If you try to do it by saving what's left over each month, you'll never save anything. The savings need to out before you get your check.

Retirement savings is not discretionary and hasn't been for a long time.

But be ready to duck.

You need to be earning more than your expenses in order to save. Now if your employer were contributing separate from your wages, you'd have a little nest egg building up over and above your paycheck. Defined benefit plans, usually through union contracts, allowed a lot of blue collar workers to have a decent retirement. Now if you're lucky you'll have a 401K plan, with or without employer match, and often without the kind of professional management that will guarantee a good return.

I have a good job and work with people making 50k-150k. MANY of the. Have huge house, nice cars, take nice trips, but have dick for retirement. THESE are the people I bet they are talking to.

thinking, how do people afford all this stuff? The big houses, the new cars, the vacations, the extravagant Christmas shopping trips......it never occurred to me that part of it was they weren't saving for retirement......while I understand many folk have had retirement savings wiped out, many people never saved when they could have......although I would have thought for sure they must be saving now

... there are lots of folks who really don't make enough money to save any.

But there are plenty who simply chose not to. If you were making $40K or more a year and you didn't save any, well I don't feel too sorry for you.

A lot of people have a "let tomorrow take care of itself" attitude, and they are going to find to their dismay that it doesn't.

it's not impossible for some people but it is definitely much harder now....and yes, I am well aware of how much savings can be wiped out by a medical disaster

Not enough to save a meaningful amount.

After 30 full years of work, a Pension should provide a minimum of 50% of their average pay for life with COLA increases.

Add in graduated vesting (where 100% isn't until year 7) and watch the "Pension overfunding" be reallocated to dividends and bonuses in a few years...

It's always fun to scold people who don't have the common sense to rake in a few extra thousand each month.

Since when is sound financial advice scolding? Financial realities are what they are and I'm posting what I believe is the best way to deal with them. The fact that some people can't or won't do what I suggest doesn't negate the value of the advice.

Where will saving nothing get you?

I've posted a strategy that's worked for me for more than 30 years. I'm sure that some on DU are in a position to implement what I suggested, but because not everyone is in a position to do so, I'm scolding. That's brilliant.

You're speaking from the position of most third-basers, declaring in the same harumphing tone that anyone whose finances aren't as solid as yours must have fucked up through carelessness or idiocy. If you're not trying to scold, then you are preposterously clumsy in your approach.

If you goal is to inspire people to listen to your advice, then it's a great shame that your 30 year strategy hasn't helped you to develop the interpersonal skills necessary to such a goal.

30 years with no apparent financial landmines tends to put traits like empathy and thinking outside one's bubble in a lock box of sorts.

I've had some, but over the long haul, sticking with the plan has worked. You're really know nothing about me except that I had a plan, followed it and was successful.

Not only do you know nothing about others; you seem incapable of acknowledging that their circumstances might differ from yours.

I didn't assign blame to anyone and I think you're shooting the messenger.

What would recommend people do about retirement?

The fact that you fail to see this calls into question the value of your advice.

I'm not shooting the messenger. I'm telling the rose-colored bootstrapper that his advice is crap for a huge majority of the population.

A younger person needs to find ways to increase their earning power. That means education, retraining and cutting their expenses as much as possible. It may mean moving to a different part of the country. An older person on fixed income should exhaust every source of assistance, public and private, that might be available.

I don't have a magic bullet, but I'd never tell anyone they're fucked and they should throw their hands up. I gave advice that hopefully, some here can use. You've contributed nothing.

We're not getting anywhere, so let's leave it at that.

I've had this conversation over and over with friends and relatives who have made more than me over the years yet saved nothing. I'm lucky that I married the love of my life who is a compulsive saver. We have both been out of work occasionally during the past 42 years, often simultaneously. Whenever the subject comes up I'm accused of being out of touch or having no empathy.

My father was an ILGWU presser in a sweat shop. He never earned very much. His union pension is $103.50 per month, plus Social Security of $1,000. He lives comfortably because whenever he could he put away some money. We had a small home and a used car that he repaired and maintained himself (he was a tank mechanic in WW2). He got laid off during the slow season and tended bar to make ends meet. We ate macaroni and peas on most Thursdays, but an occasional steak pizzaiola on Saturdays. He still lives in the same post-war home I grew up in. All the neighbors made more money than he did, some a lot more. At age 92 he's the only one that doesn't get Meals on Wheels.

But... there is no greater waste of time and effort than trying to convince people that they should act in a manner which is self evidently in their own best interest.

I'll admit that this does NOT apply to everyone, but he told me 40+ years ago that I should never give up my active income. He was in his 70s and had plenty of money, but still kept his "route."

My neighbor worked for the local utility and faced mandatory retirement. He took his pension, but also installed boilers until he was 84. He couldn't lift and carry, so kids from the block did the grunt work and he did the installations. When minimum wage was around $7 my son made $25 an hour on Saturdays when he was in high school. And he learned pipe cutting and threading.

When Sal died I had to call customers he had scheduled for the following week.

I plan on working until they shovel dirt in my face. Again, not for everyone. I love my work.

I really like the electric power business. It's just too interesting to leave.

We're thinking of going solar for electric.

Any opinions or advice? You're the expert.

If you live in a house that is a good candidate (south facing roof, not shaded by trees) and in a state that has renewable energy requirements (requirements that utilities obtain a certain percentage of their electricity from renewable sources), you might be able to sign a deal with a company at no cost to you to supply you electricity at a discount to what you would pay the utility. I looked into this for my house, but I would have had to cut down some trees that I really liked and the solar company said that if they paid for the trees it would eat up their profits. Either way, it was deal breaker.

I would also contact your electric utility to see if they have any incentive programs for installing solar and also see what state and federal tax credits might be available to help finance your system.

If you're technically inclined and are interested in owning the system yourself, you can go to the National Renewable Energy Laboratory ("NREL&quot and use their PVWatts program to estimate how much electricity a system on your house might produce.

http://www.nrel.gov/rredc/pvwatts/

Once you know that the size and expected production of your system, you can get quotes from local installers as to cost. You need to look at your electric bills and estimate how much you'd save on energy from the local utility. At that point, you're in a position to decide if you'll save enough money to make the purchase worthwhile. Talk to few solar installers in your area - a lot of them will do this work for you. Also check references - you'll need the system to operate reliably for many years to make the investment pay, so you want it done by an installer that does quality work.

I wouldn't recommend going totally off-grid. It can be done and some people do it, but I think that if you do, you'd be taking on problems that most people don't want to deal with, like limiting your use of electricity if it's cloudy. In any case,designing and installing a solar PV system is a job for a professional. An improperly designed or installed system can be a fire hazard or can jeopardize line crews working to restore service during a power outage.

My expertise is really with utility scale power generation and residential solar isn't my specialty.

Hope this gets you started.

We're in Long Island and pay $250 per month for electricity.

Through a lease program we can get a $5,000 state tax credit with a netmetering system and lock in a $189 per month rate for 20 years.

We have unobstructed south and southwest exposure.

I think it's a go. The Long Island Power Authority has been averaging increases of between 6% and 10% so that $189 rate lock looks very good.

Thanks again for the advice.

The output of solar panels does decline as they age. You should ask what performance is guaranteed over the long term - say 10 years.

Good luck with it

Your generation as a whole benefitted from a hugely expanding economy and employment opportunities that simply aren't available today, so your experiences have little to do with current reality. What you identify as penny-pinching (smal home, used car, maraconi Thursdays) would qualify as luxury living for a good deal of modern society, even among two-income homes. And even if you personally suffered hardship, it is nevertheless true that the economy is not what it was, and advice based on life in the economy-that-was has little bearing on life in the economy-that-is.

Since there are always a couple of losers around, everyone should just fucking give up on planning for retirement and instead spend their time whining on DU. No one should ever be more successful than the bigger loser. If you are, you are just stomping on the oppressed.

How's that for empathy?

I would agree with the first part, and disagree with the second part.

A huge majority would be, what, 60%?

Do you really think that 60% of American households are too POOR to save any money for retirement?

So in 2011,
20% of households made less than $20,262
40% made less than $38,520
60% made less than $62,434

My own income was $33,359.84 last year and I was able to put $6,500 in my IRA and save some other money too. Even when I made only $11,779.17 in 2008 I was able to put $920 in my IRA and maybe some in a Roth IRA.

So households that make $50,000 or $60,000 a year are unable to save?

Sure, maybe if it is a household of 4 living in a high cost place like California, Connecticut, NYC or New Jersey.

Well, in Connecticut, the median income for a four person family is $104,670.

I would ask, if a family of four making $100,000 a year is unable to save, then how can a family of four making $60,000 a year even survive?

I can believe that many people are not able to save, but I don't believe it about most people. And even for many people in this country there are many things which are seen as necessities but really are not.

If a president won with 76% of the electoral votes, it would be called a huge majority. If you don't care for that particular term, I invite you to ignore it; it's hardly central to the argument.

Regardless, unless you assume that some sizable number of those 76% are living paycheck-to-paycheck because of all the money they're setting aside for retirement, I'd like to know what you think they're supposed to save.

a person can live paycheck to paycheck because they don't have enough money to save.

OR

they can live paycheck to paycheck because they are too undisciplined to save.

You mean that median individual income is $29,000? Because median household income is higher than that.

And I don't find $29,000 to be ridiculously low, and even then 50% of the country is making more than that.

I also don't think the economy is anywhere near "totally" fu$%ed. My own experience with the roaring nineties was not all happiness and joy, but I kinda saved money all through it, even when I was only making $5.40 an hour.

I have never lived paycheck to paycheck. I would NOT do it. I would probably freak out if I did not have some kind of safety net - a personal one to fall back on. I would cut expenses to the bone until I had one. Even if that meant living without the internet.

Most Americans seem to prefer spending their money to saving it though.

Maybe they are the smart ones. It seems likely to me that I will die with money in the bank. That is, money that I worked for, but never got to spend or enjoy.

Sorry, I'm not an American, but I'm gathering from what I've read that things are very different in the US to here. Here it's mandatory for employers to contribute a percentage of their employees wages into a retirement fund (we call it superannuation), and the employee can choose to contribute a percentage on top of that. Also, for low income workers, the government puts in a percentage on top of what the employer does. We can either retire at 65 on a govt pension (for a single it's around $20,000pa) or for someone like me who's in a defined benefit fund, have a self-funded retirement. I'm planning on retiring at 61 on a pension of $70,000pa, and I consider myself incredibly lucky that I fell into the right job at the right time when DB's still existed. Many others are nowhere near that lucky, and it sucks that they'll be forced to work till they drop...

Telling people who for the most part are struggling to make ends meet and can't cut back any more than they have, while well meaning, is understandably not going to be taken well. What would work better would be telling yr govt and employers that they need to step up and help ensure financial security for older folk who shouldn't be working in their 60s and 70s unless they choose to do so...

I agree with you that employers should be helping and while defined benefit plans are now rare, many employers match a portion of 401k contributions. That's better than nothing.

In the end, people need to deal with the situation as it currently stands, as difficult as that might be. Some here are upset that I've pointed that out, but I don't see how validating a do nothing approach serves anyone's interest.

And you paint yourself as a victim because people don't kiss your ass with sufficient reverence.

In all of your posts, and despite being asked repeatedly, your haven't yet offered any of your expert advice for people who don't have a few extra thousand at the end of the month.

Until you can offer tangible, practical advice for these people, then your non-advice sure as hell isn't any better an awareness of dire fiscal reality.

What if people started with $10 a week? Even that, after twenty years would give them $15,000. Not enough money to live off of, but better than nothing, isn't it?

I hate these nonsense articles about how everybody needs a million dollars in order to retire. Not everybody lives on $60,000 a year when they are working, and not everybody needs to live on that when they are retired.

Where does the other $5000 come from in your example?

If we're talking about people who can barely save $10 per week, I'm not comfortable telling them to gamble their savings in a risky stock venture, and anything less risky will most likely have an incredibly shitty rate of return.


The million-dollar-retirement will only be a factor in my life if I suffer a medical catastrophe that doesn't quite kill me. Otherwise, I'll get by quite comfortably on a fraction of that amount.

Adding $520 yearly at about 3.5% will give you about 15K.

Well, I guess that'll buy them a year post-retirement.

Most long-term CDs offer much less than 1% interest these days.

And I was just replying where the 15K number came from.

I just think 3.5% interest these days is pretty difficult to find unless one is going to assume more risk than the 3.5% might be worth.

it comes from being old enough to remember 6% rates on a ONE year CD.

But that was never a REAL interest rate either.

I am not used to bank interest rates being in the toilet.

but still, $520 at 1% interest for 19 years adds another $98.8
$520 at 1% interest for 18 years adds another $93.6

and that is without ANY compounding.

I figured that $5,000 was a rough estimate of 20 years of interest.

Although it seems I overestimated that if rates are only 1% and I am not sure you can get much better these days. It is astounding to me how low interest rates are these days. Sickening, and it's been going on for five or six years now.

But if having a small savings account keeps you from borrowing from a stupid payday lender, then that alone makes it worth it.

As another poster noted, your calculation works just fine if we can find a 3.5% investment vehicle.

That's really not much better than nothing.

You need to be able to pay for your food, shelter, clothing and medical expenses for all of your non-working years. What the hell is $15000 going to do for you?

Your bury your head in the sand approach does nothing but support the status quo. Let's pretend that everyone can just save and everything will be better! No need for pensions.

If things do get better, you'll have lost nothing by planning and acting on the basis that things don't change.

What? It's good advice! People should walk! It's good for them. You lose nothing by exercising.

Your logic is seriously flawed.

Income inequality is the problem. Not the bootstrappy nonsense you're peddling.

Criticizing a strategy does not obligate the critic to provide an alternative.
Rejecting your "advice" does not require that a viable alternative be proposed.

When people don't like my ideas, I'm always interested in hearing their alternatives, especially when they go beyond explaining why something can't be done.

Require employers to pay a living wage
(pretty much a no-brainer)

Require employers to provide employee pensions
(this must be funded annually or per-cycle before the CEO et al receive any compensation)

End corporate subsidies & bailouts; use this money as funding for guaranteed social security.
(again, pretty much a no brainer)

Your solution has been to tell the individual "you're getting fucked, and shame on you for not fucking yourself more."
My solutions say to the employers "quit fucking your employees."

You might object that my suggestions are politically impractical or difficult to implement. Well, that shouldn't be a problem, since your suggestion that people save money they don't have is, in many cases, literally impossible.

It would be wonderful if you're successful and for everyone's sake, I hope you are. Seems like a long shot to me though, so I'll keep saving and I'll keep on recommending that others do the same.

In theory, it is something that employers (and employees) can contribute to over their lifetime. Thats basically a 401K. Pensions run and administered by companies are not coming back. Companies are not built to last as long as they once were. Increasing numbers of future generations are going to work for themselves, at a much earlier age.

Since a 401K does not seem to be a desirable option for many, what are the choices other than a government run pension? (not necessarily a bad idea, but not one I would want for myself).

If one doesn't trust 401Ks, there are not going to be other private alternatives that are acceptable.

How would this differ for SS? Would it differ in that people could contribute as much or as little as they want? Would employers be required to match it? How would this work for independent contractors? ICs pay both ends of their SS. Would this be optional?

Regardless of whether or not you're right about those benefits ever coming back, the fact is that is the reason our middle class is dying and why a significant portion of them can't save for their retirement. The solution is not to berate them for that and tell them they should save. Hence my wheelchair analogy, because it makes the same amount of sense. If you want to throw up your hands and say it's useless and no point in doing anything about helping restore the middle class, that's up to you. But at best it's surely a waste of time to tell people who have no money they should save it. That was my point in the person I was responding to.

If you mention that people with zero disposable income can't set aside $50 per month, then you're broadcasting a "can't do" attitude, even though such efforts at saving would almost certainly have a trivial longterm impact, if any.

If you throw up your hands and say that there's no way to fix the system problems caused by corporations and banks, then you're offering wise advice based on decades of sound fiscal management.

And where did throw up my hands, or tell people with no money not to save? I get it - I have a low post count.

When I say "like a 401K" it just means that its the most widely available retirement vehicle. It used to be pensions, now it's 401Ks

Seriously - what would a pension look like in todays world? In tomorrow's? People today who have been served well by a pension are deserving. It's also a foregone era. Pensions, in their former form, are not coming back.

Almost nobody spends their career at one company as they previously did.

What is the solution to this problem. If 401Ks, and the private sector are not the answer, what is?

It's okay to do that, but realize the points I was making were being adressed to another poster. i was explaining those arguments in tht context.