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Retirement: The Scary Numbers Behind The Soothing Lies

Tyler Durden's picture




 

The state of Americans’ retirement accounts is dismal is how ConvergEx's Nick Colas begins his critically important-to-read note on the reality that millions face. According to an early 2012 study by the Employee Benefit Research Institute, Colas notes only 58% of us are currently saving money for retirement – and 60% of those that are have less than $25,000. Thirty percent have less than $1,000. Needless to say, it’s a far cry from the 8x-10x final earnings suggested by most retirement planners. So why are we so far behind? Americans aren’t exactly known for impressive savings habits, but that alone does not explain our poor preparation for retirement. Rather, a general lack of financial literacy, including basic understandings of savings growth and retirement income needs, superseding financial obligations, and basic behavioral finance biases keep us from putting cash away. But if we keep up at this pace, you can expect the ongoing political debate about Social Security to take on new and more strident tones.

 

Via Nick Colas (and Sarah Miller) of ConvergEx: Hope I Die Before I Get Old

 

Note From Nick: I don’t remember anything about being 23.  Or 24.  Or…, well, you get the idea.  But understanding the financial decision making of this cohort is a useful exercise, especially when it comes to investing for retirement.  Happily, Sarah is in the thick of these decisions and is, in fact, 23.  It is pretty easy to see the long shadow of an important social problem from her narrative.  If you think the debate over Social Security is raging now, just wait a few years.  And now, over to Sarah…

I’ve been at ConvergEx for just over a year now, and I’m happy to say I’ve survived 12 months at my first job in the “real world” after college. I’d like to think I’m a bit smarter than I was when I walked in here last year. When I was given the employee handbook with all the options for healthcare, restaurant discounts, and pre-tax transportation contributions, I admit I had no idea what to choose. So I did what any 22-year-old Millennial child would have done: I called my parents. I figured my mother, who works in healthcare, and my father, the finance professional, would be the best advisors for these kinds of decisions.

After deciding on my options for healthcare and transportation, we finally came to the 401k – something I had certainly heard of, but never really confronted. At 22, retirement savings was nowhere near the top of my priority list; and having just moved into New York City, I was not keen to tuck away part of my paycheck that could have been redirected towards some other expense. After all, wouldn’t that money serve me so much better as a new pair of boots than it would in some account? Part of me is still inclined to say “YES!”. But knowing my parents probably knew more about this than I did, I followed their advice and put a whopping 1% of my paycheck towards the 401k.

Little did I know that only one year into my employment, at the age of 23, I would be farther ahead in my retirement savings plan than millions of American workers. According to a March 2012 survey by the Employee Benefit Research Institute for “retirement confidence”, the majority of Americans are vastly underprepared for retirement, with very few savings or even none at all. A few key takeaways from the report, which can be found here:

  • Only 58% of us are even saving for retirement in the first place. Of that group, 60% have less than $25,000 put away, not including home equity or defined benefit plans. Even worse, a full 30% have less than $1,000. A meager 10% have $250,000 or more. (For comparison’s sake, a quick survey of different retirement advisors’ websites showed that the average recommended savings is about 8x-10x final salary – by some estimates, around $1 million)
  • While these low savings might be expected of the youngest age cohort, almost half (48%) of workers ages 45 and up have less than $25,000 saved.
  • Savings rates and the amount saved are strongly positively correlated to education, income, and health status. 93% of those making more than $75,000 are saving, compared to 35% of those with and income of $35,000 or less.
  • Only 38% of all American workers participate in an employer-sponsored retirement savings plan. That said, only 74% are offered this kind of plan. Of those that choose to participate (81%), savings and investments typically total at least $50,000.
  • 34% of workers that had saved said they have had to dip into their savings to pay for everyday expenses. 22% of retirees claim they’re taking more than they thought they would out of their accounts, depleting their savings even faster than they anticipated.
  • Overall it’s a pretty bleak picture. On the whole, Americans are hugely underprepared for retirement, leading quite a few of them (22%) to put off retirement to a later date, or not retire at all (7%).

But why the lack of preparation? Several complementary reasons might reveal the answer:

1. Lack of financial literacy. Americans on the whole are not versed in the ways of financial planning. A study by Lusardi and Mitchell in 2005 found that less than half of a sample of US adults 50 and older was able to answer simple questions about inflation and compounding interest. Another study, by McKensie and Liersch in 2011, showed that a majority of adults misunderstood savings growth: they expected it grew linearly rather than exponentially, therefore underestimating the potential return a small investment could have over several years. When exponential growth of savings was demonstrated, real employees chose to save more for retirement (see the study here). To top it all off, 34% of those surveyed by the EBRI estimated they needed less than $250,000 to retire.

 

It’s plain correlation, here – the more you know about retirement planning, the more likely you are to do it. Most Americans don’t even calculate how much they might need, leading them to grossly underestimate the costs. A good portion of them (79%, according to the EBRI) also think that Social Security will be a dependable source of income during retirement – much more so than retirees in the 20th century. While that may be true for the Baby Boomers, my generation can’t bank on SS being there when we turn 65. Instead, it’s important that we understand the importance of saving for retirement – or, more likely, the risks of not doing so.

 

2. Basic behavioral finance biases. Much like the typical stock market investor, retirement savers face several obstructions in the way of their savings goals. A short report from the 2010 Social Security Bulletin, found here, highlights a few of these.

“Ambiguity aversion” is rampant: investors don’t trust products they don’t understand. Given the lack of financial understanding of retirement accounts, then, it’s not surprising that so many Americans shy away from them.

“Heuristics bias” is another classic behavioral finance term found in retirement savings literature. Even if we do choose to save, we may not follow the so-called “rules of thumb” that classical economics assumes in retirement accounts. For example, the traditional allocation shift from equity to bonds as one ages is assumed in classical finance, but according to a 2009 study by VanDerhei, quite a few older investors did not follow this “rule” and lost a significant portion of their savings in 2008.

“Hyperbolic discounting” is also to blame. This is the theory that we sacrifice long-term large gains for short-term immediate gains – we’d rather have an extra $20 in our pockets every month than in an account we don’t touch. This will be a tough one for Americans – the chronic spenders – to overcome.

 

3. Superseding financial obligations or situation. From weekly groceries to college tuition, savers today are putting other financial obligations ahead of their retirement plans. According to the EBRI survey, 62% of workers consider their current level of debt to be a problem, and may choose to allocate more spending to paying down that debt than to saving for the future. Lower income households are especially prone to this problem: with less income to put away, fewer and fewer of them are saving (down to 35% in 2012 from 49% in 2009).

 

4. Options. While employer-sponsored retirement savings plans yield high participation rates and above-average savings, not all workers are fortunate enough to have this option. Defined contribution plans such as 401ks and IRAs have overtaken defined benefit plans in the private sector: according to a Department of Labor report from March (found here), a peak of 175,143 private pension plans existed in 1983. That number is now down to 47,137. And as various retirement account studies show, “opt-in” retirement accounts do not draw as many participants as “opt-out” – a clear explanation for Americans’ under-preparedness. This has prompted a few researchers to suggest more active advertisement of plan options for those both with and without employer-sponsored plans to facilitate higher response rates from employees.

The public sector, meanwhile, is still in relatively good shape in terms of defined benefit plans. But while state and local public employees near retirement might expect a decent payout when they become retirees, plans may have to change for public sector employees in the future. Many states – California and Illinois  in particular come to mind – have started to consider changes to pension plans given massive cash shortfalls and, arguably, overestimation of growth potential in the pensions (to see a list of expected growth rates in public pension plans by state, see here). Some localities, such as San Diego, have already switched city workers over to defined contribution plans instead.

With these obstacles in place, it’s not necessarily shocking that Americans are financially underprepared for retirement. More financial planning education, or at least a simple demonstration of the importance of saving, and clear options to all workers may help to better prepare us. But a close look at what we expect from our retirement plans – both in the public sector and the private – is essential, given a general misunderstanding of savings growth and payouts on both ends. It’s up to individuals in the private sector to make our own changes, but public sector pensions face quite a host of litigation and regulation to push through.

Most of all, it’s concerning that so many Americans seem to think Social Security is a dependable enough program to fund their retirement. The average payout for a retired worker in August was $1,235.63 – hardly enough to sustain oneself through several years of retirement. My generation will need to come to terms with the fact that by the time we retire, SS may simply not be around. But those who are approaching retirement in the near future need to understand – and plan on the fact – that Social Security cannot be their only source of income in their retirement years. They need to start saving, and fast.

 

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Fri, 10/12/2012 - 17:39 | 2883117 Kitler
Kitler's picture

Social Security cannot be their only source of income in their retirement years. They need to start saving, and fast.

Good idea since Wall Street needs more muppets or it will soon implode.

PMs and farmland people.

Fri, 10/12/2012 - 17:40 | 2883134 AldousHuxley
AldousHuxley's picture

despite sixfigure student loans, young Americans are good for one more scam....

boomers will be able to offload their old house for multiples to finance their retirement.

Fri, 10/12/2012 - 17:46 | 2883156 Thomas
Thomas's picture

"8x-10x final earnings suggested by most retirement planners."

That won't get near security. Such estimates assume huge returns on those savings during retirements. I say 20x earnings. Some say 25x final earnings.

Fri, 10/12/2012 - 17:51 | 2883177 icanhasbailout
icanhasbailout's picture

people will simply work until they die

Fri, 10/12/2012 - 18:17 | 2883207 Precious
Precious's picture

Whoever invented the word "entitlement" should be ...

Fri, 10/12/2012 - 18:06 | 2883208 Thomas
Thomas's picture

Do you think employers will keep old folks with oxygen tanks and feeble brains on payroll?

Fri, 10/12/2012 - 19:01 | 2883328 The Alarmist
The Alarmist's picture

Nope, and that's why so many of them supported the ACA , AKA ObamaCare.  Keep the healthy ones healthy to keep them on the job, and have the Death Panels deal with the rest in the name of Qualies and efficiency.

Fri, 10/12/2012 - 19:05 | 2883334 LetThemEatRand
LetThemEatRand's picture

Do you consider it a "death panel" when the insurance company tells a 65 year old who did everything right and made sure she had insurance that her life-time maximum of $1M is met and she needs to stop the treatment that could keep her alive and reasonably self-sufficient for another decade? 

Fri, 10/12/2012 - 21:32 | 2883714 Anusocracy
Anusocracy's picture

Get the f_cking government out of healthcare so the costs can come down. The government effect drives up the cost everything.

Everything government touches turns to crap. Ringo Starr

Sat, 10/13/2012 - 06:45 | 2884178 Almost Solvent
Almost Solvent's picture

You mean end the rules that require hospitals to treat anyone who shows up regardless of insurance or ability to pay?

Because if you REALLY want to cut healthcare costs, you are going to have to start denying medical services to a huge number of people who are unable to pay for their care. 

 

Sat, 10/13/2012 - 08:10 | 2884499 JamesBond
JamesBond's picture

yes, that rule.  get rid of it.  go to a charitable hospital and accept the care you get there.

oh, you mean you won't get free hip replacement surgery?   Ah....  no.

jb

Sat, 10/13/2012 - 11:14 | 2884704 northerngirl
northerngirl's picture

Well, how about this...Hospitals stop charging $25.00 a table for Tylenol, or $30.00 for an ice pack?  There are many ways to bring the cost of health care down in this country without denying medical services to those who cannot pay.  Denying medical services is such a desperate cry for those that do not want to spend the time seeking true cost cutting measures.  What we need is for people to stop looking at the government for the solution and answer the questions for ourselves.

Sat, 10/13/2012 - 23:53 | 2886121 James_Cole
James_Cole's picture

"Get the f_cking government out of healthcare so the costs can come down. The government effect drives up the cost everything."

This idiot argument goes on ad nausea. Of the OECD countries the US spends the most (by a wide margin) on healthcare and famously has some of the worst results. Spending far more per capita than every publicly funded healthcare system in a variety of countries. 

http://en.wikipedia.org/wiki/List_of_countries_by_total_health_expenditu...(PPP)_per_capita

Sat, 10/13/2012 - 05:45 | 2884149 The Alarmist
The Alarmist's picture

They don't tell her to stop treatment ... they tell her to find other ways to pay for it.  Like selling the house she thought she could hold on to and pass to her kids.  By the way, the current ACA will do the same things, as does Medicare.  The difference is that with ACA as the law of the land, suitable alternative financing sources are drying up.

Fri, 10/12/2012 - 19:08 | 2883344 10mm
10mm's picture

Those folks will take a walk in the woods or assisted by death panel.

Fri, 10/12/2012 - 18:06 | 2883209 Boston
Boston's picture

As they should. Who decided that "retirement" is some sort of god given right?

Fri, 10/12/2012 - 18:42 | 2883301 LetThemEatRand
LetThemEatRand's picture

Non douchebags did.  

Fri, 10/12/2012 - 18:57 | 2883320 steveo77
steveo77's picture

jerk

Fri, 10/12/2012 - 21:04 | 2883653 Bicycle Repairman
Bicycle Repairman's picture

Boston, I hope you come out into the light of day and express that opinion.  Don't expect any politician to do it for you.

Fri, 10/12/2012 - 21:05 | 2883655 LoneStarHog
LoneStarHog's picture

For one thing, when people retire it creates job openings for the next generation.  Capiche'?

Tue, 10/16/2012 - 08:47 | 2893934 Nick Jihad
Nick Jihad's picture

Now this is an economic myth that needs to die - the naive idea that there is a fixed pool of jobs, so that a spot only opens up when an old person retires. Sounds kinda dumb when you spell it out like that, doesn't it?

Fri, 10/12/2012 - 18:29 | 2883269 JuliaS
JuliaS's picture

I like the Eastern European retirement plan. Everyone's covered, no one's rejected, required contributions - zero.

It's called "suicide". Live for as long as you can and then don't. If you really care about your kids' future, take a banker or 2 along with you when you decide to end your life. Don't let your own departure go to waste. Do something good for the society.

Fri, 10/12/2012 - 21:05 | 2883657 Bunga Bunga
Bunga Bunga's picture

All retirees will be on drone watch soon.

Fri, 10/12/2012 - 21:19 | 2883688 venturen
venturen's picture

25x final earning mean you saved all your money from your working life. The government takes 40% of your income so for 25x you have to work 62.5 and not spend one dime....REALLY?

Sat, 10/13/2012 - 12:13 | 2885064 hapless
hapless's picture

Yes, really.  Just becuase things are ugly doesn't change the way things are.  Such is the cost of forcing savings income to near zero in a fruitless attempt to kick start the economy.

In essence, your gov't is telling you to forget saving for retirement, spend what you have now and hope that either things get better or that the end is quick and painless.

Mon, 10/15/2012 - 05:58 | 2889344 Seer
Seer's picture

"boomers will be able to offload their old house for multiples to finance their retirement."

I spotted this flaw a LONG time ago.  Many still believe in this fantasy.  I suppose it falls under the category of "when all you have is a hammer..."

The ONLY caveat that I can think of, however, is if one's home is situated on a farm/farmland.  Well, OK, that's My Hammer... and I'll be looking to transition from "farm boss" to "mentor"...

Fri, 10/12/2012 - 17:48 | 2883167 kaiserhoff
kaiserhoff's picture

What is saving, with sharply negative interest rates and the kleptocrats in charge?  Howsabout investing..., as in ratcheer?

http://calienteresorts.com/Site/flash/slideshows/main/_pu_main.html

 

 

Fri, 10/12/2012 - 18:19 | 2883237 Cursive
Cursive's picture

@kaiserhoff

No kidding. BernanQE has made fools of savers. I'm a saver and I've truly been a sucker. Thanks, BernanQE, you sacrificed prudent savers to save the likes of legendary asshat Jim Cramer.

Fri, 10/12/2012 - 19:58 | 2883481 Just Observing
Just Observing's picture

I'm a saver too.....but about 15 years ago, I saw the handwritting on the wall, and quit saving in dollar denominated paper.  It was pretty easy to see they intended to run the national debt off the scale, and then devalue the dollar to attempt to keep up with it.

From that point on, I bought gold and silver ( 250 and 5 bucks/oz ) hand over fist, put the rest in a self sufficient homestead so we would go into retirement with no debt, almost no utility bills ( spring water, septic system, solar power, even my wireless internet is free ).

Wife and I are early 60's, retired and living our dream.  It can be done, but NOT if you listen to conventional "wisdom".

 

 

Fri, 10/12/2012 - 20:44 | 2883609 fonzannoon
fonzannoon's picture

If that is true, and i am not doubting you...and you saw the writing on the wall 15 years ago...you are my freakin hero.

Fri, 10/12/2012 - 20:46 | 2883617 mccoyspace
mccoyspace's picture

Nice work!

Fri, 10/12/2012 - 23:46 | 2883931 dhengineer
dhengineer's picture

Yeah, it can be done.  We cashed in our IRA's three years ago, paid the penalties and taxes, and bought a little fixer-upper farmhouse in upstate New York.  We qualified for the homebuyer tax give-away, so the final bite wasn't too bad.  We fixed the place up, and then we sold our NYC coop... We can actually live on the SS payouts that we will qualify for in two or three years (assuming that SS is still there).  We bought gold and silver beginning in 2005, and it has doubled in value so far.  We are becoming self sufficient, learning to can the food from the garden, and raising chickens.  Our own well, septic, neighbors who raise Black Angus, and low taxes on our rural land make things pretty easy.

Fri, 10/12/2012 - 19:22 | 2883384 stocktivity
stocktivity's picture

"Rather, Colas cites a general lack of financial literacy, including basic understandings of savings growth"

What savings growth! Bernanke took that away from savers. This guy's from another planet. It's all Bullshit!

Sat, 10/13/2012 - 00:12 | 2883954 A Nanny Moose
A Nanny Moose's picture

Why is Wall St. the only mechanism for savings? Who forces....sorry...engineers the placement of savings in to accounts which can only be invested in Wall St. instruments? Who gives Wall St. a stock market monopoly? Who destroys the currency, making Bank of A. Sealy a bad choice?

Sat, 10/13/2012 - 16:28 | 2885512 nofluer
nofluer's picture

What I don't see mentioned in the "reasons" that some aren't "savng" for "retirement" is an awareness of the careening mine ore car that has been heading for the bottom of the pit for several years. The descent has been accelerating lately - which has alerted the more clueless of our populatoin that it's coming, and they are just starting to try to figure out a way to get the snot OUT of the way of the car. I saw it many years ago, and at that point we stopped "contributing" to the delinquency of the government, bankers and insurance companies by keeping and spending our current incomes instead of meekly turning it over to them.

Which is not to say we haven't been doing our own version of "saving" for "retirement." My advice then was the same as it is now... put your "savings" into something that will return you a CURRENT SOURCE of income. The classic example of this would be buying and operating a liquor store. Another example would be to buy a farm... and learn how to grow food... and hopefully get the farm PAID for before the crapo hits the fan. This strategy works whether we get hyperinflation, deflation, or no change.

Given the fiat nature of our economy, I expected hyper-inflation. Given the history of such things I also figured that gold will be confiscated at some point, and so is a bad investment. In only one extreme case is farmland confiscated - and that's the shift to full-on socialism, (as opposed to fascism, where "ownership" is not assumed by the State), under which scenario there is no investment that will survive - even gold fails. And there are enterprises that can be pursued sub-rosa, and would therefore be immune by their nature from confiscation.

That the monetary wonks don't count those who followed my advice above don't consider them to have "saved" for "retirement" is perfectly understandable (and amusing) since they can see no world without dollar signs in it - which is to say they are "dollar" (price) oriented - not value oriented. Those who tout the purchase of gold to the exclusion of all else are somewhat value oriented. But they are also possibly of somewhat limited imaginations, since there are things that, in extremis, there will be many commodities that will have more value than a cold metal that can't be eaten and won't keep you warm or keep the rain off of your head. And there are many strategies to create such commodities that do not involve buying them.

Fri, 10/12/2012 - 17:41 | 2883129 lolmao500
lolmao500's picture

I'm 25 and I got 25k in silver... but again, I'm reading ZH, so I'm in the top 1%...

And anyway, the world will be hit by several crises in the next 10-25 years that will probably change fundamentally the world we live in. So saving money for retirement in this changing environment is quite a waste of money and time.

Fri, 10/12/2012 - 18:09 | 2883216 SemperFord
SemperFord's picture

I agree, which is why I do save but spend my money since I could die at any time. Some guys have gotten smart in their old age and started robbing banks for ONE dollarjust to be housed by Uncle Sam in the Federal Pen with 3 hots and a cot.

Fri, 10/12/2012 - 20:14 | 2883491 Ham-bone
Ham-bone's picture

That's the whole point to break the game - get out of debt fast, live within your means, avoid credit like the plague...put excess in PM's but enjoy the rest.  Stop saying I'll be happy then or saving so you can be a 65yr old busy golfing.  If you can, work less and enjoy life more...doesn't mean spend money you don't have but simplify and get happy if you can.  Do more with less.  Stop chasing some commercial fantasy that equates who you are with your income and possessions.  All this bullshit bout put away 10% of income, acheive 8% returns 4ever, what a bunch of shit.  Live in the moment without borrowing from your future and maintain self reliability.

Sat, 10/13/2012 - 19:41 | 2885795 Offthebeach
Offthebeach's picture

It's not bank robbing. It's 'retale quantitive easing '.

Sat, 10/13/2012 - 11:22 | 2884718 northerngirl
northerngirl's picture

Your parents should be proud of you!  Keep up the good work.  For those that will vote you down, they are just jealous because you are in the process of being self sufficient.  Something that many Americans hate.

Fri, 10/12/2012 - 17:39 | 2883130 AG BCN
AG BCN's picture

The illusion that there will be safety net breeds complacency. 

If you have never experienced a currency / finanical crisis then you will not prepare.  

Fri, 10/12/2012 - 18:07 | 2883210 Thomas
Thomas's picture

And you got a couple of "junks" for that post? What the hell are ZHers smoking?

Fri, 10/12/2012 - 18:19 | 2883243 AG BCN
AG BCN's picture

they think they are prepared already. 

Fri, 10/12/2012 - 18:19 | 2883244 Thomas
Thomas's picture

And now I get junked. Well, if you could hear me right now, you would hear a rapid series of armpit farts.

Fri, 10/12/2012 - 18:29 | 2883270 AG BCN
AG BCN's picture

armpit farts are a source of humour that is deeply undervalued. 

Fri, 10/12/2012 - 19:17 | 2883372 Thomas
Thomas's picture

Spent all of middle school perfecting them. I was skinny then so required careful cupping. Now I get flappy sounds without even trying.

Sat, 10/13/2012 - 09:26 | 2884585 Lloyd_Xmas
Lloyd_Xmas's picture

I can fart with my hands. Plan to supplement my retirement with that talent.

Fri, 10/12/2012 - 18:33 | 2883282 GeezerGeek
GeezerGeek's picture

Perhaps ZH has been invaded by a bunch of tweeting twits using their Obamaphones to coordinate an attack on your common-sense observations.

Fri, 10/12/2012 - 20:35 | 2883585 toady
toady's picture

There is a lot of that going around. Someone just goes through junking everything, but never saying why

Don't think about it too much ... trying to figure out the kind of person who goes through hitting every second down arrow, well, it's not worth the effort.

Fri, 10/12/2012 - 22:05 | 2883792 MilleniumJane
MilleniumJane's picture

Problem is, people have paid into the system.  People will not be receiving what they were promised.  Fraud at genius levels.  People got screwed.  That is what's wrong.  No, I didn't junk you.

Fri, 10/12/2012 - 18:09 | 2883214 Precious
Precious's picture

This is exactly right.  The co-conspirator is in the mirror.

Fri, 10/12/2012 - 18:32 | 2883279 JuliaS
JuliaS's picture

Whenever I hear the phrase "safety net" I visualize the kind of net fishermen use. It has one single purpose.

Sat, 10/13/2012 - 00:16 | 2883960 A Nanny Moose
A Nanny Moose's picture

Not unlike the parable of catching wild pigs...perhaps more analogous to crab pots.

Sat, 10/13/2012 - 16:46 | 2885552 nofluer
nofluer's picture

A safety net and a fishing net are entirely different things - that perform entirely different functions. They both can save your life - but their operation is different. With a safety net, you fall into it and are saved from harm or death. A fishing net is what fish end up in, saving you from starvation &/or poverty. Both nets are beneficial to the user.

And I haven't down-checked anyone for quite a while.

Fri, 10/12/2012 - 17:39 | 2883131 urbanelf
urbanelf's picture

Savings, bitchez!

Fri, 10/12/2012 - 17:58 | 2883187 cynicalskeptic
cynicalskeptic's picture

Problem is that under the current system, most people are struggling with debt service - even when starting out, but even if you CAN put money away for 'savings' there's no real payback.  

 

Plain old cash in the bank earns you NOTHING - you can watch it lose buying power as time passes.....most administered 401k's have crappy options and too high admin fees no matter which 'choice' you make.  Seems like 'matching' plans are disappearing - perhaps the only way these are really worthwhhile.   There's no reasonable return in bonds - even tax free munis and high risk ones don't outpace real inflation.  Clearly there's a push to get most people into equities but you don't see much in the way of dividends these days.

Even if you have some kind of 'poreservation' option in the form of PM exposure, it's likely paper.  People were told that houses were good fpr 'saving' - that didn't work out so well.

 

No wonder people don't save - there's no real return.  Just wait until government forces you to 'invest' part of your retirement funds in T-Bills - for yourt own 'safety'......  just before the dollar really tanks in value.

 

Fri, 10/12/2012 - 20:23 | 2883552 RKDS
RKDS's picture

Finally, someone who lives in the real world!

Fri, 10/12/2012 - 21:31 | 2883710 Ignorance is bliss
Ignorance is bliss's picture

I read somewhere that social security can only purchase T-Bills as an investment vehicle. So...we are already forced to invest part of our retirement in T-Bills.

Sat, 10/13/2012 - 11:28 | 2884732 northerngirl
northerngirl's picture

The government could also just Federalize all 401K accounts.  I think they started doing that in Argentina a few years back.  I know there has been talk about doing that in the US.

Fri, 10/12/2012 - 17:41 | 2883137 semperfi
semperfi's picture

Social security, food stamps, Obama phone, Obama care, and a blanket on the beach - I'm good, thanks !

Fri, 10/12/2012 - 20:41 | 2883603 cxl9
cxl9's picture

Here in Mexico, I occasionally meet other Americans who are scamming the system and living well. The cost of living in my area is about 1/3 of that in the United States (adjacent region). A few months ago I met an American who bragged to me of being on some sort of bogus disability. His SSI is directly deposited into his bank account, so he need not ever return to the United States. He pays his $300/mo. rent from his SSI and spends all his time drinking in bars and relaxing on the beach. On the one hand, as a working taxpayer, I am disgusted by his scamming lifestyle. On the other hand I think, fuck it, who cares? We're past the point of no return anyway. Go ahead and help crash the system.

Sat, 10/13/2012 - 11:02 | 2884511 Taint Boil
Taint Boil's picture

 

 

I live here in USA but I have a house in Mexico here. My wife is Mexican and the house is surrounded by family and therefore "safe". Not the answer for everyone but in my case it will be my retirement.

Fri, 10/12/2012 - 17:43 | 2883138 LetThemEatRand
LetThemEatRand's picture

It was once true that most companies offered a pension as part of worker compensation.  Those mostly went away, but wages did not rise to meet the difference.  Pretty simple equation.  The vast majority of people do not make enough to meet living expenses and save for retirement unless they plan to die shortly after they retire.  The really, really vast majority of people do not have enough in savings to meet likely medical expenses in old age, especially when Medicare gets phased out.  

Fri, 10/12/2012 - 18:12 | 2883220 Precious
Precious's picture

The vast majority of people are naive tools.

Fri, 10/12/2012 - 19:53 | 2883464 D-liverSil-ver
D-liverSil-ver's picture

I've been working for the same company for 25yrs. and I will have a fairly nice pension.

We got a new CEO about 6 months ago and just spilled the beans a couple of weeks ago,  our pensions are underfunded by 1 BILLION dollars. He did make a $100 mil. payment towards it but it still has me shaking in my boots, just upped my 401k but that won't make a significant difference before I retire.

Fri, 10/12/2012 - 20:22 | 2883470 LetThemEatRand
LetThemEatRand's picture

Unfortunately, many private companies underfunded pensions in order to increase executive compensation.   Of course said executives will be just fine.   Sorry to hear of your predicament.  At least you can rest assured that the executives will find plenty of corporate money to defend the coming ERISA lawsuits.  "We had no idea the pension was underfunded when we paid ourselves that billion dollars over the last couple of decades!"

Sat, 10/13/2012 - 08:08 | 2884497 StychoKiller
StychoKiller's picture

"Uncommon Cents - Benjamin Franklin's Secrets to Achieving Personal Financial Success",
ISBN: 0-939817-06-3, by Lynn G. Robbins

Fri, 10/12/2012 - 17:41 | 2883139 Gene Parmesan
Gene Parmesan's picture

Look around. These people won't allow you to enjoy your savings.

Fri, 10/12/2012 - 17:50 | 2883171 Kitler
Kitler's picture

Someone will be enjoying your savings, it just won't be you.

Bank on it.

Fri, 10/12/2012 - 18:13 | 2883222 Precious
Precious's picture

Will be?  They are right now.

Fri, 10/12/2012 - 21:07 | 2883666 Bunga Bunga
Bunga Bunga's picture

Vaporization, bitchez.

Fri, 10/12/2012 - 21:52 | 2883765 Gene Parmesan
Gene Parmesan's picture

Exactly. It will be taken, and it will be distributed. When the savers are so grossly outnumbered by the non savers there's going to be trouble.

Fri, 10/12/2012 - 17:41 | 2883140 tsets
tsets's picture

First people must have a job in order to start saving fast! lol

Fri, 10/12/2012 - 18:09 | 2883218 Thomas
Thomas's picture

Saving fast is also nearly impossible.

Fri, 10/12/2012 - 19:01 | 2883330 GeezerGeek
GeezerGeek's picture

Conditions change too much and too unreliably for any savings plan to be trusted. Except, maybe, investing in PMs. My first job after exiting the Air Force, in 1973, paid me the equivalent of around 200 oz. of gold. My last job, which I started in 1998, paid me around 200 oz. of gold, too. Just for kicks, let's say I could have saved, on average, 15 oz. of gold per year from 1975 to 2011. Even scaling back when the prices got excessive, that's still over 500 oz. That still doesn't come to 20x my final year's salary, but it is a nice little retirement package.

Too bad I didn't think of that in 1975. Also too bad it's subject to taxes when sold. Nice thought experiment, though.

Fri, 10/12/2012 - 17:43 | 2883149 LMAOLORI
LMAOLORI's picture

 

 

They really should teach that in schools since it seems alot of parent's don't bother to or don't understand it themself's. The fact that they don't tells me something about our public schools. Could it be if they did that people might understand that they shouldn't be dependent on government.

Fri, 10/12/2012 - 17:49 | 2883164 LetThemEatRand
LetThemEatRand's picture

More likely if they taught people the truth then the large majority would demand more benefits.   Tough to sell less goverment AND the reality that the large majority of people will never make enough money to afford retirement even if they save 10 or 20% of their income for life (the reality for most people).  Want class warfare?  Tell people that they are going to die poor even if they do everything right.  So long as they keep up the illusion that everyone will have what they need if they play by the rules, then the status quo remains.  Thus the money printing.

Fri, 10/12/2012 - 18:14 | 2883229 Thomas
Thomas's picture

The movie "Tree of Life" was an acquired taste, but there were scenes in it that were very telling. They involved kids playing without the aid of a lot of toys. We now have massively increased the number of "durable" goods in our lives (durable goods with massively accelerated depreciation rates). The average family of four makes $47K. If that family also has I-Phones, they are dropping 5% of their annual income on the fucking telephone costs. So, yes, it is very cool that we all have IBM 360s (or better) in our pockets, but not so cool that we can't afford them.

I, come hell or highwater, am going to have 20x salaries in the bank when I retire. If not, I will consider it a failure (or at least risk). I also think that, for most, this would be harder than flying to Mars by flapping their arms.

Fri, 10/12/2012 - 18:59 | 2883309 LetThemEatRand
LetThemEatRand's picture

A month in the hospital costs several hundred grand.  Old people tend to spend time in the hospital.  Or even if they are lucky enough not to require occasional stints in the hospital, they tend to need things like cancer treatment.  iPhones and other consumerism may be part of the problem in terms of people not saving at all, but living lean will not solve the real world problem of being self-sufficient in retirement for most people.   Not unless we as a society either fix the health care system or decide that old people without millions in the bank or pensions that include life-long health insurance (good luck finding a job with that anymore) are shit out of luck.

Fri, 10/12/2012 - 19:13 | 2883355 GeezerGeek
GeezerGeek's picture

You've shown us why Obamacare included the Independent Patient Advisory Board, better known by the term 'death panels'. We simply can't afford all the healthcare we want, at least not as long as the pricing thereof is allowed to be distorted by government intervention.

p.s. Want life-long health insurance? Get elected to Congress.

Fri, 10/12/2012 - 19:18 | 2883375 LetThemEatRand
LetThemEatRand's picture

Funny, because many European countries and Scandavian countries that are considered "socialist" have very good health care for everyone.   And I think Obamacare is a give-away to private insurers and the healthcare industry in general.  

Fri, 10/12/2012 - 19:49 | 2883459 gwar5
gwar5's picture

I agree with that -- Cronyism... deals were made. Not enough competition to keep prices down.

 

Interestingly in plastic surgery where cash is paid, and government is out of the loop, prices keep coming down and the quality of care keeps going up.

That is the competition model we should towards. Works every time. Those "Greedy" untalented good-for-nothing plastic surgeons are getting their come uppence by having to innovate and work a lot harder, all on their own, because of the other guy down the street. Who knew?

 

 

 

 

Fri, 10/12/2012 - 20:25 | 2883560 LetThemEatRand
LetThemEatRand's picture

Ah yes, it's all government's fault.  Have you been to the dentist lately?  Most dentists work on cash.  I have dental insurance and it doesn't cover jack shit, and the prices for simple procedures are through the roof.  Have never been to a plastic surgeon.  You?

Fri, 10/12/2012 - 21:16 | 2883682 Bicycle Repairman
Bicycle Repairman's picture

Let's just deregulate the health care industry.  Get some free market reforms. 

That's a pipe dream of course.  Healthcare is one of the oldest and biggest bubbles we've got.  Can't be bursting it.  Got to keep feeding it.

Fri, 10/12/2012 - 21:35 | 2883720 LetThemEatRand
LetThemEatRand's picture

The large majority of students who come out of medical school think they are entitled to a new Porsche (the new 911 is pretty cool) and a house on the beach/water/park/nicest part of town.  Don't you just hate the entitlement culture? 

Fri, 10/12/2012 - 19:18 | 2883374 gwar5
gwar5's picture

@LetThemEatOedipus.  You love Rand with your eyes poked out.

 

Obamacare will fix old people by pulling their plugs out so that their life savings can be snatched up before they can spend it trying to live long enough to see their grandchildren graduate HS. Honey badger don't care!!

 

Fri, 10/12/2012 - 19:20 | 2883380 LetThemEatRand
LetThemEatRand's picture

Given that I am an opponent of Obamacare, what is your point exactly?  

Fri, 10/12/2012 - 19:36 | 2883426 gwar5
gwar5's picture

Oh, so sorry. Thought you were a big government statist guy who opposed free enterprise?  So put your eyeballs back in then, and rejoice, Atlas Shrugged II starts tonight at the movies -- go get ya some!

 

 

 

Fri, 10/12/2012 - 19:48 | 2883439 LetThemEatRand
LetThemEatRand's picture

Have you ever taken a multiple choice test?  Even in the most basic one there are more than A and B options.   The world is not black and white.  There actually are options other than A.  "big government" and "anti-free enterprise" versus B. Libertarian paradise.  Say hi to Tom Cruise for me at the screening.  You guys can compare cult notes.  His involves aliens who are superior life-forms inhabiting humans.  Yours involves self-absorbed douchebags who believe they are entitled to a life of opulence because they are superior life-forms.   If Ayn had gone one step further and involved aliens and volancos, maybe she and Ron would have had sex together and given birth to the Anti-Christ.

Sat, 10/13/2012 - 18:06 | 2885678 GoldenTool
GoldenTool's picture

I have to give you a +10 on how the "true" anti-christ should be born.  Made me snarf my gatorade.

 

operari sequitur esse

Sat, 10/13/2012 - 08:33 | 2884523 Bobbyrib
Bobbyrib's picture

I'm going out like Thomas Paine minus the Revolutionary War talk. When my history teacher told me he died broke and drunk on the streets, my response was very Beavis and Butthead (before the show aired): "cool."

Fri, 10/12/2012 - 17:56 | 2883184 azzhatter
azzhatter's picture

SS was never meant to be a retirement program. Over the years, it became such. I know nobody saves money, look at the way americans live. As soon as they are credit worthy people buy new cars and Iphones, Ipads and all kinds of useless shit. Look what they spend to go to a ballgame or entertainment. I was just in Miami on a short vacation and saw a lot of 20 something year olds living it up at the most expensive joints in town. I'm semi retired and I never did anything like that until I was in my 40's. Never had a credit card balance. Paid cash for last 25 years for cars. House was paid off in 8 years. You can't save if you focus on spending.

 

Fuck You Bernanke

Fri, 10/12/2012 - 18:12 | 2883223 cynicalskeptic
cynicalskeptic's picture

Why junk for stating the truth?    SS was supposed to be a safety net to keep people out of abject poverty, NOT a comfy retiremtnt plan - THAT was supposed to come from your employer, union or own savings.  It worked.  No more poor houses.

As fpor the rest, you don't even have to be crfedit worthy to get credit now - you're offered credit cards when you're in college.

Forty years ago - best paid in my degree - I couldn't get a credit card and my stuident loans were a fraction of what's typical now.  We worked our tails off.  Had enough to pay for a bed after our wedding - no honeymoon, couldn't afford it.  Had maybe $1000 in the bank after closing on our house (in out mid 30's)  - had to put 20% down and paid points top get down to 8%.  Only started buying new cars in our late 30's and didn't take a real vacation until we were 40.  Waited a dozen years to have kids. 

Patience and long term planning - living within (or better yet BELOW) your means is a curiously outdated concept from what we see now.  Astounded at how many people lease EXPOENSIVE cars, live in big houses with no furniture, aghast at how many of our kid's freinds (whose parents make far more than we do) who have NOTHING saved for college.  WTF?  

I can understand our divorced single mother niece - no college, minimum wage jobs not having a clue about finances but for those making mid 6 figures?!?!     

Fri, 10/12/2012 - 18:59 | 2883326 QQQBall
QQQBall's picture

+100 Azzhatter.... snd once you pay the house off life gets a lot easier as does saving, particularly if your "home" is one of 4 houses on the property and the other three are producing income, preoviding writeoffs and deprecaition, etc...

Fri, 10/12/2012 - 20:06 | 2883506 Just Observing
Just Observing's picture

You nailed it QQQ.

We've owned two new houses, and built both of them ourselves.....as in drove every nail....not acted as a GC.

First one was a small house and a small mortgage we paid off in 6 years.  Sale of it was enough to build the second one with no mortgage.

As you say, without a freaking banker on your back, you'd be AMAZED at the savings you can pile up.

Fri, 10/12/2012 - 17:58 | 2883185 Monkeyfister
Monkeyfister's picture

Because starting a serious 401K on Minimum Wage is an easy thing, right? And Middle Class wages are simply SOARING through the roof, right? And those 401K's are SUPER reliable, and NEVER, EVER lose money to stupid Wall Street Greed, Graft, Fraud and outright THEFT, right. Those Wall Street Banksters are PARAGONS of trustworthiness and Honor, right?

Glibertarians and their bubble world views just make me howl with laughter. 

 

Fri, 10/12/2012 - 21:44 | 2883740 Ignorance is bliss
Ignorance is bliss's picture

Investment vehicles change over  a given lifetime. Smart investors role with the changes. Stocks, Bonds, Munis, are run by people that have been repeatedly caught stealing, cheating, subscribing to crazy accounting practices where liabilities are counted as assets. No thanks...you need to buy something that will maintain its value relative to the dollar which is continuing its 40 year decline into oblivion. I for one will not keep my assets in dollar denominated derivatives. In 25 years when I want to retire, the U.S. dollar will be spoken about in the same breath as the Zimbabwe Dollar.

Sat, 10/13/2012 - 08:46 | 2884538 Bobbyrib
Bobbyrib's picture

Mine is still in the cash equivalent. Unfortunately there is no commodity or gold funds to invest in. I'm either waiting for the next downturn, or interest rates to increase. I plan on clearing my Roth IRA contributions out (penalty free) and buying either PM's, or farmland. I've decided the thieves (CONgressMEN) will definitely double tax Roth IRA's.

Fri, 10/12/2012 - 18:00 | 2883190 zerozulu
zerozulu's picture

pick one, US nationality or retirement.

Fri, 10/12/2012 - 18:00 | 2883191 TheObsoleteMan
TheObsoleteMan's picture

If you do not already have substantial savings by now, FORGET IT. It will be impossible to save a dime going forward for most. Allot of jobs are not keeping up with inflation. Not to mention we have been programed into a "consumer society". Spend every cent you make. This is what is responsible for keeping the economy growing {albeit modestly}. If consumers were to ever slow down on their spending and start saving, the economy tanks HARD. Notice the rise of the "reverse mortgage". There was no such loan program until just a few years ago. Sell your equity back to the bank, boy to they ever love that one! They made money selling it to you, and they make more buying it back! That is some retirement plan. That is what they have in mind for us. Amazingly, many are still depending on the gubmint to care for them in their senior years. They can't imagine the gubmint allowing seniors to suffer out in the cold. Boy, are they in for a rude awakening.

Fri, 10/12/2012 - 18:15 | 2883232 Thomas
Thomas's picture

Zactly.

Fri, 10/12/2012 - 18:38 | 2883292 JuliaS
JuliaS's picture

Likewise, some of my friends that haven't had a job in a while ask me how to get back into the workforce. I tell'em it's too late for that now. By now you either have a job and are struggling to keep it, or you are out of the labor force permanently and are in the magical "no longer unemployed" BLS category.

The number of people I personally know that lost jobs and haven't found a replacement since 2008 outnumber those that found jobs 10 to 1.

Sat, 10/13/2012 - 08:49 | 2884542 Bobbyrib
Bobbyrib's picture

That's what is funny about the Flat Tax and Ryan plan. It helps the wealthy save more at the cost of the middle class. The middle class is already beaten down, it's like smashing their legs out from under them with a baseball bat. It will happen no matter who wins the election and our economy will further tank. Rather than let our economy restructure after the financial crises we decided to double down on crazy.

Fri, 10/12/2012 - 18:05 | 2883200 zilverreiger
zilverreiger's picture

What will those oldies do? They sure wont protest because they think that's communism, and so do their tool soldier kids. haha suckers. American exceptionalism. Harvest the shit from your subsidized war economy for 70 years.

Fri, 10/12/2012 - 18:04 | 2883201 abgary1
abgary1's picture

After paying down debt and saving for retirement, joe average (if he has a job) won't be spending or investing.

It doesn't look good for the American economy or the stock market for years.

Debt deflation is nasty business.

Fri, 10/12/2012 - 18:09 | 2883217 steveo77
steveo77's picture

 Living Will Form

I hope that I don't have to use this, but just in case . . .
Funny as all get go, also appreciate any klik type aloha.
http://oahutrading.blogspot.com/2012/10/living-will-form.html

Fri, 10/12/2012 - 18:14 | 2883226 GCT
GCT's picture

Why listen to the bull shit.  I am about to retire and did not follow their game plan and I am debt free.  Doom and gloom does get old at times.  Let the junking begin.  There are assets to be had and the key is not trying to keep up with your dam neighbors or go out and buy the latest and greatest device or auto.  I can feed my beast alot of fuel when it is paid for.  Both of our rides have been paid for for over 10 years.  If you play by their rules your basically fucked.  Play by your own rules you will be better off for it.

Can I lose it all you betcha.  We all can but real assets with clear titles go a long way.  This is one of those times some of you commentators might as well belly up and get your disability while you can as there is no way out for you.  You have already given up.  Or like most, all you did all your damned miserable life was consume and thought the government was your way out. 

The key is navigating these times using your brain and not your credit cards.

Fri, 10/12/2012 - 18:17 | 2883238 Thomas
Thomas's picture

Despite an indelicate delivery (and a strong finger point at your buddies at ZeroHedge), I think your stated position aligns with other posters.

Fri, 10/12/2012 - 21:23 | 2883697 Bicycle Repairman
Bicycle Repairman's picture

Do you want a Beemer, a McMansion and an I-Phone or your freedom?  Which do you value?

Sat, 10/13/2012 - 08:44 | 2884535 GCT
GCT's picture

Thomas I apoligize for sounding gruff.  I was on morphine after an operation on a previous injury in 1982 on my back.  Still I do not like to miss reading this site.  All the doom and gloom lately is a tad over stated in my mind.

Why try to etch out a living if we are going to lose it all?  I happen to disagree with it.  Thats what I like about ZH is freedom of speech.  I could have worded it differently and for that I am sorry.  I am not rich nor do I make 6 figures but I have during my journey through life saved, invested a significant amount of money by not playing the debt game. Sure I had a mortgage on my home.  I paid cash for my vehicles which happens to be a jeep and a pick up truck.  I maintain them and they serve me well.  I just at times feel anyone here can indeed make money to retire on if you have the discipline to not be swayed by all the hype of needing to spend more then you make.  Sure I have a two credit cards I use when I travel or buy something online.  But I never spend more then I can pay off next month.

I just got upset with all the doom and gloom.  Again I am sorry.

Fri, 10/12/2012 - 18:46 | 2883304 AG BCN
AG BCN's picture

I'm kinda with you but this is ZH, we do not try to keep up with the neighbours, we buy in cash, we stack, we argue, we listen to Eric King telling is "gold is about to explode" on a weekly basis. we like it. 

Fri, 10/12/2012 - 19:33 | 2883347 LetThemEatRand
LetThemEatRand's picture

If we end Medicare today, how do you plan to pay for medical care if you live another 30 years and have a few major medical issues in the years to come?   Or do you advocate only that the program be done away with for those one year younger than you and below?

Sat, 10/13/2012 - 08:54 | 2884544 Bobbyrib
Bobbyrib's picture

I plan to not get sick.

Fri, 10/12/2012 - 18:20 | 2883245 cynicalskeptic
cynicalskeptic's picture

I have a brother whose Fortune 500 employer closed the plant he worked in 10 years back.  After 30 years he had a half million in a 401K (in company stock),  Within 6 months it had lost almost half its value (he was too clueless to divdsify immediately after leaving gthe company).  Only after losing that much did he 'diversify' poutting half into a mutual fund the 'financial advisor' was paid handsomely to push.  Within 12 months he had less than $200,000 left.

Even if you are one of the sheep that DO have savings, you're likely to get fleeced.

Took me less than a year to take over managing our savings (after we finally managed to build up some) - why pay someone to LOSE moeny for you?  Even in my learnign phase I did better than the 'experts'.

Sat, 10/13/2012 - 09:47 | 2884606 MachoMan
MachoMan's picture

Exactly.  I would hope that anyone who has been able to see the entire cycle can realize that virtually the entirety of people who would seek to manage your money are nothing but dart throwers.  In bull markets, they can be complete idiots and still win.  In bear markets...  or whatever the hell kind of market we have now...  those poor decisions have much different consequences.

The most laughable part for me in so much of this, is that your "financial manager" simply outsources the work to X fund, "the super duper formula fund that's sure to bring you financial success", located in NY, et al.  They're just salesmen...  there is NO value added in this proposition.

If people will avoid retirement plans and accounts and simply have the discipline to invest their money in things they know: more durable consumer goods, local businesses, microloans, art, silverware, automobiles, precious metals, musical instruments, rent houses, commercial space, farm land...  things that are tangible and if they want to go inspect their condition, it's only a phone call or short drive away.  Localization.

Fri, 10/12/2012 - 18:24 | 2883259 Lukacko
Lukacko's picture

To me it's the stagnating wages that play a big part of it. I mean, to me the numbers just don't add up. I'd say $50k salary is decent for most people these days, but after $1000/month for housing, $400/month car, utilities, student loans, and food, you really don't have much left for a reasonable savings. Wages just aren't high enough at all. Even without luxuries like a smartphone or cable tv, and living relatively frugal otherwise, it's difficult to save much of anything, and squirreling away $50 or $100 or even $200 a month for retirement, I feel like you'll never get to a number like $250k. Maybe you can if you put everything in a 401k and put 10% in and somehow it goes up every year, but that just seems like pixie dust to me, like there's no rational reason why it should increase in value so much.  Not to mention, the state hitting me up for $200 in taxes from 5 years ago, the city claiming an unpaid parking ticket from 6 years ago, everyone is always after my money it seems. It's crazy I feel like I'd have to do everything perfect from here on out, live like a monk, just to afford some Alpo to fill the cupboards in my double wide if I ever want to retire. I just hope my house actually appreciates in value, but even still, if i ever sell it at a higher value, all the other houses will also likely have increased, so I won't be able to buy anything anyways. What's the point?  Even worse, when I look around, I feel like I'm doing better than most people I see!  Do people not think about anything? Everyone is up to their ears in debt. Still acting like they're in high school, needing the latest gadgets and clothes and cars, on wages that would have put you in working class 30 years ago. The only thing I can control is my health, and at least I'm in the 1% fitness-wise.  Most people are just absolute slobs.  It blows my mind to see people out in public.  You see pictures of people 50-100 years ago, nobody was this fat and out of shape. What the hell happened? People are so disgusting anymore, it's like they're cartoon characters or something, they don't even look like humans anymore.

Sat, 10/13/2012 - 00:26 | 2883974 RockyRacoon
RockyRacoon's picture

Well done.  Why you have a few junks is beyond my comprehension.  Must have been a couple of fat slobs just cruising through.   You've described the exact reasons why the wheels will soon fall off this POS economy.  The saddest part is that all those you describe have a vote.   What do you think they are going to do with that vote?  Right -- vote for the politician who promises them more FREE fried Twinkies.

Sat, 10/13/2012 - 06:55 | 2884186 Almost Solvent
Almost Solvent's picture

And the GMO foodstuffs is a major cause in the rise of obesity, along with lack of physical work in most people's day to day lives. 

Corn poison is in almost every package in the supermarket. Fresh veggies, beans & meat are the only way to go. If it's in a box or a can, it's loaded with corn poison.  

Sat, 10/13/2012 - 08:59 | 2884550 Bobbyrib
Bobbyrib's picture

Good luck with your frest vegetable and meat plan when TSHTF. I buy organic canned vegetables and imagine that there is no, or less poison in my food. You have to buy canned vegetables and meat (tuna for me) to live through what is coming down the pipe.

Sat, 10/13/2012 - 10:57 | 2884680 beachdude
beachdude's picture

Lukacko, and everyone, you'll enjoy reading this ZH post from several days ago. I've sent to many friends & family towards their greater awakening.

http://www.zerohedge.com/news/2012-10-08/guest-post-decline-decay-denial...

Fri, 10/12/2012 - 18:28 | 2883267 Yen Cross
Yen Cross's picture

 I don't want to retire. You don't use it, then you lose it! The key is finding something you enjoy doing and can make a decent living doing. My mother stopped working over 10 years ago and you can see a marked difference in her people skills and memory/physical health.

  If you want to retire, make sure you have a lot of hobbies.

Fri, 10/12/2012 - 19:15 | 2883361 LetThemEatRand
LetThemEatRand's picture

People who love what they do get things like dementia and they have strokes and they get cancer and a myriad of other health problems, making them unable to work.    Even mundane problems like arthritis can make people unable to do their given trade (most 65+ people cannot do trades that require hard physical labor or constant standing or squatting etc).  Even children get cancer.   I don't disagree with you that some of it is "use it or lose it," but that is a gross over-simplification to suggest that all human beings can simply will themselves to life-long health such that retirement is optional.

Fri, 10/12/2012 - 20:32 | 2883573 Yen Cross
Yen Cross's picture

 I think "forced retirement" is another topic all together. Yes, it is extremely disheartening when physical ailments force people into retirement.

 Regarding, "gross simplification", I don't recall my post being in the plural. I simply stated my personal preference, then concluded with a "personal observation", of a retired family member.

 ps/I didn't junk you

Fri, 10/12/2012 - 20:52 | 2883622 LetThemEatRand
LetThemEatRand's picture

My point is that probably most people (if given access to modern medical care) will live well beyond their ability to work.  So either we need to accept as a society that those people simply need to die, or we need to accept that we have a shared responsibility to care for them.  You know which camp I'm in.  Of course there are people who abuse the system, but far more of our collective resources go to "feeding" the greed at the top versus literally feeding the leeches.  I really do believe that the very large majority of people do not try to be leeches.   The reality is that most blue-collar workers who don't work for big companies that have pensions will never save enough to pay their own way until death.   Thanks for not junking me, but you are in the minority and I'm used to it.

Sat, 10/13/2012 - 10:57 | 2884681 Hulk
Hulk's picture

The system needs to allow so called assisted suicide, as much as I hate that fucking term.

If I ever had dementia, a massive stroke, alzheimers,locked in syndrome etc, I do not want to be a burden to my family, myself, and society. Just give me a fucking shot, like we do old dogs, and be done with it. Why drain everybody around you for a hopeless situation? We do not handle death well at all...

Fri, 10/12/2012 - 19:25 | 2883396 gwar5
gwar5's picture

Studies show you are correct! Stress free activity is one key to a long and happy life.

 

 

Fri, 10/12/2012 - 19:49 | 2883442 LetThemEatRand
LetThemEatRand's picture

You are obviously not a business owner.   The irony is lost on you, but not on me.

Sat, 10/13/2012 - 00:38 | 2883984 RockyRacoon
RockyRacoon's picture

Some people are just not suited to the entrepreneurial life style.  It has stress, for sure, but the thrill of having a great day, or year, having really happy customers, knowing that you did something right and honestly, and feeling secure in your finances overcomes the stressful aspects of having your own business.   I can recall over 50 years of being "self-employed" and the times I recall are the pleasant ones.  It's all about attitude, and that can be acquired.  One does not get that feeling making widgets or shuffling paper for someone else to take home the bacon of the bloody pig you just slaughtered.

Fri, 10/12/2012 - 18:49 | 2883310 Downtoolong
Downtoolong's picture

I live in a community of typical middle class people. They’re good, generally well meaning people. But, it’s amazing how many tell me they feel set for retirement because they’ve saved $50-$100k. They somehow think that’s a huge amount of money that’s going to get them through it, even though their annual cost of living is at least $50k.  It’s pathetic. I don’t have the heart to even try explaining the simple math to them. If I did, they would probably go out and blow it on lottery tickets, or just give up saving altogether.  

 

Of course, what's even more pathetic, thanks to the Fed and Central banking policy, is that there is no longer a single place for these people to invest that will preserve the purchasing power of their savings without putting them at unreasonable risk of losing it all.

 

Maybe those lottery tickets aren't such a bad idea after all.

Fri, 10/12/2012 - 19:05 | 2883314 QQQBall
QQQBall's picture

Work hard, live below your means, save and invest - do not borrow to purchase depleting assets. I am like some of the other ZH'ers, I have never really upscaled from college.  It sounds corny but books like "the Millionaire Next Door", "Your Money or Your Life" and "Cashing in on the American Dream, How to Retire at 35" (by Terhortz) are really decent guides. My kids do not have college debt and studied around the world (Son has a master's degree from France, daughter is taking an on-line master's course from Havard and plans to go to law school) , I have no debt, etc., but I have NEVER owned a new car, never paid more than $4,000 for a used one and typically paid $1,500 to $2,500 (last one was a 1994 honda accord with 73k miles for $2,500 and it now has 267,000 and has been trouble free).  I have purchased SFRs as investments, but I have always lived in one of my  small MFD investments. Compound interest is a mofo if you are on the wrong side of it. Pooplava at financialsense has a retirement series going and I am amazed at how much money want to live on in retirement.

If you follow the herd, you gonna end up slaughtered.

 

 

 

Fri, 10/12/2012 - 18:57 | 2883321 The Alarmist
The Alarmist's picture

Well, until 2008 or so, most people's retirement plan was their ever-increasing-in-value house ... guess that bubble didn't turn out too good, eh?  Good thing we have safe, dependable Social Security and Medicare to backstop us.

Sat, 10/13/2012 - 09:10 | 2884559 Bobbyrib
Bobbyrib's picture

I wonder if it will happen again with QE and all.. /sarcasm.

Fri, 10/12/2012 - 19:01 | 2883329 gwar5
gwar5's picture

I'm not so harsh on Americans (or Europeans) for being 'dumb' -- they only did what (lying) PhD economists and politicians wanted them to do for the last 50 years. Per savings, Americans have felt somewhat secure by trusting government, and assuming a 15% savings rate through Social Security and the Social Welfare State, which was/is a big fat lie. Only now are they are waking up.

 

But let's assume (conservatively) a constant $20,000/yr earnings since 1972, over a 40 year career, those private individual savings @15%/yr would be worth $120,000 (with no interest). In constant $USD real terms, those same private savings (in 1972 USD) would be worth $658,896. 

And, if that same 15%  same private savings were done in gold coins, the same $120,000 would be worth about $2,600,000 -- which would be quite a retirement nest-egg for  someone making $20,000/yr, for 40 years. Check the math if you like, I believe it is fair, I was trying to be conservative in my assumptions. But this is also the same thing Milton Friedman said about SS a long time ago, in the 1970s.

We was robbed! And by we, I mean those who do not own gold buillion.  

 


 

Fri, 10/12/2012 - 21:00 | 2883644 Urban Redneck
Urban Redneck's picture

Time Value of Money -what are your annual figures to arrive at $2.6M, or are you somehow assuming front loading of Au acquisitions?

Fri, 10/12/2012 - 19:07 | 2883331 razorthin
razorthin's picture

If you have a mortgage and have no choice...pay it down with extra principal payments.  Saving at least 3% is the best bet, second to accumulating PMs.

Fri, 10/12/2012 - 19:08 | 2883345 QQQBall
QQQBall's picture

It is not 3% or 3.5% or whatever the mortgage interest rate is.... Run your calculator; the principal portion of the base payment increaeses as the extra princiapl reduction payments work their magic.  When I paid down my mortgages, I got 2% above the rate b/c what was to be interest became principal reduction and after a while your turn the amort table around (kinda).

Fri, 10/12/2012 - 19:11 | 2883353 razorthin
razorthin's picture

Even better.  Thanks for clarifying.

Fri, 10/12/2012 - 19:15 | 2883365 Uber Vandal
Uber Vandal's picture

When I sit down and try to tweak my retirement strategy, I keep coming with these same questions:

1) How long will I be able to work, and will I be able to live long enough to see it (I knew at least 5 people in my age group (30-50) who died from accidents and illness such as cancer, and how many old roofers, welders, or concrete workers do you know.

2) What will my purchasing power be when I retire ($1,000,000 at 5% would be a 50K cash flow, at 1%, 10K, and when you factor in taxes and inflation.....)

3) How long until anyone who was clever enough to use a ROTH IRA, and actual carefully manage their nest egg, be the next "evil rich people getting tax free income"?

4) What good will a pension or other contract (annuity, etc) be when it is becoming obvious that contract law is meaningless.

Quite often, I keep reaching the conclusion that the only way to win is not to play....

 

Sat, 10/13/2012 - 09:57 | 2884618 MachoMan
MachoMan's picture

DO NOT WASTE YOUR MONEY IN A RETIREMENT ACCOUNT.  It will either be confiscated or its value will be stolen from you through inflation.  That's presuming there is some left after the "manager/administrator" of the account leaves you with anything after the fleecing.

Find local businesses to invest in or otherwise participate....  get revenue generating assets that have long useful lives.  The "new" retirement will involve continuing to work in some form or capacity, not pray to a financial manager and wait for his rain dance.  If you can stuff away sufficient income producing assets, then the SS, et al, payments should be able to supplement nicely.  However, as a caveat, if you are prudent enough to adequately prepare for your own retirement, you will be nothing but punished from the government...  expect means testing. 

Fri, 10/12/2012 - 19:17 | 2883373 Seasmoke
Seasmoke's picture

30% ????.........if you have LESS than $1000 , you are NOT saving for retirement

Fri, 10/12/2012 - 19:34 | 2883427 Seasmoke
Seasmoke's picture

now i understand why the public leeches refuse to give $1 of their entitled pensions.......corrupt fucks

Fri, 10/12/2012 - 20:01 | 2883490 Debtonation
Debtonation's picture

Maybe if the government didn't force us to "save" for retirement through Social Security we would have more savings for retirement.

Sat, 10/13/2012 - 01:01 | 2883830 LMAOLORI
LMAOLORI's picture

 

 

Too bad this comment wasn't the first one on the article so that all would see it. We lived frugally have no debt and saved and saved even more. We also have an excellent well run pension fund with good regulation that is actually solvent so even if Social Security somehow isn't paid we will be OK our plan pays us until we are both dead. However by threat of imprisonment we were forced to pay in almost $600,000 to SS a program that was started before we were born and that money would sure go a long way towards improving our retirement. We plan on taking S.S. at 62 with the hopes that at least we'll get back a pittance of our forced contribution.

Fri, 10/12/2012 - 20:03 | 2883493 q99x2
q99x2's picture

I ran a 10 mile race this weekend and there were a heck of lot of retirement aged people out there running. The globalists shouldn't fool themselves by thinking that group won't put up a fight.

Sat, 10/13/2012 - 11:01 | 2884688 Hulk
Hulk's picture

But you all were running ...

Fri, 10/12/2012 - 21:56 | 2883771 americanspirit
americanspirit's picture

I have a deal for the government. I am 72. I have Medicare and SS. Give me $1 million and I will never, ever ask for or accept another penny from you. Condition - if I put that $1 million into gold and silver there will be no taxes when I sell. Aside from that - no medicare, no social security, nothing. If and when that $1 million runs out I will deal with it. No disposal costs. No whining. Deal?

Sun, 10/14/2012 - 14:45 | 2887979 LMAOLORI
LMAOLORI's picture

 

 

That's not a deal that screws the younger people

According to a 2011 study by the Urban Institute, a married couple retiring last year after both spouses had worked throughout their lifetimes wound up paying about $598,000 in Social Security taxes. If the man lives to 82 and the woman to 85, they can expect to collect about $556,000 in benefits.

http://blog.aarp.org/2012/08/06/the-takeaway-todays-retirees-first-to-pay-more-into-social-security-than-theyll-get-back/

Sat, 10/13/2012 - 02:53 | 2884082 dolph9
dolph9's picture

Repeat after me:  there's no such thing as retirement.

Either you have health, savings in precious metals and hard assets, and family that can support you, or you don't.

If you don't, the government will inflate the currency away to keep you living until the system collapses, and then good luck.

Sat, 10/13/2012 - 03:05 | 2884093 malek
malek's picture

 put a whopping 1% of my paycheck towards the 401k

That's ridiculous, Sarah.
You need to put at least 5% away (not necessary a 401k unless you like you savings partially confiscated by the government some day),
better 10%.

Sat, 10/13/2012 - 08:46 | 2884536 Lost Wages
Lost Wages's picture

The only reason we stop saving for retirement is because sites like Zerohedge tell us we're going to lose it all if we do. Otherwise we'd be shoveling money into a 401K to get the company match. Free money bitchez. So tell me, Zerohedge. Which of the two mixed messages should we be listening to? If you save money for retirement the financial system will vaporize and you'll have nothing, so use it or lose it now? Or save as much as you can for retirement so these statistics look less dire. I don't know what people fucking want from us anymore, so fuck it. If I run out of money, I'll just commit suicide. That is the new fucking economics.

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