I’m not smart enough to follow all of this. Especially the credit card debt part??
My next door neighbor has been battling heart issues. He is on a Medicare Advantage plan, and oh my gosh … his copays have accumulated to the point where he is getting calls from collections. They live entirely on SS, with no savings. I feel so bad for them. It seems like most of us here are going to be fine in retirement, but there are a lot of people who aren’t. It’s really scary for some folks.
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@kelsmom 's post is one of my concerns about retirement. From a purely selfish point of view, how will such a large population with very little savings affect the economy?
A second concern is what happens to the market, primarily in investment accounts as the baby boomer generation starts withdrawing significant dollars from these accounts for retirement income.
We’ve tried to discuss both of the above with our former financial planner(s) with no particular helpful answers.
I’d love to hear the collective wisdom from CC posters.
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My guess in that is that you end up with a very have/have not society, which is happening now. Those who have little saved, and those who have plenty, with their children reaping the rewards of it.
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If your H is still working, then I agree that it probably does not make sense to convert at this time. It’s a bit of a guessing game about future rates, and completely out of our control.
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The $$ will pour into the economy, and the excess will most likely will be reinvested. Judging by what the posters here are planning to do! 
Markets should love this!
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My MIL’s savings are pouring into the economy where she lives. She’s helping to support a number of healthcare workers. And thank goodness she had savings!
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Which probably negatively impacts her chances for leaving inheritance, but has a net positive effect on the local economy (hospital bills get paid instead of written off etc.). Glad she was prepared!
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If I recall, both of those gents feel they should be paying more taxes anyway.
Getting calls from collections - unfortunately, that is where if one possibly could have been proactive with the medical provider and stay with ‘in house collections’ instead of “being turned over to collections” – with a tiny payment plan. But medical providers are required to ‘attempt’ to collect copayments. Perhaps there are some local resources/programs to assist them. There also is are some senior type of advising programs – maybe he/they are on the wrong Medicare Advantage program. Maybe they qualify for some debt forgiveness due to being with low household income.
Our country, IMHO, will never have the income spread that some countries have (not much middle class, huge numbers in low income, and some very wealthy people that politically are in bed with dictatorship or non-democratic politics). However, there are areas and even some smaller states that challenge how well QOL is for even some middle-income folks and those that have properly saved and invested for retirement. The tax dynamic and COL may have just driven some people out.
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Actually, it’s still the in-house collection folks. They have been able to get some debt written off, and they will continue to try to work with the various hospitals. Right now, they are feeling overwhelmed from his health issues as well as hers, so they’re behind the eight ball. I talked with the wife a bit about options when she shared this past weekend - she was having a garage sale, hoping to make enough money to pay off some of the smaller bills.
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Her insurance is great, fortunately. She’s in assisted living with additional caregivers now, though, which is really expensive. As much as she wants to leave an inheritance, we want her to have the care she needs. And yes, we’re so glad that she has the resources.
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We’ve “properly saved and invested” for the past forty years (plus putting H through grad school and two kids though college) and I still have no freaking clue if it will be enough. On paper, the numbers look great, but given medical expenses and Medicare cutting back on their formularies, esp for things like my expensive daily oral chemo that I must take the rest of my life, it’s impossible to predict how those things will play out, and it’s not something I can control. The only option I see to mitigate some of that risk is to pay for both Medicare and H’s current medical coverage which we can carry into retirement. Even that doesn’t solve for AL/skilled nursing care. I got LTC coverage at age 41, the first year it was offered through H’s employer, and a few months after my cancer dx. Got the max amount I could get in that initial open enrollment without having to answer health questions.
Of my three surviving siblings, only one has a pension. Their futures scare the heck out of me. One sib had twenty-seven years of service (max credit in her pension plan) and she gets $800/mo. The other two began contributing to 401ks in the past four years. That’s all the savings they have. They are in their late 50s. There has simply never been enough income for them to put aside. They aren’t spendy people and it’s not a moral failure; it’s just bloody hard to save when you don’t get paid a lot, despite relevant degrees and experience (one is an accountant, one is a CAD mechanical engineering drafter), because the local job market can’t offer a true living wage.
If it weren’t for the pensions my dad and FIL earned through the military and IBEW, respectively, they would have been in a world of hurt. Neither had any other savings outside of the pension and SS. There’s a societal cost to not having an adequate safety net for people who have worked their entire lives. Social Security is not enough of a safety net; Corporate America shed their obligations by dumping pensions for 401k plans where employees bear all the risk, in terms of being able to save and then having to manage those investments. I was a 401k administrator for many years and the stories I could tell will curl your hair.
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It’s basically ranking different ways to use your money based on risk-adjusted return. Credit cards often have a high interest rate of >20%. You are unlikely to be able to get a high >20%/year return through traditional investments, so paying down high interest credit card debt should be a high priority. It’s a similar idea for free money from an employer 401k match. If you don’t have high interest debt, free money from employer, or other options for a very high return with near zero risk; then choose the next best option that is available.
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This is such a good and important post.
Especially this part. I don’t think enough people (here on CC and otherwise) understand this:
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Thank you so much for pointing this out, @CountingDown and @abasket. Aside from the $2000/year I put into my IRA long ago until my daughter was 4 or 5, I have never made enough money to cover more than rent and very modest living expenses. I was never eligible for a pension or 401K/403B. If it weren’t for a not-huge inheritance from my dad and the aforementioned IRA, I would not be able to meet my living expenses now in my old age.
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I know several people who have not been able to put much aside and it has not been because of excess spending. Many people just don’t make enough money and it’s even harder when there is no partner/spouse to share expenses. Death/Divorce/Disability/Downsizing and other misfortunes can/does derail savings.
Agree 100% with @CountingDown that there is a huge lack of a safety net in this country.
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I grew up where if my mom said there was $20 left in the checking account, that was truly all the money they had. And in a family with five kids, that was scary. We qualified for free lunch, though Mom never told us. At that point I was in HS, but she only applied for the my younger sibs who were still in elem school.
H’s dad was often underemployed because the commercial real estate construction market in 1970s and 80s NYC fluctuated wildly. H was the one who dealt with bill collectors, as his parents weren’t able to manage finances. Pretty scarring experience for a 12 yo, trying to keep his family from being evicted. For him, getting an education was the ticket out.
Neither of my BILs have college degrees. My middle sister (the accountant) is the primary breadwinner and makes what most here would consider a poor recent-graduate wage. Life for working class families is hard. H is still a govt employee because the benefits and pension offer security and protection against the financial risks of my health (and it still costs a lot).
To this day, DH and I still live like the next paycheck is the last, and because we know that at some point we may need to help family members.
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Honestly the lack of a safety net has IMHO always been there. One can state better chances at some other Countries, but many of those that get cited for these kinds of things has the population of maybe one state of the US, if that. Social Security was developed, and then retirement saving with 401k, IRA, Money Market accounts; later more evolution with Roth accounts.
Some people do move to either have better career earnings or lower COL so their money goes further during working years and retirement years.
DH and I are thankful for the nest egg we have, and we are guiding DDs/family with their working/saving/investing. DD1/SIL are 30 and 34 and have 4 children but are not homeowners – they are in a city where they are on their dual career tracks and may become homeowners over time, but in the interim have an affordable almost newly built home that has an excellent layout for their needs. Their children (age 1 - 6) are well taken care of and have excellent school and daycare. Most likely DD1/SIL will both be completing graduate degrees - which will be a time challenge for them (but they are relatively young…). Don’t know what the future will bring in the next few years. DH and I plan to stay in our location another 8 - 10 years unless something else has us move (like getting to DD1/SIL/Gkids’ location).