Very helpful ,@mcat2. I am meeting with my financial advisor tomorrow and have to figure out what to do with tax deferred savings after the DB max-out.
I am in a process of psyching myself up for being a poor beach bum. It is scary to think that our income will be so much lower with the SS check! Unless I am kicked out, I am working for about 2 more years. If we were not moving, I would never ever quit my job on my own, it is way too entertaining and provides a decent income. But we are planning to be in a warmer place for good part of the year, and probably also move our primary home to be closer to our D. and she does not know where she will be for about 2-3 years. We do not need to leave anything for kids, they are going to be significantly (several folds) richer than we are.
It doesnât hurt for offspring to be in metro areas where there are a lot of singles their age and with similar qualities.
DD who is graduating nursing school in April - I hope she goes on to nurse practitioner. She is still dreaming about med school. So we shall see. She is in a great metro area.
DD2 is on the âsuccess trackâ - just has a lot of college work going yet - 3 more years which includes MBA after summer 2019. Hope the internship in her field (civil eng) goes well.
One thing is that our culture with technology seems to move so fast. So many things early in the process can have long term consequences.
The retirement money - having a growing nest egg early has always been a good standard. However our dynamic world is constantly changing the game plan to keeping employed, the cost of insurance, etc.
Once we stop spending money on the kids, we can really see what we can comfortably live on in retirement. Still some years away.
My son signed up for his companyâs 401K plan, but there is no match and when he looked at the investment options - they were all expensive mutual funds (management fees of 1%+) he decided to stop participating. He is going to max out his IRA and Roth IRA and invest in low fee index funds. I couldnât argue against that decision. His tax bracket isnât that high and probably would loose more to fees than he would save in taxes over the years, but its more the principle of the thing.
A Roth IRA when youâre in low tax brackets can be wonderful. Shame on companies that have expensive 401k funds; they should have their employeesâ best interests at heart. I think itâs often someone in HR benefits who picks the plan and knows nothing about funds; they are easy pickings for salesmen. When I become dictator, things will be different 
Hey - many companies have a decent plan (and I was the HR person that was the point person for enrolling, explaining, etc). With no match, easy to decide to put money in IRA, Roth IRA, etc.
It turns out my employer was âtop heavyâ and all employees not in the high end got an extra 5% of salary put in (so 8% of employer money total if doing 3% employee with 3% employer matching). That was a sweet deal. Hâs company match 50% up to 6% (so essentially 3% of income). We both put max in. When Roth came around, we missed the opportunity to do that for a few years when we could afford to do so - we should have shifted some of the money to Roth from 401k. However with young children, one had to let go of some things.
In our early years, H had a employer with a pension, but now we are trying to find out if his âpartial vestingâ is worth anything - the HR consulting doesnât understand and they didnât dig deep enough; the company dropped the vesting period a few years later and he indeed had the years in, but will have to chase down what the âpartial vestingâ meant. So our early years was put into purchasing a home, purchased 3X in 3 different cities with job relocation. Final home built 22 years ago. The 90âs was where we both had 401k participation. When I hired in to my job (which included the HR hat) in 1991, I was to put into place the 401k, which I did with the selected financial firm (Principal) almost immediately.
There are good ways to save $$ now - people have to have the discipline, and become informed/educated. Plus one needs to keep the bottom feeders away from oneâs nest egg.
Read from the Internet:
About 59% of people have the retirement savings. The following is about the financial situation of this group of people: (not sure if this group refers to those near the retirement or not.)
The 59% who have saved:
The financial situation of this group was a much wider range, with 7% having less than $10,000 and 9% having more than a half-million dollars. Of this group:
The median net worth per household is $337,000.
87% are homeowners, but only 27% own their home outright.
45% have a defined benefit plan.
For those who are competitive, the authors also took into account all of the households with some retirement savings, and broke them down into percentiles.
As a refresher, being in the 10th percentile means you have a nest egg bigger than 10% of all those with some saved up; the 90th percentile means you have more than 90% of those with some savings.
Hereâs how it all shook out.
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Those in the 10th percentile had $8,909 saved.
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Those in the 25th percentile had $26,420.
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The 50th had $106,113.
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The 75th had $305,300.
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And the 90th had $730,405.
Hopefully, the majority of the CCers on this thread belong to the 90th percentile category. (I do not belong to this category!)
Somehow I think the CCers are above average, especially those who are on this thread.
The 90th percentile saving will not last long. And that is the truth that we are all facing.
I do know most people undersave, but having 100k at 30 puts you in a different scenario than 100k at 65. This doesnât appear to factor in age.
@eyemamom, thatâs the problem with incomplete stats. DS will appear in the report as someone with only $10k in savings. The fact that heâs 20 years old is lost.
Statistics like these always comfound me. Iâve seen data from different sources such as Fidelity. How does any of this data take into account individuals that have multiple 401k plans from different employers, are married and have taxable accounts. I doubt it does so Iâm not comfortable believing any of the numbers.
@DocT, not to mention that most of the sources have a vested interest in encouraging more savings on the part of their readers, to boost their AUM. It is probably the case that most people are under-saving, if the goal is a retirement that doesnât include a reduced standard of living, but itâs unclear whether 1) most people expect that and 2) most people can do much about it even if they want it.
Another group is saving appropriately, by which I mean that there will not be a dramatic change in their standard of living when they stop working.
A third group, one that my wife and I fall into, over-saves. My wife enjoys working, and while we donât begrudge ourselves anything, we also donât spend just to spend. Most likely, this will leave us with a good bit to leave our heirs and charity.
I think @mcat2 info may not be âcompleteâ but I have heard similar things about people over a certain age, some having none saved. It seems odd to some on this thread, but if you listen to some of the stories on Dave Ramsey or Chris Brown you will have some idea of how people are managing their income and expenses. For example, there was a couple that had a small business but had their home debt and nothing saved for retirement in their late 50âs, and some credit debt too - the H took a 2nd job as a UPS driver and they dug out of their hole.
When one has a higher income or monies coming in, one doesnât need to spend most of it - so saying you âover-saveâ; I would just say you are comfortable spending some of the fruits and realize you are very blessed to be able to invest for the future, and also provide for heirs and charity.
There is a lot of paradigm shifts going on in life. Some adapt and some do not. We all know people that donât plan anything and then rely on others when they are in trouble with no safety net.
One does need to spend enough time on income, expenses, savings, investments, proper insurance, etc - however it doesnât need to consume oneâs life either.
I have four siblings. One has a retirement account. Her DH also has one. None of my other sibs do (and they are 53, 51 and 47). Scary, scary stuff. I administered 401(k) and pension plans for many years and know how bad it is out there. Not enough people take the long view, and some folks simply donât have the funds.
2015 Wells Fargo Retirement Study:
The Chart 1 seems to be interesting:
(1st number is for 55-59 yo.
2nd number is for 60+ yo.)
Average age started savings (Mean)
31 37
Expected retirement age (Mean)
65 71
Amounts saved for retirement (Median)
$150,000 $50,000
Amount needed for retirement (Median)
$500,000 $300,000
Savings toward retirement goal
30% 16.7%
Household investable assets (Median*)
$82,900 $40,200
Annual household income (Median)
$100,000 $70,000
For the age group 55-59, the median of what they think is âenoughâ for retirement is $500,000, even though their annual household income now is $100,000.
This March 3, 2016 article from Economic Policy Institute covers more grounds (You may want to skip the usual ârantâ about 401K, IRA as a replacement of pensions at the beginning of this article. The latter part of the article includes a wealth of data, in the form of 32 charts.)
http://www.epi.org/publication/retirement-in-america/
I did not include the link in post #8266, likely because I read it from a blog and I was not supposed to post it. However, it is likely that the info in post #8266 is from the article referred to in link above. (I could be incorrect here though, since this article is so new.)
âA third group, one that my wife and I fall into, over-saves. My wife enjoys working, and while we donât begrudge ourselves anything, we also donât spend just to spend. Most likely, this will leave us with a good bit to leave our heirs and charity.â
Plus, it will hopefully cover you in most of the outlier negative scenarios. Hope for the best but plan for the worst.
I have no real knowledge of my sibs finances but suspect they will all be fine. Unless they come to you with their finances or disclose, hard to really know anotherâs situations.
@mcat I believe the difference between employee and total contribution is the employeeâs portion vs. total is employee+employer. Lets use an example. An employee that makes 200,000 contributes the max (over 50) which is 18k + 6k or 24k - the employer matches 15% or 30k. 24k + 30k is 54k which is over the total contribution of 53k.
My son started working 6 months ago and I showed him a spreadsheet of what his 401k would look like in 20+ years. The spreadsheet showed by year how much his total contribution (employee+employer match) would be and a running total. Then I showed him how it would look if he earns even a modest interest rate. His eyes got so big he couldnât believe it and he signed up immediately. He even asked for a copy of the EXCEL spreadsheet. It worked!
In my opinion having a 401k is the best investment especially if you have the option of getting an employer to match your contribution. Its free money and the best return!