$20k in Retirement Savings is the Average Now for Middle Class

Discussion in 'Retirement Planning Forum' started by scagnt83, Dec 8, 2010.

  1. scagnt83
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    A recent survey by Wells Fargo, its pretty scary.

    "The average American has saved less than 7 percent of his desired retirement nest egg and will likely have to keep working in retirement to supplement his income.

    Middle-class Americans think they need $300,000 to fund their retirement, but on average have only saved $20,000, according to a survey released on Wednesday by Wells Fargo
    .....
    Respondents aged 50 to 59 have saved an average of only $29,000 for retirement.
    ....
    Consequently, more than a third of respondents believe they will have to work during retirement in order to afford the things they want or just to make ends meet.
    ....
    The vast majority of respondents admitted they need help figuring out how much money they need to live on in retirement and picking investments for their 401(k)s.
    But in a negative twist for financial advisers, more than two-thirds said they were not willing to pay for this advice"


    News Headlines
     
  2. 0b1kanobee
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    Re: $20k in Retirement Savings is the Average Now for Middle Clas

    And someone had to ask Wells Fargo for that information? Hell even I know that. The world is a different place than it was when our parents were alive and saving. Things have got more expensive and earnings haven't kept up with inflation or what it actually costs to live today unless one buys a little RV and parks it in a cheap RV spread along the St. Johns River here in Florida for example. This recession isn't helping some either. Folks used to saving are depleting that savings if they are not working.
    The only thing good that will come out of the recession (I think it's a depression of sorts) is that people will be more cautious of how they spend and save. The problem with that is, our economy thrives on spenders since everything is made in China. What we actually have IMO is a fast death coming soon compared to the slow death that has been happening.
    We have see the edge of the cliff and I'm afraid we are going to go over it. As someone quoted a Bible verse here recently, "they know not what they do" (or have done until it is too late).
    Through greed, we are going to soon if not now, be a society of the haves and have nots.
     
  3. Full Throttle
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    Re: $20k in Retirement Savings is the Average Now for Middle Clas



    Typical Suggested Withdrawl Rate
    $300,000 @ 4% = $1,000 / Month + Social Security​

    Say They Did a SPIA @ 7% (arbitrary number, who knows what interest rates will be)

    $300,000 @ 7% = $1750 / Month + Social Security​




    My prediction: a lot of reverse mortgages for income, hopefully nobody goes into a nursing home or has unexpected medical expenses.

    Here's the problem:
    1. An investment advisor can't really afford to help someone with a $29,000 balance unless he is getting the insurance business as well.​

    2. Fee-Only (not 1% AUM fee) advisors have a tough time being profitable and as this survey shows, most people will not pay the fee anyway.

    3. The 401(k) plan provider has to legally provide them resources, however, most won't utilize them anyway.

    The solution: a knowledgable agent/RR combo that can profitably serve the massive middle class and give them some basic advise. It's not complicated, most of us could give someone an idea of where they stand and what they need to save in 5 minutes on a yellow pad.



    That's not all bad, as long as someone is healthy enough to work. I'm a long ways away, but I don't think I'll ever fully retire. That being said, knowing I can work as hard or as little as I want is a lot different than working because I have bills to pay.
     
    Last edited: Dec 8, 2010
  4. 0b1kanobee
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    Re: $20k in Retirement Savings is the Average Now for Middle Clas

    I agree with Full as well. The situation is people are not naturally savers. They are keeping up with the Jone's types. Saving isn't natural, is it taught/learned and requires discipline, something we lack in this country.

    I work with lots of school teachers who don't make much money. You have one end of the spectrum that gripes and complains who lives above their means. When summers come they take the whole time off. They have every channel available on cable TV and who knows what else. This is something else we didn't have years ago to pay (cable, internet and cell phones).

    Then I'll have another teacher who works full time teaching and full time as a correctional officer plus goes to school (bless her heart). However she is 40 and looks like 50 from all that work. I don't know how she does it. However, she contributes plenty to her deferred comp plan. She does so because that is how she was taught and raised by her family. She has no tv because she has no time for it. Wouldn't have internet if she didn't need it for school nor a cellphone if she didn't need one to keep track of her child and jobs.
     
  5. BNTRS
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    Re: $20k in Retirement Savings is the Average Now for Middle Clas

    Again I say, this idea of the golden ages is relatively new. There's a reason Social Security is in so much trouble, it's because it was originally designed to take care of those who had lived unusually long and couldn't physically work anymore, we'd abandoned this idea, so even the bleeding hearts who want to march up and down the streets screaming "Viva FDR!" are stupid punks who don't get it. The retirement age is way too low.

    Meanwhile my old high school is looking at a proposal to cut the entire business department due to budget woes...that will help the kids learn what investments are all about and how to plan for retirement. As a society we place such a low importance on financial security it's kind of embarrassing.
     
  6. Crabcake Johnny
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    Re: $20k in Retirement Savings is the Average Now for Middle Clas

    Retirement is a myth. I'll never retire.
     
  7. Full Throttle
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    Re: $20k in Retirement Savings is the Average Now for Middle Clas

    My grandparents said that as well, retirement wasn't be choice, it was due to health. Now all the kids have the write a check each month to support them. It will be a much larger check each month if one of them ends up in a nursing home.
     
    Last edited: Dec 10, 2010
  8. BNTRS
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    Re: $20k in Retirement Savings is the Average Now for Middle Clas

    Wait, you mean sometimes these things are the result of things beyond your control?:shocked:

    If only there were financial products to help address this sort of thing...


    :idea:
     
  9. njh_lfg
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    Re: $20k in Retirement Savings is the Average Now for Middle Clas

    Sounds about right. Any registered reps or IAR will tell you the same thing: you can harp on the need for clients to put away more money every year but at the end of the day most will not change their spending habits or lifestyle regardless of their the lack of savings.
     
  10. russelltw
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    Re: $20k in Retirement Savings is the Average Now for Middle Clas

    I have about 500 clients as a multiline agent. I can only think of a hand full that will be prepared for retirement. Most are too busy refi-ing their $90,000 house so they can buy a used $26,000 bass boat they use a couple days a month...
     
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