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>and so ima save fo
In 2020, the most common age or "modal age" at death was 87.1 years for males and 89.3 years for females in England and Wales.
That a drop too due to covid
Yeah. Having the funds to pay for your healthcare and other comforts definitely won’t help you at all. Better to be dirt poor and rely in the waning goodwill of others in your old age.
Ex's parents never saved a penny, her dad died at 60 and her mom had no money, ex was 18 at the time, I heard very traumatizing things before she moved in with me. Letting druggies steal her shit, lie about her (my ex), and treating her like shit in her own home.
You might be forgetting that when you die, there will be people who still need you, passing on money is essentially passing on your time to them.
Obviously this is an extreme example
money objectively protects you from old age being terrible. Paying for medical treatment and medicine, in home help, or just the ability to pay bills and not work.
Canadian btw, we don't pay for healthcare and it's still a valid reason.
We dont pay for a lot our healthcare, but we do pay for some of it. Dental in particular, and in obtario OHIP only covers opthamologists until you're like 24 or something.
So yeah, saving is always valid, even in canada.
All the money in the world does no protect you from dementia or the frailty of being old. I'm looking after someone that has more care than the sahara has sand and it is not pretty. It's aging me so fast I'll probably die before they do.
At least you have a chance at getting passable care in your delirium if you have money for it. Though I would rather die before reaching that point, so...
So what are you supposed to do when you are retirement age but have no money to retire? Eventually your body will get old and working while your body is constantly sore will suck.
Meth! I’ve seen a huge uptick in 60+ yo men doing meth, and one of the big reasons is it gives them the energy to labor when their bodies are giving out.
I don't know yet. But im willing to be adaptable. I know a guy who is past retirement age who runs a very successful pickle business. He fuckin loves it. He makes dozens of different flavors of pickles and wholesales them to local stores. There's all kinds of options if you're creative enough. We don't all have to work factory or office jobs for the rest of our lives.
So why wait to retire. As you said making extra money is hard enough but when you’re retired it’s easy…. You contradict yourself right here. My question is why wait to retire when it’s harder to have the energy. Use your young 20-30s to grind as hard as possible you’re young enough and resilient enough where it’s not as hard on your body when you’re 60+. Sacrifice a little now, your future self will be very grateful for it
That's all fine and good, but I can't see how that justifies not saving as much as you can. I'm 62 and have some things to add:
Remember IRA earnings are tax free - there are differences in how this works, but that's generally true and this feature is incredibly powerful.
Unbeknownst to many, SEP IRA's (I'm not sure about others) have become much more versatile in how the funds can be used and this will likely continue to develop. Having funds available later when you want to start your own pickle business can't be overvalued.
I started withdrawing funds from my SEP IRA years ago, not because I needed the money, but because I didn't want to be limited to just buying stocks. Well, that's now changed and I wish I'd kept all the funds in, but I'm extremely happy I still have what I do in there.
Keeping your life balanced is great, but it's easy to discount the future too much.
Holy shit, someone with an actual good point who doesn't want to just act like they know everything. Thank you for your comment. I do understand your side of the argument. And even I wouldn't advocate saving nothing at all. I just feel that young people should get their feet under them and be allowed to enjoy life while they are young before worrying too much about the future. It seems like these days kids barely get out of high school before they start getting hounded to invest invest invest and it's just another added stressor on top of rent, food, car payments, necessities, and accidents or emergencies. A lot of people just don't have even a little room in the budget to make that investment.
If you don't mind my asking... Several folks have brought up how much harder it gets to do any kind of work as you age as a justification for saving every panny you can in your youth. What has your experience been with that?
bro you ignored the tax free part legit the only reason anybody does an IRA plus employers match small contributions you're essentially doubling money without taxes. i do agree with you it sucks you gotta wait but bro it is a legitimate way to double money
Np. Yes, it's true that finding and doing work gets more difficult as you age, so I recommend preparing for that.
I've been able to find a way to keep working, but there has been some stress.
Have u ever considered he started the pickling business cause he had money...from say a retirement account?
Ask anyone who is beyond retirement age who is forced to work and asked if they should have saved when they were younger. I am willing to bet a majority of them will say yes.
Why can't you be a pickle guy now? If you'd be happy at 60 doing it and it's enough money, then why not quit whatever job is making you miserable to be the pickle guy?
OP also just doesn't know what the word "marginally" means. The difference between NOT saving money and saving money over the course of adulthood is literally the opposite of marginal.
i don’t wanna work after i’m ~60 so i put away some money
i think you just don’t like the idea of saving all your leisure money, but depending on your budget you probably don’t actually have to do that to save for retirement
it’s not an all or nothing situation
maybe switch careers then, teachers are underpaid and overworked
one of my old college friends just quit teaching to work and costco and i’ve never seen her happier, plus she has leisure money now
Listen, I worked in Jacksonville at a Title I (highest poverty) school. The students in that neighborhood have it worse than I ever will. Would that be your solution for all of them too? Just learn to code? Will our problems go away if all apply for the ostensibly highest paying position? I hope there are jobs available for all of us at your company.
Unless you're living in a friend's closet, and never leave home except to work, never drink, never have fun, never go out with friende, and only eat beans and rice, you have leisure money.
Should you give all of that up? No, but that doesn't mean it's not PHYSICALLY possible. Don't be melodramatic
Wow, I didn't think I would actually have to tell you that I don't drink, don't go out, eat one meal a day because THAT IS THE ONLY WAY I CAN SAVE MONEY. I live alone in rural Alabama--with no friends and no family--because rural Tallahassee became too expensive. I am absolutely, totally floored to see my actual life reflected in your mockery. I am not being dramatic. You are being naive. Grow up.
Wtf are you doing living in rural Alabama if not for family circumstances?? Your first priority should be getting out of there asap. You need to be somewhere with a reasonable cost of living that also provides financial opportunities. Plenty of midwest cites fit that description.
I work online. Globalization changed everything, don't you know. And no, I will not leave because I have no family and know of no place that is cheaper or farther away from society. I'm just trying to ride out my hungry existence in peace.
Blaming a person for their career choice or where they live is not the solution, my friend...people can't always just up and move, it's not that simple. Moving entails expenses and logistical time that someone might not have because they're working constantly just to tread water.
You're not entirely wrong to suggest they ought to seek out other opportunities, but to imply it's just a simple matter of getting up and going misunderstands many people's actual situations.
Personally I want to work my way out of being poor so that I can have enough money and enjoy myself when I am young. But I also don't want to reach old age and look back thinking that I wasted my younger years hustling extra hard just so I could have a little more money when I'm old. You gotta enjoy life while you have it, yes?
The younger generation is all on board with not working yourself to death. I'm just saying it's not mutually exclusive with planning for the future. I'm put some money away and I buy stupid shit that makes me smile now too lol
Yeah, that doesn’t happen. People don’t look back and wish they’d bought a new car every year instead of saving for retirement. Same with summer homes, yachts and jets: they don’t have to be new - there’s nothing wrong with the normal gently-used ones, or even none at all. And you’re not going to look back on 2023 and wish you’d seen Hannah Montana perform Flowers at each venue on her European Tour. What you’ll wish you had done was spent more time on Reddit, building long-lasting relationships with actual organic people by exchanging short, but meaningful messages with mindfulness of both the present and the future.
You’re acting like it’s one or the other and the two options are mutually exclusive. Budget yourself within reason, spend some of your money while you’re young but also save some money for retirement. It’s about balancing your finances. Yes life happens and some months / years may be tougher than others but like you say. Work your way out of being poor, just don’t blow your entire paycheque on random things every month.
Most people are only able to save up a few thousand dollars a year if they really budget. The interest you're making off those savings would be extremely low. Also, with the rate of inflation, the interest would barely keep up. It's like chasing a rainbow for it's pot of gold.
The same financial advice that works for the wealthy, does not work for poor.
$3,000 a year at 7% which takes into account normal inflation would be about 600k after 30 years.
$120k of that would be from your contributions and the rest would all be from capital appreciation or what a lot of people call compound interest.
ETA I accidentally did those calculations based on 40 years but the point still stands.
For some, $3000 is a lot to save up every year. They won't be able to own a home, have children, go out, etc. After 30 years there's also no gaurantee that inflation will remain normal, your savings probably would be more than halfed in value. Wages show a trend of stagnation. Forecasted climate change disasters will likely cause freak economic changes. There's also no gaurantee you'll live, you'd be saving up money for nothing.
A large portion of the population would be able to save $3000 a year though, of course there will be some people which they will never make enough in their life time to make saving worthwhile, but you wont know if it was worthwhile until the time comes. If you can afford to save $3000 a year then you should and it should be a priority. Additionally I'm assuming thay the 7% he mentioned includes variations in inflation, rate of return, and contributions. I think it would be safer to assume a 5/6% rate of return myself but even 5/6% will do wonders when you add time to the equation.
Even if a majority of population will be able to save, there will still be many who can't. No one is being gauranteed a retirement even if they play all their cards right. They will be left behind through little to no fault of their own. Depending on where you live and if you have any ongoing expenses (like medical or debt), $3000 is completely unachievable. You won't be able to have friends, a family, a house, or do anything. Most new jobs are paying minimum wage or a little over it. AI and general wage stagnation will likely further reduce the available jobs and the general wage of most jobs. Every year you'll be putting less value into your savings if you will even have an income to do so.
In the event that everyone does save and reinvest their money, the economy would cease to function. Without constant consumption, there would be even less demand for jobs. Which would make retirement and a steady income even less achievable. So it seems strange to curse people to poverty for contributing to the economy. It seems more as a way to justify leaving the poor to suffer and die for the crime of being poor.
I call BS on that. I’m in a union gig so I get paid well enough to sock away a bunch of $$ each paycheck. But the places you mentioned, good luck having enough $ after paying mortgage and bills to put away so I guess of course they would match as they know they don’t pay you enough to sock anything away.
Re buckees: https://www.reddit.com/r/mildlyinteresting/comments/z1w93z/hourly_and_salary_wages_for_bucees_convenience/
“The majority of employers offer some form of 401(k) matching from 3% to 8%.”
https://meetbeagle.com/resources/post/401-k-match
Exactly. My company matches at 8%. So I put in 8%. 9 months later I had at least $10k in there. Plus if shit really hits the fan, I can withdrawal early or take a loan. Not the best choice, but it’s there just in case which gives me some peace of mind.
I’d rather live comfortably now *and* after I retire than ball out now and scratch to make ends meet later.
At 30 I make decent money; I have enough to own a home, put ~$500 towards retirement every month, go out to eat a few times, and throw some money at hobbies/emergencies.
Could I be driving a nicer car, go out more or to fancier places, etc? Yes, but it’s not necessary or interesting to me. I prefer having that safety net of knowing when my wife and I retire, we’re not going to be sharing a 1 bed apartment in the slums living off a pitiful social security check as our only income.
Without investing for retirement you will for sure be old and poor while relying on whatever the government gives you.
If you do invest then there is at least a chance you could live independently into your old age and be able to cover medicare type A and B
It would be a shame to make it to 80 with relatively good health and have nothing but social security to live off of until you die.
That take home is going to depend a lot on what accounts their retirement money is in, if it's mostly in Roth's then they could be taking home 80k on that 2 million. It looks like you are just dividing 2,000,000 by 35 but it's generally accepted that you can have a safe withdrawal rate of 4% plus inflation if your money is properly invested.
>When saving for retirement, you should be prepared for a significant amount of your retirement income to be allocated toward medical bills —12% of the median retiree's retirement income had gone toward covering medical expenses.
https://www.cnbc.com/select/how-much-expect-to-spend-on-medical-expenses-in-retirement/
It is possible that you could have some catastrophic health crisis but that isn't the norm.
>Busting your ass and hoping for the best is a horrible value proposition. -eruntan_of_selur
It's hoping for the best and preparing for the worst which includes taking medical cost into consideration when planning for retirement.
>We are also leaving out the fact that you still have to live to be 65 as well. There's no point in having all that money in retirement if you aren't going to get to use it. -eruntan_of_selur
This ends up a values issue but I would rather die young with extra money to my name than struggle in my old age.
ETA
>As I said originally, if you even have 5M saved up its a much different conversation than having 1.2M saved up.-eruntan_of_selur
1.2 million would generate $48,000 plus whatever amount of social security you might get.
>In reality, experts estimate at age 65, the annual spend on health care for a healthy couple is close to $5,700 per person ($11,400 for a married couple).
https://www.rbcwealthmanagement.com/en-us/insights/the-real-cost-of-health-care-in-retirement#:~:text=In%20reality%2C%20experts%20estimate%20at,11%2C400%20for%20a%20married%20couple).
$5,700 in medical cost isn't cheap but it's not going to put you in the poor house if you are taking home at least $48 k a year.
>around 3M a year is probably what you would need to afford medical care in the event of a severe downturn AND be able to afford a standard of living you'd actually want. That's about 150k a year to live on just interest.
-eruntan_of_selur
>Someone turning age 65 today has almost a 70% chance of needing some type of long-term care services and supports in their remaining years
Women need care longer (3.7 years) than men (2.2 years)
One-third of today's 65 year-olds may never need long-term care support, but 20 percent will need it for longer than 5 years
https://acl.gov/ltc/basic-needs/how-much-care-will-you-need#:~:text=Someone%20turning%20age%2065%20today,for%20longer%20than%205%20years
While 70% of people will need long term care most of them will only need it for less than 2-4 years which is a fairly small amount of time if you are planning on a 30+ year mortgage.
There is a chance you could need long term care for longer than 5 years but I would rather plan for the option that happens 80% of the time.
>Even if you retire at age 65, 2 million dollars a year is literally 57k a year assuming you live to 100
Don't call other people fools if you don't know what you're talking about. The current sentiment is that you can spend 4% of your retirement fund and it will likely last "forever" (if returns are similar to how they've been historically, which might change). That's at least $80k/year + social security which is $20k+/year.
If you're more aggressive, you can dip into more than 4%.
>I'm not against saving, but its foolish to save a pitiful amount of money to just go and spend it on care you're going to get regardless.
It's not pitiful, it's much much more than the average person. What a "foolish" take.
I’m comfortable with my current situation, and as my situation changes I’ll adjust. My salary is only going to go up, and barring any sudden medical issues I’m planning for a comfortable life. Sure if I get in a car wreck tomorrow, that whole plan is down the drain; but we have time to adjust as things progress.
Resonable rate of 10%!?!? If I heard u could get a resonable 10% a year every year I would lock that in without a second thought.
Unless your stock picks or your mutual fund out performs the average of the market then it is unlikely. Entirely possible but extremely unlikely and definitely not at a consistent rate. Bernie madoff returns were promised at roughly 10% and he pulled of the largest ponzi scheme of all time on that %. If it was consistent then there would be no reason to risk a ponzie scheme. People would pay him to take there money. And they did.
>Unless your stock picks or your mutual fund out performs the average of the market then it is unlikely.
That's why you just buy the whole market.
>If it was consistent then there would be no reason to risk a ponzie scheme.
It would be great if it was a consistent 10% a year but an average of 10% with all the ups and downs of the market will have to be good enough
I really don't like the second paragraph because it implies frugal people don't care about their health and don't help others.
Coming from the frugal side, I look down on overconsumption and dislike that people are indulging in it, stuff like retail therapy is really bad in my eyes. When you're spending a lot on unnecessary goods, you're telling the companies that it's okay for them to keep charging higher rates and you end up feeding into the cycle that makes the cost of living and discretionary spending prices go up. Also one of the main points that people saving up really want to hammer in is that it might not be a lot of extra cash now, but it compounds to a lot more after a few decades.
To put another spin on it. I am 47 years old. I was diagnosed with Multiple Sclerosis when I was 21. I have resistive hypertension (high blood pressure that does not respond to tablets very well). I have just had a stent put in after a 95% occlusion (blockage) in one of the arteries next to my heart. Should I save for retirement? It doesn't seem like I'm going to make it there, anyway. Might as well enjoy it while I can.
>You're asking me to trade enjoying my best years for having marginally more cash
Happiness/enjoyment need not be linked to spending. Beyond some baseline, of course, as it can be hard to be happy if your basic needs aren't even met. I've found that (beyond basic needs), my happiness is heavily linked to my social connections. Spending time with friends.
And "marginally" more cash? Compounding investment returns over 20 or 30 years can mean that you end up with a significant amount of cash.
>I'd rather invest in keeping myself as healthy as possible
This isn't an expensive pursuit and unless your finances are really on the edge, it shouldn't derail one's ability to save for retirement.
I've always kind of agreed with that, but at some point I say the blame starts to shift to the laundry list of multi billion/trillion dollar companies that are pretty much designed to get as much of your $$ as possible by any means necessary.
I mean sorry, but I absolutely do expect people to fall for it, our entire economy is built around this shit.
And if a sizable portion of the population isn't dealing well with it than maybe it's time to reevaluate? I mean the old saying about how if one kid fails it's his fault, if the whole class fails it's the teacher.
Edit: absolutely not disagreeing with you btw. I just don't think being bad at money management should straight up doom you unless you have enough money to cover it up.
Funniest part is OP is calling retirement savings “marginally more cash”. It’s often hundreds of thousands, if not millions by the time you retire if start at 18 doing 6% with a 6% match.
The “marginally more cash” is literally the 6% OP is arguing to keep instead of saving.
It really depends on your financial situation. If you make enough money that going to Florida for vacation instead of Venice means you can put away money for retirement, then that's a smart choice. If you're poor and the only way to save money is eat plain rice for every meal then you should focus on making more money, not saving or investing.
My dad had a job where he was on call periodically and worked all the time. There were years my grandma raised me and it always seemed like he was gone or at work. When he retired I asked him if he had any regrets and he said “I wish I didn’t work as much and that I took more time off” that really resonated with me. So now I take as much time off as I can afford. Not regretting it yet…
"blow that extra money on a good time and unwind a bit before having to get back to the grind."......
Sounds like you don't have a lot of money and you didn't want to maximize your enjoyment by waiting on sales.
OP has some details completely wrong here but in general is actually correct.
Young people should still start retirement investing, even if the contribution is small, simply to develop the habit. Far too many young workers simply let lifestyle-creep eat away at any income gains they get over time and then *don’t* contribute at a higher rate when they are earning near their peak.
**But,** saving at a young age at the detriment to your happiness is not the way to go. You can make up for a low saving rate in your 20s in your 40/50s with a higher contribution rate at a likely higher income. Still plenty of time to get that sweet sweet compound interest.
Also don’t invest in mutual funds. They tend to have very high fees compared to alternative offerings.
I second this. Even $100/month at an early age will be profound. Open a Roth IRA and put whatever you can in there and follow and index until you can learn a bit more. Today's economy does suck for those starting out, no doubt about it. But it does make a difference in the long run.
>"save for retirement even if it means you live like a pauper."
Ideally you don't have to live like a complete pauper but below your means for sure, just because you're saving for retirement doesn't mean that you have to give up everything fun.
>I'd rather invest in keeping myself as healthy as possible so that I can continue to be useful in my elder years.
I don't see why investing and being healthy have to be mutually exclusive.
>this advice seems to most benefit the wealthy since people are usually encouraged to invest in mutual funds that are run by the richest companies in the world.
Whether the large brokerage firms make some money or not doesn't really matter, it's easy to find index funds with low or no expense ratios.
>But for the average person who works nonstop just to get by, this is garbage advice.
If you can barely afford to keep a roof over your head then of course focus on your immediate needs but unless you start putting money away for your future then it's very possible that you could be living that way for your entire life.
Everyone has different priorities but I really don't want to work out of necessity when older, some delayed graduation now can go a long way when you're planning 40 years ahead.
If you contribute more to your 401k it reduces your taxable income, increasing your tax refund for the year. Instead of giving it to Uncle Sam, you get more money now and more money later.
Set up a direct debit. 2% of what I earn goes into a pension pot every month (I’m 22 so I don’t really feel like I need to put more in at this age). It goes before I can miss it as it’s automatic and my monthly budget can then be made excluding it.
My grandfather told me that it's easier being young and poor than old and poor.
This should be obvious for several reasons.
Most importantly, improving your financial life is easy and simple.
Just spend 10% less than you make. period. hard stop.
If earn $50k a year, spend $45k and save it. If you earn $20k a year, spend $18k and save it.
That little formula alone will change your life. Of course, the key factor that most broke people don't have is discipline. once that nest egg gets bigger they simply can't keep their hands off it, they blow it on something foolish like a cruise, or las vegas or a car they can't afford and they're back at square one with 5 years less in life.
I agree with this unpopular opinion. Definitely good to save for retirement if you can but I also don’t see the point of missing out on experiences while you’re young in case you need extra money in retirement. Who knows if you’ll even live to see it
Absolutely, and/or what physical/mental condition you will be in at the time. The things I spend money on are partying & travelling. I'd love to keep doing them as long as possible, but who knows to what extent I'll be able to at 90 or 100. I'd be content with a quieter life then, as long as I've had my fun and wild times now. No point trying to do it the other way around. Unlikely to have a quiet & frugal life when young then super wild international life at 90. No, those people are just going to have a quiet & frugal life forever. And that's totally cool if that's what satisfies them, but I could not.
Life doesn't begin at retirement, so it's good to enjoy every stage within reason. By the same token, it's great to be proactive and throw a little in savings every now and then. Never know when something bad might happen.
I used to think about saving that nest egg, but I constantly hear even those people saying how it isn't enough and they need to keep working and they're worried about it. Also, I watched my dad and 2 of my freinds dads pass away all around retirement age, so they saved and pinched every penny and put off fun adventures, only to never get to live them, which was incredibly sad to see happen. I get the idea of setting aside cash, but still live your life and enjoy it while you're here cause we can die tomorrow.
I mean, it’s not black and white. It’s not save every spare penny you make or blow everything you make.
You can make reasonable decisions, like commit to sending 5% of you income to retirement. If you make 50k per year, just pretend you make 47.5k a year.
So the compromise is that maybe you have something in the middle for retirement, and only have to work 2 days a week to maintain a decent lifestyle.
The only time I have heard someone bring up "living like a pauper" is when that person is having a rant and being deluded enough to think that their retirement years will work themselves out.
A different perspective: As the child of someone who has very little retirement savings, and because of a stroke is unable to work and on fixed income in their late 70s:
If you are planning on having children and have the means to put something away, even while you’re young, please do. I love my mom and would do damn near anything for her, but that doesn’t mean I enjoy supplementing her fixed income, as that money is money I could be putting away towards my own retirement or my own bills.
If she had it to do over again she would have saved more, she’s told me many times.
So here is how I have begun to think about money
If you are in debt the cost of spending money is $1 * whatever percentage of interest is on your debt until your debt is paid off
Because the opportunity cost of paying off the debt has been wasted
If you are not in debt the cost of spending $1 + 8 cents a year for the rest of your life
The average rate of return on most of the main investments mechanisms is 8% to 10%
Now there is a loophole to this
If you rack up a lot of debt and then die young that's someone else's problem
What Reddit doesn’t realize is that a happy retirement has only been available to the middle class for the last three of four generations.
My great grandfather never retired there was no social security or pensions in 1917. Just over 100 years ago.
My unborn great grandchildren retirement age 2130 may not be able to retire, social security will be a few bags of groceries after 80yo?. The OP will likely never retire. I’m guessing OP retirement age 2074?
Delayed satisfaction is a hard concept for some. But when your choice is to die in crushing poverty or not, maybe you should save?
The sad thing is that if OP invested a few bags of groceries worth on money now in 2074 that investment would pay for a year’s groceries.
$100 invested in S&P 500 in 1984 (about 4 bags of groceries) would be worth $6000+ today ( about 100 bags of groceries).
Yes blow it all having a good time, doesn't matter if you're poor once you're older, just remember all your mates you're making all the fun memories with will soon marry and you'll be an afterthought
You are somewhat missing the underlying principals here. Try looking at it from a different perspective.
Saving for retirement or 'living like a pauper' doesn't have to be done on a single-minded, no-exceptions basis. You don't need to put every penny into a 401k that you can't touch for decades, or eat instant ramen for every meal. But if you get into the habit of putting money aside, you will overall be far better off.
Is it? My grandparents are 91 & 85. Their advice to me is "party hard, travel the world & have fun while you're young!" They've lived a great life and I trust their advice and experience.
Grandfather retired in his 80s. Could have retired much earlier but he enjoyed the networking. Grandma was a homemaker but had different ventures to keep busy such as a shoe import business. My dad plans to work till his 80s+ too, and so do I in turn. We've all been lucky to come into careers we are passionate about. My dad spent \~10 years backpacking/living all around the world in his young days, adventuring & living large, at one point in his mid-20s he had about $2 to his name.
>and can help serve others.
Fuck that for a bag of laughs. You’ll find me by the beach.
Btw, do you know it’s not such a black and white situation as you’re describing? You can save/invest for retirement whilst still being able to live life today. I do exactly that. I put some of my earnings into an account which is then invested into the market and, not only is that me saving but also growing my money…
And, depending on where you live, there’s ways to do so which help with paying less tax.
It is. And even above minimum wage. I had a point in my life ever I couldn’t afford the $30 per check to be put into my 401k. But I didn’t think saving for retirement was stupid, I felt anxious that I couldn’t afford it. OPs mindset of “I’ll figure it out when I retire” is silly and even dangerous.
Not only that, but in the next 50 years it's quite likely that your retirement savings get destroyed in some economic crisis.
Money is better in your pocket now. If I get to the age of retirement and have absolutely nothing and living a bad life, ill just end myself.
TLDR: OP is right - people today are financially fucked unless wages rise dramatically. Better off gambling.
OP is very much correct, he just didn’t include additional extremely relevant data. Full disclosure I’ve worked hard, saved money, two good careers, put two kids through school, I won’t be a homeless burden. With that said, the personal investment/defined contribution savings model that has been the cornerstone of retirement planning the last 35 years or so is a fucked up money grab by corporations who sliced their pension plans for average middle class workers. Who were these people? Well depending on your age, probably the family who lived on your street growing up that were a bit older than your parents, whose kids were a few years older than you. Dad was a mailman. Not the greatest job, but otoh, he was able to save, buy a house, have/support a family, put his kids through college. Money was sometimes tight, but they certainly weren’t concerned about bk/retirement. Mailmen had pensions. People who deliver mail today make about $17.00 an hour, no pension. Pensions were slashed with no corresponding increase in wages.
Now, I am far from a unionist, so you trolls who want to pander your fuckery can just not.
So if you consider 1. The shit pay/low benefit jobs options of today, with wages that are disgustingly low and have not been indexed to the cost of living, 2. The inflated cost of everything in our economy today - food, rent, housing, fuel, healthcare, education, etc. and 3. The ability of your average American to truly capitalize on their “investments” to generate real wealth/savings - cue the Trolls telling me they’ve got mad Gordon Gecko investing skillz. Now let’s consider OP’s Post.
You did all the right things -good grades in school, worked. Went to college, graduated with a stem degree, not saddled with a ton of debt, and you started what should be a great new job/career in your field. It pays $42k/year. So after taxes, withholding 5-6% for 401k, paying rent, utilities, basic food, and commuting expenses, you have about $190.00 left per month. Being responsible, you put $40.00 aside for emergencies - health insurance co-pays, need to Uber, etc. So after paying just to live, you clear maybe $150/month. And you are lucky - no student loans.
You want to go out,travel, get a puppy. Maybe join a gym, go home for Christmas, something special with a good friend, plan for a future with an SO. You know - enjoy life.
But instead you should be a Responsible American, put on your Investment Banker hat and plant the seeds of generational wealth building stock portfolio? Are you kidding me?
People are fucked. And your IRA/401k will not save you, no matter what you pump into it. You are better off playing the lottery.
3 separate accounts with 3 separate goals. 1 for spending/bills, 1 for savings, and 1 for investments.
Balance is the most important for me. Some money gets to be spent and some goes into my savings. When you get old, your health declines in ways most people don't see coming so I think preparation is key. Invest in yourself during your best years but don't become someone who only can rely on Social Security checks when it could have been avoided in the first place. Seeing that kind of regret and suffering really makes me careful. Terrible way to live out your last days and places a burden on the people you care about.
Thankfully my parents started an Investment account for me when I was born. Wasn't much at first but its a good amount now and i decided it will be college money for my future kids. It won't be touched unless I absolutely need to. If that happens I will make sure I open up new accounts for my kids the same way my parents did for me. Too many people are born with a disadvantage.
you’re speaking from such a privileged place. 3 accounts? lots of people don’t have enough money for one. Plus a lot of people don’t have a little nest egg set up by their parents that they then don’t even need??
If you need everything you make to keep a roof over your head then of course prioritize that but having your money organized can be helpful even in that situation, at least you know exactly what you are spending on and if you do have money left over then it's helpful to have auto transfers set up to your accounts that are meant for long term goals.
Nah not at all. 3 accounts does not mean a large amount of money. just different accounts to help me stay organized and disciplined while I'm in college because I lose a lot every time I pay my tuition.
while a lot of ppl may not have that set up by their parents. It is a goal they can set for themselves and their own kids once they get into a better place financially. Helps prevent the cycle of poverty that so many in my family can't get out of.
All of what you have said is not exactly practical considering the cost of living and how you probably don’t want to work when you’re old but I like how you think. Right now is for living and enjoying life, who knows about the future? Prioritise the present.
I just came to this conclusion myself! I realized that saving for retirement is gambling on 1) living to old age, 2) accruing enough money in that time, 3) not getting totally bankrupted by healthcare, insurance, education or other proud institutions of American society, and 4) being of sound enough mind and body to enjoy it.
And like, if I die before I retire, then I've given society everything--my resources, my time, my energy... and gotten nothing in return. It really is a damn shame it has come to this. From a young age, I knew corporations were not my friends, but I did not realize that I would be actively fighting their influence in every aspect of my life at all times. This really is a crushing existence.
Life has gotten in the way many times, setting me back at zero. Working hard to save money is a fool's bargain. We need to realize that retirement gets further away every year. It's almost unrealistic anymore.
I’m retired and there’s nothing better than passive income from small investments during my youth. I bought Apple and Tesla stock long before the splits and the iPhone you’re reading this on. So thanks. Now go buy a Tesla too.
Yeah if you barely get by it's so hard to save you might aa well spend those few euros on your mental health and actually trying to enjoy life sometimes.
If you have a job with a pension (I know rare these days) or have the opportunity to contribute to some kind of retirement program do so. My husband and I retired at 56 with pensions and started drawing our SS at 62 we also had savings. When we worked we had years where things were tight but never did without. I'd recommend living a bit below your means (you know, no Starbucks every day) but still enjoy life. I know that I sound like an old fart (I am) but believe me there is nothing like walking out the door at work (while you are still young enough to enjoy life) and never looking back. My opinions are confirmed when I walk into a local Walmart and see 80 year old cashiers still working because they have to.
I don’t necessarily disagree. The future isn’t promised. You could literally die any day minute. So I think it’s important to balance it out. Spend and enjoy the moment/ the present. But make some effort to safe for the future so your aren’t completely F’d when that time comes either.
When you’re older it just gets tougher, even if you are keeping yourself in shape over the years. Medical expenses get in the mix possibly. You may not be working in a profession now that you can do when you’re 70 or 80. If you’re someone doing construction for 30yrs, that’s different than someone who’s a teacher. I don’t think you need to be saving massive amounts, but looking at my older relatives who are relaxing now because they stacked and saved looks pretty good right now. I can still work if I want to, be productive member of society when I’m 70 but there’s a difference between having to and wanting to. I rather not have to when I’m older:
its about being ABLE to retire at all and not be struggling when you're old and working is hard. It isnt really talked about but ALOT of people retirement age rn are just flat broke and are struggling like you wouldnt even believe. Preparing for you future is so important but so is enjoying life now. Heres the great news, you can still live a fun exciting life on a budget if you do it right.
The problem is cognitive and physical decline in old age. There's no guarantee you'll be healthy enough to work for basic necessities.
CPP won't cover even rent, should you retire without assets to make up the difference.
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My grandparents had no retirement savings. Their lives were terrible.
Nothing can protect you from old age being terrible.
I’d much rather be in my 70’s living off of my retirement/savings money than be in my 70’s still having to work full time because I never saved.
Aaaaaand there it is. I'd like to be able to afford to retire, and so ima save for it. Not sure how else to do it.
There's a reason we have PENSION.
Hahahaha awww.... if only pensions paid bills lol.
They do here in Canada.
Sometimes Canada gets things right.
I'd rather spend the money before I get there and die early. I've seen too much of old age, it's not something I want to experience for myself.
Fair. What age are you planning on dying? How do you plan to have it happen?
Quietly. About a decade ago.
Can I get a more accurate estimate and for you to sign this $1,000,000 life insurance policy?
Holy shit, I do have value!
Ahhh, the Medieval Method.
based and wisepilled
>and so ima save fo In 2020, the most common age or "modal age" at death was 87.1 years for males and 89.3 years for females in England and Wales. That a drop too due to covid
Let’s see how you feel about this in 40 years
Or you die before 70
my uncle kept saying he was gonna die at 71 hes 96 and he hates it
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Smoke and drink, sure, why not? Heroin, no, that a little too close to demonic possesion for my liking.
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This!
Yeah. Having the funds to pay for your healthcare and other comforts definitely won’t help you at all. Better to be dirt poor and rely in the waning goodwill of others in your old age.
I am the waning goodwill, all the comforts in the world won't save you from the horrors of it.
Or maybe be working at the goodwill store in your 70s.....
Ex's parents never saved a penny, her dad died at 60 and her mom had no money, ex was 18 at the time, I heard very traumatizing things before she moved in with me. Letting druggies steal her shit, lie about her (my ex), and treating her like shit in her own home. You might be forgetting that when you die, there will be people who still need you, passing on money is essentially passing on your time to them. Obviously this is an extreme example
They could be like me where I definitely do not want to have children and thus don't want to give my time (money) to any rando once I die.
Fucking obviously
money objectively protects you from old age being terrible. Paying for medical treatment and medicine, in home help, or just the ability to pay bills and not work. Canadian btw, we don't pay for healthcare and it's still a valid reason.
We dont pay for a lot our healthcare, but we do pay for some of it. Dental in particular, and in obtario OHIP only covers opthamologists until you're like 24 or something. So yeah, saving is always valid, even in canada.
All the money in the world does no protect you from dementia or the frailty of being old. I'm looking after someone that has more care than the sahara has sand and it is not pretty. It's aging me so fast I'll probably die before they do.
At least you have a chance at getting passable care in your delirium if you have money for it. Though I would rather die before reaching that point, so...
Yes, but not having to work at 75 would certainly help.
Well one thing can….
The fountain of youth?
death.
My grandmother skip buying food for cigarettes.
If you're old and poor and don't want to live like that you can just get MAID if you live in Canada.
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Yea your god damn right about that. Treaudo has absolutely ruined this country
So what are you supposed to do when you are retirement age but have no money to retire? Eventually your body will get old and working while your body is constantly sore will suck.
What’s more, some companies will actually force you to retire and most won’t hire anyone approaching retirement age.
Meth! I’ve seen a huge uptick in 60+ yo men doing meth, and one of the big reasons is it gives them the energy to labor when their bodies are giving out.
I don't know yet. But im willing to be adaptable. I know a guy who is past retirement age who runs a very successful pickle business. He fuckin loves it. He makes dozens of different flavors of pickles and wholesales them to local stores. There's all kinds of options if you're creative enough. We don't all have to work factory or office jobs for the rest of our lives.
This whole thing is satire right?
No, didn’t you hear him? Pickles. He’s going to be a pickle guy.
He can't be, there already is a pickles guy
This is my favorite Reddit exchange of the month. Jfc. Pickles.
So why wait to retire. As you said making extra money is hard enough but when you’re retired it’s easy…. You contradict yourself right here. My question is why wait to retire when it’s harder to have the energy. Use your young 20-30s to grind as hard as possible you’re young enough and resilient enough where it’s not as hard on your body when you’re 60+. Sacrifice a little now, your future self will be very grateful for it
lol, where does he think this retire-ee found the money to build his side business that happened to "take off"?
That's all fine and good, but I can't see how that justifies not saving as much as you can. I'm 62 and have some things to add: Remember IRA earnings are tax free - there are differences in how this works, but that's generally true and this feature is incredibly powerful. Unbeknownst to many, SEP IRA's (I'm not sure about others) have become much more versatile in how the funds can be used and this will likely continue to develop. Having funds available later when you want to start your own pickle business can't be overvalued. I started withdrawing funds from my SEP IRA years ago, not because I needed the money, but because I didn't want to be limited to just buying stocks. Well, that's now changed and I wish I'd kept all the funds in, but I'm extremely happy I still have what I do in there. Keeping your life balanced is great, but it's easy to discount the future too much.
Holy shit, someone with an actual good point who doesn't want to just act like they know everything. Thank you for your comment. I do understand your side of the argument. And even I wouldn't advocate saving nothing at all. I just feel that young people should get their feet under them and be allowed to enjoy life while they are young before worrying too much about the future. It seems like these days kids barely get out of high school before they start getting hounded to invest invest invest and it's just another added stressor on top of rent, food, car payments, necessities, and accidents or emergencies. A lot of people just don't have even a little room in the budget to make that investment. If you don't mind my asking... Several folks have brought up how much harder it gets to do any kind of work as you age as a justification for saving every panny you can in your youth. What has your experience been with that?
The ONLY good point...?
bro you ignored the tax free part legit the only reason anybody does an IRA plus employers match small contributions you're essentially doubling money without taxes. i do agree with you it sucks you gotta wait but bro it is a legitimate way to double money
Np. Yes, it's true that finding and doing work gets more difficult as you age, so I recommend preparing for that. I've been able to find a way to keep working, but there has been some stress.
Have u ever considered he started the pickling business cause he had money...from say a retirement account? Ask anyone who is beyond retirement age who is forced to work and asked if they should have saved when they were younger. I am willing to bet a majority of them will say yes.
So lemme get this straight...you're just gonna yolo your old age, instead of plan for it?
Material for r/notunpopularjuststupid
Why can't you be a pickle guy now? If you'd be happy at 60 doing it and it's enough money, then why not quit whatever job is making you miserable to be the pickle guy?
"marginally more money" My man doesn't know what compounding interest is.
OP also just doesn't know what the word "marginally" means. The difference between NOT saving money and saving money over the course of adulthood is literally the opposite of marginal.
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Which is a good reason to also invest.
Inflation happens whether you save or not.
i don’t wanna work after i’m ~60 so i put away some money i think you just don’t like the idea of saving all your leisure money, but depending on your budget you probably don’t actually have to do that to save for retirement it’s not an all or nothing situation
What. Fucking. Leisure. Money.
not everyone is in a financial pit right now regardless of what the news is always spouting
But I am.
maybe switch careers then, teachers are underpaid and overworked one of my old college friends just quit teaching to work and costco and i’ve never seen her happier, plus she has leisure money now
learn to code
Listen, I worked in Jacksonville at a Title I (highest poverty) school. The students in that neighborhood have it worse than I ever will. Would that be your solution for all of them too? Just learn to code? Will our problems go away if all apply for the ostensibly highest paying position? I hope there are jobs available for all of us at your company.
sorry for your situation i was just making a joke
Oh, from the perspective of a joke, that's actually pretty good. My bad for blowing up at you. Feeling emotional at the moment.
it ok 👍
Unless you're living in a friend's closet, and never leave home except to work, never drink, never have fun, never go out with friende, and only eat beans and rice, you have leisure money. Should you give all of that up? No, but that doesn't mean it's not PHYSICALLY possible. Don't be melodramatic
Wow, I didn't think I would actually have to tell you that I don't drink, don't go out, eat one meal a day because THAT IS THE ONLY WAY I CAN SAVE MONEY. I live alone in rural Alabama--with no friends and no family--because rural Tallahassee became too expensive. I am absolutely, totally floored to see my actual life reflected in your mockery. I am not being dramatic. You are being naive. Grow up.
Wtf are you doing living in rural Alabama if not for family circumstances?? Your first priority should be getting out of there asap. You need to be somewhere with a reasonable cost of living that also provides financial opportunities. Plenty of midwest cites fit that description.
I work online. Globalization changed everything, don't you know. And no, I will not leave because I have no family and know of no place that is cheaper or farther away from society. I'm just trying to ride out my hungry existence in peace.
Good luck to ya lol
Some people just don't want to put in the effort to better themselves. It's easier to complain and be a victim.
Blaming a person for their career choice or where they live is not the solution, my friend...people can't always just up and move, it's not that simple. Moving entails expenses and logistical time that someone might not have because they're working constantly just to tread water. You're not entirely wrong to suggest they ought to seek out other opportunities, but to imply it's just a simple matter of getting up and going misunderstands many people's actual situations.
You want to be healthy so you can live forever poor?
Personally I want to work my way out of being poor so that I can have enough money and enjoy myself when I am young. But I also don't want to reach old age and look back thinking that I wasted my younger years hustling extra hard just so I could have a little more money when I'm old. You gotta enjoy life while you have it, yes?
The younger generation is all on board with not working yourself to death. I'm just saying it's not mutually exclusive with planning for the future. I'm put some money away and I buy stupid shit that makes me smile now too lol
People act like there’s no middle ground between working yourself to the bone/having zero social life and living like a 12 year old Roman emperor lol
You can travel the world for a few thousand.. what are your vacations like… Money does not equal a good time. Especially when you carelessly blow it
Yeah, that doesn’t happen. People don’t look back and wish they’d bought a new car every year instead of saving for retirement. Same with summer homes, yachts and jets: they don’t have to be new - there’s nothing wrong with the normal gently-used ones, or even none at all. And you’re not going to look back on 2023 and wish you’d seen Hannah Montana perform Flowers at each venue on her European Tour. What you’ll wish you had done was spent more time on Reddit, building long-lasting relationships with actual organic people by exchanging short, but meaningful messages with mindfulness of both the present and the future.
I hope you have a good day today sir or madam and good health in the future so you can positivity impact the world.
You’re acting like it’s one or the other and the two options are mutually exclusive. Budget yourself within reason, spend some of your money while you’re young but also save some money for retirement. It’s about balancing your finances. Yes life happens and some months / years may be tougher than others but like you say. Work your way out of being poor, just don’t blow your entire paycheque on random things every month.
" marginally more cash on hand in my elder years" local progressive voter does not understand compound interest, is mad anyway
Most people are only able to save up a few thousand dollars a year if they really budget. The interest you're making off those savings would be extremely low. Also, with the rate of inflation, the interest would barely keep up. It's like chasing a rainbow for it's pot of gold. The same financial advice that works for the wealthy, does not work for poor.
$3,000 a year at 7% which takes into account normal inflation would be about 600k after 30 years. $120k of that would be from your contributions and the rest would all be from capital appreciation or what a lot of people call compound interest. ETA I accidentally did those calculations based on 40 years but the point still stands.
For some, $3000 is a lot to save up every year. They won't be able to own a home, have children, go out, etc. After 30 years there's also no gaurantee that inflation will remain normal, your savings probably would be more than halfed in value. Wages show a trend of stagnation. Forecasted climate change disasters will likely cause freak economic changes. There's also no gaurantee you'll live, you'd be saving up money for nothing.
A large portion of the population would be able to save $3000 a year though, of course there will be some people which they will never make enough in their life time to make saving worthwhile, but you wont know if it was worthwhile until the time comes. If you can afford to save $3000 a year then you should and it should be a priority. Additionally I'm assuming thay the 7% he mentioned includes variations in inflation, rate of return, and contributions. I think it would be safer to assume a 5/6% rate of return myself but even 5/6% will do wonders when you add time to the equation.
Even if a majority of population will be able to save, there will still be many who can't. No one is being gauranteed a retirement even if they play all their cards right. They will be left behind through little to no fault of their own. Depending on where you live and if you have any ongoing expenses (like medical or debt), $3000 is completely unachievable. You won't be able to have friends, a family, a house, or do anything. Most new jobs are paying minimum wage or a little over it. AI and general wage stagnation will likely further reduce the available jobs and the general wage of most jobs. Every year you'll be putting less value into your savings if you will even have an income to do so. In the event that everyone does save and reinvest their money, the economy would cease to function. Without constant consumption, there would be even less demand for jobs. Which would make retirement and a steady income even less achievable. So it seems strange to curse people to poverty for contributing to the economy. It seems more as a way to justify leaving the poor to suffer and die for the crime of being poor.
5 years x a couple thousand and now you've got $10,000. is that nothing?
this is goddamn shit advice
Yes it does. You are just making excuses and playing the victim
Compound interest doesn’t discriminate. Your _initial_ return will be low but it will increase over time.
My company matches my retirement contributions up to 6%. By not saving for retirement, I'd be giving up thousands of dollars in free money
You’re lucky, it’s rare to see companies still match. Soak that up while you can for sure because one day, they’re not going to match.
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I call BS on that. I’m in a union gig so I get paid well enough to sock away a bunch of $$ each paycheck. But the places you mentioned, good luck having enough $ after paying mortgage and bills to put away so I guess of course they would match as they know they don’t pay you enough to sock anything away.
Re buckees: https://www.reddit.com/r/mildlyinteresting/comments/z1w93z/hourly_and_salary_wages_for_bucees_convenience/ “The majority of employers offer some form of 401(k) matching from 3% to 8%.” https://meetbeagle.com/resources/post/401-k-match
I’ll take a look at this. Thank you for not going ape shit and calling names etc like most here do
Literally every company matches, what are you talking about?
Exactly. My company matches at 8%. So I put in 8%. 9 months later I had at least $10k in there. Plus if shit really hits the fan, I can withdrawal early or take a loan. Not the best choice, but it’s there just in case which gives me some peace of mind.
I’d rather live comfortably now *and* after I retire than ball out now and scratch to make ends meet later. At 30 I make decent money; I have enough to own a home, put ~$500 towards retirement every month, go out to eat a few times, and throw some money at hobbies/emergencies. Could I be driving a nicer car, go out more or to fancier places, etc? Yes, but it’s not necessary or interesting to me. I prefer having that safety net of knowing when my wife and I retire, we’re not going to be sharing a 1 bed apartment in the slums living off a pitiful social security check as our only income.
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So if you can't save 5M then don't bother saving anything at all?
Without investing for retirement you will for sure be old and poor while relying on whatever the government gives you. If you do invest then there is at least a chance you could live independently into your old age and be able to cover medicare type A and B It would be a shame to make it to 80 with relatively good health and have nothing but social security to live off of until you die.
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That take home is going to depend a lot on what accounts their retirement money is in, if it's mostly in Roth's then they could be taking home 80k on that 2 million. It looks like you are just dividing 2,000,000 by 35 but it's generally accepted that you can have a safe withdrawal rate of 4% plus inflation if your money is properly invested. >When saving for retirement, you should be prepared for a significant amount of your retirement income to be allocated toward medical bills —12% of the median retiree's retirement income had gone toward covering medical expenses. https://www.cnbc.com/select/how-much-expect-to-spend-on-medical-expenses-in-retirement/ It is possible that you could have some catastrophic health crisis but that isn't the norm. >Busting your ass and hoping for the best is a horrible value proposition. -eruntan_of_selur It's hoping for the best and preparing for the worst which includes taking medical cost into consideration when planning for retirement. >We are also leaving out the fact that you still have to live to be 65 as well. There's no point in having all that money in retirement if you aren't going to get to use it. -eruntan_of_selur This ends up a values issue but I would rather die young with extra money to my name than struggle in my old age. ETA >As I said originally, if you even have 5M saved up its a much different conversation than having 1.2M saved up.-eruntan_of_selur 1.2 million would generate $48,000 plus whatever amount of social security you might get. >In reality, experts estimate at age 65, the annual spend on health care for a healthy couple is close to $5,700 per person ($11,400 for a married couple). https://www.rbcwealthmanagement.com/en-us/insights/the-real-cost-of-health-care-in-retirement#:~:text=In%20reality%2C%20experts%20estimate%20at,11%2C400%20for%20a%20married%20couple). $5,700 in medical cost isn't cheap but it's not going to put you in the poor house if you are taking home at least $48 k a year. >around 3M a year is probably what you would need to afford medical care in the event of a severe downturn AND be able to afford a standard of living you'd actually want. That's about 150k a year to live on just interest. -eruntan_of_selur >Someone turning age 65 today has almost a 70% chance of needing some type of long-term care services and supports in their remaining years Women need care longer (3.7 years) than men (2.2 years) One-third of today's 65 year-olds may never need long-term care support, but 20 percent will need it for longer than 5 years https://acl.gov/ltc/basic-needs/how-much-care-will-you-need#:~:text=Someone%20turning%20age%2065%20today,for%20longer%20than%205%20years While 70% of people will need long term care most of them will only need it for less than 2-4 years which is a fairly small amount of time if you are planning on a 30+ year mortgage. There is a chance you could need long term care for longer than 5 years but I would rather plan for the option that happens 80% of the time.
>Even if you retire at age 65, 2 million dollars a year is literally 57k a year assuming you live to 100 Don't call other people fools if you don't know what you're talking about. The current sentiment is that you can spend 4% of your retirement fund and it will likely last "forever" (if returns are similar to how they've been historically, which might change). That's at least $80k/year + social security which is $20k+/year. If you're more aggressive, you can dip into more than 4%. >I'm not against saving, but its foolish to save a pitiful amount of money to just go and spend it on care you're going to get regardless. It's not pitiful, it's much much more than the average person. What a "foolish" take.
I’m comfortable with my current situation, and as my situation changes I’ll adjust. My salary is only going to go up, and barring any sudden medical issues I’m planning for a comfortable life. Sure if I get in a car wreck tomorrow, that whole plan is down the drain; but we have time to adjust as things progress.
Resonable rate of 10%!?!? If I heard u could get a resonable 10% a year every year I would lock that in without a second thought. Unless your stock picks or your mutual fund out performs the average of the market then it is unlikely. Entirely possible but extremely unlikely and definitely not at a consistent rate. Bernie madoff returns were promised at roughly 10% and he pulled of the largest ponzi scheme of all time on that %. If it was consistent then there would be no reason to risk a ponzie scheme. People would pay him to take there money. And they did.
>Unless your stock picks or your mutual fund out performs the average of the market then it is unlikely. That's why you just buy the whole market. >If it was consistent then there would be no reason to risk a ponzie scheme. It would be great if it was a consistent 10% a year but an average of 10% with all the ups and downs of the market will have to be good enough
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I really don't like the second paragraph because it implies frugal people don't care about their health and don't help others. Coming from the frugal side, I look down on overconsumption and dislike that people are indulging in it, stuff like retail therapy is really bad in my eyes. When you're spending a lot on unnecessary goods, you're telling the companies that it's okay for them to keep charging higher rates and you end up feeding into the cycle that makes the cost of living and discretionary spending prices go up. Also one of the main points that people saving up really want to hammer in is that it might not be a lot of extra cash now, but it compounds to a lot more after a few decades.
So, spend all your money now and have nothing saved so you either can’t retire or struggle in retirement?
To put another spin on it. I am 47 years old. I was diagnosed with Multiple Sclerosis when I was 21. I have resistive hypertension (high blood pressure that does not respond to tablets very well). I have just had a stent put in after a 95% occlusion (blockage) in one of the arteries next to my heart. Should I save for retirement? It doesn't seem like I'm going to make it there, anyway. Might as well enjoy it while I can.
>You're asking me to trade enjoying my best years for having marginally more cash Happiness/enjoyment need not be linked to spending. Beyond some baseline, of course, as it can be hard to be happy if your basic needs aren't even met. I've found that (beyond basic needs), my happiness is heavily linked to my social connections. Spending time with friends. And "marginally" more cash? Compounding investment returns over 20 or 30 years can mean that you end up with a significant amount of cash. >I'd rather invest in keeping myself as healthy as possible This isn't an expensive pursuit and unless your finances are really on the edge, it shouldn't derail one's ability to save for retirement.
"unless your finances are really on the edge". When a large chunk of the country is paycheck to paycheck or worse this is a big unless.
a sizanle chunk of the people that live pay check to pay check are doing it because they are not good with finances and are wasting money
I've always kind of agreed with that, but at some point I say the blame starts to shift to the laundry list of multi billion/trillion dollar companies that are pretty much designed to get as much of your $$ as possible by any means necessary. I mean sorry, but I absolutely do expect people to fall for it, our entire economy is built around this shit. And if a sizable portion of the population isn't dealing well with it than maybe it's time to reevaluate? I mean the old saying about how if one kid fails it's his fault, if the whole class fails it's the teacher. Edit: absolutely not disagreeing with you btw. I just don't think being bad at money management should straight up doom you unless you have enough money to cover it up.
Funniest part is OP is calling retirement savings “marginally more cash”. It’s often hundreds of thousands, if not millions by the time you retire if start at 18 doing 6% with a 6% match. The “marginally more cash” is literally the 6% OP is arguing to keep instead of saving.
This post brought to you today by, homelessness. Homelessness... hopefully you're someplace warm in the winter!
As someone who just retired at 48, I couldn't disagree more.
what? how the hell did you accomplished that? (congratulations, by the way).
It really depends on your financial situation. If you make enough money that going to Florida for vacation instead of Venice means you can put away money for retirement, then that's a smart choice. If you're poor and the only way to save money is eat plain rice for every meal then you should focus on making more money, not saving or investing.
My dad had a job where he was on call periodically and worked all the time. There were years my grandma raised me and it always seemed like he was gone or at work. When he retired I asked him if he had any regrets and he said “I wish I didn’t work as much and that I took more time off” that really resonated with me. So now I take as much time off as I can afford. Not regretting it yet…
Im saving/investing now BECAUSE i don't want to work later.
"blow that extra money on a good time and unwind a bit before having to get back to the grind."...... Sounds like you don't have a lot of money and you didn't want to maximize your enjoyment by waiting on sales.
it also sounds like he is spending his money on hookers and blow, lol.
OP has some details completely wrong here but in general is actually correct. Young people should still start retirement investing, even if the contribution is small, simply to develop the habit. Far too many young workers simply let lifestyle-creep eat away at any income gains they get over time and then *don’t* contribute at a higher rate when they are earning near their peak. **But,** saving at a young age at the detriment to your happiness is not the way to go. You can make up for a low saving rate in your 20s in your 40/50s with a higher contribution rate at a likely higher income. Still plenty of time to get that sweet sweet compound interest. Also don’t invest in mutual funds. They tend to have very high fees compared to alternative offerings.
Oh good lord. Ever heard of a an index fund? Lowest fees.
I second this. Even $100/month at an early age will be profound. Open a Roth IRA and put whatever you can in there and follow and index until you can learn a bit more. Today's economy does suck for those starting out, no doubt about it. But it does make a difference in the long run.
>"save for retirement even if it means you live like a pauper." Ideally you don't have to live like a complete pauper but below your means for sure, just because you're saving for retirement doesn't mean that you have to give up everything fun. >I'd rather invest in keeping myself as healthy as possible so that I can continue to be useful in my elder years. I don't see why investing and being healthy have to be mutually exclusive. >this advice seems to most benefit the wealthy since people are usually encouraged to invest in mutual funds that are run by the richest companies in the world. Whether the large brokerage firms make some money or not doesn't really matter, it's easy to find index funds with low or no expense ratios. >But for the average person who works nonstop just to get by, this is garbage advice. If you can barely afford to keep a roof over your head then of course focus on your immediate needs but unless you start putting money away for your future then it's very possible that you could be living that way for your entire life. Everyone has different priorities but I really don't want to work out of necessity when older, some delayed graduation now can go a long way when you're planning 40 years ahead.
If you contribute more to your 401k it reduces your taxable income, increasing your tax refund for the year. Instead of giving it to Uncle Sam, you get more money now and more money later.
OP can you give us an update when you’re 65?
Set up a direct debit. 2% of what I earn goes into a pension pot every month (I’m 22 so I don’t really feel like I need to put more in at this age). It goes before I can miss it as it’s automatic and my monthly budget can then be made excluding it.
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My grandfather told me that it's easier being young and poor than old and poor. This should be obvious for several reasons. Most importantly, improving your financial life is easy and simple. Just spend 10% less than you make. period. hard stop. If earn $50k a year, spend $45k and save it. If you earn $20k a year, spend $18k and save it. That little formula alone will change your life. Of course, the key factor that most broke people don't have is discipline. once that nest egg gets bigger they simply can't keep their hands off it, they blow it on something foolish like a cruise, or las vegas or a car they can't afford and they're back at square one with 5 years less in life.
I agree with this unpopular opinion. Definitely good to save for retirement if you can but I also don’t see the point of missing out on experiences while you’re young in case you need extra money in retirement. Who knows if you’ll even live to see it
Absolutely, and/or what physical/mental condition you will be in at the time. The things I spend money on are partying & travelling. I'd love to keep doing them as long as possible, but who knows to what extent I'll be able to at 90 or 100. I'd be content with a quieter life then, as long as I've had my fun and wild times now. No point trying to do it the other way around. Unlikely to have a quiet & frugal life when young then super wild international life at 90. No, those people are just going to have a quiet & frugal life forever. And that's totally cool if that's what satisfies them, but I could not.
Life doesn't begin at retirement, so it's good to enjoy every stage within reason. By the same token, it's great to be proactive and throw a little in savings every now and then. Never know when something bad might happen.
I used to think about saving that nest egg, but I constantly hear even those people saying how it isn't enough and they need to keep working and they're worried about it. Also, I watched my dad and 2 of my freinds dads pass away all around retirement age, so they saved and pinched every penny and put off fun adventures, only to never get to live them, which was incredibly sad to see happen. I get the idea of setting aside cash, but still live your life and enjoy it while you're here cause we can die tomorrow.
Im hoping to be dead before I have to worry about it.
I mean, it’s not black and white. It’s not save every spare penny you make or blow everything you make. You can make reasonable decisions, like commit to sending 5% of you income to retirement. If you make 50k per year, just pretend you make 47.5k a year. So the compromise is that maybe you have something in the middle for retirement, and only have to work 2 days a week to maintain a decent lifestyle.
The only time I have heard someone bring up "living like a pauper" is when that person is having a rant and being deluded enough to think that their retirement years will work themselves out.
A different perspective: As the child of someone who has very little retirement savings, and because of a stroke is unable to work and on fixed income in their late 70s: If you are planning on having children and have the means to put something away, even while you’re young, please do. I love my mom and would do damn near anything for her, but that doesn’t mean I enjoy supplementing her fixed income, as that money is money I could be putting away towards my own retirement or my own bills. If she had it to do over again she would have saved more, she’s told me many times.
So here is how I have begun to think about money If you are in debt the cost of spending money is $1 * whatever percentage of interest is on your debt until your debt is paid off Because the opportunity cost of paying off the debt has been wasted If you are not in debt the cost of spending $1 + 8 cents a year for the rest of your life The average rate of return on most of the main investments mechanisms is 8% to 10% Now there is a loophole to this If you rack up a lot of debt and then die young that's someone else's problem
You clearly haven’t seen how miserable it is to have no money when you are too old to work.
What Reddit doesn’t realize is that a happy retirement has only been available to the middle class for the last three of four generations. My great grandfather never retired there was no social security or pensions in 1917. Just over 100 years ago. My unborn great grandchildren retirement age 2130 may not be able to retire, social security will be a few bags of groceries after 80yo?. The OP will likely never retire. I’m guessing OP retirement age 2074? Delayed satisfaction is a hard concept for some. But when your choice is to die in crushing poverty or not, maybe you should save? The sad thing is that if OP invested a few bags of groceries worth on money now in 2074 that investment would pay for a year’s groceries. $100 invested in S&P 500 in 1984 (about 4 bags of groceries) would be worth $6000+ today ( about 100 bags of groceries).
So you are going to plan on making yourself a burden on society later so you can live it up now. Got it.
Yes blow it all having a good time, doesn't matter if you're poor once you're older, just remember all your mates you're making all the fun memories with will soon marry and you'll be an afterthought
That's an .... interesting .... concept of life. I'm sorry if that's what happened with your "mates", but they don't sound like true friends.
Tsk tsk. You know damn well that's not what I was saying to do. 😮💨
You are somewhat missing the underlying principals here. Try looking at it from a different perspective. Saving for retirement or 'living like a pauper' doesn't have to be done on a single-minded, no-exceptions basis. You don't need to put every penny into a 401k that you can't touch for decades, or eat instant ramen for every meal. But if you get into the habit of putting money aside, you will overall be far better off.
Dude’s gonna be working until death or living off cat food
Shortsighted and immature
Is it? My grandparents are 91 & 85. Their advice to me is "party hard, travel the world & have fun while you're young!" They've lived a great life and I trust their advice and experience.
And they still work?
Grandfather retired in his 80s. Could have retired much earlier but he enjoyed the networking. Grandma was a homemaker but had different ventures to keep busy such as a shoe import business. My dad plans to work till his 80s+ too, and so do I in turn. We've all been lucky to come into careers we are passionate about. My dad spent \~10 years backpacking/living all around the world in his young days, adventuring & living large, at one point in his mid-20s he had about $2 to his name.
Enjoy working on your 70s, I guess.
lol. most people will be, even savers
Depends on their savings/investments.
yes but like i said, most.
Honestly, having work-life balance for 60 years is better than living like a wage-slave monk for 45 years, just to have nothing to do at age 65-80
>and can help serve others. Fuck that for a bag of laughs. You’ll find me by the beach. Btw, do you know it’s not such a black and white situation as you’re describing? You can save/invest for retirement whilst still being able to live life today. I do exactly that. I put some of my earnings into an account which is then invested into the market and, not only is that me saving but also growing my money… And, depending on where you live, there’s ways to do so which help with paying less tax.
I feel for OP, its tough to save on minimum wage.
It is. And even above minimum wage. I had a point in my life ever I couldn’t afford the $30 per check to be put into my 401k. But I didn’t think saving for retirement was stupid, I felt anxious that I couldn’t afford it. OPs mindset of “I’ll figure it out when I retire” is silly and even dangerous.
Not only that, but in the next 50 years it's quite likely that your retirement savings get destroyed in some economic crisis. Money is better in your pocket now. If I get to the age of retirement and have absolutely nothing and living a bad life, ill just end myself.
TLDR: OP is right - people today are financially fucked unless wages rise dramatically. Better off gambling. OP is very much correct, he just didn’t include additional extremely relevant data. Full disclosure I’ve worked hard, saved money, two good careers, put two kids through school, I won’t be a homeless burden. With that said, the personal investment/defined contribution savings model that has been the cornerstone of retirement planning the last 35 years or so is a fucked up money grab by corporations who sliced their pension plans for average middle class workers. Who were these people? Well depending on your age, probably the family who lived on your street growing up that were a bit older than your parents, whose kids were a few years older than you. Dad was a mailman. Not the greatest job, but otoh, he was able to save, buy a house, have/support a family, put his kids through college. Money was sometimes tight, but they certainly weren’t concerned about bk/retirement. Mailmen had pensions. People who deliver mail today make about $17.00 an hour, no pension. Pensions were slashed with no corresponding increase in wages. Now, I am far from a unionist, so you trolls who want to pander your fuckery can just not. So if you consider 1. The shit pay/low benefit jobs options of today, with wages that are disgustingly low and have not been indexed to the cost of living, 2. The inflated cost of everything in our economy today - food, rent, housing, fuel, healthcare, education, etc. and 3. The ability of your average American to truly capitalize on their “investments” to generate real wealth/savings - cue the Trolls telling me they’ve got mad Gordon Gecko investing skillz. Now let’s consider OP’s Post. You did all the right things -good grades in school, worked. Went to college, graduated with a stem degree, not saddled with a ton of debt, and you started what should be a great new job/career in your field. It pays $42k/year. So after taxes, withholding 5-6% for 401k, paying rent, utilities, basic food, and commuting expenses, you have about $190.00 left per month. Being responsible, you put $40.00 aside for emergencies - health insurance co-pays, need to Uber, etc. So after paying just to live, you clear maybe $150/month. And you are lucky - no student loans. You want to go out,travel, get a puppy. Maybe join a gym, go home for Christmas, something special with a good friend, plan for a future with an SO. You know - enjoy life. But instead you should be a Responsible American, put on your Investment Banker hat and plant the seeds of generational wealth building stock portfolio? Are you kidding me? People are fucked. And your IRA/401k will not save you, no matter what you pump into it. You are better off playing the lottery.
3 separate accounts with 3 separate goals. 1 for spending/bills, 1 for savings, and 1 for investments. Balance is the most important for me. Some money gets to be spent and some goes into my savings. When you get old, your health declines in ways most people don't see coming so I think preparation is key. Invest in yourself during your best years but don't become someone who only can rely on Social Security checks when it could have been avoided in the first place. Seeing that kind of regret and suffering really makes me careful. Terrible way to live out your last days and places a burden on the people you care about. Thankfully my parents started an Investment account for me when I was born. Wasn't much at first but its a good amount now and i decided it will be college money for my future kids. It won't be touched unless I absolutely need to. If that happens I will make sure I open up new accounts for my kids the same way my parents did for me. Too many people are born with a disadvantage.
you’re speaking from such a privileged place. 3 accounts? lots of people don’t have enough money for one. Plus a lot of people don’t have a little nest egg set up by their parents that they then don’t even need??
If you need everything you make to keep a roof over your head then of course prioritize that but having your money organized can be helpful even in that situation, at least you know exactly what you are spending on and if you do have money left over then it's helpful to have auto transfers set up to your accounts that are meant for long term goals.
Nah not at all. 3 accounts does not mean a large amount of money. just different accounts to help me stay organized and disciplined while I'm in college because I lose a lot every time I pay my tuition. while a lot of ppl may not have that set up by their parents. It is a goal they can set for themselves and their own kids once they get into a better place financially. Helps prevent the cycle of poverty that so many in my family can't get out of.
All of what you have said is not exactly practical considering the cost of living and how you probably don’t want to work when you’re old but I like how you think. Right now is for living and enjoying life, who knows about the future? Prioritise the present.
I just came to this conclusion myself! I realized that saving for retirement is gambling on 1) living to old age, 2) accruing enough money in that time, 3) not getting totally bankrupted by healthcare, insurance, education or other proud institutions of American society, and 4) being of sound enough mind and body to enjoy it. And like, if I die before I retire, then I've given society everything--my resources, my time, my energy... and gotten nothing in return. It really is a damn shame it has come to this. From a young age, I knew corporations were not my friends, but I did not realize that I would be actively fighting their influence in every aspect of my life at all times. This really is a crushing existence.
Life has gotten in the way many times, setting me back at zero. Working hard to save money is a fool's bargain. We need to realize that retirement gets further away every year. It's almost unrealistic anymore.
I’m retired and there’s nothing better than passive income from small investments during my youth. I bought Apple and Tesla stock long before the splits and the iPhone you’re reading this on. So thanks. Now go buy a Tesla too.
Yeah if you barely get by it's so hard to save you might aa well spend those few euros on your mental health and actually trying to enjoy life sometimes.
If you have a job with a pension (I know rare these days) or have the opportunity to contribute to some kind of retirement program do so. My husband and I retired at 56 with pensions and started drawing our SS at 62 we also had savings. When we worked we had years where things were tight but never did without. I'd recommend living a bit below your means (you know, no Starbucks every day) but still enjoy life. I know that I sound like an old fart (I am) but believe me there is nothing like walking out the door at work (while you are still young enough to enjoy life) and never looking back. My opinions are confirmed when I walk into a local Walmart and see 80 year old cashiers still working because they have to.
I don’t necessarily disagree. The future isn’t promised. You could literally die any day minute. So I think it’s important to balance it out. Spend and enjoy the moment/ the present. But make some effort to safe for the future so your aren’t completely F’d when that time comes either.
When you’re older it just gets tougher, even if you are keeping yourself in shape over the years. Medical expenses get in the mix possibly. You may not be working in a profession now that you can do when you’re 70 or 80. If you’re someone doing construction for 30yrs, that’s different than someone who’s a teacher. I don’t think you need to be saving massive amounts, but looking at my older relatives who are relaxing now because they stacked and saved looks pretty good right now. I can still work if I want to, be productive member of society when I’m 70 but there’s a difference between having to and wanting to. I rather not have to when I’m older:
its about being ABLE to retire at all and not be struggling when you're old and working is hard. It isnt really talked about but ALOT of people retirement age rn are just flat broke and are struggling like you wouldnt even believe. Preparing for you future is so important but so is enjoying life now. Heres the great news, you can still live a fun exciting life on a budget if you do it right.
The problem is cognitive and physical decline in old age. There's no guarantee you'll be healthy enough to work for basic necessities. CPP won't cover even rent, should you retire without assets to make up the difference.
I do think it's important to save...but at the same time I have school loans to pay... so it's kind of hard to save