America’s 60-Year-Olds Are Staring at Financial Peril

[DrQ]

America’s 60-Year-Olds Are Staring at Financial Peril​

A bruising recession and the disappearance of pensions have left many young boomers financially exposed​

https://www.wsj.com/personal-finance/americas-60-year-olds-are-staring-at-financial-peril-62599a76

 

[Cornell]

I read this & got super depressed

 

[clifffaith]

I found a paywall.

 

[geist1223]

Ditto. Had to initiate paid subscription to read full Article.

We are well past 60. We both have State of Oregon Retirement, Social Security, and my Military Retirement from 20 years of Active and Reserve Duty. So we are doing fine.

We both retired at 58.75.

 

[Luvtoride]

I read the article and wanted to post it too but figured the paywall wouldn’t allow most to read it without a WSJ subscription.

Unfortunately, this is very true and not for just the Young 60 year-old boomers. The smart ones knew they couldn’t rely on SS and pensions (that disappeared) and saved voraciously for retirement. Others were hit with generational bad luck of the financial crisis during their prime earning and saving years and couldn’t recover.

I retired last year at 65 while many of my older friends are still working. Some “friends” look at us and say “well, you have 2 pensions while some of us have none”. Yes, and we both worked our asses off to earn those during years we were raising our kids .
So many things changed during the span of the baby boomer generation making it more difficult for the later ones to retire comfortably. This dynamic could have far reaching effects on the government, the economy and future generations.


Sent from my iPhone using Tapatalk

 

[easyrider]

The reality is people don't need as much as the experts think to retire. It seems the newest number the experts came up with is $1,460,000 to retire which is a nice number but an over estimate, imo.

Bill

Do we really need $1M in retirement savings? Not even close, one top economist says

A prominent economist argues that you can retire on savings much less than $1 million.

www.usatoday.com

A majority, roughly 85%, said they were just fine: They were living comfortably, or at least “doing OK.”

Only 15% said they were struggling.

The finding matters, Biggs says, because most retirees have much less than $1 million in the bank. In the federal survey, the typical senior who reported a satisfactory retirement had $50,000 to $100,000 in savings.

 

[Brett]

I read the article and wanted to post it too but figured the paywall wouldn’t allow most to read it without a WSJ subscription.

Unfortunately, this is very true and not for just the Young 60 year-old boomers. The smart ones knew they couldn’t rely on SS and pensions (that disappeared) and saved voraciously for retirement. Others were hit with generational bad luck of the financial crisis during their prime earning and saving years and couldn’t recover.

I retired last year at 65 while many of my older friends are still working. Some “friends” look at us and say “well, you have 2 pensions while some of us have none”. Yes, and we both worked our asses off to earn those during years we were raising our kids .
So many things changed during the span of the baby boomer generation making it more difficult for the later ones to retire comfortably. This dynamic could have far reaching effects on the government, the economy and future generations.


Sent from my iPhone using Tapatalk

I suppose I'm one of the luckier "boomers" - no pension but invested early in real estate and the stock market -- and had a working spouse and inherited some $$

Baby Boomers’ Good Times Drive the Economy​

https://www.wsj.com/us-news/baby-boomers-drive-economy-d4b72e40

 

[DrQ]

I suppose I'm one of the luckier "boomers" - no pension but invested early in real estate and the stock market -- and had a working spouse and inherited some $$

Baby Boomers’ Good Times Drive the Economy​

https://www.wsj.com/us-news/baby-boomers-drive-economy-d4b72e40

The article I posted was referring to late boomer who got hit with a double whammy during their peak earning years: 2008 and then COVID.

I was lucky, during 2008, I was working for a company who had a product that was used to detect mortgage fraud.

We knew people who were in their early 50's forced into retirement. I also stayed technical rather than managerial and found that even as an older worker who had been RIF'd, I could find another job, even when I was 63.

 

[joestein]

It is a pretty simple formula. Contribute enough to your 401K to get the maximum match from your company. Start early. Even a few thousand a year in your early 20s can turn into millions.

My daughters each have around $25K in Vanguard accounts. I have shown them how if they earn an average 8% return over time the money will grow to well over a million by age 65. I have also explain how when the money doubles every 9 years. The last doubling was almost $1 million. If they put that money away 10 years later - they wont see that last doubling.

 

[DrQ]

It is a pretty simple formula. Contribute enough to your 401K to get the maximum match from your company. Start early. Even a few thousand a year in your early 20s can turn into millions.

The problem with boomers is that they changed the rules midway through the game. We went from having company pensions to 401k and managing your own accounts. Some companies funded their 401k accounts with their own stock, which turned out to be worthless.

Pensions had their own perils, but they were a more known entity.

Now, 401k's are more regulated and standardized but it was a rough transition.

 

[Passepartout]

Those who chose to ignore warning signs during their 'earning years', did so at their own peril.

 

[HitchHiker71]

The reality is people don't need as much as the experts think to retire. It seems the newest number the experts came up with is $1,460,000 to retire which is a nice number but an over estimate, imo.

Bill

Do we really need $1M in retirement savings? Not even close, one top economist says

A prominent economist argues that you can retire on savings much less than $1 million.

www.usatoday.com

A majority, roughly 85%, said they were just fine: They were living comfortably, or at least “doing OK.”

Only 15% said they were struggling.

The finding matters, Biggs says, because most retirees have much less than $1 million in the bank. In the federal survey, the typical senior who reported a satisfactory retirement had $50,000 to $100,000 in savings.

Those numbers are likely more accurate for younger Boomers and certainly for GenX'ers and Millennials though, since they don't have any pension type income sources, so nearly all income in retirement needs to be generated from savings as opposed to pensions which no longer exist for the most part. A good number of the older Boomers have pensions, but those of us in the younger generations (I'm a GenX'er) don't have that luxury. It's either we save for our retirement like mad, or we don't ever retire basically.

 

[PigsDad]

Those who chose to ignore warning signs during their 'earning years', did so at their own peril.

Agree. I entered the workforce in 1988 (beginning of Gen X), and even then I remember thinking that I can't rely on SS when I retire, so I had plan to save myself. I never had a pension; it was all on me.

Kurt

 

[joestein]

The problem with boomers is that they changed the rules midway through the game. We went from having company pensions to 401k and managing your own accounts. Some companies funded their 401k accounts with their own stock, which turned out to be worthless.

Pensions had their own perils, but they were a more known entity.

Now, 401k's are more regulated and standardized but it was a rough transition.

I understand that. My wife worked for Merrill Lynch/BOA for 25 years. BOA stock makes up about 1/3 our entire 401K savings - between both of us. We are hoping to sell it soon and invest it into the broad market. Hoping it will hit 50+. Only reason I am still holding onto it now is that everybody is pretty bullish on that stock.

 

[weems637]

My job was eliminated at age 54.5, but did include a sizeable buyout. I drew unemployment for two years, sent out 250 resumes to get 3 interviews. One guy said I can't hire you, you'd have my job in six months. I liquidated all my investments and with the buyout was able to make it until 59.5 to start drawing a minimal amount out of my 401k. Worked a small job to keep me busy. Started SSI at 62.5. I'm now approaching 68. Have a younger spouse that will work 2 more years then retire at 65. Both our 401k's now exceed $2,000,000, thru dedicated saving during our working years. With conservative spending, the $1,000,000 number is more than enough, as long as the markets don't get too crazy with our ever changing political environment!

 

[am1]

Wyndham forced me into retirement at 36 I think it was. Now i have rentals, stocks and heavy equipment but work harder for a maybe a 5th of the income. Just moved into our forever home. So hopefully spending going forward are a lot less. I spend less then a $1000 on taxes outside of sale tax. A few thousand in car insurance and $3000 a year in health insurance for the family. The key is always to keep expenses down.

 

[gln60]

How much is enough money to retire and live comfortably for the rest of your life depends on where you live…California and New York is much much more expensive..than say Mississippi or Arkansas

 

[easyrider]

Those numbers are likely more accurate for younger Boomers and certainly for GenX'ers and Millennials though, since they don't have any pension type income sources, so nearly all income in retirement needs to be generated from savings as opposed to pensions which no longer exist for the most part. A good number of the older Boomers have pensions, but those of us in the younger generations (I'm a GenX'er) don't have that luxury. It's either we save for our retirement like mad, or we don't ever retire basically.

Do gen x er's save or spend ? The younger people I know spend a lot on things like coffee, vehicles and entertainment. Many boomers are content with regular drip coffee, an old vehicle and cheap entertainment.

Bill

 

[easyrider]

Agree. I entered the workforce in 1988 (beginning of Gen X), and even then I remember thinking that I can't rely on SS when I retire, so I had plan to save myself. I never had a pension; it was all on me.

Kurt

We entered the work force during the Carter years, There were no jobs so we became self employed for our entire life. I use to think the same about SS but now that I'm close I'm happy I paid in.

Bill

 

[Timeshare Von]

The reality is people don't need as much as the experts think to retire. It seems the newest number the experts came up with is $1,460,000 to retire which is a nice number but an over estimate, imo.

Bill

Do we really need $1M in retirement savings? Not even close, one top economist says

A prominent economist argues that you can retire on savings much less than $1 million.

www.usatoday.com

A majority, roughly 85%, said they were just fine: They were living comfortably, or at least “doing OK.”

Only 15% said they were struggling.

The finding matters, Biggs says, because most retirees have much less than $1 million in the bank. In the federal survey, the typical senior who reported a satisfactory retirement had $50,000 to $100,000 in savings.

I agree with this 100%! I think the financial and investment industries push this narrative to get people hyped up and worried, to create business for themselves. I refused to buy into the hype. While we have saved judiciously, and have a small retirement fund to supplement our SS . . . we are not anywhere close to $1M nor do we feel it necessary to achieve such a level to feel financially comfortable.

 

[Timeshare Von]

The problem with boomers is that they changed the rules midway through the game. We went from having company pensions to 401k and managing your own accounts. Some companies funded their 401k accounts with their own stock, which turned out to be worthless.

Pensions had their own perils, but they were a more known entity.

Now, 401k's are more regulated and standardized but it was a rough transition.

Add to that, the move from "defined benefits" to "defined contributions" . . . people got lost in the shuffle and weren't prepared to make sound financial decisions, all the while financial advisors were collecting fees.

 

[Ralph Sir Edward]

The hardest thing for people to do is to "down size" their lifestyles. . .

 

[Luvtoride]

Do gen x er's save or spend ? The younger people I know spend a lot on things like coffee, vehicles and entertainment. Many boomers are content with regular drip coffee, an old vehicle and cheap entertainment.

Bill

Easy, I guess I'm not among the "many boomers" you refer to. If I don't drink fancy coffee, drive a nice vehicle and attend great entertainment events, my Millennial kids will!

 

[joestein]

Do gen x er's save or spend ? The younger people I know spend a lot on things like coffee, vehicles and entertainment. Many boomers are content with regular drip coffee, an old vehicle and cheap entertainment.

Bill

I just had my inlaws over for 10 days. Their kids (17 & 19) and a boyfriend - eat out or get takeout for EVERY MEAL. I am sitting in my office in Manhattan and I can see my ring camera go off and its these kids going out to get food and bringing it back.

My SIL makes plenty of money (her husband is retired and drives a school bus to keep busy) - so they can afford it. But what kind of lesson is that for these kids when they are on their own. It drives her husband crazy, but he says he has no say. He says that SIL says as long as kids are happy that is all that counts.

 

[Ralph Sir Edward]

Do gen x er's save or spend ? The younger people I know spend a lot on things like coffee, vehicles and entertainment. Many boomers are content with regular drip coffee, an old vehicle and cheap entertainment.

Bill

In the end, it's about the question - Capital versus Cashflow. For retirement, substituting capital for cashflow OUT is the better course (up to a point). On the other hand you have the need of cashflow IN when retired, as you have no other way of earning cashflow.

Example, paying off a mortgage reduces your capital (effectively, it strands your capital in an asset you can't sell without replacing with another), but it reduces your cashflow needs (no mortgage payments). Reducing cashflow OUT.

OTOH, having assets that produce net income in allows you use the cashflow IN, to pay for your lifestyle in retirement, while still owning the assets. If you depend on selling assets to generate cashflow, 1.) you don't have that assets any more (you are getting poorer). and 2.) You don't know what price those assets will fetch when you actually need to sell them.

Planning and executing this juggle is what retirement planning is all about.