Retiring Boomers Find 401(k) Plans Fall Short .

[xrac]

I'm sorry but there's a few things there that should never have happened. College loan? Sure. But co-signing the car and house? Not a shot in hell. Rent and buy a used car.

There's no reason for a 25 year old to own a house if they obviously don't qualify for the loan.

I do not disagree. I think it was all dumb, dumb, dumb but this is the type of decisions that a lot of boomers have made and an adequate amount of life insurance would have certainly been a life saver. Instead of fighting to survive financially this couple could have had some space to grieve.

 

[LGilmore]

Boomers are finding their plans fall short because for a lot of them, they are taking a ton of debt into retirement. A few years ago the term was called "retiring Red" as in the red.

A generation or so ago, it was really unheard of not to have all your debt paid off before you retired. That changed 10-15 years ago. People over 55 are still buying "up" carrying hundreds of thousands in debt into retirement.

Heck, almost half my business is selling 20-30 year terms or guls to the over 60 crowd as they perpare to retire. Most of them have wives who realize that if retired husband dies, they loose the house and everything else.

Retirement plans weren't meant to finance a working man's debt load. I think this is a lost cause for the generations coming into retirement, but for their kids, the idea of saving is coming back into style.

 

[BNTRS]

I know a couple that was a single breadwinner family forever. Husband retired close to 10 years ago because his company went under and he decided "why not?" They live off an income that most would consider tiny. And that income comes from Social Security and a Pension. They take the pension income and but it in the bank each month. Indeed they live a simple life, and are fairly thrifty. Wife has had some serious health issues over the past year and racked up substantial hospital bills. Yes it sucks, but it's not the end of the world for them. This would be game over for a lot of boomers.

Oh I should mention that they had 5 kids and he was a machinist, not a high income professional all his life.

It can be done. You just have to be committed to the cause.

 

[Braxtonut]

People need to look at their parent's and grandparent's generations. Many of them got pensions, and they still saved. Now people won't contribute to their 401ks in meaningful manner, nor save outside of them.

This is true, and younger generations aren't going to get pension plans as the work force changes and contract work and freelancing become more prevalent. Social Security will be dried up as well, so something needs to be done and the savings rate needs to increase.

 

[Crabcake Johnny]

Since we're talking about our grandparents, while this isn't the exact house, they grew up in Richmond Heights OH in a house like this:



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And this is where we want to live



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[VolAgent]

Dude, your house got fat!

 

[xrac]

Since we're talking about our grandparents, while this isn't the exact house, they grew up in Richmond Heights OH in a house like this:



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And this is where we want to live



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Naw! Not nice enough!

 

[Crabcake Johnny]

In 1950 the average home was 938 sq. ft. Now it's 2,349. My dad was over yesterday for his 80th b-day dinner.

He remembers back in the day when he bought his first new car for $3,000 when he was making 18K a year. That's 6:1.

That means someone earning 60K a year should buy a car that costs 10K. Can you buy a new car for 10K? Absolutely.

So it's not that the cost of anything has gone up. It hasn't. It's that we are choosing to live a much different lifestyle from our parents and grandparents.

We can't say it's a better quality of life since we're 10th in the happiness scale around the world. In fact, there's nothing more soul crushing than debt.

BTW...gas prices are largely not up. Adjusted for inflation $1.35 in 1980 was $3.24.

 

[xrac]

The key to financial success is not how much income you make, or how well your investments do. The real secret is how much of the money that you earn you keep. Living within your means and being a saver not a spender are the keys. It is in this area that I agree with Dave Ramsey.

My son and his wife will be 34 this year. My son is a plumber working for the schools system and his wife is an elementary teacher. They both make about $40K per year. Although my daughter-in-law has missed about 3 years of school total off and on while on leave while the children were born. They have four children. My daughter-in-law earned a B.A. before they were married and a M.A. after they married. They own a farm of 42 acres with a small two story house with basement of about 1400 square feet total. They have about $50,000 in retirement plans. They own all of the toys: Honda Odyessey, Ford F-150, Toyota Tacoma, 4 wheeler, New Holland tractor and implements, mowers, etc.

Here is the amazing thing. They owe less than $20,000 in total debt whiling having all of this stuff and those 4 children. They do it by being savers, by living within their means, and by evaluating every purchase that they have made. They are now getting ready to double the size of their house and my son will do most of the work. It can be done if a person is disciplined.

Their total net worth is probably something like $300,000.

 

[Crabcake Johnny]

Who's gonna do better:

Tim: Makes 60K but saves 15K a year by putting the money under his mattress.

Bob: Makes 60K but saves $2K a year and invests it at an annual return of 6%.

After 35 years Bob has $236K while Tim has 525K. I'm not saying not to invest for a return - if Tim put his 15K a year into an account earning 1.5% he'd have 700K.

Live beneath your means. Using a real world example, if Tim is out of work after 5 years he basically has 10K. Bob has 75K and it's the difference between losing everything you have and being just fine.