Waffle
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Post by Waffle on Sept 11, 2012 9:09:06 GMT -5
Out of 100 people who starts working at the age of 25, by the age 65:
Will be considered wealthy 1%
Have adequate capital stowed away for retirement 4%
Will still be working 3%
Are dependant on Social Security, friends, relatives or charity 63% Are dead 29%I just stumbled across this today - I found these numbers quite depressing. What do you think about them? Link (includes more statistics) www.statisticbrain.com/retirement-statistics/
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resolution
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Post by resolution on Sept 11, 2012 9:24:18 GMT -5
I think they would have been better off starting working before they were 25.
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needanewjob
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Post by needanewjob on Sept 11, 2012 9:33:08 GMT -5
As long as I can avoid that 29% category, I'll be fine.
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midjd
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Post by midjd on Sept 11, 2012 9:33:41 GMT -5
I didn't get out of law school until 25 Those numbers are depressing - especially the 29% who are dead by 65. I guess that's one retirement plan... Other interesting stats: Average years in retirement - 18 Average savings of a 50yo - $43,797 (eek!)
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movingforward
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Post by movingforward on Sept 11, 2012 9:36:48 GMT -5
It says 35% of retirees are dependent on SS but then it says out of 100 people who start working at 25 that 63% of them will be depend upon SS. I am guessing they think more people will be dependent upon SS than they have in the past I often wonder how accurate these type of statistics really are...
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Tennesseer
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Post by Tennesseer on Sept 11, 2012 9:54:52 GMT -5
It says 35% of retirees are dependent on SS but then it says out of 100 people who start working at 25 that 63% of them will be depend upon SS. I am guessing they think more people will be dependent upon SS than they have in the past I often wonder how accurate these type of statistics really are... You misread it. It states: Percentage of Americans over 65 who rely completely on Social Security 35% Are dependant on Social Security, friends, relatives or charity 63% Those 35% currently have no access for assistance from friends, relatives or charities unlike the 63% who expect to have multiple access for assistance in the future.
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alabamagal
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Post by alabamagal on Sept 11, 2012 10:13:55 GMT -5
"Are dependant on Social Security, friends, relatives or charity 63%"
Well that question is pretty vague also, so you don't really know how many people are totally dependent on ss. I would answer the question "yes" on ss, because I have contributed the max to ss for several years and will get a fairly large ss check at age 65. I will also get a fairly large pension check. So I will "rely" on those two sources of income to pay my monthy expenses.
My parents are well off retirees right now, and they "rely" on their ss checks. It pays their monthly bills. They have other income and savings also.
Rely on ss is quite different than having ss as your only source of income in retirement.
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movingforward
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Post by movingforward on Sept 11, 2012 10:18:10 GMT -5
It says 35% of retirees are dependent on SS but then it says out of 100 people who start working at 25 that 63% of them will be depend upon SS. I am guessing they think more people will be dependent upon SS than they have in the past I often wonder how accurate these type of statistics really are... You misread it. It states: Percentage of Americans over 65 who rely completely on Social Security 35% Are dependant on Social Security, friends, relatives or charity 63% Those 35% currently have no access for assistance from friends, relatives or charities unlike the 63% who expect to have multiple access for assistance in the future. Got it. I see now what you are saying. Thanks for clarification. Still for a group that apparently has no money they certainly are spending a lot - 80% of luxury travel and 47% of car sales Thank goodness for the 1% or the travel industry would completely dry up.
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Bluerobin
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Post by Bluerobin on Sept 11, 2012 10:18:54 GMT -5
I retired early because I saw similar stats and didn't want to be in the 29%.
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Tennesseer
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Post by Tennesseer on Sept 11, 2012 10:22:42 GMT -5
'Are dependant on Social Security, friends, relatives or charity 63%'
From the way it is worded, I am assuming none of the respondents have yet to reach the age of 65. In the end, that 63% will probably be a lower percentage because certain life events have not occurred yet (no children, alienation from family, divorce, outliving family and friends, few monies going to charities, etc.) for these folks.
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Tennesseer
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Post by Tennesseer on Sept 11, 2012 10:30:33 GMT -5
"Still for a group that apparently has no money they certainly are spending a lot - 80% of luxury travel and 47% of car sales Thank goodness for the 1% or the travel industry would completely dry up."
Read it again. It states "Americans older than 50 account for" and not over 65. [Most] Working Americans are in their prime earning years during their 50s. It makes sense folks in their 50s would account for the high percentage of luxury travel and car sales.
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Phoenix84
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Post by Phoenix84 on Sept 11, 2012 10:40:48 GMT -5
Hmmmm, I thought Seniors had the lowest poverty rate of any age group and the most wealth.
And I'd like to see their methodology too.
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movingforward
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Post by movingforward on Sept 11, 2012 10:43:29 GMT -5
"Still for a group that apparently has no money they certainly are spending a lot - 80% of luxury travel and 47% of car sales Thank goodness for the 1% or the travel industry would completely dry up." Read it again. It states "Americans older than 50 account for" and not over 65. [Most] Working Americans are in their prime earning years during their 50s. It makes sense folks in their 50s would account for the high percentage of luxury travel and car sales. Yes, and the average saving for a 50 yr old is 43K - perhaps because they are spending so much money on luxury vacations I may be reading it all wrong but these numbers just don't jive with me. ETA: yes, I know it says older than 50 spend money on travel but I still say these numbers sound bogus
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Tennesseer
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Post by Tennesseer on Sept 11, 2012 10:50:19 GMT -5
Folks in their 40s and 50s usually have higher credit line limits. Not everything is paid for in cash.
What's that expression? 'The only difference between men and boys is the price of their toys.'
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happyhoix
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Post by happyhoix on Sept 11, 2012 12:22:38 GMT -5
"Have adequate capital stowed away for retirement 4%"
I'm curious as to how they define this category.
I've read some financial experts who claim in order to maintain your current standard of living when you retire, you must have a combination of retirement savings and SSI/pension to total 100% of your salary that last year you worked.
Then there are other financial experts who claim you don't need 100% of your pre-retirement income, because 1) most retires have a paid for house, 2) you won't be driving your car as much, or having to purchase 'work' clothes, or spending as much money eating lunches out and 3) often a retired couple can share a car.
I think the person who came up with this study is one of the 100% salary replacement folks.
I would be interested in another statistic - if all the people currently retired, what percent of their old work salary are they currently living off of, and do they consider that adequate?
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Deleted
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Post by Deleted on Sept 11, 2012 12:47:57 GMT -5
"Still for a group that apparently has no money they certainly are spending a lot - 80% of luxury travel and 47% of car sales Thank goodness for the 1% or the travel industry would completely dry up." Read it again. It states "Americans older than 50 account for" and not over 65. [Most] Working Americans are in their prime earning years during their 50s. It makes sense folks in their 50s would account for the high percentage of luxury travel and car sales. Yes, and the average saving for a 50 yr old is 43K - perhaps because they are spending so much money on luxury vacations I may be reading it all wrong but these numbers just don't jive with me. ETA: yes, I know it says older than 50 spend money on travel but I still say these numbers sound bogus My mom is one of those who does not have enough saving, yet is spending like crazy. She does not do luxury vacations but in the last two years went on two month long road trips.
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cronewitch
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Post by cronewitch on Sept 11, 2012 12:49:44 GMT -5
You don't have some cost in retirement, my main difference is I won't be saving for retirement. If I earn 60K and save 30K I don't need 60K to live in retirement. I will quit paying SS tax too but have more health care cost, Medicaid cost and might need some assistance like painting I could do before I get old.
My plan is to live on SS of about 20K, of 20K or more so living better in retirement than while working.
Living on SS alone isn't that hard if you have two people and a paid off house, one used car to share and don't have vices and hobbies that cost a lot.
These scare stories are from financial industry workers who want your investment money. A 50 year old is just getting started saving for retirement if they bought a home first, raised children and paid off the house. If they have 40K and save 20K a year they can have much more at 65 that last 15 years is prime saving time. Some will have pensions or inherit money too or work part time a few more years.
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alabamagal
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Post by alabamagal on Sept 11, 2012 13:39:42 GMT -5
These scare stories are from financial industry workers who want your investment money. A 50 year old is just getting started saving for retirement if they bought a home first, raised children and paid off the house. If they have 40K and save 20K a year they can have much more at 65 that last 15 years is prime saving time. Some will have pensions or inherit money too or work part time a few more years. YES!!!!! At 49/51 DH are way behind what we are supposed to be contributing to retirement if you look at all the calculators, but here is what we have going for us - will get max amount (or close to it) from ss due to contributing max for several year - Have 20 year pension from Fortune 500 company - Complete ownership of a small business that is in pretty good shape We can contribute to retirement funds more now than we have in the past, got one kid through college, one has 2 more years and one 4. Once I get my kids off of my auto insurance, I can fund a pretty big retirement account! (kidding somewhat)
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Sum Dum Gai
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Post by Sum Dum Gai on Sept 11, 2012 13:46:20 GMT -5
If they wait until 50 to get started no wonder so many seniors have no savings and are reliant on SS only. It's far far easier to save early and let compounding turn it into a pile of money, than it is to try and save a pile of money on your own in a few years with no long term compounding.
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Deleted
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Post by Deleted on Sept 11, 2012 13:53:46 GMT -5
If they wait until 50 to get started no wonder so many seniors have no savings and are reliant on SS only. It's far far easier to save early and let compounding turn it into a pile of money, than it is to try and save a pile of money on your own in a few years with no long term compounding. My mom was 47 when she started maxing her 401k out. Prior to that I think she had less than $50K. She is 57 now and has about $200-$250K.
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CarolinaKat
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Post by CarolinaKat on Sept 11, 2012 13:53:51 GMT -5
While starting early is better of course, it is always good to start- no matter what the age. I like how you put that
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skubikky
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Post by skubikky on Sept 11, 2012 14:29:42 GMT -5
If they wait until 50 to get started no wonder so many seniors have no savings and are reliant on SS only. It's far far easier to save early and let compounding turn it into a pile of money, than it is to try and save a pile of money on your own in a few years with no long term compounding. How many of those 50 years olds are poor? Or working poor who had always lived hand to mouth? What segment of the population currently lives that way.? Just making enough to survive. Saving, investing for the future? The future for them is next month's rent payment, food for the week, payment of the electric bill etc. The assumption that all 50 year olds "should" have some substantial amount of assets is ridiculous.
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Sum Dum Gai
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Post by Sum Dum Gai on Sept 11, 2012 14:33:38 GMT -5
I've never maxed my 401k out, am 30, and have around $88k in mine. If I never contribute another dollar, and get an 8% annual return, I'll have over $750k at 57. The earlier you contribute the less money you have to put in to get the same final amount at 65. If you wait until later to start it takes far more money each year in contributions to hit a specific number at 65.
If the markets average 10% over the next 27 years, and I never contribute another dollar, I'll have over 1.3 million at 57, and that's just from saving from the age of 25 to 30, and never saving another dollar after that. If you wait until 50, and want 1.3 million at 57, you're going to need to be saving six figures a year. Most people can't do that.
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Taxman10
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Post by Taxman10 on Sept 11, 2012 14:36:55 GMT -5
I've never maxed my 401k out, am 30, and have around $88k in mine. If I never contribute another dollar, and get an 8% annual return, I'll have over $750k at 57. The earlier you contribute the less money you have to put in to get the same final amount at 65. If you wait until later to start it takes far more money each year in contributions to hit a specific number at 65. If the markets average 10% over the next 27 years, and I never contribute another dollar, I'll have over 1.3 million at 57, and that's just from saving from the age of 25 to 30, and never saving another dollar after that. If you wait until 50, and want 1.3 million at 57, you're going to need to be saving six figures a year. Most people can't do that. Time is your friend
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movingforward
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Post by movingforward on Sept 11, 2012 14:37:04 GMT -5
If they wait until 50 to get started no wonder so many seniors have no savings and are reliant on SS only. It's far far easier to save early and let compounding turn it into a pile of money, than it is to try and save a pile of money on your own in a few years with no long term compounding. How many of those 50 years olds are poor? Or working poor who had always lived hand to mouth? What segment of the population currently lives that way.? Just making enough to survive. Saving, investing for the future? The future for them is next month's rent payment, food for the week, payment of the electric bill etc. The assumption that all 50 year olds "should" have some substantial amount of assets is ridiculous. Very true and there will always be a segment of the population that will fall into this category. I believe it was dark who pointed out on another thread that if everyone in the US had a viable degree we would still have people working minimum wage because there aren't enough jobs. There will always be poor people in our society.
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Sum Dum Gai
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Post by Sum Dum Gai on Sept 11, 2012 14:45:36 GMT -5
Not quite. It's even worse. If every single adult in the country had amazing degrees from prestigious universities, there would still be some who couldn't even find minimum wage work. There are fewer jobs than workers right now. It's like musical chairs. Somebody is going to get left out.
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Sum Dum Gai
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Post by Sum Dum Gai on Sept 11, 2012 14:48:34 GMT -5
Roughly 4-5% of US households are on welfare at any given time, well TANF anyway, which is the direct cash payment type of welfare for the neediest of the needy. The other 95% should be trying to put something away each year and starting as early as humanly possible.
The one advantage the very low paid have going for them is that the SS calculation is skewed in their favor. At the lowest income brackets their SS check by itself will replace 90% of their earnings. The more you make the lower the bend points get in terms of the percentage of income SS will replace. So, at the lowest income categories, and we're talking like right at the poverty line here, SS will replace 90% of your working income by itself. If they tried to save just a couple percent of their income, like 1-3%. Maybe just to get the match on a 401k if they have access to one, over time that could grow to more than replace the other 10% they're missing. Or, if they can't afford to save at all, a really low hour part time job after retirement, like one day a week, will more than make up the 10% they're missing.
If they can find some way to cut costs by 10%, maybe living with roommates in their golden years, they're fine without any savings or effort on their part at all.
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tskeeter
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Post by tskeeter on Sept 11, 2012 14:51:53 GMT -5
I agree. I suspect that the "savings" excludes 401K accounts, investment accounts, home equity, CD's, annuity contracts, and the like. I've seen statistics similar to this before that only included savings account and checking account balances, but none of the retirement savings vehicles people typically use. Manipulating the definition to generate a statistic that will attract attention. How many of us keep our entire retirement savings in a savings account these days, anyway? Kind of makes you wonder what other creative or unconventional definitions might be behind some of the other statistics, doesn't it?
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cronewitch
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Post by cronewitch on Sept 11, 2012 15:14:59 GMT -5
Not everyone can save for retirement and buy a house or raise kids when they are 20 something. Most people start broke at 18 then either work or go to school so at 25 are just getting a foot hold on the working world. If they buy a house and have a baby or two they might be 35 before they can save much. If they want a little better house, car that runs better and to help kids with college and to have a healthy emergency fund they might not really save more than a couple thousand a year for retirement.
Most people don't earn 6 figures, many only earn 30-60K so supporting a family while saving, paying down the mortgage and paying off student loans if any might make it harder to save for retirement.
It doesn't matter if you save for retirement in your youth or pay off high interest debt, build home equity, start a business as long as your net worth grows. It might take people until over 30 to pay off student loans and pay a down payment on a house especially if they have children.
Look at Carl and Mrs Carl, they have student loans, no house yet, no kids yet but are saving for retirement. That is great for retirement savings to grow. They are working at career growth and still want to settle down and have kids but that might not be soon. If they didn't need to keep moving for jobs a house purchase might have been just as wise as saving to retire. Paying more cash for college rather than student loans might have been good too instead of retirement savings depending on rates. Nobody can do it all unless they land career jobs young or get family help with education expenses or house down payments.
Personally I got divorced and started over at 35 and probably had about 35K at 50 maybe less because I bought a house and paid cash for more college. Now I have over 600K saved at 64.
If some of those 50 yr olds with 43K each marry they will have a decent start and with two decent salaries, no kids and no mortgage they can save like gang busters. They could each have a million in 15 years.
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Sum Dum Gai
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Post by Sum Dum Gai on Sept 11, 2012 15:26:00 GMT -5
There's no magical number that you have to hit in order to be saving for retirement. It's not a binary choice between maxing a 401k or not saving at all. Save a couple percent to start. Nobody misses 2 or 3% of their paycheck. When you get that first raise, bump it up to 5% and still have more take home pay. Even if you start really small, every dollar you save early is ten or twenty dollars you don't have to save later. And who says you have to buy a house before saving for retirement? Do both. Save a bit and pay the mortgage. Once you get the mortgage, save even more and don't pay the mortgage early. The goal is to have as much money as you're finances allow making you money every year. It's not to get debt free as fast as humanly possible then save as much as you can in the few working years you have remaining.
Not a great example. The only thing holding them back is her giant student loans. Without that payment they could afford to buy a house now. Even with the payment they could probably swing it, but job wise a house purchase isn't a great idea for them right now. And that's with saving for retirement. Without the student loan they could be saving, buying a house, and making babies right now.
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