# Apparently, baby boomers haven't saved for retirement; What happens next? **URL:** \ **Category:** Great Debates\ **Created:** [March 18, 2014, 10:51am UTC](https://boards.straightdope.com/t/apparently-baby-boomers-havent-saved-for-retirement-what-happens-next/683991 "2014-03-18T10:51:01Z")\ **Posts on this page:** 13\ **Page:** 5
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [March 24, 2014, 4:28pm UTC](https://boards.straightdope.com/t/apparently-baby-boomers-havent-saved-for-retirement-what-happens-next/683991/81 "2014-03-24T16:28:32Z")
Hmmm. [I started a new thread](http://boards.straightdope.com/sdmb/showthread.php?p=17224417#post17224417) in IMHO to solicit advice. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [March 24, 2014, 5:55pm UTC](https://boards.straightdope.com/t/apparently-baby-boomers-havent-saved-for-retirement-what-happens-next/683991/82 "2014-03-24T17:55:40Z")
IIRC average fees are around 1% for large companies, higher for small. Access to index funds is not the norm. ---
**Author:** ![shiftless](https://avatars.discourse-cdn.com/v4/letter/s/e9c0ed/32.png) [@shiftless](https://boards.straightdope.com/u/shiftless)\ **Post date:** [March 24, 2014, 6:20pm UTC](https://boards.straightdope.com/t/apparently-baby-boomers-havent-saved-for-retirement-what-happens-next/683991/83 "2014-03-24T18:20:42Z")
> [@septimus](#): > > It’s bizarre that American discourse degrades into pitting one generation against another. Is this, like race vs race, something promulgated on behalf of a right-wing agenda? It is part of the famous ‘generation gap’ we’ve been having here since the 60’s, between the folks who won the great war and their kids who wanted to have love-ins and protest war. It’s part of the same song Europians hear, about how that generation of Americans won the war and freed the world. I think we have all come to love those generational groups so much, we constantly try to fit it onto other generations. Xers are like this, Yers are like that and Millinials are a whole different thing. They don’t have that in other countries? ---
**Author:** ![Deeg](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/deeg/32/2955_2.png) [@Deeg](https://boards.straightdope.com/u/Deeg)\ **Post date:** [March 24, 2014, 7:21pm UTC](https://boards.straightdope.com/t/apparently-baby-boomers-havent-saved-for-retirement-what-happens-next/683991/84 "2014-03-24T19:21:34Z")
> [@shiftless](#): > > It is part of the famous ‘generation gap’ we’ve been having here since the 60’s, I don’t think it started in the 60’s. There were complaints about flappers and their damn loud jazz music in the 20’s and I’m sure it goes back to ancient Egypt. ---
**Author:** ![Dogzilla](https://avatars.discourse-cdn.com/v4/letter/d/e480ec/32.png) [@Dogzilla](https://boards.straightdope.com/u/Dogzilla)\ **Post date:** [March 24, 2014, 7:38pm UTC](https://boards.straightdope.com/t/apparently-baby-boomers-havent-saved-for-retirement-what-happens-next/683991/85 "2014-03-24T19:38:09Z")
> [@Voyager](#): > > But we are also far more immune to them. When I was a kid we couldn’t fast forward through the ads. > > First, as I mentioned, lots more people were covered by pensions, and so didn’t have to worry about it. The first five or six years I worked I had a pension and no 401K (which didn’t exist yet.) I did see lots of ads for annuities and insurance. > In a more rustic time, the retirement type ads I recall had more to do with fishing than beaches - but air travel was not so common back then. > > Marketing works more subtly than that. They don’t expect anyone to think they will have that kind of life, but they do expect people to think they’ll have a better life. You won’t score the Swedish Bikini Team, but you might score that blonde at the bar. > If you want an insidious campaign, try the retirement calculators, which seem super mathematical and scientific, but which give a stronger marketing message than the kinds of ads you mention. I play with them to figure out the underlying formulas and assumptions that they are using, but most people are just going to buy what they say. Ah, the marketing of retirement. I saw the Frontline episode on PBS about [The Retirement Gamble](http://www.pbs.org/wgbh/pages/frontline/retirement-gamble/), and it made me feel _really_ hopeless about retirement. Basically, there are so many hidden fees that most of us have no idea what we’re investing in and such a significant portion of our return is sucked up in fees, that we’re pretty much lucky if a 401(k) provides any cushion at all. I have very little control over which investment funds my 401(k) agent of record chooses to be available to employees of my company. As an individual, I have very little control over which investment choices are available within my IRA. And I’ve been taught to not trust financial advisors because they’re just trying to make money like everyone else and those people _have_ money to invest, so they think nothing of gambling with other people’s money. So I started thinking about the target market for this sort of advertising and marketing. I do not fit most of the assumptions, so I have no idea what I need to retire. I am not married. I was never in the military (no VA benefits or USAA insurance). I do not have children. My own college loans are paid off. My house will be paid off in ten years (when I’m about 55). And another thing people fail to realize is this: if you were born after 1960, [retirement age (to receive full SS benefits) is 67 for you](http://www.socialsecurity.gov/retire2/agereduction.htm). Not this 65 business. Someone voted for that, but I sure didn’t. Who added two years on to my work life without my consent or knowledge? (Baby Boomer legislators, I’m looking at _you_. :mad: ) Anyway, any time I go to these calculators, I can’t figure out why they think I need so much money. I’m supposed to need $1-2 million! For _what_!!! :eek: Then I remember, I am not in the target market. These calculators are useless to me and it’s useless to try to figure out how to calculate what I will need because I don’t know what things are going to cost in 25 years. So I guessed that my taxes and insurance will double. And all my utilities and groceries and every day fixed expenses will also double. Divide that total back out by 12, add in a bit extra for the unforeseen… and I’m coming up with somewhere around a hundred to a couple hundred thousand (I’m assuming 20 years, but as a smoker I think planning to live until 87 is pretty damn optimistic). There is no need to sweat a couple million dollars unless I plan to jet around the world, provide college educations for all my six children and my 17 grandchildren, and trade in my Cadillac for a new one every year. I mean, I just can’t even. Who _are_ these people who live like this? And what of the minimum wage workers? What of the under-the-table workers? What are you supposed to do if you’ve never topped $10/hour in your lifetime ever, and it’s been all you can do to keep yourself and your children fed and under a dry roof? How are those people supposed to come up with hundreds of thousands of dollars for retirement? I am not one of them, but obviously The Retirement Marketing Machine™ is also not targeting the lower end of the income scale. And the reason why is obvious: The Retirement Marketing Machine™ is trying to bring in interest dollars to the financial industry… so they can play Bernie Madoff with our life savings. SS was supposed to be the safety net for the less fortunate, regardless of the reasons of their misfortune (self-directed or otherwise). But now my generation, not only can we not count on SS being there in 25-30 years (depending on who you listen to), but we can’t even count on our own 401(k)s and IRAs to be there either because 2008. At any given moment, for reasons only understood by financial sector types, the market could crash and burn and there goes my 401(k) balance, thanks for playing, and fuck you very much. It _is_ a gamble. And I still don’t know for what? _If_ I win, what do I win, because it sure seems like the table is rigged and the House is going to win. Recently, because of all this, I cut back on the percentage I’m contributing to my 401(k). I think I’d rather have that money in hand where I can control how it’s spent or invested or used or whatever, rather than trust overly complicated financial products that I do not understand, to provide that nest egg cushion for me. And I’m sure I’m not the only person who is starting to see this as a useless, futile game that the investment companies are making fortunes from, but I’m thinking I will be screwed at retirement either way. And, of course, that’s notwithstanding a hurricane or a terrible car accident or a cancer diagnosis and then all financial plans and bets are off. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [March 24, 2014, 8:21pm UTC](https://boards.straightdope.com/t/apparently-baby-boomers-havent-saved-for-retirement-what-happens-next/683991/86 "2014-03-24T20:21:40Z")
> [@Dogzilla](#): > > Anyway, any time I go to these calculators, I can’t figure out why they think I need so much money. I’m supposed to need $1-2 million! For _what_!!! :eek: Then I remember, I am not in the target market. These calculators are useless to me and it’s useless to try to figure out how to calculate what I will need because I don’t know what things are going to cost in 25 years. So I guessed that my taxes and insurance will double. And all my utilities and groceries and every day fixed expenses will also double. Divide that total back out by 12, add in a bit extra for the unforeseen… and I’m coming up with somewhere around a hundred to a couple hundred thousand (I’m assuming 20 years, but as a smoker I think planning to live until 87 is pretty damn optimistic). There is no need to sweat a couple million dollars unless I plan to jet around the world, provide college educations for all my six children and my 17 grandchildren, and trade in my Cadillac for a new one every year. I mean, I just can’t even. Who _are_ these people who live like this? When I use one of these calculators, I do stuff like see how much they think I need each year in retirement with my real data, and then increase and decrease my current salary to see how it changes. In some cases it changes in lockstep. Make $100K it will say you need $90, make $1 million it will say you need $900K. I know I’m okay because my financial planner, who has some interest in having me save more, says I’m okay. The best I figure is to calculate how much you expect to spend, and how much you can take out, and see how long you have. Another bug in these things is that they assume linear spending habits. You are going to travel a lot more at 65 than 85. You probably won’t be on the cutting edge of gadgets either. > [@](#): > > Recently, because of all this, I cut back on the percentage I’m contributing to my 401(k). I think I’d rather have that money in hand where I can control how it’s spent or invested or used or whatever, rather than trust overly complicated financial products that I do not understand, to provide that nest egg cushion for me. And I’m sure I’m not the only person who is starting to see this as a useless, futile game that the investment companies are making fortunes from, but I’m thinking I will be screwed at retirement either way. And, of course, that’s notwithstanding a hurricane or a terrible car accident or a cancer diagnosis and then all financial plans and bets are off. It makes sense to maximize employer matches. But, depending on the range of products a company 401K offers, it might make sense to save money beyond that outside your company plan, which gives you a lot more options. When I’ve changed jobs I rolled over my 401K to my investment account, where I can do things with it not possible in my employer 401K plan. ---
**Author:** ![Urbanredneck](https://avatars.discourse-cdn.com/v4/letter/u/ea5d25/32.png) [@Urbanredneck](https://boards.straightdope.com/u/Urbanredneck)\ **Post date:** [March 25, 2014, 5:15am UTC](https://boards.straightdope.com/t/apparently-baby-boomers-havent-saved-for-retirement-what-happens-next/683991/87 "2014-03-25T05:15:27Z")
Most people have the 3 legged stool for retirement - social security, pension, and private investments. Others its social security, 401k, and private investments. Some have the 4 legged chair - social security, pensions, 401k, and private investments. I have the 5 legged kind - social security, pensions, 401k, private investments, plus I own a farm which right now brings in around $40k a year. Regardless one needs to look at their expenses when they retire. You will need about 75% of your working income if you stay in your current home. Many people either trade down their house to a smaller and cheaper one, move to a small town where the expenses are cheaper, move to some retirement community in say Arizona which is cheaper, or move to a foreign country. Regardless you need to get a good idea of what lifestyle you want when you retire and plan your savings around that. ---
**Author:** ![Dangerosa](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Dangerosa](https://boards.straightdope.com/u/Dangerosa)\ **Post date:** [March 25, 2014, 1:21pm UTC](https://boards.straightdope.com/t/apparently-baby-boomers-havent-saved-for-retirement-what-happens-next/683991/88 "2014-03-25T13:21:16Z")
> [@Urbanredneck](#): > > Most people have the 3 legged stool for retirement - social security, pension, and private investments. Others its social security, 401k, and private investments. Some have the 4 legged chair - social security, pensions, 401k, and private investments. I have the 5 legged kind - social security, pensions, 401k, private investments, plus I own a farm which right now brings in around $40k a year. > > Regardless one needs to look at their expenses when they retire. You will need about 75% of your working income if you stay in your current home. Many people either trade down their house to a smaller and cheaper one, move to a small town where the expenses are cheaper, move to some retirement community in say Arizona which is cheaper, or move to a foreign country. Regardless you need to get a good idea of what lifestyle you want when you retire and plan your savings around that. Retirement calculators are one of the things that the early retirement websites (like the previously mentions Mr. Money Moustache) make fun of. First, they start with the assumption that you’ll need 75-80% of your INCOME - but that is only if you spend what you make. You’ll really need to replace what you spend (and what you spend it on will change from work to retirement and over the course of retirement). If you make $200,000 a year and live of $40k, you don’t need to make $150k a year in retirement - you need $40k. Then frequently they go for a “safe withdrawal rate” - maybe 4%. The idea that you have - especially early in retirement - enough money out there that the bulk of it is still earning money in the stock market, and your gains in the market will cover inflation - in theory, you could pull 3-4% out a year forever…But to do that you need to have a lot of money in the market. The effect of all this is to discourage people from saving anything at all - they’ll never get to the incredible numbers shown in the calculator, so why try? In some ways we’d be better off marketing retirement to saving for “small goals” - your grandchildren might end up at the other end of the country - you’ll want plane tickets…with social security picking up the pure needs of shelter and food - social security won’t get you that plane ticket. Instead of showing a retirement of playing golf at Hilton Head (which is illustrative of who they think will need millions in retirement). ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [March 25, 2014, 1:25pm UTC](https://boards.straightdope.com/t/apparently-baby-boomers-havent-saved-for-retirement-what-happens-next/683991/89 "2014-03-25T13:25:26Z")
> [@Urbanredneck](#): > > Most people have the 3 legged stool for retirement - social security, pension, and private investments. Statistically, that is not true. Most households have no pension, and no investments whatsoever. ---
**Author:** ![Dangerosa](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Dangerosa](https://boards.straightdope.com/u/Dangerosa)\ **Post date:** [March 25, 2014, 1:51pm UTC](https://boards.straightdope.com/t/apparently-baby-boomers-havent-saved-for-retirement-what-happens-next/683991/90 "2014-03-25T13:51:20Z")
> [@Fear\_Itself](#): > > Statistically, that is not true. Most households have no pension, and no investments whatsoever. Yep, for most people its a one legged stool. And for some people - those who don’t have their social security quarters in because they’ve worked for cash for instance - the leg they have isn’t at all sturdy. ---
**Author:** ![Urbanredneck](https://avatars.discourse-cdn.com/v4/letter/u/ea5d25/32.png) [@Urbanredneck](https://boards.straightdope.com/u/Urbanredneck)\ **Post date:** [March 25, 2014, 2:24pm UTC](https://boards.straightdope.com/t/apparently-baby-boomers-havent-saved-for-retirement-what-happens-next/683991/91 "2014-03-25T14:24:37Z")
> [@Dangerosa](#): > > Retirement calculators are one of the things that the early retirement websites (like the previously mentions Mr. Money Moustache) make fun of. > > First, they start with the assumption that you’ll need 75-80% of your INCOME - but that is only if you spend what you make. You’ll really need to replace what you spend (and what you spend it on will change from work to retirement and over the course of retirement). If you make $200,000 a year and live of $40k, you don’t need to make $150k a year in retirement - you need $40k. > > Then frequently they go for a “safe withdrawal rate” - maybe 4%. The idea that you have - especially early in retirement - enough money out there that the bulk of it is still earning money in the stock market, and your gains in the market will cover inflation - in theory, you could pull 3-4% out a year forever…But to do that you need to have a lot of money in the market. > > The effect of all this is to discourage people from saving anything at all - they’ll never get to the incredible numbers shown in the calculator, so why try? > > In some ways we’d be better off marketing retirement to saving for “small goals” - your grandchildren might end up at the other end of the country - you’ll want plane tickets…with social security picking up the pure needs of shelter and food - social security won’t get you that plane ticket. Instead of showing a retirement of playing golf at Hilton Head (which is illustrative of who they think will need millions in retirement). Very good point. A better “investment” is to look for a source of income like maybe rental property. ---
**Author:** ![ThisUsernameIsForbidden](https://avatars.discourse-cdn.com/v4/letter/t/b4bc9f/32.png) [@ThisUsernameIsForbidden](https://boards.straightdope.com/u/ThisUsernameIsForbidden)\ **Post date:** [March 25, 2014, 4:23pm UTC](https://boards.straightdope.com/t/apparently-baby-boomers-havent-saved-for-retirement-what-happens-next/683991/92 "2014-03-25T16:23:25Z")
> [@Urbanredneck](#): > > Very good point. > > A better “investment” is to look for a source of income like maybe rental property. Seems obvious at first, but other people have thought of it. Example, you own a house worth 300K. 5% of that is 15K. Maybe that is more than what you would get from having it in your IRA, maybe not. In order to beat that 5%, rent would need to be 1250/mo. Plus you have to figure in property taxes, taxes on rents, upkeep, etc. And then there’s the whole appreciation/depreciation of value thing. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [March 25, 2014, 11:29pm UTC](https://boards.straightdope.com/t/apparently-baby-boomers-havent-saved-for-retirement-what-happens-next/683991/93 "2014-03-25T23:29:24Z")
> [@Urbanredneck](#): > > Very good point. > > A better “investment” is to look for a source of income like maybe rental property. That requires work. REITs don’t. Not that I have anything against people who want to work during their retirement. I’m happy to watch. [Previous page](https://boards.straightdope.com/t/apparently-baby-boomers-havent-saved-for-retirement-what-happens-next/683991.md?page=4)