Let's face it — a million bucks isn't what it used to be. You know it. We know it. Even millionaires themselves know it. In a recent UBS survey, well-heeled investors said they won't actually relax about retirement savings until they hit the $5 million mark.
We're not opposed the idea of miracles happening, but the reality is that most Americans are far (far, far) away from that kind of milestone.
The average 401(k) balance for pre-retirees (55 years and up) has nearly doubled since the depths of the downturn, but still sits at just$255,000.
In what might be one of the most sobering assessments of America's retirement crisis this year, The New York Times' Jeff Summer threw a proverbial cold bucket of water on anyone who still thinks $1 million is all it takes to retire well.
Read more: Why $1 Million Won't Cut It In Retirement - Business Insider
Yup. The Boomers have had more wealth flow through their hands than any generation in human history. And they blew all of it. Hey, if it feels good, do it, right?
:roll: and the rest of us are going to have to eat the bitter fruits of those crappy decisions.
I reiterate and plug and plug again turning Social Security into a forced savings / investment vehicle so that even our low-income populace can retire with financial independence.
As for the article...... yields are low? That is a surprise?
Alaskans at one time per capita were one of the biggest suckers on the teat of the government plus entitled to state oil money. To the residents of Iowa a big high five.The states with the highest amount of average credit card debt in 2012 were Alaska ($7,045), Colorado ($5,728), North Carolina ($5,619) and Connecticut ($5,532).[SUP]32[/SUP]
The states with the lowest amount of average credit card debt in 2012 were Iowa ($3,874), North Dakota ($4,006), Wisconsin ($4,252) and South Dakota ($4,257).[SUP]32[/SUP]
This isn't only about spending habits or savings rates. It's also about:Yup. The Boomers have had more wealth flow through their hands than any generation in human history. And they blew all of it. Hey, if it feels good, do it, right?
Yup. The Boomers have had more wealth flow through their hands than any generation in human history. And they blew all of it. Hey, if it feels good, do it, right?
:roll: and the rest of us are going to have to eat the bitter fruits of those crappy decisions.
I reiterate and plug and plug again turning Social Security into a forced savings / investment vehicle so that even our low-income populace can retire with financial independence.
As for the article...... yields are low? That is a surprise?
If most baby boomers didn't "blow" most of their wealth, we wouldn't have had enough demand, and thus jobs, to supply everyone with a job, and we would have thus been even more poor of a country in aggregate.
...
If you don't suffer from the "I want it and I want it now" syndrome of the boomers and today's youth, you can quite reasonably live on the income generated by $1 million.
Demand Side economics is a backwards equation that presumes production and savings. If Boomers hadn't blown most of their wealth unemployment would have been just fine and we would have been a wealthier country in aggregate, not least because we would not now be on the hook for their complete failure to take basic responsibility for themselves.
This isn't only about spending habits or savings rates.
Inflation, which increases the actual amount you need on hand to retire
Cost of living
Expectations about the standard of living in retirement
Life expectancy, which is nearly 20 years greater than when "collect Social Security at 65" was set into law
Bonds, which are touted as a safe investment, have had low payouts for several years now, and are not as stable as in the past
I'm not aware of any solid data which indicates that younger generations have a higher savings rate than the Boomers.
But don't let any of this get in the way of a rant about the allegedly degraded morals of a large demographic cohort, with nothing in common except the years they were born.
Where would the demand for the goods and products that most baby boomers produced come from then?
Seriously, if we all quit consuming half of what we consume, then there would only be half as many jobs, and with a 55% unemployment rate, jobs wouldn't pay crap because employers wouldn't have to compete very hard for employees.
The same. Your confusion is that you think that savings is incompatible from consumption - but savings is merely delayed consumption, usually put into investment.
Where would the money come from to start new businesses, build new houses, make loans, etc, if people did not save? The Gubment? All the goods we sell are dependent upon excess supply that can be traded for it - all the theoretical demand in the world is useless if the people who would like to purchase our goods do not have the excess supply to trade for them.
Hell, I have theoretical demand for my own island, complete with McMansion, boat dock, sattelite communications, helipad, hangar, the works. Do I have the excess supply to trade for one? Nope? Well then, I guess no one will be able to sell me one.
:shrug: no one said half. In order to be set up for retirement Baby Boomers would have only had to have saved 10-15% of their income.
Now, however, we are going to see a 55% drop in their consumption. Because they won't have the income or the savings to support continued consumption. That is the problem with the short-term demand-driven model: it is the equivalent of trying to get stronger by ingesting caffeine rather than by exercising and eating healthy. Sure, it might even work in the short term - but then there is an energy crash, and you are as weak as you were when you started, if not weaker because now you are dependent.
I'm not confused, and I agree that we need a balance of savings and consumption. Where you are confused is that you don't realize that we had that balance. Since we had the greatest growth in history during the time that the babyboomers were (and still are) working, obviously there was never a lack of savings.
If we would have had more savings, then that would have mean we would have had to have consumed less, and thus there wouldn't have been ample jobs.
The fewer jobs we have, the less that is produced, and thus the less wealthy we are.
Again, you seem to have missed the fact that we did have money to start new businesses, build new houses, and to make loans. Lots of new businesses, new houses, and certainly lots of loans. Why can't you understand that?
You don't seem to understand the difference between "desire" and "demand". Desire is your wants, which may or may not become demand. Demand is when you actually pay for a product or service. Demand equals business sales (revenue). Desire equals whatever your dreams are worth, which the last time I checked, no one was willing to pay for dreams.
They actually did. It's called "Social Security".
Sure, I just made up that "half" figure, but if it would have been 90% or 10% less consumption, we would have still had fewer jobs, less production, and less wealth creation.
The amount of wealth that we create in any given span of time is equal to demand, although some of that wealth is consumed during the same period or shortly after it is created.
Bull****!
If you don't suffer from the "I want it and I want it now" syndrome of the boomers and today's youth, you can quite reasonably live on the income generated by $1 million.
As a member of the Boomers I agree to a certain extent. But if you think your generation is doing any better you better think again. Everybody has to have the newest vehicle to drive and the newest toys it seems. Found this site about credit debt and quite interesting.
From the article:
Alaskans at one time per capita were one of the biggest suckers on the teat of the government plus entitled to state oil money. To the residents of Iowa a big high five.
Credit card statistics, debt statistics, industry facts
That is false, as is demonstrated by the fact that now there are not enough savings. Clearly there was not a savings balance as the money was not actually put into savings. If there had been[/i] saving, then there would be savings. If the average baby-boomer had taken the basic step to show the minimum responsibility necessary to save 10-15% of their income, the average boomer would be retiring with a million or so, not $255,000.
That is a false direct correlation. Since consumption would continue to exist, we would have continued to be fine - in fact we would be better off, because now we would not be facing the kind of crises that we are.
You cannot consume yourself wealthy - nor would increased savings have meant fewer jobs. On the contrary - increased savings would have meant more money for things like new businesses, which create the vast majority of new jobs. Increased savings over the course of baby boomers lives would have meant more start-ups, more creative destruction, more (believe it or not) aggregate consumption. But you can't put the cart before the horse and expect it to perform up to par.
We did indeed - and we would have had more. Why can't you understand that money that goes into savings does not disappear from the economy?
:shrug: what I am labeling theoretical demand you are labling desire. Semantics isn't going to win you much.
Well, that's fantastic! So all these baby boomers have accounts with Social Security which are flush with cash?
Because there are some nasty rumors going around that in fact that money was then immediately sent to current recipients, and that any surpluses were immediately "lent" to congress who immediately spent it, meaning that there is, in fact, no savings in the SS Trust fund outside of a bunch of IOU's, and certainly no actual individual savings..... which would be silly, of course, because, as you said, the baby boomers saved inside of Social Security. Certainly a government elected by boomers would never be so foolishly self-destructive as to socialize their savings and then immediately spend it.
No it would not have - the money would have remained in the economy itself. "Savings" does not equal "money that is put in a giant silo a'la Scrooge McDuck", Savings equals bank deposits, new businesses, new houses, investments in older businesses allowing them to raise cash to add on new projects, greater creative destruction, greater growth, greater wealth creation.
That is false, as indicated by the fact that we do, in fact, have savings, misallocation of resources, hoarding, and even wealth destruction. Broken windows do not increase aggregate wealth.
What a well thought-out and sourced counterargument. You have convinced me. I am now assured that the fact that Baby Boomers will have no money in retirement outside of a paltry $255K and a pitiful Social Security Check will have no effect whatsoever on their consumption. Surely their magical money trees will in fact come through, and they will be able to continue to support their current consumption rates despite their lack of income or savings through the power of Hope. :roll:
I'm not saying that savings is not a factor at all. I'm saying it is one of many.Actually it is - had the boomers saved like they should have, they would have been fine, even through the 2008/2009 crash....
Sure. But inflation still erodes savings and asset gains. E.g. with 3.5% inflation, the value of a dollar is cut in half in about 20 years.Inflation is at historic lows.
That's a rather glib assertion.We pay less for the necessities today than we have in American history.
1) This is not about "Boomers." Their parents, who were really the first to live through a big wave of consumerism, were just as materialistic as their kids.That is true. Boomers expected to retire like their parents did, but without saving like their parents did.
No, it belongs right here in this discussion. If life expectancy has changed, then so should the savings recommendations -- and our ideas about the viability of a safety net for senior citizens. And many of the allegedly "financially illiterate" Millenials have low expectations for SS.Also true, though that belongs in a discussion of Social Security, as people do not today save for retirement assuming they will likely drop dead when they hit SS retirement age.
...and as I'm pointing out, "trusting your savings to bonds" is a) going to impact how much you need to save for retirement, and b) not linked to one's savings rates.That would indeed be the OP. Which is why you shouldn't be wholly in Bonds - interest rates at this point have almost nowhere to go but up.
How easy is it to save $1 million today?
Let's simplify things. You work every year, start at age 25, you work until age 67, and we ignore inflation. We start with a household that earns $50,000 a year (current US median household income), and assume they have no major setbacks.
• If your wages increase 2% per year and you save 2% of your income every year, you will accumulate $67,000 by age 67.
• If your wages increase 2% per year and you save 10% of your income every year, you will accumulate $335,000 by age 67.
• Wage increase 4% and you save 10% each year, you will accumulate $550,000 by age 67.
• Wage increase 2%, save 25% of your income every year, and you'll accumulate $839,000 by age 67.
How can we hit the magic number by age 67? One way is to earn $95,000 a year, get raises that outpace inflation every year by 4% and save 10% of your income.
Or, we could just say you need to save $23,000 (in 2013 dollars) for 47 years in a row.
Am I the only one who thinks this is not easy?
Define "blowing it". I make good money, live in a relatively low cost of living area, have one small CC bill, rent a mid sized house, drive a 14 year old car.Yup. The Boomers have had more wealth flow through their hands than any generation in human history. And they blew all of it. Hey, if it feels good, do it, right?
:roll: and the rest of us are going to have to eat the bitter fruits of those crappy decisions.
I reiterate and plug and plug again turning Social Security into a forced savings / investment vehicle so that even our low-income populace can retire with financial independence.
As for the article...... yields are low? That is a surprise?
Define "blowing it". I make good money, live in a relatively low cost of living area, have one small CC bill, rent a mid sized house, drive a 14 year old car.
So, where am I "blowing it", yet saving is hard.
You are falling into the "Fallacy of Composition", and you need to learn about the "Paradox of Thrift".
If some savings is good, that doesn't mean that more savings is better.
Also what is good for the individual, is not always good for the aggregate, if you take what is good for the individual to an extreme, it becomes so harmful to the aggregate, that even on an individual level it is bad.
What we need is a balance between savings and consumption, we have had that balance, and you have done absolutely nothing to indicate otherwise.
Technically, I'm one of the last baby boomers, and while I don't have what most people consider an investment portfolio of a million dollars, I still have 20 or more years of work left in me, plus I own "stuff" of value, like my home and my business, that I wouldn't have owned if I were more thrifty.
If the average babyboomer has a quarter million bucks in a retirement account, I'd suggest that is pretty darned good, and far more than their parents ever had
plus they have "invested" around 13% of their income into social security, which will provide them with an additional income for life.
More savings in the past 50 years would not have likely created more production, because it would have subtracted from the need for production.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?