to 1st Year Teacher salaries in our area.
In many states that is barely above the poverty level when rents are over $2500 a month
Marilyn, one thing that’s very apparent to me is that we, as a society, don’t want to pay very much to those who take care of our youngest at day care centers, and our oldest who need late stage life care. It’s really a sad commentary because we all want the very best for our young children and elders–and the best teaches for our kids of course–but we don’t seem to want to pay for it.
For most of my life, as a responsible saver, I believed in allowing everyone to take on the responsibility for their own retirement. As much as I believe in free markets and free enterprise, I believe even more in reality and track records.
It appears, to my chagrin, that most of our fellow citizens simply cannot and will not save adequately for retirement and they would prefer a government program to do the saving for them.
You are half right. Most CANNOT save. Bit you are dead wrong. Most DO NOT prefer government programs. Some may, but not most. Ever hear of the working poor? According to reports, up to 51% of households are struggling to cover basic expenses.
Deleted
If you put away $$$ early in your career in to the SP500 Index Fund over 40-50 years you will have enough. Might wanna open a Trump account for kids under 18; guarantees a very healthy and wealthy retirement fund as a traditional IRA
That account is a one time $1,000 seed deposit, but if you do not have the money after that, it does not guarantee a healthy and wealthy retirement fund. Many experts say you would be better off with a 529 plan. But again, you have to have the money to invest
I’m Not sure how you put away $$$ that isn’t there.
That’s not always the case.
The wealthy retirees are getting their money from……irresponsible people who spend every cent they can get their hands on. One man’s interest expense is another man’s interest income.
But here’s the thing: if you really do well, you will pay substantial taxes as a retiree. Your first duty is to support yourself, but if you do a good job at it you will be supporting many others as well.
So thanks for the money, you drunken sailors out there – now here’s some of it back.
Many are spending every cent because they do not get paid enough.
How does that getting money from irresponsible people work?
Yes, everybody is subsidizing everybody else.
That’s the way a society functions. We may not like it, but it has always been the case.