The Retirement Outlook for 20-Somethings

Over Memorial Day weekend, a few friends and I took an RV to Banff, Canada. I'm from Chicago and have only been in the Pacific Northwest for a few short months. We Chicagoans are flatlanders and the geographical splendor of the snow-caps that now surround me is a source of a daily inspiration.

While we were heading through Glacier National Park, I sat at the coffee table in back of the motor home playing cards with my girlfriend, contemplating the turquoise melt-water when Brian said from the front seat, “Take a good look, my friends. We're gazing into the future. Here's us in 40 years. This is what retirement looks like.”

It lead to an interesting discussion between a group of 20-somethings about what we picture our retirement will be like. The vision of Florida, golf courses, cruises, and RV trips didn't fit for any of us. We all agreed that our generation, with its student-debt, terrible economy, and little ability to trust the solvency of social security, has to redefine our image of retirement.

Why 65 (ish)?
Right now, according to the website for Social Security, I'm set to retire in 2053, a year that seems positively sci-fiesque. My NRA (normal retirement age) is 67. Why 67?

Well, according to the website, Social Security was set up as part of FDR's New Deal in the 1930s. The retirement age was set for 65 to pay the older workers to leave the work force, making room for younger workers. Keep in mind that the average life expectancy for men in the 1930s was just under 60 years old. In other words, the government would give you money to stay at home only if you made it to the modern day equivalent of 89 years old.

My great grandparents, like many of the their contemporaries, would have benefited from Social Security if they could've lived another 10 years. That's a slightly more morbid image of retirement. It was my grandparents and their friends however, who cashed in, propagating the image of retirement as golf pants and yacht shoes.

Life Expectancy on the Rise
With the rise in life expectancy came a rise in how many people were getting Social Security benefits. I found these numbers on the SS website as well:

YearNumber of SS BeneficiariesDollars spent
193753,2361,278,000
1940222,44813,896,000
19503,477,243961,000,000
196014,844,58911,245,000,000
197026,228,629$31,863,000,000
198035,584,955$120,511,000,000
199039,832,125$247,796,000,000
200045,414,794$407,644,000,000
200850,898,244$615,344,000,000

I agree with FDR that spending a mere million and change to usher the 50-odd-thousand modern day centurions to a more relaxed lifestyle making way for the young blood ready to throw their hats in was a great idea. What's harder to chew is the now 50 million plus living well past 65 and the $615 billion going to them each year. I'm not here to debate the ethics of it, just the reality that with the baby-boomers readying themselves for retirement, I'm notbanking on much coming my way when 2053 rolls around.

Baby Boomers' Parents
My parents' parents were able to make out like bandits for the exact opposite economic freakishness that my generation is struggling today.

  • They had no reason to doubt the strength of Social Security
  • They graduated college with little to no debt and could start saving immediately. (The GI bill covered college for many of them.)
  • Half of them had pensions, a concept that is far from reality today.
  • At the point that they were ready to sell their homes and move to sunnier pastures, the Baby Boomers were coming of age, quickly filling any occupancies and spiking up housing costs.

None of these advantages do us Gen Y'ers enjoy and look forward to. For most of these, we get the exact opposite. Even if my dream was to be behind the wheel of a golf-cart for the rest of my days, the odds are against me.

Meaningful Retirement
As we got closer to Lake Louise, we all attached ourselves to the idea of a meaningful retirement rather than a leisurely one. Two of my RV companions work for big corporations involving a lot of desk time, jobs that they like fine, but probably wouldn't want to do for the rest of their days. On their list of things they could see themselves doing in their more golden years include:

  • Group exercise instructor
  • Tour guide
  • Museum docent
  • Farmers market worker
  • Secret shopper

All of these options were geared to their specific passions. All of these will generate some income and take some time and energy. This isn't a list of full time jobs, but just activities to keep them young and make it so they're not wholly reliant on savings. From there, I spouted off some of the tenets of Get Rich Slowly, which I plan on following into retirement:

  • Money is more about the mind than the math — Knowing the numbers is secondary to playing the mental money game well. One thing that the older folks around me seem to have is wisdom. With another 40 or so years to figure out how to control my spending, I hope I'll have most of the mental aspects of money down.
  • Small amounts matter — I practice frugality now and will continue in the future. Just because I'm no longer working for every dime, whether it come from savings of government assistance, does not mean my hard earned thrift should be out the door.
  • Large amounts matter, too — Yes, I'll be frugal, but there are a lot of smart decisions I can make before retirement to free-up finances during retirement. Whether it be having my mortgage paid off or make the right decision on a car, getting the bigger expenses out of the way will free up a lot of possibility.
  • It's more important to be happy than to be rich — I don't want to worry about money in retirement but even more so, I don't want to obsess about money in retirement. I want to continue to cultivate my joy in simplicity, and have that carry through indefinitely.
  • Do what works for you — There's no right way to save and there's no right way to retire. If you've got your golf clubs picked out, good on you. If you're hoping to do your same job past 100, awesome. I like the idea of a physically active retirement. Maybe that means picking potatoes, maybe it means leading those super cool pool dance classes. Whatever you do in retirement, make it meaningful, not just leisurely.

I can't predict what my retirement will look like. I know the games have changed and that the image of the perfect retirement no longer exists. For now, I'm going to continue to save for whatever the future may hold and when I can, enjoy a little taste of what my great grandparents might have experienced in the back of an RV, gazing wistfully out the window as the scenery flies past. Why wait, right?

Have you started thinking about your retirement options? Or those of you closer to your NRA, what will retirement look like for your children?

More about...Planning, Retirement

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Elizabeth
Elizabeth
8 years ago

Retirement looks pretty bleak for us thirty somethings too 🙂 I worry about the fact that my retirement investments seem to be going nowhere (and I’m missing out on crucial compounding) and that I can’t advance at my job because there’s no room to move up. (Not to mention the fact that I can’t predict how long I’ll live or what new technologies and I’ll be able to take advantage of.) Here’s another interesting angle: some experts figure that the baby boomers parents are the last generation as a whole to be able to count on significant inheritances to help… Read more »

Dogs or Dollars
Dogs or Dollars
8 years ago
Reply to  Elizabeth

Yep, 30 somethings are in the same pickle. I expect to inherit nothing from my parents, despite them having inherited from theirs. I can’t count on my employer any further than my 401k match. And who knows about social security. My retirement is completely in my own hands. There is no deus ex machina in the house.

But what better motivation to practice all those little things to keep plugging away at retirement mountain?

Josh @ Live Well Simply
Josh @ Live Well Simply
8 years ago

And retirement mountain is going to look a lot sunnier to those of us who rely on other income sources than SS to see us through our golden years. 🙂

RMS
RMS
8 years ago
Reply to  Elizabeth

Thanks for sharing about the SKI generation. That totally sums up my parents.

I’m also in my 30s, got a decent amount of savings for retirement. However, I worry that at least one of my parents (separated) will require me to support them in the next 10-20 years. I believe they even expect it (Asian families).

Kevin
Kevin
8 years ago
Reply to  Elizabeth

I’ve often wondered about one possible interesting side-effect of the gradual elimination of defined-benefit pensions. I actually tend to think it may increase inheritances. In the past, when DB pensions were prolific, there was little need for people to save much of their own money for retirement. And when they died, the pension ceased, leaving little estate for the beneficiaries. With the elimination of DB pensions, however, there’s much more incentive for people to save their own money for retirement. Certainly some people drop the ball and end up living off much less than they would have if the DB… Read more »

Beth
Beth
8 years ago
Reply to  Kevin

I’m curious to see if you’re right — though we won’t know for a very long time 🙂 I’ve seen a similar debate about annuities.

I don’t get anything from my employer — not even RRSP matching. I’m not counting on inheriting anything and I don’t have a spouse to plan for retirement with. Being completely in charge of my own retirement is both scary and empowering.

CB
CB
8 years ago
Reply to  Beth

I feel the same way – empowered to be in charge of my own retirement. I feel like the rules of the game have been very clear for my generation: don’t count on an employer pension, don’t count on social security (or CPP here in Canada), don’t think that retirement at 65 is realistic if you’ll live to 90 years. However, you’ve got these great tools available to you for tax sheltered investments. Now it’s up to you. Personally, I feel really in control of my destiny and I like it. Now, if I’d been told all my life that… Read more »

Don H
Don H
8 years ago
Reply to  Kevin

It is highly unlikely this scenario will play out as you predict. The government likes it when people become dependent on them by the apperance of the numbers. The number of people drawing on social benefits is increasing each year, not decreasing or holding steady. This includes those on welfare. I talked to my mom, and there was a time when you held your head extremely low and in shame when you had to ask the government in help. Today it is common acceptance to take money from the government, almost like it’s owed to you. This is a long… Read more »

EMH
EMH
8 years ago
Reply to  Elizabeth

My parents like to say “If there is any money remaining, then we didn’t plan correctly”.

Bella
Bella
8 years ago
Reply to  EMH

Am I the only thirty something who thinks that’s how it should be? 1) My parents gave me the good start to make my own money, to achieve my future, I don’t think they owe me any more 2) The vast bulk of their retirement funds were self funded – yes they inherited ‘some’ but it’s a pittence compared to what they earned themselves 3) I want them to have just enough money to get into a nice nursing home – and then – let’s be honest – even if you saved a bunch for for your kids inheritence –… Read more »

EMH
EMH
8 years ago
Reply to  Bella

Oh, I wasn’t complaining! I think it is wonderful that my parents were able to save a nice nest egg and have the time and health to use it. I hope to be in their situation as well. I personally think it is a bit morbid to actually want or think you deserve an inheritence.

Looking at my parents photos of their travels, hearing about their months in Mexico and their volunteer work means more to me than a few measly dollars.

Kelly@thehungryegghead
8 years ago
Reply to  Bella

I think like you as well. I am so happy to see my parents enjoy life. They worked hard for it. My dad still does, he is 63 and working around 60 hours a week not including. But he is a very positive person, he says that working keeps his brain active.

I never expected an inheritance from them, so if I get one it will be a bonus.

Beth
Beth
8 years ago
Reply to  Bella

Definitely not the only one! 🙂

partgypsy
partgypsy
8 years ago
Reply to  Bella

I’m in my mid-40’s. I am thankful of all the things I was given, a normal childhood, the majority of my college paid for. But, both of my parents received inheritances, sometimes multiple significant (at least to me) inheritances. And they did not manage their money well. In addition to knowing I will not receive an inheritance (the money is not only gone, they are in debt), I am given guilt/expectation for helping them financially. So that’s why people my age are called the “sandwich” generation.

Not my Usual Handle
Not my Usual Handle
8 years ago
Reply to  Bella

partgypsy, I am in the same boat, except for the part about said parents giving me any start in life. : ) I’m not disappointed, just disgusted (because these are folks who really had a lot given to them), and work REALLY hard to give my kids a better start!

Carla
Carla
8 years ago
Reply to  Elizabeth

My parents didn’t inherent anything from their parents. My dad was a sharecropper growing up = VERY poor. My maternal grandmother was a domestic worker. My maternal grandfather worked for Ford for 40 years, but everything was left to his second wife and step-children. In terms of me getting anything from my parents, its doubtful. Besides insurance for burial expenses and a house that’s fully paid (purchased in 1970) everything’s on a tight rope. I want them to be able to spend whatever money they will have in their golden years for themselves because God knows I can’t take care… Read more »

Jen from Boston
Jen from Boston
8 years ago
Reply to  Carla

One item about Social Security that not many people know is that farm workers and domestics were excluded from Social Security. So they were unable to retire with the minimum lifeline that SS provided.

Carla
Carla
8 years ago

That is true. My father was a child laborer/sharecropper so that would not apply to him anyway. The people that raised him didn’t get any benefits or rights either (being.

My grandmother, as a domestic laborer, worked until she was in her 70s.

John
John
8 years ago
Reply to  Elizabeth

30 somethings? I wish I had that kind of time. I’m fifty. I had a very substantial retirement savings going, with a real possibility of retirement at 55. Of course that was 10 years ago. Now my retirement accounts are barely above that 10 year ago threshold, even though I have tripled the amount I actually save. At least at 30 you have many extra years to make up the shortfall. I am likely to have to keep working until I am in my 70s to make up my lost earnings.

Jen from Boston
Jen from Boston
8 years ago
Reply to  Elizabeth

I thought it was the Baby Boomers who were inheriting? I heard on the news that as the Greatest Generation dies the largest generational asset transfer was taking place as Boomers inherited from their parents.

Of course, inheriting isn’t universally true for any generation, and I’m sure there are many Boomers who aren’t inheriting anything… But, I guess in the history of the country a larger % of Boomers were inheriting compared to previous generations.

20's Finances
20's Finances
8 years ago

I agree that retirement planning has changed for 20-somethings. I think the best way to plan for retirement is what you are doing. Saving now, so that you will have more flexibility as the time comes closer to pulling the plug. I personally would hate to be forced to work because of earlier decisions.

Nicole
Nicole
8 years ago

You can expect to get social security, but the age will probably be in the early 70s.

Personally if I were you I would be worrying more about your healthcare expenses 40-odd years from now.

Holly@ClubThrifty
8 years ago
Reply to  Nicole

That is exactly what I am worried about! A few years ago, we finally got a group healthcare plan at work. Before that, my husband and I were paying almost $1000/month for a private healthcare plan….and that was for two healthy adults in their late 20’s. At this point, we will be completely debt free (house paid off) in 5 years at age 37. Then we plan on working until we are 55 or so. However, how much is healthcare going to cost us on the open market? Will we even be able to get healthcare on the open market?… Read more »

Queeb
Queeb
8 years ago
Reply to  Nicole

I agree. I have read that Medicare is the real worry.
Also, I am 49yrs old and retirement is daunting for us too. We won’t inherit much because (thankfully) I wouldn’t be surprised if our mothers lived until they were 90. Our retirement accounts have been taking some bad hits these last few years and college costs are weighing heavy on us. (We aren’t paying for all of it, but trying to help).
Right now DH and I do what we can with finances and concentrate on taking care of our health.

Holly
Holly
8 years ago
Reply to  Nicole

ITA that what we need to worry about is health insurance costs. Plans like Rep. Paul Ryan’s, which will give older adults a voucher for a fixed amount towards health insurance will go a long way towards reducing the federal deficit, but are likely to decimate the savings of older adults. The vouchers are not guaranteed to increase at the same rate as healthcare inflation, which rises at breakneck speed. That means we are all going to have to pitch in much more to pay for our insurance in retirement. Medicare covers a fraction of older adults’ healthcare, as well.… Read more »

Beth
Beth
8 years ago
Reply to  Nicole

Yes! And whether we’re able to work past “retirement age” to begin with. A lot of people are forced in to early retirement because of a health issue or disability that prevents them from working.

I’ve seen my parents’ friends grapple with issues like strokes, heart disease, cancer and complications from diabetes — all before age 70 and often before age 65. Sometimes spouses and kids put their own financial well being on the back burner to care for someone.

What scares me is not being able to work as long as I want or need.

Holly@ClubThrifty
8 years ago
Reply to  Nicole

I guess the best thing we can do is to worry about the things we can control. Taking care of our health should be a priority to (hopefully) decrease our healthcare costs down the road. Even then, there are no guarantees. I am in the mortuary business and I see a lot of folks die young…and it turns out they they didn’t smoke or drink and worked out every day. Some of it is just genetics.

Holly
Holly
8 years ago

Yes! Just saw a study today saying 50% of health is due to a healthy lifestyle.

Cathy
Cathy
8 years ago

It’s disappointing that this site chose to participate in the scaremongering that goes on all the time about Social Security. A little bit of research would show that most of what you wrote is not true. – http://www.ssa.gov/history/lifeexpect.html J.D. I expect more from this site.

Dink
Dink
8 years ago
Reply to  Cathy

Social Security is the sacred cow that no politician in their right mind would slaughter if they valued their own reelection (which is, of course, the thing they all most value). However, as a young adult, I do not plan on receiving any substantial benefits when I reach retirement age; sure, my generation will get something in the way of benefits but not enough to live on and thus I think we must all plan accordingly. With our country’s monster deficit, politicians that just can’t get along, corporate philosophy now tilting the scale toward greed over societal good, the health… Read more »

John
John
8 years ago
Reply to  Dink

“….because no one in power cares to assist anymore, which unfortunately feels like a breakdown of our society and culture.” That’s why more of us should pay less attention to things that distract us and don’t matter (eg. Kardashians, who Justin Bieber is dating, etc.) and more to what’s going on in the political arena. All these programs that pass as entertainment are created by big business to distract and divert our attention away from what’s important: that is, being engaged in the political process. I understand that the sorry state of political discourse in this country is discouraging to… Read more »

Dink
Dink
8 years ago
Reply to  John

I’m with you, John, but what kind of choices do we get really when we’re given two people to vote for in any given election (sometimes three, but come on) and neither really cares too much about us? Do you know how much money it takes to run for any substantial office? It often feels like the popular vote is just a constitutional formality while the real voting goes on behind the scenes with the exchange of dollars. I do believe that anybody, from any background, can succeed in politics. But, to me at least, it feels that one must… Read more »

John
John
8 years ago
Reply to  Dink

Dink, as my reply to your reply, I hear you. Believe me, I hear you. I agree that it’s depressing, and like you, there’s been more than a handful of occasions where I, too, felt like just “dropping out.” But unless you’re part of the “1 percent,” (ok, maybe even the 5%) do you really think that you can really accumulate enough wealth in your 401k alone, given the performance of the stock market over the past decade, such that it can protect and insulate you from the vagaries of life? In this day and age, how many of us… Read more »

Rosa
Rosa
8 years ago
Reply to  John

I know SO MANY people in their late 50s who WANTED to work til their 70s but got downsized and can’t find anything.

Not only do the “raise the retirement age” folks not consider the health effects of some jobs (do you really want 68 year old nurses and firefighters out there serving the public?) but they assume people have more control over the job market than they do.

Cgirl
Cgirl
8 years ago
Reply to  Cathy

I don’t think this article is scaremongering at all. I think it’s more of a “well, this system looks broke. We can’t depend on it, so let’s start looking at other options.” SSA was started in 1937 as a social experiment. Experiments fail. Although everyone speaks like it’s been around forever, it hasn’t. If SSA went from “well funded” to “how are we going to pay our bills” in 75 years, why should I expect it to get better in the 35-40 years until I retire? I think it’s healthy for folks of all ages (especially younger ones, I’m 31)… Read more »

Melinda
Melinda
8 years ago
Reply to  Cgirl

Our Monetarily Sovereign federal government has the unlimited ability to create its sovereign currency and can pay any bill at any time – including all entitlements. Read these articles to understand how government budgets work as opposed to your own personal budget. There is a huge difference all GRS readers need to understand. We can “pay” for all the entitlements we choose as long as there are “goods” to purchase with the money.

Fixing this misconception will only happen with education and political intervention.

http://www.forbes.com/sites/johntharvey/2011/04/08/why-social-security-cannot-go-bankrupt/

http://rodgermmitchell.wordpress.com/2012/05/30/tragic-or-hilarious-social-security-disability-trust-fund-projected-to-run-out-of-cash-by-2016/

http://www.cfeps.org/pubs/sr/sr0501/sr0501.html

Cgirl
Cgirl
8 years ago
Reply to  Melinda

I’ve heard the “the government budget doesn’t work like a personal budget” argument before. It’s never been explained in a way that makes sense to me. Of course the government can just make more money and pay any bills it wants. However, every time I’ve heard of a government doing that it’s always ended up with hyper inflation, devaluation of currency, and hurting the populace. Additionally, the first paragraph of the first article you posted mentioned that SSA could be “elminated.” If anytime before I turn 70 the SSA is eliminated (or runs out of money or fails to keep… Read more »

Chris
Chris
8 years ago
Reply to  Melinda

Unfortunately if the government prints an unlimited amount of money, inflation will be so high that the social security payments that you receive won’t do much to help you survive. The government can be “Monetarily Sovereign” all it wants, however, if the money isn’t worth anything in the global marketplace it is irrelevant.

Sorry about the rant, I just really think that printing money is the wrong solution to the problem.

Positive_Net_Worth
Positive_Net_Worth
8 years ago
Reply to  Cathy

I don’t see this as “scaremongering” at all. While those currently on Social Security will more-than-likely continue to receive these benefits until they die, the amount that SS pays is certainly not enough to live a “comfortable” lifestyle – even today. I work in healthcare and hear stories frequently from little old ladies who receive less than $800.00 per month from Social Security as their only source of income, and must make the choice every month whether to buy medications or food and electricity. Based on the SSA retirement calculator, if I were to retire at 67, I would collect… Read more »

Steve
Steve
8 years ago
Reply to  Cathy

I agree Cathy. I’ve noticed that most of these sorts of Social Security is going to end posts are from 20 somethings. The stock market is at or below where it was back in 2000. Home values have decreased. Interest bearing accounts are below the rate of inflation. Pensions are nearly extinct. With recessions causing job loss and requiring families to dip into savings, it is harder and harder to save up a nest egg. What all this means is that now, more than ever, we need strengthen the generational contract. I realize you young folks think you can stick… Read more »

Jen
Jen
8 years ago

This could well be one of the most important posts that people read on Get Rich Slowly. I’m constantly surprised/concerned about the statistics I see about how little people have saved for retirement. Relying on Social Security just isn’t wise. I’m already assuming I’ll work longer than retiring at 65; I think most people should just assume they will be working until at least 70, if they are in good health. Sadly, the political will just isn’t there to make even minor changes to the program. I am honestly concerned that we are going to see vast numbers of our… Read more »

getagrip
getagrip
8 years ago
Reply to  Jen

The point about relying on Social Security is that it was never, and has never, been meant to be a sole source for retirement. It was always meant to supplement your retirement at best and keep you from starvation at worst.

So you shouldn’t rely on it any more than you should rely on a well intentioned and well off parent being able to leave you an inheritance since a sudden medical condition and a three or four year nursing home stay could alter their ability to leave you anything despite their wishes.

Justin @ The Family Finances
Justin @ The Family Finances
8 years ago

As a fellow 20-something (almost 30-something, which is kind of scary, lol) I can relate. While I still believe Social Security will exist by the time we retire, realistically the benefits will be less and the retirement age will be higher. What all of us 20 and 30-somethings need to do is have lots of kids. That way we can have a lot more younger people paying into the system when we start to hit retirement. Ha, just kidding. I don’t really like the concept of the leisurely retirement, though. I enjoy my work in corporate accounting, and once I… Read more »

Daria
Daria
8 years ago

I am a tale end baby boomer born in 1958. My brothers and I were sent off to college not even knowing how to open a bank account or CD,how to balance a check book or even a credit card. I chose not to finish college. As stated in a previous column, thank goodness for the internet and it’s access to personal finance blogs. IRA’s came into being just as I started working. Then the government changed the terms. 401k’s came out and were rapidly offered in place of pensions. Like many of our younger generations, we have lost years… Read more »

Renee
Renee
8 years ago
Reply to  Daria

To all of the above, I say AMEN!!! I too, am a late-born “Boomer” (always hated that term!) and my whole life has seemed like I am riding on the coattails of the generation born before me, trying to catch up. I plan to keep working as long as I am able,I try to help my college-age children out and am stressed to the MAX about my aging mother. Not all of us boomers are going to be playing cards in the back of the RV as we scale the mountains!

Kim
Kim
8 years ago

As a twenty-something, I was excited when I saw the headline. I was hoping for substantive information on how, specifically, my age group should be preparing for something so far off. Reading morose musings about the death of social security and why the baby boomers have set us up to fail is neither uplifting nor useful. Can’t we instead focus on the fact that, since we’re in our twenties, we have so much time ahead of us to use compound interest? I’m really not fond of seeing my age group portrayed as whiners, and maybe I read this too quickly,… Read more »

Liz
Liz
8 years ago
Reply to  Kim

You read too fast. He provided useful guidelines re: how he’s approaching retirement, and it came across to me as flexible and practical, not whiny. And selling compounding interest to younger readers has been done to death – this article illustrates precisely why we should be taking advantage of it rather than putting off contributions to our retirement funds.

Quest
Quest
8 years ago
Reply to  Kim

Don’t you think the author has a point? Politicians HAVE sold this country down the river by sending jobs to BRIC, not to mention the loopholes created by NAFTA. The jobs need to come BACK because, without them, the unemployment rate will continue to rise and the real estate market will remain flat (just as two examples). No jobs = no spending. No spending = dead economy. Dead economy = flat interest rates and stagnant investment. Exactly what we’re seeing now. Whose bright idea was it to decimate the middle class, the economic engine of this nation? The national debt… Read more »

Chase
Chase
8 years ago
Reply to  Quest

Politicians don’t send jobs anywhere, just like a president/governor/mayor cannot “create” jobs (unless the government directly hires people, which no one is crazy about in this political environment). The BRIC countries have been able to get jobs because of their low cost of living/wages. That won’t be the same forever though, as some companies are repatriating jobs due to higher wages in China. As consumers, we have a choice to support American jobs by buying American-made products. Being frugal, this can be a conflict of interest at times. I spend money on quality where it’s important to me. Most of… Read more »

Kristen
Kristen
8 years ago
Reply to  Chase

I “like” this post times twelve!

Quest
Quest
8 years ago
Reply to  Chase

Actually, Chase, politicians DO send jobs wherever they like. Please see Bill Clinton’s back door deals and the millions of dollars he made while ‘President’. Also, please feel free to substitute the word ‘politician’ with ‘Bilderberg’ LOL I do realize that all politicians are puppets. Let me have my fun!

john
john
8 years ago
Reply to  Chase

There maybe some truth about what you are saying with back door deals and politicians from both parties lining their pockets, but the truth of the matter is if you can pay a person 50 cents an hour or $15 an hour to make widget X or a software engineers 10k vs 90k, without an adverse impact in quality where is the job going to go, its called a globalized workforce which has been ramping up since the early eighties. Even if you put laws in place to impact trade restrictions or force certain job types the cost of services… Read more »

ChefAMW
ChefAMW
8 years ago
Reply to  Quest

Being a 40 something, this article also resonated with me. My retirement will not look like my parents nor be as early. More relevant than the politics,to me, is that the overall message here is that Retirement is not going to be status quo, things will be very, very different. Expectations need to change and plans need to be made accordingly. The 20 somethings that rely on themselves for retirement, regardless of social security, will fare far better than those that don’t.

Greg@ClubThirfty
8 years ago
Reply to  Kim

Kim, investing in the markets and the beauty of compound interest is great! I contribute to my retirement accounts every month. With that said, my advice to you, is to get out of debt as quickly as you can – be that credit card, mortgage, auto, or student loan debt. Without debts, hanging over your head, you really need very little money to live on during your retirement. Of course, this is assuming that your spending is not out of control and that you live within or below your means. If you can get yourself out of debt, you’ll be… Read more »

Kelly@thehungryegghead
8 years ago

No generation prior to the boomer’s enjoyed retirement. Therefore our expectations have been raised. To give people perspective. I currently live in Hong Kong where there is no social security. Many past retirement age work hard labor jobs, from garbage collectors, washroom attendants, waiters/waitresses, food deliveries, etc. It is a stark reminder that the government will not provide for you and that you must work hard and save for your own future. I think about the future often and I do not expect the government to provide for me when I grow old. I have been a poor saver in… Read more »

Kelly@thehungryegghead
8 years ago

Here is a post with pictures I wrote about the Elderly Workers of Hong Kong awhile back: http://thehungryegghead.com/2012/04/10/the-elderly-laborers-of-hk-the-lunchtime-delivery-men/

Brett
Brett
8 years ago

I’m 27 and my ideal retirement is coaching youth hockey or being a ski resort mountain guide. Yes, this post totally speaks to me. I think my generation should not count on SS for their retirement and that it should be phased out. I would love it if congress passed a resolution to phase it out for anyone under 30….and make us pay less in taxes. Live a little frugally now and enjoy the benefits in your golden years. Our lifestyles in this country grew to big for us to pay for. I don’t mind living a lower quality of… Read more »

SteveK
SteveK
8 years ago

Some of us 20 somethings are doing just fine. We went to school, got a STEM degree, worked at a relevent job during college, had our employer pay for our Masters, and have been pouring money into investments. We’ve taken advantage of the poor stock market performance to increase our holdings and low interest rates to buy homes. We’ve known for years that SS is not to be counted on and have planned accordingly. We’ll be ready to retire at a time of our own choosing and live a comfortable lifestyle. Just thought I’d give the more optimistic side of… Read more »

Dink
Dink
8 years ago
Reply to  SteveK

Hey. Stop the STEM degree crap. You know if everybody got the same degree as you it wouldn’t be worth anything, right? If everybody went to college to be an engineer, engineers would get paid low wages (it’s already happening, actually). It’s not the degree you get that matters. You don’t even need a degree to be successful.

Brett
Brett
8 years ago
Reply to  Dink

I’m an engineer in my late 20’s and all I see are wages going up. The average age in my engineering field is 49! No, not everyone should get a STEM degree, but neither should everyone go to college. Too much is made of just getting a degree in something, whether it’s basket weaving or a STEM degree. One can make a fantastic living with a certificate or apprenticeship in a skilled labor job, and there is a huge need for these types in the manufacturing sector. My company is struggling to find young machinists to replace our aging shop… Read more »

Marsha
Marsha
8 years ago
Reply to  Brett

At my husband’s company, he’s one of the younger engineers, and he’s 53! The Powers That Be are frantically trying to recruit newly minted engineers, but they’re having a lot of trouble replacing those that are retiring. They need the new engineers at least a year or two earlier, so they have time to train them on the specific systems.

SteveK
SteveK
8 years ago
Reply to  Dink

I agree that you don’t “need” a degree to be successful but getting one usually helps. Any type of degree or higher education is a good thing, if it doesn’t cause you to go thousands of dollars in debt. If the number of Indian/Chinese/etc… STEM graduates is any indication, the US could certainly have a lot more US STEM degrees without overwhelming the industry demand. When I started my B.S. in 2003, I was told to expect somewhere around $50k starting, the reality is most folks I know are starting around $65k+ with B.S. and we’re quickly going up to… Read more »

Bella
Bella
8 years ago
Reply to  SteveK

“In the end, hard work is what matters, which is yet another reason employers value STEM degrees because it shows you were willing to get punched in the gut day after day but still kept going…” If I could like this a thousand times I would. I appreciate that there are MANY MANY people in this world who work harder than I do for significantly less money – BUT – part of the reason my salary ‘out of the gate’ was so high and continues to be high is the high standard imposed on those in this profession. ALL of… Read more »

Brett
Brett
8 years ago
Reply to  SteveK

STEM degrees aren’t meant to be easy. These are the people who design and build bridges, buildings, cars and power plants. If you can’t hack it in a 4/5 year program, then you can sure as hell bet I won’t be driving the car you designed or using the bridge you constructed or installing the pace maker you developed.

And the number of STEM degrees China reports are greatly inflated. They count individuals who graduate and become machinists, electricians and plumbers as STEM degrees.

Quest
Quest
8 years ago
Reply to  SteveK

This is why, IMO, SteveK makes sense. STEM degrees are difficult to achieve. One of my own children is in the middle of one and it sure isn’t easy. In fact, employers regularly email the college asking for new grads to contact them immediately! “Everyone” most certainly will not be able to achieve a STEM degree so I don’t think we need to worry too much about that 🙂 What we should be worried about is the availability of cheap, smart labor in the BRIC nations.

http://www.nytimes.com/2011/11/06/education/edlife/why-science-majors-change-their-mind-its-just-so-darn-hard.html?pagewanted=all

Chasa
Chasa
8 years ago
Reply to  SteveK

Amen Dink – and to the poster who says out engineering degrees would be worth less if there were more of us, think again. You can’t find nearly enough good engineers. My company is ramping up hiring for the talent shortage it foresees in the next 5 to 10 years. In an era of high unemployment I get headhunter calls weekly for different 90k + opportunities and I don’t even have a lot of experience. We could double engineering degrees in the next few years and still make ‘big’ bucks with secure jobs. I think all this negativity about the… Read more »

jim
jim
8 years ago
Reply to  Chasa

Chasa, I have to question this idea that there aren’t nearly enough good engineers in the US. We hear that sometimes. Often corporations say it cause they want more H1B visas. Then those same corporations lay off 5000 Americans when their profits drop. And my laid off peers can’t find a job for 1-2 years. If you’re a comp. sci. from Stanford in San Jose then sure theres demand. I don’t think that most new engineer grads are being headhunted. When people talk about the abundant demand for engineers they always say ‘good engineers’. What qualifies as ‘good’? Top 10%… Read more »

PawPrint
PawPrint
8 years ago
Reply to  Chasa

As my 61 year old DH starts looking for a new job in computer science (has a BS and MS), I’m interested in seeing if this applies to older workers, too. If there really aren’t enough computer scientist in the labor force, you’d think employers would be willing to hire an older, experienced, stable worker who loves to code. We’ll see.

Kelly@thehungryegghead
8 years ago
Reply to  PawPrint

One of my dad’s close friends was laid off this year. He could not find a job in NYC where he lived so he moved to Atlanta, while his son and wife stayed in NYC. He is 50 years old and a computer programmer as well.

Quest
Quest
8 years ago

I can’t emphasize enough just how impressed I am that you are thinking about retirement in your 20s. That is stellar and you are already putting yourself ahead of the curve by keeping note of the fact that you WILL be old one day. So many people, including me, make the mistake of not realizing just how fast time goes by. Keep doing what you’re doing. Social Security may not take the same form that it takes today but it will still exist. It was only meant to provide supplemental income anyway, not supposed to provide a full income to… Read more »

Greg@ClubThirfty
8 years ago
Reply to  Quest

Agreed. I wish I had been thinking about retirement in my early 20’s. My biggest regret is that we didn’t start saving sooner. Luckily, I’m still in my early 30’s, so there is plenty of time to catch up. It would have been nice to have realized this 10 years ago, however.

jim
jim
8 years ago

Buddy, lighten up on yourself. We didn’t begin to start saving for our retirement until we were in our early 30’s – and even then, it wasn’t much. But, 2 more decades down the road, we kept it up and added to it and we’re going to retire with more than enough to see us thru AND leave an inheritance to the kids. Not a whole helluva lot, but enough to give them a nest egg. You’ll do fine.

getagrip
getagrip
8 years ago

Retirement is looking bleak for a lot of folks right now. As a parent of college aged kids I hear from other parents about their kids having trouble getting jobs, working for a reasonable salary, etc. and therefore I see myself having to plan not just for my retirement but for my kids potential sluggish ability to get into the market, pay back loans, and generally get their lives started. Now none of that may come to pass, they may all not need a dime from me, but that doesn’t mean I’m planning on that. So for me that means… Read more »

Kaytee
Kaytee
8 years ago

Inheritence?! I’ll be lucky not to be having to send money to my parents to help them out… while also paying off my student loans, saving for retirement, saving for my kid’s college. I don’t think either of my parents (divorced) have much saved for retirement at all. Looks like it might be time to have some uncomfortable conversations.

Chase
Chase
8 years ago
Reply to  Kaytee

This isn’t a problem so much for me. I was lucky enough to have financially-savvy parents who have enough saved for retirement (and are already retired). I’m not hoping for an inheritance though (not saying you or anyone is). I’d gladly pay out of pocket to help them along the last years of their life if they get to stay around longer. My girlfriend, however, is a completely different story. Both her parents passed away at a young age, and she was cared for by an aunt as a teenager. Her aunt, like it seems far too many baby boomers,… Read more »

bg
bg
8 years ago

I like the idea of partial retirement and that’s what I strive for, for the whole of my next decades (40-something here who wants to enjoy life now too, not just save up).

The only thing that makes me nervous is failing health / cancer / stuff like that. As long as I can see, sit, think and type, I’m able to make money. If I can’t do that anymore, it’s got to go downhill asap to save costs *cough*

Isela
Isela
8 years ago

I am almost 41. My retirement plan has changed several times already. First I wanted to travel the world, then I realized that I may be too slow and have bad vision to really enjoy visiting other sites, so better doing it right now. Now I just plan to arrive to retirement healthy, debt free, with money saved and working only for the pleasure of it ; not because I depend on every cent I made to live. I am reinventing my career right now to open more possibilities for the future. So I will recommend everyone to plan not… Read more »

Realist
Realist
8 years ago

If you want to take a guess at what social security will be when you retire (and you are under 40) look at your benefits statement and lop off 25%. That’s because as-is, the current structure (without reform) will have enough to pay 75% of benefits. It’s a guess but I’d say the best guess. Libertarians would like you to think that we should all be responsible for our own retirements but the evidence is clear that most people do not. Let’s have an individual/employer mandate for retirement accounts and leave social secutiry as is. If we want low taxes… Read more »

Lauren {Adventures in Flip Flops}
Lauren {Adventures in Flip Flops}
8 years ago

I’ll be honest, I haven’t thought a whole lot about retirement except that I’m not counting on any kind of SS benefit or pension. I do believe those things will be there, but because they’re subject to politicians/company CEOs etc., I just can’t plan for that because I have no idea what the *actual* benefits will be.

Chase
Chase
8 years ago

I don’t think about it a whole lot either, but it’s important to save. I think one of the best things someone can do that doesn’t want to think too hard is: 1. Open a Roth IRA at a low cost firm (Vanguard is my preferred firm), use one of the “Targeted Retirement” funds 2. Set automatic contributions for as much as you can afford ($416/month is the max you can contribute now) 3. Forget that the account is even there and keep contributing. If you don’t contribute the max, each time you get a raise add some more to… Read more »

Jen
Jen
8 years ago

This was a good post for making me think about retirement, as someone in my mid-20s. While I do focus on putting away money for retirement, I often don’t actually think about what we want to do when we retire, or even when we will retire. I’ve been saving for retirement since starting my first real job at 22. Everyone says that we’ll get SS money when we retire, but we’d rather plan without it and be pleasantly surprised than the reverse. Tens of thousands of dollars later, it is one of the smartest decisions I’ve ever made. People in… Read more »

Kevin
Kevin
8 years ago
Reply to  Jen

“I imagine once we have children, they’ll be like a back up insurance policy. We’ll save like it’s going out of style, but when we retire we hope that if we get into dire straights, our kids will help us out.”

What an incredibly awful reason to have children.

Has it occurred to you that your children might not be willing and/or able to save you from yourself?

Tracy
Tracy
8 years ago
Reply to  Kevin

I agree with Kevin. Speaking as one of three kids, and the one who did everything ‘right’ in terms of frugal/careful life choices, I am now the one that is expected to shoulder the bulk of supporting my mother (thank goodness my dad was financially responsible, but they divorced). I love my Mom, but this eats at me every damn day, and it puts strain on my relationship with my two siblings, neither of whom are in any position to help at ALL, and possibly never will be.

LJ
LJ
8 years ago
Reply to  Tracy

I’m in a similar situtaion. Only child of the family to get my finances sorted out (ie spend less than I earn, own a house, not rent and save). My mom is still years off retirement and has already started asking me for money. She actually helps my siblings out regularly even though I know we earn similar money, they just waste all their income and then ask for hand outs. I’m not looking forward the time when she hits social security age and stops working. Everyone spends all their income, laugh it off if I talk about saving for… Read more »

Jen
Jen
8 years ago
Reply to  Kevin

I think my point didn’t come across very well. I wasn’t meaning to say that we would have kids solely as a backup in case we don’t save enough. We plan to have a family and we also plan to save, not one or the other. If we aren’t able to have a family, that frees up a very large portion of our income that we can save for retirement. Or, if God forbid we have a child with a disability, we have enough time until retirement that we can reconfigure our savings plans to save more. I understand that… Read more »

Donna Freedman
Donna Freedman
8 years ago
Reply to  Jen

Or you could find yourselves infertile and for whatever reason unable to adopt.
Or you could have a child with a disability who will struggle to support himself and won’t be able to help you — or who will always need YOU to help support HIM.
I hope that doesn’t happen. But please don’t view your (potential) kids as your backup plan. Speaking as the mom of one who became very ill at 19 and was left with some permanent impairment, I can say that the universe has a way of throwing not just curveballs, but also change-ups.

Jen
Jen
8 years ago
Reply to  Donna Freedman

Donna I think you make a very good point. I had not really considered the possiblity of children becoming severely disabled at a much later age, but it is a possibility. I think at that point I would put more effort into using some savings to create a safety net of insurance and legal direction so that we would already have our plans in place by the time we reached that point of our life.

Adam Hagerman
Adam Hagerman
8 years ago

Being a twenty-something myself, I have to agree that things definitely look different for us in retirement.

There is a lot of “do what you love” going around in our generation and I think that saying will carry us throughout our lives. Even if we are unable to do what we love right away, we will always be dreaming about it. I think that is what we will all envision our retirement to be: something we love.

graduate.living
graduate.living
8 years ago

As a late twenty-something, I have only a small amount saved for retirement (I know, I know…). If I end up as a tenured-professor at a college/university (which is the typical goal of people in my field, but I’m not 100% sure it’s mine) I’ll probably work well into my seventies (assuming I live that long). As soon as my debt is paid off, I plan to start saving aggressively for retirement (although I’ll never recoup that compound interest… =( When I do retire, I plan on continuing to work through volunteering. For Americans, so much of our identity is… Read more »

Amy
Amy
8 years ago

I am not waiting till age 62 to live my life. Yes, I find it important to make sure we have enough to live on comfortably in our old age, so I’m not saying we’re not preparing. But we are starting to travel now. There’s a trade-off… we buy less and less Stuff to do so, and I don’t regret it one bit. But retirement to me isn’t waiting decades to enjoy my earnings. Personally, I would volunteer in schools, esp. younger grades for reading, when you have 20+ students ranging in reading levels from practically nothing to 6th grade… Read more »

Beth
Beth
8 years ago
Reply to  Amy

I remember reading that in Europe, experts are starting to see a shift towards people taking more time off during their careers (to travel, etc.) and working longer as a trade off. The research isn’t published yet — the trend is still being studied. I like the concept, and maybe I’ll try it myself one day 😉

Greg@ClubThirfty
8 years ago
Reply to  Amy

We are choosing to use the same approach. We won’t spend our life waiting to live during retirement either. In the field in which I currently work, I see people who die young all the time. While we are saving for retirement, our goal is to cut our spending on things we really don’t want so that we can spend on things we do want. I don’t really want, or need, to go out to the bar on the weekends. I’d rather save my money and take my family on a great vacation. I don’t need to eat out 4… Read more »

Norman
Norman
8 years ago

“Whatever you do in retirement, make it meaningful, not just leisurely”

Honestly, I just wanna be a slug in retirement. I’ve strived for meaning all my life. When I retire, I’m just gonna play like a kid.

notpollyanna
notpollyanna
8 years ago

At 27, with a lot of student loan debt, and no employer match to retirement contributions, I haven’t been saving for retirement. Right now, the biggest ROI available to me is to pay off my student loans as fast as possible. Someday, if I have an employer that matches retirement savings, I intend to take advantage of that as much as I can and as much as makes sense, since it can be that paying off debt faster means more significant benefit to my lifestyle overall even if that means I miss out on some matching). I won’t be able… Read more »

Deborah
Deborah
8 years ago
Reply to  notpollyanna

You raise a valid point about the difference between life expectency and ability to work. Many people who “make it” to 75 (or 80 or 85) do so in poor health. When your health is lousy you’re not able to do your best at a job. Raising the retirement age will likely keep a lot of these less-capable folks in the workforce while also preventing the younger generations from moving up. That doesn’t sound like an economically good deal either.

Ramblin' Ma'am
Ramblin' Ma'am
8 years ago

I’m 29. Right now I’m saving 6% of my income in a 401(k), and my employer matches 2/3’s of that. I also get a bonus deposited in my account every year, equal to 3% of my salary. So overall I’m saving 13% of my gross income. But the numbers still look small, because I don’t make that much. After my emergency fund is at a level I am comfortable with, I will likely up my contributions and/or start funding a Roth IRA using a Targeted Retirement fund. I do think Social Security will be around when I retire, but certainly… Read more »

Gomez
Gomez
8 years ago

I am 47 and I have read the article and the comments and I have become very concerned about the attitudes of some readers. Most think that if you work hard, put money into a 401K, then that is all you can do, and hope for the best. People should be thinking of other ways of investing their money to have multiple income streams when they retire. I had about 40K saved for my daughters college education, (I know, not even half of what is needed), but instead of writing checks to the college I decided to by a residential… Read more »

Daria
Daria
8 years ago
Reply to  Gomez

We did this too. We bought a rental property and also paid off our home. The combination of no mortgage, the sale of the rental property when our second child started college, some college academic scholarships, and my second income enabled us to put 4 children plus my husband getting his masters through college debt free. Last year we bought another house two houses away from where we lived on a short sale. It had a pool. We turned the house that was paid off into rental property which is easy to look after because it is two houses away.… Read more »

William @ Drop Dead Money
William @ Drop Dead Money
8 years ago

There is one more thing to keep in mind while contemplating the “golden years.” In the past, the primary restriction was age – something like: we’ll get as much as we can till no employer will give us a job, and then we’ll do the best we can on what we have at that point. You, though, read this blog. You have an entirely different dynamic going for you. I call it drop dead money: enough money to tell everyone to drop dead and do what you want. You get to check out of the rat race whenever you reach… Read more »

getagrip
getagrip
8 years ago

I agree. I was going to throw something in that the retirement thoughts should be more in line with financial independence and setting yourself up not to have to work if you choose not versus working until you die or hit a predetermined age. Be that via passive income from rentals, a nest egg, side business’s, serious reduction in spending, etc. I think a big problem is with the current economic issues, it’s not just ourselves we end up worrying about supporting, but other family, to include our parents, siblings, and our children. It adds to our perceived pressure and… Read more »

Tracy
Tracy
8 years ago

Honestly, retirement is looking tough for the Gen X-ers, too. The post WW2 economy that the Greatest Generation retired in and the Boomers grew up in? I think that was a crazy historical abberation that abnormally skewed Americans’ idea of what to expect as normal. We started planning for retirement late, due to my husband’s Army service and time required to get 4 STEM degrees to be competative for jobs in his field. And of course there was the student loan, car, mortgage (very modest) debt. We never really had much credit card debt, thankfully. We knew early on that… Read more »

Ash (in US)
Ash (in US)
8 years ago
Reply to  Tracy

Tracy, would it be possible to build onto your house with a mother-in-law suite? That might free up some of that 10k because even if you make the addition almost 100% separate you aren’t maintaining 2 locations. Or you are, but you rent out the second home after you move her into yours. Just a thought. I know that personal privacy and freedom from drama are without price, though.

Tracy
Tracy
8 years ago
Reply to  Ash (in US)

Yes, it might be necessary within a few years. We tried all living in one house for a year, and it was not a very good situation. We are actually really fortunate that we live in a low-cost city with extremely cheap real estate, and can (technically) afford to maintain two locations. As my Mom ages, we will need to rethink. Either she’ll have to move back in with us, in which case an addition would be required, or we’ll all have to move to a larger house. Depending on cash flow, we might try to keep that second house… Read more »

Rosa
Rosa
8 years ago
Reply to  Tracy

every time our local radio talk show has “boomerang kids” as a topic, they get a few callers whose 20something kids moved home to help Mom & Dad pay the bills through a rough spot. And yet somehow the host always manages to make it be about how 20somethings can’t get launched.

Paul
Paul
8 years ago

I have been saying two things for years:

If you rely on the government to take care of you, expect to be disappointed

If you are under 50, you need to plan to be 100% responsible for your well being in retirement. That means plan for no Social Security, and plan to have to pay for your own healthcare.

LMN
LMN
8 years ago

This article really hit a nerve for me. I’m 45, Mom is 66, Dad 71, very early boomers both. I guess I feel like, although they made some very good choices (classic millionaire next door stuff, frugal living, saving like crazy — 20% of income since 1960s, had kids young, drive cars for 300k miles plus, live in same house since 1972, very smart investing) and I have made much poorer choices, that they have been historically and generationally lucky as well. Don’t get me wrong, I am very lucky. Had two loving parents (still happily married) who gave me… Read more »

Tara
Tara
8 years ago
Reply to  LMN

Sing it, sister! I am 46, single and no kids. My parents are currently living in retirement (retired at 58) on far more money than I have ever made per year, with social security, pensions and IRAs – they had the greatest stock run-up in history to swell their accounts. My dad retired with $400K in his account and says he has already withdrawn more than he ever put in – and the account is still currently over 600K! I have been putting the max into my 401K for 20 years and after lackluster market performance and two big crashes,… Read more »

CA
CA
8 years ago
Reply to  LMN

Good for your parents.

Clare
Clare
8 years ago
Reply to  LMN

Technically speaking, your parents aren’t baby boomers.

Carla
Carla
8 years ago
Reply to  Clare

Her mother is right on the edge. Father is not.

“A baby boomer is a person who was born during the demographic Post-World War II baby boom between the years 1946 and 1964, according to the U.S. Census Bureau”

http://en.wikipedia.org/wiki/Baby_

jim
jim
8 years ago
Reply to  LMN

LMN,
Seriously? You’re a lawyer who makes $60,000 plus a year – you support no one but yourself – and you haven’t saved and invested enough to ensure a safe retirement? You need to get some serious financial advice. You’ve got the world by the tail, from most people’s perspectives. There is absolutely NO reason in the world for you to not retire comfortably – assuming you get a budget, live beneath your means and invest. Hell, if I only had to support 1 person on $60,000 a year, I’d be a multi-millionaire.

Carla
Carla
8 years ago
Reply to  jim

Jim, I wouldn’t assume she was making that kind of money during her entire career.

jim
jim
8 years ago
Reply to  Carla

Well, you should. Read her later posts. The only thing that girl needs to do is get off her pity pot and grow a pair. There is absolutely NO reason she’s financial insecure when she’s a lawyer making $60K plus with no one but herself to support. Total b.s.

LMN
LMN
8 years ago
Reply to  jim

Yes, I know that I’m luckier than a lot of other people. And I mentioned that I made a lot of mistakes, lived beyond my means, got into debt, etc. And I’m paying for that now. I guess I had always thought SS was not a given but I had counted on a pension that was substantial — that was the deal the state made with me, as I saw on my retirement statement each year. Those benefits are (were) substantial, and I counted on them. But now at a career point where I really can’t do anything as a… Read more »

partgypsy
partgypsy
8 years ago
Reply to  LMN

Sounds like my parents in law. I love them, but they are a little clueless for those who are living in entirely different financial situations. They don’t like where we live, want us (really the grandkids) to live in a nicer house with a bigger lawn, their own bedrooms. They will give us flyers of houses for sale near them. Maybe next time that comes up I’ll say sure, if you give us the downpayment for it… what I say is, we are doing what works for us.

LMN
LMN
8 years ago

And I meant to add, as a state employee, I used to feel like the trade-off for my miserable salary was the guarantee of a relatively generous pension for the rest of my life, as I have no kids, no neices or nephews, to care for me. I’m all I have. But now that they’re blaming the economic meltdown on we “greedy” govt. employees, and keep trying to chip away from our pensions, keep raising the bar and threatening to move it away altogether, I don’t feel secure about that anymore either. After 16 years of working for the state… Read more »

Tracy
Tracy
8 years ago
Reply to  LMN

I really relate to your second post (as I noted posting in response to the state worker article from a few days ago. There are something like 6 different bills in various stages right now, which propose to do some sort of damage to federal employee wages. Ironically, I support the idea of the federal cost of living freeze (which we’ve been under for a few years now) AND I don’t think federeral employees contribute enough to their pensions, so I support phasing in increases for that, even though it’s gonna hurt us. But the ugliness of the attitude towards… Read more »

Martin
Martin
8 years ago
Reply to  LMN

Well, a. Deep breath. What is the worst that can happen? You lose your job? You lose benefits? You don’t directly control that happening, but you can take steps to minimize the probability and/or impact. b. You are single, responsible for only yourself. You are where you are at because of the choices you have made. Don’t like where you are at? Start making different choices. Also take a moment to step back and objectively consider where you are at *without* holding up the yardstick to people more successful than you (e.g. parents). You got a law degree, how many… Read more »

LMN
LMN
8 years ago
Reply to  Martin

Thank you for this kind, helpful, and reasonable response. I wanted to point out before people start thinking that I’m at work goofing off here, I’m on vacation this week. So yes, another good thing about my life is I have paid vacation. I try not to be envious but there is an element of cluelessness about my parents. One thing I didn’t mention is they spend, my mother told me last week after they crunched the numbers, more than $25k/year on their dogs. These are very SPECIAL dogs who get weekly acupuncture, massage, etc.; one dog has had three… Read more »

CB
CB
8 years ago
Reply to  LMN

This is EXACTLY why I’m glad that no one (government, employer, parents) are making any promises to take care of me. I know up front (I’m still in my 20s) that it’s up to me and that anything extra is gravy on top. I am perfectly happy with this arrangement.

Danielle L. Schultz, CFP
Danielle L. Schultz, CFP
8 years ago

Especially since pensions are pretty much non-existent now since we were all sold on the great “benefit” of 401ks with their measley employer match, which we’re supposed to be so grateful for, it’s absolutely essential to save. But in my financial planning practice, I see problems even for people who have worked very hard and lived frugally–they didn’t learn about investing. Either they’ve parked their money in something ultra safe that they think they understand (like CDs)and earned nothing, or they’ve been scammed by some broker who calls themselves a financial advisor-coach-planner and they’ve been rooked by high fees, commissions… Read more »

Jennifer
Jennifer
8 years ago

I also want to mention that working for the rest of your life may not be an option because of age discrimination, especially in corporate jobs, which usually presents itself when you’re in your 50s. If you’re over 50 and have a job, corporations look for ways to phase it out so they can hire a younger person who will work for less income and is willing to work longer hours. If you’re looking for work, some places won’t hire you if you’re over 50. I work for one of the largest financial companies in the country, and age discrimination… Read more »

kl
kl
8 years ago

For the person thinking they’ll work in retirement as a museum docent? You could volunteer, but without an MA in art history and years of experience you will probably not be able to get a paid position as a docent. Just FYI.

Kylie
Kylie
8 years ago

Great article, thank you. It gives me the willies when I hear people of my parents’ generation talk about themselves like they were real estate wizards back in the 70s, 80s and 90s. Quite frankly, 1) you could have bought a tin shed in Australia in the 1980s and today it’d be worth a million dollars, 2) you didn’t save up the equity in your property–inflation did that for you.

Erica
Erica
8 years ago

I am curious to see how this situation will affect age discrimination in the workplace. With people living longer and having to or wanting to work after age 65, we can’t just cast aside people over 50 when hiring like many organizations do. But on the flip side, many Boomers don’t have the technology skills needed today, and those of us who grew up with computers and the Internet will still need to keep up with the latest technology as we age.

Pete
Pete
8 years ago

I disagree with most posts here. I think the age of technology has made us more prepared than our parents or grandparents ever could have been about retirement. They didn’t have 401k’s, IRAs, and websites teaching them how to automate finances and leverage tax loopholes. We can switch jobs by throwing resumes out to 1000’s of companies simultaneously and move across the country comfortably thanks to yelp, craigslist, and other websites which allows us greater earning power and quicker promotions. At 26, my wife and I both work, no kids, rent our house, and save 50% of our income for… Read more »

J.Mill
J.Mill
8 years ago

I’m 26, married and my husband and I live in downtown Chicago (Chitown pride, what what!). We think about retirement as much as the next couple in our demographic. We have some responsible friends that are working their butts off now to try and retire early. They work long hours at hard jobs to live comfortably now, but mainly to “have options” later as they like to say. We don’t save as aggressively as they do (retiring at 45 is not our goal), but we are mindful of putting away a lot of each paycheck into our 401ks. I’m glad… Read more »

Alex
Alex
8 years ago

Back when I was in my 20s the older folks were saying that social security won’t be around. Now I’m in my late 40s and all the dire predictions didn’t happen. Social security is still around.

That doesn’t mean you shouldn’t save.

J.
J.
8 years ago

I’m disappointed the government doesn’t offer more ways to save for retirement. If you have a company sponsored retirement plan (e.g. 401k or SIMPLE IRA), consider yourself lucky. Many companies I’ve worked for offer no such benefits. All I have is a paltry $5K/year IRA. Why hasn’t the limit been increased, especially if we’re not supposed to depend on social security?

Jenna, Adaptu Community Manager
Jenna, Adaptu Community Manager
8 years ago

I’m far from retiring. Although to be far I can’t imagine myself not ever “working.” But I can imagine myself traveling and volunteering more as part of my “work”. Being healthy, both physically and mentally is key for me when I do retire. More than any amount of money in the bank.

Jane
Jane
8 years ago

You missed an important lesson from my father’s and husband’s (and now my children’s) lives on HOW they got the GI Bill. They joined the military and worked for their country. Anyone can do it! Really- just volunteer. There is always the Peace Corps or Americore if you don’t like the military. As we (53&62) gain inheritances we fund our kid’s IRAs and house down payments. We give in slow increments so they will not be taxed and neither are we. We talk about money ALOT and let them know that we did it ==so can they. Our kids(28M24 &… Read more »

Kim
Kim
8 years ago

In all the retirement calculators, either ones I do myself or ones with my financial advisor, I leave out SS. If we do have it’ll be a nice bonus for extra travel or some such, but we don’t count on it. We save 30 percent of our income, and always have in diversified funds. Other than that we live a pretty simple life — when we buy something we make sure we actually want it, not “keeping up with the Joneses”. This seems to get people in more trouble than anything else. My husbands’ parents bought a six-bedroom McMansion as… Read more »

Lance@MoneyLife&More
8 years ago

I am in my mid twenties and saving a ton of my take home pay for retirement so I can retire how I want to. If you’re proactive now you can still retire at a decent age and live the life you want. However, you have to sacrifice a little now to get what you want later.

Stephanie @ The Empowered Dollar
Stephanie @ The Empowered Dollar
8 years ago

Last week I went to a conference about retirement planning. The speaker mentioned that many of her clients were disappointed that they didn’t have enough money in their 401(k) to fund the lifestyle they want, and that it was sad because your 60’s and 70’s are supposed to be the time of your life! I wasn’t sure whether to puke or cry when she said that… Retirement now has a different meaning than in past generations, and (as most of us know) the job market is a different place as well. Therefore my own goal is to be able to… Read more »

Paul
Paul
8 years ago

Tim, I’m a parent of two young children and have been giving a lot of thought to your comment below. Quite frankly, I think there’s a lot of truth to it: We all agreed that our generation, with its student-debt, terrible economy, and little ability to trust the solvency of social security, has to redefine our image of retirement. What are you thoughts on introducing…even encouraging my young children to take a close look at entrepreneurism at an early age? I’m not saying it’s an easier alternative, or even a solution. But I’d like for them to be more proactive… Read more »

DaftShadow
DaftShadow
8 years ago

Tim, Please read this article: http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ You and your friends are focusing on the wrong things. In order to get control of your retirement, your ultimate goal is not to rely on the state, but instead to collect enough cash and assets that you can live off the investment returns into perpetuity! The key element to reaching a long-term retirement stash actually has nothing to do with SS calculators, life expectancy graphs, or even the cost of housing in Florida. The one key element that defines how quickly and how successfully you will get to retirement is this: “Savings Rate.”… Read more »

John G.
John G.
8 years ago

I say let’s retire at 40 for 10 years and then go back to work, then just do that until you stop. You can enjoy a lot more between 40 and 50 I think.

Janette
Janette
8 years ago
Reply to  John G.

Nice thought. good luck getting back into the job market at 50 after you have taken 10 years off. Unless you are in a field that doesn’t change or are self employed…getting back in is basically impossible.

Financial Advice for Young Professionals
Financial Advice for Young Professionals
8 years ago

I am a big proponent of making sacrifices now so that I can semi-retire ASAP.

I’m probably most interested in personal financial advice and real estate but I knew that I wouldn’t make much money doing this at first. Instead, I majored in aerospace engineering, something that I was good at. Now I make double the average salary for my age. I save like hell, bought a condo, have roomates, max out 401k, etc. I don’t mind my job, but I know I wouldn’t be able to do it for the rest of my life.

Alan | Life's Too Good
Alan | Life's Too Good
8 years ago

Hi Tim, Interesting discussion – it’s now more important than ever to invest for your own future and to take control of your own situation and your own finances – including your plans for retirement. We shouldn’t be relying on the state to pay us back for our years of hard work given the mess the global economy is in. Relying on the state or anyone other than ourselves for our financial security was a bad idea before but even more so now than ever. … and I agree, so much money is wasted these days even despite hard times.… Read more »

K.C.
K.C.
8 years ago

I retired at 56. I can tell you that even as a Baby Boomer, I didn’t count on SS. It will be nice to receive it, but I made plans to retire without it. I didn’t start thinking about retirement until my father was diagnosed with Alzheimer’s disease at age 54 and took a disability retirement. That really opened my eyes. I was 28, in debt, and broke at the time. Everything I owned fit comfortably in the back of a ’72 Gremlin which I had borrowed from a friend. It is unproductive to think about how you will spend… Read more »

DaftShadow
DaftShadow
8 years ago
Reply to  K.C.

In the past, when I thought of saving for “Retirement” it never clicked for me and I could ignore it as something far away. But once I started thinking about Saving for “Freedom”, it all started to make sense… It’s a subtle difference that makes all the difference in the world! With the right pattern of saving, and starting it up while you’re young, you can get yourself absolute freedom for the rest of your life. Your 30’s, 40’s, 50’s, and on and on and on… Building a family while never worrying about money. Building the life you want without… Read more »

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