Retiring Boomers Find 401(k) Plans Fall Short .

[VolAgent]

I am not going to argue that I am right but I am going to say that assuming the 85% replacement % for absolutely everyone isn't appropriate either..

Yes, but you need to have something to shoot for, and you are better off aiming too high than too low.

 

[Crabcake Johnny]

So the average income is 50K and the average savings rate is 4%. $2,000 a year. 35 years later it's $236K worth $118K. At 3% it earns $3,540 per year.

.....no problems there. Good Lord.

Now how 'bout a really good dose of how it actually works. Same scenario except they don't start saving until they're 45. Now it's 77K worth $38K and that's the position a lot of seniors are in.

So what are you gonna do with 40K for retirement savings? Nothing - go buy a boat and at least have a bit of fun before it crashes and burns.

My brother is 57 and has zero....zero for retirement. In fact he's in debt. He'll be working into his 80's.

 

[BNTRS]

Of course we shoot higher than absolutely necessary. It's called wiggle room.

 

[xrac]

And how about the effect of inflation?????????

 

[Air Jer]

and you are better off aiming too high than too low.

Perhaps. Do we have people save so much for a retirement that may not come because of premature death that they don't enjoy the todays of their lives? Asking people to save enough that they can fund 85% of their pre-retirement income off of investment income means they have to put a lot of jack back and start ASAP. How much of life do they not enjoy today so that they are rich when they are old and gray?

Now I understand the need to save and thankfully I have through the years. When someone is in their late 50's and have nothing at all as one poster stated about his brother, that is the other extreme. I'm sorry but I don't buy into the theory that everyone needs to fund 85%. The number 85% is arbitrary. I use to work for a guy who borrowed heavily to support his desired and lavish lifestyle. We use to joke that he would need 150% of his pre-retirement income just to maintain his lifestyle. Everyone's situation is different and I can tell you I won't need 85% but others may. One broad brush stroke of 85% for everyone won't always be the best thing to serve others well.

 

[VolAgent]

Then determine your own personal number. And actually, I can't recall ever hearing 85% as the number. I may just be confusing disability here, but I generally recall hearing 70% as the number to shoot for. Personally, I want 100%.

 

[Air Jer]

Then determine your own personal number.

Yep.
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I can't recall ever hearing 85% as the number.

That was the # in the article in the original post.

 

[xrac]

Today I talked to an optometrist that is an acquaintance. One year ago his 25 year old son died and I hadn't saw him since this occured. I expressed my condolences to him and asked how he was doing. This gentleman is about 60 years old. He told me about his grief but he also told me how his son's death had almost bankrupted him and his wife. He had cosigned for some college loans, a automobile loan for his son, and on a mortagage for his son for a house. His son's death had left him saddled with all of these obligations as well as his son's final expenses. He sold his son's house for $50,000 less than the mortgage amount. He told me he had to beg $10,000 from his brother to keep from going bankrupt. He has been working 6 days a week to dig his way out. He sold his house and moved to a smaller place.

Here is a typical baby boomer. He is well educated and has made good money but has spent it. He has too much debt and not enough savings. He is not looking forward to a favorable retirement at this time. With his obligations from co-signing for his son. It would have been a life saver if he had had $100-$250,000 of cheap term insurance on his son.

 

[VolAgent]

Today I talked to an optometrist that is an acquaintance. One year ago his 25 year old son died and I hadn't saw him since this occured. I expressed my condolences to him and asked how he was doing. This gentleman is about 60 years old. He told me about his grief but he also told me how his son's death had almost bankrupted him and his wife. He had cosigned for some college loans, a automobile loan for his son, and on a mortagage for his son for a house. His son's death had left him saddled with all of these obligations as well as his son's final expenses. He sold his son's house for $50,000 less than the mortgage amount. He told me he had to beg $10,000 from his brother to keep from going bankrupt. He has been working 6 days a week to dig his way out. He sold his house and moved to a smaller place.

Here is a typical baby boomer. He is well educated and has made good money but has spent it. He has too much debt and not enough savings. He is not looking forward to a favorable retirement at this time. With his obligations from co-signing for his son. It would have been a life saver if he had had $100-$250,000 of cheap term insurance on his son.

Just yet another reason to buy a $50 or $100 a month whole life or IUL on a very young child. You'll probably get $100,000 or more in death benefit, and you're building a slush fund for the kid. Use it to help out with college, buying a car, down payment on a house, whatever.

I feel bad for your friend, but so many of these sob stories are really just the result of poor planning. And being an optometrist, I guarantee you at least two agents a year called on him, in a slow year.

 

[Crabcake Johnny]

Today I talked to an optometrist that is an acquaintance. One year ago his 25 year old son died and I hadn't saw him since this occured. I expressed my condolences to him and asked how he was doing. This gentleman is about 60 years old. He told me about his grief but he also told me how his son's death had almost bankrupted him and his wife. He had cosigned for some college loans, a automobile loan for his son, and on a mortagage for his son for a house. His son's death had left him saddled with all of these obligations as well as his son's final expenses. He sold his son's house for $50,000 less than the mortgage amount. He told me he had to beg $10,000 from his brother to keep from going bankrupt. He has been working 6 days a week to dig his way out. He sold his house and moved to a smaller place.

Here is a typical baby boomer. He is well educated and has made good money but has spent it. He has too much debt and not enough savings. He is not looking forward to a favorable retirement at this time. With his obligations from co-signing for his son. It would have been a life saver if he had had $100-$250,000 of cheap term insurance on his son.

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.