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The Que sera, sera retirement planning strategy. 

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AUTHOR: R Quinn on 1/13/2025

$244,750 or $87,572 take your pick.

The Vanguard 2024 How America Saves report, says those number are the average and median 401k balances among their 401k participants aged 55 to 64. 

For those folks time is running out.

Is there a valid excuse for that level of savings? Rarely. 

What are people thinking? Consider that many, perhaps most, of these folks have an employer match as well. 

I maintain that we humans have a serious flaw in our ability to plan and act with the future in mind. Perhaps there is a gene we retain from lower animals that can only live in the moment.  

Maybe these folks have other assets  This quote from a victim of the LA fires caught my eye. 

“It (their house) was our retirement. It was our investment. It was our equity. It was everything.”

Why don’t people save? The common excuse is they can’t afford it. I don’t buy that, especially for people later in their working life. Of course there are low income individuals where that is true, but for most middle class Americans it’s a matter of priorities. There is no money to save, but there is money for XXX? Look around, there is a lot of X spending going on every day. 

I think the essence of the problem is: 

  • Poor Planning Skills: Many people don’t have a clear understanding of their income and expenses, making it difficult to track spending and identify areas where they can cut back.
  • Lack of Savings Goals: Without specific savings goals, it’s easy to feel overwhelmed and unmotivated to save.
  • Impulsiveness: The tendency to make unplanned purchases can significantly impact savings efforts.   
  • Procrastination: Putting off saving for the future can lead to regret later on.   
  • Fear of Missing Out (FOMO): The constant pressure to keep up with social trends and consumerism can make it difficult to resist spending – but you could save first.

Does it boil down to a lack discipline, to a clouded view of financial priorities? I don’t think Que sera, sera is going to cut it as a retirement strategy. 

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Nick Politakis
20 days ago

You raise a valid question and I think it leads back to poor financial education and not having parents whose example you can follow. My parents were raised in villages with no electricity, running water and prevalent food insecurity. They overcame all this and taught me the lessons of living within your means and saving as much as possible. I thank them for being comfortably retired.

bbbobbins
20 days ago

Is this just another punching down thread?

Why don’t people save enough? Because they are people.

Same as why do people go bankrupt with mcmansions, holiday villas, boats and big RVs?

Why do people serially choose incompatible spouses and endure multiple divorces?

Why do people get addicted to booze, drugs, unhealthy food?

parkslope
20 days ago
Reply to  R Quinn

The problem with this thread many other similar ones you have started is that you are quick to identify problems and assign blame but rarely provide suggestions on how these problems could be mitigated.

parkslope
19 days ago
Reply to  R Quinn

Simply telling people they such things as that they should save more, payoff credit cards each month and live in more modest homes is no more effective than telling people who struggle with being overweight that they should eat less and exercise more.

bbbobbins
20 days ago
Reply to  R Quinn

Well no and yes. I think it’s unlikely to be a thread that provides insightful actionable answers that will improve the lot of every prospective retiree but quite likely to produce a bunch of anecdotes about people who have squandered chances relatively to the oh so prudent HD readers.

Part of what makes humans interesting is that we’re all individuals (Cue Life of Brian) but it does mean that we’re the products of all sorts of forces from the genetic lottery to parental investment, education, training, peer pressure, romantic choices, breeding choices even before we get to pure luck/misfortune and our own self inflicted harms. Sin of projection below seems pretty apt to me.

Maybe people in general are happy to work to or through SS age if they enjoy what they spend on on the journey. Maybe they don’t have a choice but make the best of what they have.

Last edited 20 days ago by bbbobbins
Norman Retzke
22 days ago

The “Great Wealth Transfer” may be part of a retirement plan, and I know individuals who expect to fund their retirement beyond social security in that manner. “Baby boomers and the silent generation are expected to transfer a total of $84.4 trillion in assets through to 2045” Sources: New York Times and Yahoo Finance, 2023. However, this is a somewhat risky plan, in my opinion. Such funds may not be available as expected. I’ve seen to it that the children were well educated with STEM degrees, a strong work ethic and careers that they could cherish. They are aware that G and I will not be leaving them a dime. On the other hand, our expenses are covered and they won’t be supporting us, either.

Last edited 22 days ago by Norman Retzke
stelea99
22 days ago

I would like to point out that over 45% of those who work in the private sector work for small businesses which employ less than 500 people. The vast majority of these businesses do not offer 401k plans, or any retirement plan. And, when they do offer a plan, the small size of the plan will mean that it has high expenses, and poor investment choices, and often zero employer matches.

Furthermore, more than half of the population of the US lives on the coasts where the cost of living is much higher than in the interior. Even with a very high minimum wage, apartment rentals are astoundingly expensive in these areas and not affordable to those who work for the minimum wage.

There are many sites with statistics which show that there is a vast gulf in the US between those who already have financial assets, and those who do not. HD readers are most likely in the have category.

I would like to caution against what I call the sin of projection. This is when we use our own experiences, beliefs, and attitudes and try to project them in the minds of others who have not enjoyed the same benefits which we have in our lives. Where we enjoyed mostly a healthy life, a good education, or consistent employment, or family support, there are many people who have not.

stelea99
21 days ago
Reply to  R Quinn

In your forum post, without any evidence, you quickly jump to the conclusion that when people don’t save for retirement it is not because they cannot afford to. I am sure that you believe this to be true.

There is so much complexity in our modern world, that when you consider any issue/problem the first question you need to consider is whether the problem you have discovered is a problem itself, or instead a symptom of a more fundamental problem. You are trying to uncover a place where an intervention might make things better. In a system of systems, when you intervene at too high a level the intervention does not make things better. There are many, many examples of how we as a society have tried to solve problems unsuccessfully. Whether it is drugs, homelessness, crime, healthcare, education, any number of other topics, as a society, we have tried to intervene many different ways without much success.

And, when we look at other societies (other countries), when we see that they may have done better with one of these problems, we reject their approach because it does agree with our (USA) view of reality.

Back to saving for retirement. I think that this is a symptom of a more fundamental problem easily demonstrated through the statistics of wealth and income inequality. Please provide any evidence to support that those who cash in their 401k’s when they change jobs are in the upper half of the income distribution or otherwise have the resources which would allow them to retain those $$ for retirement.

https://en.wikipedia.org/wiki/Systems_thinking

GaryW
23 days ago

I can’t understand why so many people consider their home equity as their retirement fund. They still must live somewhere so, even if they downsize, much of that equity will still be illiquid. I don’t even count my home equity when I calculate my net worth.

I grew up in a family where we didn’t have a lot of money, but I never really thought about it much. When my father died, and I was going through his papers, I realized that we had had even less than I thought. My sister and I never really changed our lifestyles, and each of us have saved prodigiously. Now we both have much more than we will likely spend in our lifetimes.

baldscreen
19 days ago
Reply to  GaryW

Our families have used the paid off home equity when our grandmothers, and now our mothers, have needed/are needing long term care. There was no LTC insurance. Chris

Cammer Michael
23 days ago

When I was 25 my boss called me to his office. He asked me if I was in the 403(b) plan. I said no. He said that the school matched up to 7% of contributions, so even if I couldn’t afford to put away 10%, I should at least enroll for 7%. He called it free money.
He was right, and at the next enrollment period I maxed it out. I also opened a post tax IRA and maxed it out.
I was underpaid, the lowest tier of non tenure track faculty. I was really lucky to have the job; my alternative plan was temping. The only reason I could afford to save for retirement was I had no debt and I had no rent payments. If I weren’t living at my parents’ or I had student loans, saving for retirement would have been impossible. My character is compulsive saver. But putting away money in the 403(b) and IRA would have been impossible if I had to pay for my own housing (and car, my parents were liberal with letting me use theirs).
I agree with your pointing out how many people can’t save because of their behaviors. This is true for many. But we’re also too quick to blame people who simple didn’t start with a firm foundation, made a youthful error of taking on too much debt, or had bad luck, like medical bills.

Last edited 23 days ago by Cammer Michael
John Barthel
23 days ago
Reply to  Cammer Michael

I recall a similar talk, but with a friend who constantly harped on us to get started with our 457 savings plan. I was one of the few (only one?) who did, and I still cannot believe the difference it has made (along with our IRAs) in our lives, being able to do just about anything and everything we want.

George Waters
26 days ago

Consider this. We HD readers in a perverse way are the beneficiaries of the largesse of those that spend and don’t save. Consumer spending is 70 percent of our Gross Domestic Product. This spending feed the coffers of all businesses including the S&P 500. As corporate earnings grow so goes the value of those stocks. We savers through our investing are the long-term beneficiaries of this growth. We should be thanking the spenders for our growth in our wealth.

PS: Richard, I very much enjoy your postings.

Doug Kaufman
23 days ago
Reply to  George Waters

While you have a valid point, HD households are probably spending more per capital than the median household due to building wealth.

Adam Starry
26 days ago

Net worth numbers would be more indicative.

This site has info based on Federal Reserve data.

Average Net Worth by Age plus Median, Top 1%, and All Percentiles

There are 2 sets of Net worth by age- with home equity and without.

For 55-59 median net worth with equity is $321,074 and $131,460 without.
For 60-65 median net worth with equity is $392,860 and $143,640 without.

This site gives some background on methodology.
United States Net Worth Brackets, Percentiles, and Top One Percent – DQYDJ

This net worth data does not include value of social security and defined benefit pensions.

I think it’s more representative than Vanguard’s numbers as non-participants in 401(k)’s are included.

All that said – Quinn’s not wrong. Most of the median 55-65 year old’s households net worth is tied up in their homes, and home equity assets are pretty paltry.

Jack Hannam
25 days ago
Reply to  Adam Starry

This is an excellent resource. Go to the site and click on “American Retirement Savings by Age: Averages, Medians and Percentiles”. Under “methodology”, note their definitions of “Strict” and “Expansive”. An interactive calculator will give you a percentile ranking for your age cohort. I was both surprised and concerned by how little half of American households of all age cohorts have to fund their retirement, beyond unmeasured social security and pension benefits.

Various reasons have been suggested to explain why many have saved so little. We also have heard stories about some who earned a modest income over their careers, saved and invested diligently and left a fortune to charity. Was it Jonathan who once wrote something like “Give me a saver and an investor, and I’ll bet on the saver every time”?

Adam Starry
26 days ago
Reply to  R Quinn

I would agree, not normal and more importantly not equally exposed to the broader population. There is a reason people in certain professions have a more jaded view of other people – they are exposed to broader range of characteristics in the population.

luvtoride44afe9eb1e
27 days ago

The first 2 bullets are ”Learned Skills” (planning and savings goals) that someone needs to teach them. WHO will that be? Parents? Employers HR departments? No one ever taught me about savings goals other than general advice…”start early, etc”.
the other 3 are behavioral “flaws” that many people exhibit and probably can’t do much about. Yes, we have a real crisis but how is it going to change?
I speak to my grown kids about these things in general but I can’t / won’t get into specifics with them. Yes, it kills me when they exhibit the other 3 flaws and buy things NOT really needed impulsively but what can I say…”you’re screwing up your retirement “? Maybe they are counting on mom and dad leaving them a substantial inheritance to fund their old age and retirement?! I’m sure many of our kids will be in that position to inherit substantial wealth from US.

Kristine Hayes
27 days ago

I’ve known two people who were relying on the, “inheritance retirement plan”. They assumed they would inherit enough family money that saving their own money wasn’t necessary.

Linda Grady
27 days ago
Reply to  Kristine Hayes

My husband’s advice to our kids; “If I go first (which he did), I’ll leave your mom well-fixed (which he did), but don’t count on it for yourselves because she will probably give it all away before she dies, so you better start saving.” I’m working on the giving away, but haven’t quite reached the expectation of “all.” 😊

Kristine Hayes
27 days ago
Reply to  Linda Grady

I knew a family where the kids would go into their grandmother’s house (while she was alive and living there) and put their names on any items they wanted after she died. It always made me feel creepy to see them doing that.

Linda Grady
26 days ago
Reply to  Kristine Hayes

I agree that it’s creepy when the person has dementia, but less creepy when the person has asked the children and grandchildren about items they would like, as I have done. Then I myself put the names on them (only two things so far). The other side of the coin is when the person decides to downsize and gets rid of possessions that the kids or grandkids wanted to keep. Who knew that after three moves in close succession I would find not one but two VCR players after having sold the treasured Disney tapes at yard sales? (Thank God for Disney + and streaming – I think I’m out of the doghouse).

DrLefty
24 days ago
Reply to  Linda Grady

We had this conversation with my own mother recently, at her initiation. It was a little weird, though. She said to my sister, “You have plenty of jewelry, so I’m giving my jewelry to your sister” (me). But she gave my sister her pick of artwork in their house, which is awkward because she has a younger partner who owns the house and will most likely outlive her, and he may not want the artwork being taken.

I’m not big on jewelry, but my sister might like a piece or two of my mother’s as a keepsake. And I’d probably rather have one of the paintings. I guess I’ll work it out with my sister and my mom’s partner in due course!

Dan Smith
27 days ago
Reply to  Kristine Hayes

Kristine that is beyond creepy.

Jonathan Clements
Admin
27 days ago
Reply to  Dan Smith

I think it’s odd as well. But I knew a woman whose nieces did the same thing, and she wasn’t the slightest bit bothered.

Kristine Hayes
27 days ago

In this particular family, the grandmother suffered from dementia, so I’m pretty sure she wasn’t even aware of what was going on. The fact that she had dementia made it seem even worse to me.

On more than one occasion, a family member would remove a name from a certain item and replace it with their own name. This would, of course, lead to arguments among the involved parties.

Dan Smith
27 days ago
Reply to  Kristine Hayes

Reminds me of a statement made by an estate attorney; Probate court is like divorce court for siblings.

Dan Smith
27 days ago

This old union thug agrees with the old HR guy way more often than I care to admit. The thing is, between my labor thing and my tax practice, he and I have seen the same things over and over. Commenters are correct that you can’t always judge a book by its cover, or in this case someone’s 401k balance, but I’ve seen the Que sera sera method of personal finance way too many times. And I’ve come to the conclusion that most of those folks won’t be helped no matter how hard anyone tries.
And now I’ve got that damn song in my head; thanks a lot Quinn. 

Ormode
28 days ago

If you just look at the balance of the 401K where a worker is working now, you have very little idea of their total financial picture. You have to look at total financial assets across all accounts, minus debt. Then add in any business assets or investment real estate that their household happens to own.

Last edited 28 days ago by Ormode
BenefitJack
23 days ago
Reply to  R Quinn

Median tenure of American workers has been less than five years for the past seven decades. Median tenure for workers age 55+ has been under 10 years for the last five decades. Department of Labor studies suggest workers often have 12 different employers by the time they reach age 50. So, individuals who are working at age 62 or age 65 or older likely have a different employer than the one they had at age 50.

If you look at Form 5500 data, you will see that 1 in 5 retirement savings accounts belong to someone who is term vested.

There is no effective option for capturing all of the retirement assets that have already been distributed – and, surveys suggest that many older Americans who are subject to RMD have not spent that money – but invested it elsewhere, gifted it to others, used it to pay down debt, etc.

Bottom line, looking at balances in existing 401k accounts is informative, but, not likely to be conclusive – especially for older Americans.

Jeff Bond
28 days ago

Statistics are dangerous because you may never know the motivation behind what someone is trying to say. So I’ll pose the following:

Another consideration, or perhaps question, is how much those same 55-64 y.o. workers have in IRAs in addition to their 401(k) accounts.

When I was 55 (and 64) I was still working and contributing the max to my employer’s 401(k) plan. But at the same time, I had a rollover IRA which contained and invested of the 401(k) contributions and earnings I’d made with my previous employers. Depending on how frequent/often employees change jobs, a rollover IRA can contain a significant portion of future retirement benefits.

Also, in a two-worker family unit, two 401(k) accounts for 55-64 y.o. workers, each with $245K – – – I’d argue that’s not bad for a lot of circumstances.

Norman Retzke
28 days ago

Sometimes circumstances intervene. For example, during the Dot-Com bust, my retirement portfolio dropped in value to less than $9,000. Because of additional circumstances I later found myself starting over at age 57. The good news was because I had been a saver, I had no debt. But I had no house or retirement savings, either. I’d say it is never too late to start. As for “Impulsiveness” and “procrastination” I recall this sage advice “Look before you leap” and “He who hesitates is lost”. Pick your poison, LOL. I did successfully start over; I did save sufficiently for an excellent retirement. It did require discipline, setting realistic priorities and goals (Including alternative plans), practicing balance, and the making of numerous and sometimes difficult decisions. There were sacrifices to be made. I’d suggest that flexibility although not mentioned, is a very useful approach. BTW no pension, but I do have a 401(k), SEP IRA, Roth IRA and other savings. I did work longer than some and there was no FIRE for me!

Last edited 28 days ago by Norman Retzke
Kristine Hayes
28 days ago

Just a quick observation for now.

Focusing only on 401(k) values is a bit deceiving.

After 30 years of full-time work, my 401(k) value is $0.00.

What I do have is a state pension, a 403(b) and access to a generous early-retiree health care benefit offered by one of my former employers. In addition, I have cash savings.

I’m not arguing that a lot of people don’t save enough. But using this single statistic may make the picture of overall retirement savings look too bleak.

Many government employees have generous pension plans. They may have small-or non-existent-401(k) balances. The same goes for many of the people who work in the trades (electricians, plumbers, etc.).

Kristine Hayes
28 days ago
Reply to  R Quinn

My personal observations aren’t that numerous, but they definitely don’t correspond to your statement that “…many of those are not employed under it (a pension) for long enough to obtain much value.”

The folks I have known who have been covered by pensions (either through government positions or through the trades), have tended to stay at their jobs much longer than the people I know who weren’t covered by such benefits.

When I worked in a state government job we had very little employee turnover. The pension contribution (paid for entirely by the state) was equal to almost 16% of an employee’s salary. The lab I worked in employed about 20 people total and most of them had been there for 10-25 years when I started working there.

Similarly, I’ve known quite a few tradespeople and they tended to stay in their trade for decades. They would occasionally change which company they worked for. Since they were covered under a pension plan offered by their union, it didn’t matter which shop they worked for.

The same goes for the people I know who were covered by 403(b) plans. In my case, my employer contributed an amount equal to 10% of my salary into my 403(b) plan starting six months after I began working for them. We had very little turnover in staff (or faculty) jobs and I suspect part of that was due to this generous benefit.

John Barthel
23 days ago
Reply to  Kristine Hayes

I always find it interesting how many state and local government employees have their pensions fully funded by the government. In Minnesota, we split the contribution just like Social Security, at about the same rate. I would have enjoyed having that 7-8% for me to add to my 457 plan or IRA.

Dan Smith
28 days ago
Reply to  Kristine Hayes

Kristine I agree that employees in the occupations you mention do tend to stay on the job and accumulate substantial pension credits. If you look back several decades when DB pensions were fairly common, employees frequently left jobs before vesting, leaving lots of pension credits behind. In my union days, I represented workers at a tiny beer distributorship. It was a lousy place to work and I don’t recall anyone vesting in the pension. We ended up replacing the DB pension with DC plan; it seemed like the right thing to do in that situation.
A side note to the building trade jobs you mention. Here in NW Ohio, the union guys have some very lucrative supplemental pensions in addition to their DB plans. Our local plumber/pipefitters union has a local DB, a national DB, and a great supplemental plan. 

Edmund Marsh
28 days ago

Dick, your list of harmful behaviors is sad, but true. While there are certainly folks caught in circumstances that deserve our sympathy and prayers, and even our help, many others with the means to help themselves fail to do so. It’s a problem I regularly think about.
And thanks–Doris Day will be in my head for the rest of the day 🙂

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