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This "top economist" says most of us are saving too much for retirement
Posted on 6/7/24 at 3:26 pm
Posted on 6/7/24 at 3:26 pm
quote:
If you want to retire in comfort, investment firms and news headlines tell us, you may need $1 million in the bank.
Or maybe not. One prominent economist says you can retire for a lot less: $50,000 to $100,000 in total savings. He points to the experiences of actual retirees as evidence.
“You Don’t Need to Be a Millionaire to Retire,” says the headline of a column penned by Andrew Biggs, a senior fellow at the American Enterprise Institute think tank, and published in April in The Wall Street Journal.
quote:
Biggs disagrees. To prove his point, the economist looked at responses to the federal Survey of Household Economics and Decisionmaking between 2019 and 2022.
The survey asked retirement-age Americans, 65 to 74, how well they were managing financially.
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.
LINK /
I can't fathom a scenario where I wouldn't panic if I only had 100K in savings at retirement
I suppose you could survive but if you wanted to travel or even dine out you'd burn through that money in no time. Where do people come up with these ideas?
29
Posted on 6/7/24 at 3:34 pm to Powerman
His analysis is probably correct for the currently retired generation who owns their properties and didn't carry debt into retirement and owns their vehicles outright. If I didn't have house or rent or car payments i could get by on current social security amounts. But when you need to get a new car or have a big health cost, you'd be boned.
The upcoming wave of millennials will consist of a larger chunk that don't own their homes and even carry debt into retirement. Also, there's ongoing debate as to how much social security will be there in thirty years.
The upcoming wave of millennials will consist of a larger chunk that don't own their homes and even carry debt into retirement. Also, there's ongoing debate as to how much social security will be there in thirty years.
Posted on 6/7/24 at 3:35 pm to Powerman
Frick that. And who knows what the hell the Federal Government may do with IRAs and 401ks, after "promising" what the tax rules will be.
I put my target at 2.2 MM. May need more than that, or may not need that much, but is seemed to make sense when I got out of college 20 years ago.
I put my target at 2.2 MM. May need more than that, or may not need that much, but is seemed to make sense when I got out of college 20 years ago.
Posted on 6/7/24 at 3:42 pm to Powerman
This all assumes social security pays you a wage. Social security will be defunct soon
Posted on 6/7/24 at 3:42 pm to Thundercles
I'd assume that you would want to have your primary residence paid off and little to no revolving debt for any of this to make sense
It just seems like you would have to really scale back your lifestyle to make this work
I don't want to just "get by" in retirement. I plan on taking that time to travel and go on trips that I didn't budget time for in my working years
It just seems like you would have to really scale back your lifestyle to make this work
I don't want to just "get by" in retirement. I plan on taking that time to travel and go on trips that I didn't budget time for in my working years
Posted on 6/7/24 at 3:48 pm to Powerman
How many of them have pensions?
Posted on 6/7/24 at 3:59 pm to Powerman
quote:
Or maybe not. One prominent economist says you can retire for a lot less: $50,000 to $100,000 in total savings. He points to the experiences of actual retirees as evidence.
Going to the boss's office not
quote:
A majority, roughly 85%, said they were just fine: They were living comfortably, or at least “doing OK.
Guess that is part of the disconnect. Many people, especially on this board, want to be better off than "living comfortably, or at least “doing OK."
Posted on 6/7/24 at 4:01 pm to Powerman
Probably 80% of people younger than 45 will never retire
When I was a kid some guy on the radio was saying that you better have more than 100k unless you want to retire in a trailer in Arkansas
That was 25 years ago. Think how much it’d cost to retire to a trailer in Arkansas now
That sounds awesome tbh but it’d cost at least 3 million
ETA: think of how much better off we were as a society when men died off at 56 from mesothelioma
When I was a kid some guy on the radio was saying that you better have more than 100k unless you want to retire in a trailer in Arkansas
That was 25 years ago. Think how much it’d cost to retire to a trailer in Arkansas now
That sounds awesome tbh but it’d cost at least 3 million
ETA: think of how much better off we were as a society when men died off at 56 from mesothelioma
This post was edited on 6/7/24 at 4:03 pm
Posted on 6/7/24 at 4:12 pm to el Gaucho
While 100K sounds low I have suspected people who sell investment overstate the average persons needs assuming they have SS/Medicare and no debt. Live a basic life style. My observations are that most people once over 80 years of age don't really consume a lot of extras. Of course if one retires younger with good health and wants to enjoy the fruits of their labor they will need well north of a million.
Posted on 6/7/24 at 4:22 pm to iron banks
quote:this for sure.
d people who sell investment overstate the average persons needs
I couldn't care less about travel or excessive living so a couple hundred thousand will be far more than I'll ever spend.
Posted on 6/7/24 at 4:27 pm to Powerman
I think younger people do not have a clue what retirement goals were 40 and 30 years ago.
In 1970, $10,000 a year was doable to live off of.
In 1980, $25,000 a year was doable to live off of.
Kids graduating in the 60s and 70s were targeting $200k to $400k for retirement. $400k was a shite ton of money back then.
Many do have pensions.
Many don't.
The most basic rule for "comfortable" living in my opinion is to be married. 2 incomes for 1 home is a lot easier than the alternative.
How many of those "getting by" on 2 social security incomes will be doing the same when that drops to 1.
In 1970, $10,000 a year was doable to live off of.
In 1980, $25,000 a year was doable to live off of.
Kids graduating in the 60s and 70s were targeting $200k to $400k for retirement. $400k was a shite ton of money back then.
Many do have pensions.
Many don't.
The most basic rule for "comfortable" living in my opinion is to be married. 2 incomes for 1 home is a lot easier than the alternative.
How many of those "getting by" on 2 social security incomes will be doing the same when that drops to 1.
Posted on 6/7/24 at 4:35 pm to Powerman
Too little info to truly decide, like others have said, those currently in that situation are likely:
Pulling SS/Pension
House Paid Off
Married with dual sources of $$$
When SS goes insolvent, 50% divorce rate, and the current costs of housing persists, it’s going to be a lot more in the next 20-30yrs.
Pulling SS/Pension
House Paid Off
Married with dual sources of $$$
When SS goes insolvent, 50% divorce rate, and the current costs of housing persists, it’s going to be a lot more in the next 20-30yrs.
Posted on 6/7/24 at 4:51 pm to Powerman
One thing from the article:
They also have Medicare. We could live off 46k, if our house is paid off, we have no consumer debt(including cars), and Medicare is covering most of the healthcare costs.
quote:
The average couple that retired in 2022 reaped nearly $46,000 in annual Social Security benefits
They also have Medicare. We could live off 46k, if our house is paid off, we have no consumer debt(including cars), and Medicare is covering most of the healthcare costs.
Posted on 6/7/24 at 5:18 pm to Powerman
You'll own nothing and be happy!
Posted on 6/7/24 at 5:28 pm to LoneStar23
If I save too much I'll just retire younger.
Posted on 6/7/24 at 5:29 pm to Dawgfanman
quote:
One thing from the article:
quote:
The average couple that retired in 2022 reaped nearly $46,000 in annual Social Security benefits
They also have Medicare. We could live off 46k, if our house is paid off, we have no consumer debt(including cars), and Medicare is covering most of the healthcare costs.
That is the "average couple that retired in 2022".
People who retired in 2000 and are still alive are bringing in much less. Earnings from 1960 to 2000 was much less than earnings from to 1982 to 2022
Posted on 6/7/24 at 5:43 pm to Dawgfanman
After this next term healthcare will just be abortion, death shot, or tranny surgery so nobody needs a big medical budget
Posted on 6/7/24 at 5:45 pm to Powerman
quote:if you don’t have that taken care of before retirement regardless of your savings you’ve failed
I'd assume that you would want to have your primary residence paid off and little to no revolving debt for any of this to make sense
Posted on 6/7/24 at 5:49 pm to Powerman
I think retirement calculators are conservative.
Retirement industry makes money the more you invest. Do you think their retirement calculators would help them be more profitable or less profitable?
Retirement industry makes money the more you invest. Do you think their retirement calculators would help them be more profitable or less profitable?
Posted on 6/7/24 at 5:50 pm to meansonny
quote:that’s about what my after 62 benefits should be once my wife reaches retirement age. That’s before taxes of course. And honestly, that amount should more than cover our monthly bills (utilities, phones, TV, and at least one of us’ insurance premium). That’s not a small thing, SS should almost cover our non-elective overhead.
The average couple that retired in 2022 reaped nearly $46,000 in annual Social Security benefits
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