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Post by Elusions of Grandeur on Mar 4, 2011 17:40:38 GMT -5
So, my post on another board got me wondering - what do people do to remedy differences in retirement savings?
To preface, I am closing in on 30 and I put away 12% of my salary. (I am taking advantage of the full match, so I really only put away 6%.) I have been saving for retirement only since I was 25, and slowly increasing 1% every year. In contrast my DF's company doesn't have any sort of retirement plan, he's in his mid-30's and hasn't put away a dime. He also makes almost 2x as much as I do.
I worry about how in the world we could potentially retire on what I have saved alone and would like to get him on board with retirement - but there are always more immediate concerns to deal with (there really are! It's not just an excuse).
So, I'm sure there's someone else out there who is putting away for retirement while their SO is not putting away anything or not putting away nearly as much. How does one deal with the discrepancy? What plans, if any, are in place to remedy the situation?
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Sum Dum Gai
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Post by Sum Dum Gai on Mar 4, 2011 17:48:19 GMT -5
Well, my situation is a little different since my wife is a stay at home parent, but I tell her I'll be here to drive her to work at Wal-Mart when she's old so she doesn't have to worry about her lack of retirement planning. She counters with this crazy theory that half of my money is really hers, so therefor half of the retirement money is hers too. Don't ask me, I have no idea where she gets this wacky stuff.
I occasionally tease here about how I'll be living it up in retirement while she's eating cat food and trying to make it on SS alone, but it's really not funny. I don't know if you've seen the price of decent cat food lately, but her SS check might not buy a whole lot in 30+ years.
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stats45
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Post by stats45 on Mar 4, 2011 17:53:32 GMT -5
Does he have any reason for putting nothing away? Debt payment, child support, etc.
Higher earners do get higher Social Security payments, so if DF means married, that can be an advantage. I can't follow the lingo sometimes...
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Sum Dum Gai
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Post by Sum Dum Gai on Mar 4, 2011 18:04:55 GMT -5
High earners get larger SS checks, but not by much. The SS formula is designed to replace a larger percentage of wages for low wage workers. The thinking was that higher income earners would have other sources of retirement funding, namely that they'd save for it on their own and have larger pensions. If neither of those are true, retirement will be no picnic on just SS.
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stats45
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Post by stats45 on Mar 4, 2011 18:14:25 GMT -5
I agree Dark. I was looking pretty hard for anything optimistic and that was all I could think of.
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Deleted
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Post by Deleted on Mar 4, 2011 18:44:06 GMT -5
Well, yes, this is where the rubber meets the road if a saver marries a spender. I'm hoping DarkHonor is only being facetious, but you really do throw your lot in with the other person at retirement. You should be working to pay the house off-that's a major expense you won't have to fund out of savings and investments. But if you're in your 70s and DH needs dental implants or expensive hearing aids and has run through whatever he saved, what then? If you need a new furnace or his car transmission dies, who pays? And if he's now your fiance I know you don't want to hear it, but money you accumulate during the marriage by not squandering it on all the frivolous things you'd like to have could be declared 50% his in a divorce.
I'm actually married to a 72-year old who had very little savings when we married 8 years ago, but he's so low-maintenance it doesn't matter. He supports me in a lot of other ways. In his case, he'd always made less than I did, and spent years trying to save his daughter, who had severe asthma (she came through it, but there were years when the medical expenses were more than his salary), supporting his mother in her last years, and propping up a financially inept girlfriend before me. In your case, I'd really try to get him on a plan for accumulating retirement savings on his own- maybe by showing how much better off you could be years from now if you saved from both salaries. Good luck.
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Sum Dum Gai
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Post by Sum Dum Gai on Mar 4, 2011 18:53:17 GMT -5
I was being facetious*, but there's some truth in it too. If you stay with a guy who doesn't save, your money needs to cover both of you, or you'll be able to retire and he'll have to work until he dies. That's the way it is. It's pretty simple math really, and no amount of hoping things work out differently will change the numbers. SS doesn't pay enough for most people to live all that well on. If you have a paid off house in a low cost area, you can do it, but if you don't you're going to be hurting. Either way, you'll only be covering the basics for the most part.
If this relationship is something you're in for the long haul you need to get him saving for retirement pronto, or start reworking your plans to cover both of you from your savings later in life.
* Not that I don't tease my wife about the cat food thing or working at WalMart when she's old. Of course she says I'm her trained puppet who marches off to work everyday and brings her home a paycheck to spend. We each have our things that we rib the other about.
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phil5185
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Post by phil5185 on Mar 4, 2011 18:57:53 GMT -5
It sounds like the two of you are making over $80,000 gross, that is actually a pretty good family income, well above the US average. Your 12% 401k must be about $3600/yr, if you invest it in the 10% to 12% choices, it will be about $1,000,000 when you are age 60, closer to $1,700,000 at 65. If DF gets on board financially, fund a $5000 Roth for him each yr, if he is 35 now, that will be about $1,100,000 when he is 65. Starting young and sticking with the plan is what gets it done, you can't waiver and say 'oh lets skip a year and redo the bathroom, buy a new car, yada. Have the $8600/yr automatically invested so that you never see it in the paycheck - and you'll have the $2,700,000. The good part of this plan is that you can enjoy spending everything else without guilt and w/o money arguments. (At least that's how it works in our 42 yr marriage). BTW, did you say that DF spends $200/m on storage units? That is $2400/yr - is the stuff in storage even worth $2400? If not, spend $25 to haul it to the Landfill and be done with it.
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souldoubt
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Post by souldoubt on Mar 4, 2011 19:02:01 GMT -5
Saying there are more immediate concerns kind of sounds like a cop out. Not trying to sound like an ass and there are really are things that can keep you from saving for a while but if he's in his mid 30's and has nothing saved up then odds are it's not because of some 10-15 year long string of excuses. You're a saver and he isn't and even if he owns a house he should still be trying to save for retirement. The sooner he starts the better otherwise as Dark pointed out it's all on what you save. I'm approaching 30 too and your DF isn't that much older so I wouldn't be counting on a whole lot from SS. If you can't get him on board then there are people on here who will say to really think about making him DH. I'm not going to say that but finances are one of the biggest things couples argue about so if things don't change now it's only going to get worse.
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blackcard
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Post by blackcard on Mar 4, 2011 19:17:38 GMT -5
<<You're a saver and he isn't>>
That says it all.
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schildi
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Post by schildi on Mar 4, 2011 22:19:03 GMT -5
Your 12% 401k must be about $3600/yr, if you invest it in the 10% to 12% choices, it will be about $1,000,000 when you are age 60, closer to $1,700,000 at 65. It WILL be a million at age 60? How do you know?
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Deleted
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Post by Deleted on Mar 4, 2011 23:13:23 GMT -5
but there are always more immediate concerns to deal with (there really are! It's not just an excuse).
Yeah - actually it probably is an excuse - sorry. Your husband is mid 30s and if he graduated college at 22 would make probably 13 years in the work force. And in all of that time he hasn't saved anything in a Roth or an IRA? Though I realize that there may be times where the unexpected things in life may prohibit retirement savings, the reality is if there is NO savings in that time frame, it is not a priority for him.
Is all the concern for this coming from you? Or does he have concerns as well? If you are both concerned, maybe it is time to re-evaluate your budget, lifestyle, whatever and to make retirement savings a priority. If he is unconcerned - I wish you the best. I don't know how to change that situation.
Good luck to you and your family - I hope you can work things out.
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cronewitch
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Post by cronewitch on Mar 5, 2011 1:41:28 GMT -5
Retirement savings is the recommended method of paying for retirement but not the only way. Look not just at you are saving and he isn't but at if he is building net worth.
One person might save a million and while the other buys assets that are worth a million so even if they didn't save in a 401K or IRA they might be fine.
If he is building equity in a home, buying investment homes, starting a business and not wasting every cent that he gets he might end up even better off than socking away a few thousand in a retirement plan. If he is blowing it all on current wants and getting obligations instead of assets then he won't be alright.
Why not ask him how he plans to live in retirement?
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Bluerobin
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Post by Bluerobin on Mar 5, 2011 10:12:44 GMT -5
If you are 30, don't count on a million being enough to support you by the time you retire. $3-5 million would seem more apt. You have to get your SO on a path to saving. If not, don't plan on retiring together.
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Post by Elusions of Grandeur on Mar 5, 2011 12:59:27 GMT -5
Man, I so didn't mean to make this thread about me. I meant about the situation in general. *sigh* But, being the type of person who has a hard time not responding I'm going to say a few things. Yes, okay, more immediate concerns is not an excuse. And it is. For instance, right now we're focused on the fact that every time it rains our basement floods (well he is, and as long as he's taking care of it I'll leave it be, but it's still happening so we need to get a plumber and the landlord out, which he is now working on). But just because we're dealing with the furnace going out, or the basement flooding doesn't mean he doesn't need to start a retirement savings. They're concerns, and very immediate ones at that, but they're also distractions. Phil, he spends $233 a month on storage units. This has been a point of contention since I agreed to move in with him. He is WORKING on getting rid of them. Not quickly enough in my opinion. But then again, one of the reasons we moved into this house was so that he could empty them into the basement and we were working on that before the flooding. He has had $140 worth of storage units for like 15 years, and the last one which is another $93/month for closing in on 2 years now. I just asked him to sit down and calculate how much that has cost over 15 years and after he did the math he agreed to empty them. Throwing the stuff out is not an option since it's stuff from his grand father and his deceased father (whose death coincides with the timing of getting the storage units). Dark Honor - your wife must be a saint. But yeah, some of that cat food is REALLY expensive. ;-) phil - I hate that you're so spot on, but I did put the info out there and anyone can figure it out. My 12% is just under $4,000 a year. I am holding you personally responsible for ensuring it is at least a million by age 60. ;D Unfortunately we live in a HCOL area, with the highest taxes in the entirety of the U.S. So, that doesn't bode well for us. And whoever said if he graduated at 22 that meant about 13 years in the work force, yes and no. Traditionally, yes. But he was married before and was a stay at home dad, he got a job after the divorce (it took some time though) when he got custody of the kids. His ex wife however quit working right around the divorce so she has never paid alimony or child support. Man, I feel like my whole life is on these boards now. I should just post my full name, credit card numbers, and social security while I'm at it. Oh and I know that 50% of my retirement savings and anything else I don't blow could become his in a divorce, while I trust and love him and also don't expect to get divorced - I am still crafting a basic pre and post nuptial agreement before I talk to a lawyer. He thinks I'm crazy since I make less than him and have far fewer assets. Crazy like fox.
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lynnerself
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Post by lynnerself on Mar 5, 2011 18:26:21 GMT -5
So, general advise. If at all possible get a traditional or Roth IRA started for him. Whichever you qualify for. Use a tax refund, windfall or find one where there is little money needed to start. (People on this board can help with that.) Then get automatic deposits set up. Money needs to go in regularly, without him seeing it. The money needs to be" out of sight out of mind". If he is a spender, have that money never get into his hands. Start very small if necessary. Once the plan is set up, it is easier to increase a little as you go and never notice. Just my opinion.
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Deleted
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Post by Deleted on Mar 5, 2011 18:45:02 GMT -5
I think about this topic sometimes. My ex BF didn't save for retirement. He had a govt pension coming and a nice side business building/repairing computers. I figured that when we finally retired, my retirement savings would make the difference in the quality of our lives. But in the end when he left, it was my $$$ that I had been saving just as it was my house that I had been making payments on. You really can only take care of yourself.
Now I'm married to someone who evidently had a total of about $60,000 in retirement savings, which he cashed out when he retired (big sigh . . . ). He gets $23,000 a year in SS. When his $$$ run out, and they will, I guess I will be paying for the better brand of cat food after I also retire. But again I just keep saving in my name.
The bottom line is that you should help him start retirement savings, but keep saving as much you yourself can independently of him. You aren't married yet.
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Deleted
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Post by Deleted on Mar 5, 2011 19:03:25 GMT -5
I'd love to give my opinion, but i'm off to track down loop and fill her in on this little thing called a spousal IRA...
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teen persuasion
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Post by teen persuasion on Mar 5, 2011 21:55:37 GMT -5
DH wouldn't save for retirement if I didn't talk him into it, and I was a SAHM for 20 years, so all funds are communal with us.
He started at 5% (didn't think he could afford more). I tweaked his withholdings and convinced him to up it to 10%. When we paid off the mortgage, I got him to increase it to 20%, and opened a Roth IRA for me (since I had no retirement savings). When I was offered a PT job w/ no 401k, I got DH to increase his 401k to 40%. This year I'll fund ROTHs for both of us.
The funny thing is that DH always teases me that I'm putting "his" money away for myself (after he's gone). When I ask him what he intends to retire on, if I didn't force him to save, he always tells me he'll figure it out when he gets there.
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