Save for retirement? Why bother....

[TheHaitian]

Because based on this article:
- you will never be able to save enough
- it will take too long to save that much
- you would have sacrificed to much to make it worth it.

Also can someone talk to this writer about the "power of compounding" because they seem to still live in the dark ages were you stick your money into a mattress or plain savings accounts.

If you were running out of excuses as to why you were not saving, this article will help

www.theguardian.com/money/us-money-blog/2014/feb/03/retirement-saving-study-fantasy-salary-millions

[thyme4change]

I've always assumed I would live to be very old.  Now, I'm starting to think that my body might give up on me earlier than it did on my clean-living grandmothers.  I'm debating if I should adjust my savings and play more now.

But you are right.  That article was stupid.  

[midjd]

At their most self-indulgent, the theological scholars of the Renaissance were mocked for abandoning the debate over moral decisions to bicker about how many angels could dance on the head of a pin. The scholars of personal finance seem on track for a similar level of disconnection from reality.

Take this new study, in the Financial Analysts Journal, that says "retirement is not hopeless."

If you save more than 20% of your salary for retirement, you're giving up enjoying your present life: you're dedicating yourself to living in holy denial of all worldly pleasures like a monk or a nun, in the hopes of a lavish, or at least an exceedingly comfortable, life when you're over 60-years-old. Twenty percent for retirement is, by the way, an aggressive goal. Most people save much less.

I'm a monk! Who knew? 

This is why the cult of "saving for retirement" needs to be held in check, lest it brainwash anyone and pile guilt on hardworking families for having some mild enjoyment of life rather than living only for the future.

Uhhh.... 

If only we could impose the same kind of discipline on corporate executives as we do on the middle class, perhaps we'd have a real answer to the retirement problem.

Ah, nice closing. Did someone in publishing actually pay money for this article?

[Deleted]

I hate these articles.  Reminds me of the banter from my friend at work that it's just pointless to even try. 

[Deleted]

Dec 22, 2014 10:14:43 GMT -5 midjd said:

If you save more than 20% of your salary for retirement, you're giving up enjoying your present life: you're dedicating yourself to living in holy denial of all worldly pleasures like a monk or a nun, in the hopes of a lavish, or at least an exceedingly comfortable, life when you're over 60-years-old. Twenty percent for retirement is, by the way, an aggressive goal. Most people save much less.

I'm a monk! Who knew? 

Yeah, apparently I am too.

Yet, I live in a big house in the country with horses and other critters, travel at least every couple years and am managing to save some for the kids college too.  Start early and keep at it and you'll be fine.  I've never made much.  I think I peaked at 40K back in 2005 before kid #2 but I'm now at the point where my investment growth often exceeds my income.  2013 I made 33K and my investments went up 52K. 

[Tiny]

That's $20,000 a year you're now foregoing, not putting it into school fees, into trips, into anything you might need at the moment. It's locked away with a retirement chastity belt - in a bank account, by the way, not in stocks.

I stopped reading when I got to the above two sentences. Mostly because, well, I've lost the belief that I'm gonna save for retirement with Savings Accounts and CDs (even the one's held in IRAs). I've been exposed to the wonders of investing. Basically, I've become more knowledgeable about 'retirement' and how to get there... and savings accounts and CD while useful for short term or 'liquid' funds is NOT the way to save for the long term.

I got the feeling that this article was for people who enjoy watching 'unscripted' reality TV -- cause you know -it's "unscripted" and the 'real thing'.

[Tiny]

Dec 22, 2014 10:14:43 GMT -5 midjd said:

If you save more than 20% of your salary for retirement, you're giving up enjoying your present life: you're dedicating yourself to living in holy denial of all worldly pleasures like a monk or a nun, in the hopes of a lavish, or at least an exceedingly comfortable, life when you're over 60-years-old. Twenty percent for retirement is, by the way, an aggressive goal. Most people save much less.

I'm a monk! Who knew? 

I'm downright impoverished.    

[Lizard Queen]

This blog wasn't very well written.  I think they're trying to compare the guarantees that used to be provided by the middle class to the riskier investments that are needed to get return in a 401k or IRA. They did a really bad job of stating their point, if that's what it was.  

[Bonny]

I think a lot of these articles are written by free lance writers with poor money management skills who dig up "facts" that support the "I can't save for retirement and it's not my fault. The system is against me."

[gooddecisions]

I invest 20% to my 401(k), I'm not going to lie- sometimes I'd rather spend foolishly. But, sigh, I'm responsible, so I'll stay the course. Now, to get the door, because my new bathtub just arrived. Merry Christmas to me.

[TheHaitian]

Dec 22, 2014 11:03:16 GMT -5 @tbird said:

SPOILER: Click to show

insert quote here

According to my Phil Script, a yearly investment of $20,000.00 bearing an annual return of 11% could grow to $4,418,263.49 in 30 years!

what are they smoking? they say putting aside 20k/yr will take 110 years to save up 2.2 million?

they aren't even giving you .5% for a savings return!

Like I said: someone need to retrieve them from the cave they are living under and introduce them to the world of "investing"

[Ombud]

Yet another monk here!!

[Tiny]

Dec 22, 2014 11:03:16 GMT -5 @tbird said:

SPOILER: Click to show

insert quote here

According to my Phil Script, a yearly investment of $20,000.00 bearing an annual return of 11% could grow to $4,418,263.49 in 30 years!

what are they smoking? they say putting aside 20k/yr will take 110 years to save up 2.2 million?

they aren't even giving you .5% for a savings return!

it's because they are putting their money in a savings account....   The article specifically says they are ARE NOT investing their savings. 

FWIW:  I think alot of people get stuck on that first introduction to 'saving' - a savings account or interest bearing checking account.   They are told/shown as kids how to 'save' using those accounts and they never move on to other vehicles.   This would be why I have a friend who is saving for retirement with CDs or a more 'risky' in her eyes money market account inside an IRA.  She doesn't want to "lose money" by investing in any of the other funds offered within the IRA.  Oh, and the IRA was opened at a Bank... ::sigh::     There's also the save it and never make another decision or change anything kind of thinking. That may just  be base/default  'Human Nature' versus personality or intelligience or whatever... not sure why people get stuck in that "It was good enough 30 years ago - I can't do it any other way" kinda thinking.

[phil5185]

But this plan doesn't trust the stock market. Ideally, your $2.2m would all be invested in "riskless assets" (no such thing, by the way; every investment carries some risk, even if low). In this case, the riskless asset that you should favor is a kind of Treasury bond that protect you against inflation.

There was an opinion in our Paper this morning - paraphrased -
'This country is becoming unrecognizable compared to earlier generations who were willing to take risk for social & economic development. Now, the vast majority want no risk - air bags to avoid getting hurt, no teeter totters/merry-go-rounds for the kids, no un-PC talk cuz someone might get offended, etc. And a cancelled movie cuz we're afraid a twit in the Far East. Ie, a nation of wimps.'

Yeah, in today's world where $100k dual income is common, $2.2M in 30 yrs is pretty straight forward (Invest $10k/yr @ 11%/yr for 30 yr). Plus you get a $3000/yr tax break for doing it, that gets you another $600k. 
(We were making a bit over $30,000 when 401k's were started in 1982  - and it worked OK for us).

[Tiny]

Saving for retirement is a smart idea, and a necessary one, but stacking up bills in a bank account and eating ramen every night won't get you there; it is both utterly joyless and totally ineffective.

::facepalm:: Yeah, ok, skrimping for your ENTIRE life is stupid and unreasonable and no one's going to do it... but, here's that nifty chart where someone saves 5K a year...

www.businessinsider.com/compound-interest-retirement-funds-2014-3

Yeah, 5K is astronomical for someone starting out. My take away from the 'chart' is that "If I can suck it up and sock away money EARLY in my career - I'll have more money later in life without having to suffer so much when I'm older/mid career." So, if I can start out getting even 2K invested every year while I'm in my 20's - I might not have to save as much of my disposable income (20%!)  OR I won't have to really belt tighten when I'm in my 30's and 40's and 50's -  which means I'll have more disposable income to spend on stuff I want to do!

[Ryan]

For some people, they probably need someone to tell them that it's ok to enjoy a little money for today instead of socking it away for retirement.  I will say that my dad spent years worrying about retirement to the point where he probably didn't enjoy spending "today" money without worrying about the future.  

That ended up serving him pretty well overall, but I always thought that if he made the decision to go to Disneyworld (for example), he should just put the money thing out of his head for awhile and enjoy himself.  He ended up taking a big income hit in his late 40's and was saved by the fact that he was so frugal in his 20's, 30's, 40's.  So basically I'm taking the same path...I am really trying to save as much as possible now, while enjoying the money I do spend.

[Deleted]

I always wonder with these is there actually someone reading it today that is on the fringe mentally due to who know what, and they actually stop saving anything due to a ridiculous article like that? That it would actually provide justification, "oh yeah, I read that in one of those fancy money articles"

[The Captain]

Dec 22, 2014 10:51:03 GMT -5 gooddecisions said:

I invest 20% to my 401(k), I'm not going to lie- sometimes I'd rather spend foolishly. But, sigh, I'm responsible, so I'll stay the course. Now, to get the door, because my new bathtub just arrived. Merry Christmas to me.

I'm.so.jealous...

[Deleted]

A lot of times I feel like I fell for the YM hype and saving money period is overrated and it sucks. But when something happens and I'm not up the creek, I'm always happy I fell for the hype. I'm pretty sure that when the time comes to spend my retirement money, I'll be more than happy that I have it to spend.

Saving money still sucks though imo. I just keep it on automatic and try not to think about it.

[tskeeter]

If you save more than 20% of your salary for retirement, you're giving up enjoying your present life: you're dedicating yourself to living in holy denial of all worldly pleasures like a monk or a nun, in the hopes of a lavish, or at least an exceedingly comfortable, life when you're over 60-years-old. Twenty percent for retirement is, by the way, an aggressive goal. Most people save much less.





Damn, I screwed it all up!


Saved 20% or more


Bought new cars since I got out of college

Bought a string of what could be called mini McMansions.  Certainly more house than we needed

Flew across the country for every major holiday for over 30 years

Went on family ski vacations more years than not

Made three two week trips to Ireland

Made a half dozen or so sailing trips to the BVI

Made two two week trips to France

Frivolously spent thousands and thousands of dollars on woodworking equipment

Trying to figure out why I'd bother working until I'm 62


Gee, I didn't realize that monks had it so good

[midjd]

For some people, they probably need someone to tell them that it's ok to enjoy a little money for today instead of socking it away for retirement.

I think that's true of many YMers, but as far as the general population goes I think the opposite message would be more useful. I hear a lot more "I work hard, I deserve ____" than I do "I wish I could get ____ but I know I'll need that money later."

[Wisconsin Beth]

Dec 22, 2014 12:18:36 GMT -5 The Captain said:

Dec 22, 2014 10:51:03 GMT -5 gooddecisions said:

I invest 20% to my 401(k), I'm not going to lie- sometimes I'd rather spend foolishly. But, sigh, I'm responsible, so I'll stay the course. Now, to get the door, because my new bathtub just arrived. Merry Christmas to me.

I'm.so.jealous...

It's ok Captain 

Someday your bathtub will come! 

[The Captain]

Dec 22, 2014 13:33:46 GMT -5 Wisconsin Beth said:

Dec 22, 2014 12:18:36 GMT -5 The Captain said:

I'm.so.jealous...

It's ok Captain 

Someday your bathtub will come! 

Sure...

After the kitchen remodel, and
After we get new windows in 3 of the remaining 4 rentals...
After DH puts on the deck he can't live without



The kitchen is really barely functional for two cooks.  The windows - well it is what it is.

I may be able to move the bathtub in front of the deck project.

What really sucks is DD brought home some mutant respiratory virus and I really want a long.hot.soak now, cause yannow, she had to share with me.

[Plain Old Petunia]

Yep, that was a pretty dumb article, all right.

[shanendoah]

I think they are purposely misunderstanding the 50/30/20 budget.
Retirement savings come out BEFORE your take home money. Now, I'm only saving 15% right now, but I'm also only paying 7.5% to save that total, and that money comes out before my take home pay. And looking at the numbers, the 15% of pre-tax dollars that I'm saving are greater than 20% of my take home pay.

Take home budget of 50/30/20, that 20% savings is absolutely NOT meant to be your retirement savings, or at least not only or all of your retirement savings. It's your emergency fund, your car fund, your vacation fund, etc. It's the money you set aside specifically so you CAN have fun today as well as in retirement.

[Peace Of Mind]

Dec 22, 2014 10:42:43 GMT -5 Bonny said:

I think a lot of these articles are written by free lance writers with poor money management skills who dig up "facts" that support the "I can't save for retirement and it's not my fault. The system is against me."

That's what I was going to post but with words like:  Losers, morons... instead of "free lance writers".  

[cronewitch]

You can start slow like I did and build over time. Thirty years ago I got divorced and had nothing, I saved 2K a year in my first IRA for the next 7-8 years. I was penny pinching buying a house, paying down a mortgage, getting more education, buying bigger house. Twenty years ago I saved a little more some years maybe 6-8K total the final 10 years was aggressive saving someitmes more than 50%. This year all my pay went to savings and taxes but I was living on inheritance and investments. My investments are up 70K this year and were up 150K last year if you get to the end of your work life with little mortgage and no other debt you can save huge amounts for retirement.
They didn't count lump sums you might get over a life either like selling a paid off house or refi with cash back or inheritance you can add 100K or more in a single day.

[Bonny]

Dec 22, 2014 12:01:01 GMT -5 @aj said:

I always wonder with these is there actually someone reading it today that is on the fringe mentally due to who know what, and they actually stop saving anything due to a ridiculous article like that? That it would actually provide justification, "oh yeah, I read that in one of those fancy money articles"

I think the folks who believe this kind of stuff are the folks who have never been saving and can point to this article as justification to keep doing nothing.

[Deleted]

Dec 22, 2014 16:23:59 GMT -5 Bonny said:

Dec 22, 2014 12:01:01 GMT -5 @aj said:

I always wonder with these is there actually someone reading it today that is on the fringe mentally due to who know what, and they actually stop saving anything due to a ridiculous article like that? That it would actually provide justification, "oh yeah, I read that in one of those fancy money articles"

I think the folks who believe this kind of stuff are the folks who have never been saving and can point to this article as justification to keep doing nothing.

Yeah, there's a few cheerleaders in the comments section below the article.

[dannylion]

Articles like this just reinforce my suspicion that the planet is knee-deep in morons.  It was such a web of ignorance that it would be futile to try to explain what was wrong with it. It would be like punching soapsuds.

Interestingly, I encountered someone today who would likely find nothing at all wrong with this article. Monday is my volunteer day in the ER, and I happened to overhear a conversation among some of the EMT guys while I was restocking supplies in the EMT ready room.  One of them appeared to be a true YM acolyte.  He was encouraging his buddies to contribute to their 401k program.  One of the other guys was asking intelligent questions, but the third guy was clearly not YM material.  He wanted to know "How do you keep from spending the money?"  He had difficulty understanding the concept of investing for the long term.  I missed part of the conversation when I had to take some blankets to a patient, and when I got back, they were getting ready to leave.  All I caught was Not-YM-EMT saying something like "Yeah, I had some money in the retirement account, but then Brandi wanted to go on a cruise, so I had to take it out." (I don't know that it is Brandi with an I, but that's how I see it in my head.)  YM-EMT asked him "Didn't you have to pay taxes and penalties?" and the last thing I heard before the door whooshed shut behind them was Not-YM-EMT saying, "Yeah, but I didn't have any choice." 

I think this article was written for people like Not-YM-EMT, probably to make them feel better about making stupid choices.  It's not their fault, they don't have any choice.  They have to spend the money because Brandi wants to go on a cruise.