INCOMPREHENSIBLE

When I read stories like the one below and the information about how much people have saved for their retirement, I’m flabbergasted by the delusional, utterly ridiculous behavior of American consumers. We know for a FACT that 60% of all workers in the country have less than $25,000 of total savings. Many have absolutely nothing saved. Even better, over 25% of all 401k participants have borrowed against their 401k plan as of the end of 2010. This data is for people with jobs. How about the 88 million people who aren’t in the labor market? I wonder how much savings they have. In order to retire at 65 and live above the poverty line, people need to have saved at least a couple hundred thousand dollars. Those who retired in the 1980s and 1990s had equity in their homes, many had defined benefit pensions, and could rely on Social Security and their savings.

Today you have 55 year old people with $25,000 of liquid assets earning .15%, underwater homes, no pension plans, and $15,000 of credit card debt. They cannot afford to retire. They will stay in the labor market until the day they die. This is not good news for the Millenials.

What I find incomprehensible is that Americans ramped up their spending in the 1st quarter of 2012 and their savings rate in back at a four year low of 3.9%. With the data about retirement savings being so pitiful consumers SHOULD BE saving 10% of their disposable income like they did in the early 1980s. Going further into debt in order to enjoy going out to dinner two times per week is about the stupidest thing anyone could do. And our leaders, media and Ivy League trained economists actually encourage this delusional foolish behavior. Can this many Americans be this stupid? What are they thinking? Are they counting on the government to come to their rescue when they are 75 years old, broke, homeless, and begging?

I find myself shaking my head and talking to myself when I see this data and watch the behavior of the majority. We’re surely doomed.   

Delaying retirement: 80 is the new 65

NEW YORK (CNNMoney) — A quarter of middle-class Americans are now so pessimistic about their savings that they are planning to delay retirement until they are at least 80 years old — two years longer than the average person is even expected to live.

It sounds depressing, but for many it’s a necessity. On average, Americans have only saved a mere 7% of the retirement nest egg they were hoping to build, according to Wells Fargo’s latest retirement survey that polled 1,500 middle-class Americans.

While respondents (whose ages ranged from 20 to 80) had median savings of only $25,000, their median retirement savings goal was $350,000. And 30% of people in their 60s — right around the traditional retirement age of 65 — that were surveyed had saved less than $25,000 for retirement.

As a result, many people aren’t in a hurry to quit their day jobs.

Three-fourths of middle-class Americans expect to work throughout retirement. And this includes the 25% of Americans who say they will “need to work until at least age 80” before being able to retire comfortably.

The 2012 Retirement Confidence Survey: Job Insecurity, Debt Weigh on Retirement Confidence, Savings

March 2012 EBRI Issue Brief #369 Paperback, 36 pp. PDF, 1,585 kb Employee Benefit Research Institute,  2012

Download Issue Brief PDF

Executive Summary

  • Americans’ confidence in their ability to retire comfortably is stagnant at historically low levels. Just 14 percent are very confident they will have enough money to live comfortably in retirement (statistically equivalent to the low of 13 percent measured in 2011 and 2009).
  • Employment insecurity looms large: Forty-two percent identify job uncertainty as the most pressing financial issue facing most Americans today.
  • Worker confidence about having enough money to pay for medical expenses and long-term care expenses in retirement remains well below their confidence levels for paying basic expenses.
  • Many workers report they have virtually no savings and investments. In total, 60 percent of workers report that the total value of their household’s savings and investments, excluding the value of their primary home and any defined benefit plans, is less than $25,000.
  • Twenty-five percent of workers in the 2012 Retirement Confidence Survey say the age at which they expect to retire has changed in the past year. In 1991, 11 percent of workers said they expected to retire after age 65, and by 2012 that has grown to 37 percent.
  • Regardless of those retirement age expectations, and consistent with prior RCS findings, half of current retirees surveyed say they left the work force unexpectedly due to health problems, disability, or changes at their employer, such as downsizing or closure.
  • Those already in retirement tend to express higher levels of confidence than current workers about several key financial aspects of retirement.
  • Retirees report they are significantly more reliant on Social Security as a major source of their retirement income than current workers expect to be.
  • Although 56 percent of workers expect to receive benefits from a defined benefit plan in retirement, only 33 percent report that they and/or their spouse currently have such a benefit with a current or previous employer.
  • More than half of workers (56 percent) report they and/or their spouse have not tried to calculate how much money they will need to have saved by the time they retire so that they can live comfortably in retirement.
  • Only a minority of workers and retirees feel very comfortable using online technologies to perform various tasks related to financial management. Relatively few use mobile devices such as a smart phone or tablet to manage their finances, and just 10 percent say they are comfortable obtaining advice from financial professionals online.

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SSS

TPC

If you pose one more thought-provoking question like that, I’m going to ask Admin to ban you from the site. TBP is reserved for profane, shit-throwing monkeys who haven’t a lick of common sense.

CavTanker
CavTanker

Admin, i had to laugh when I read your post. You missed by a mile on the debt call. 10 years ago i spent all i had on a farm–2,500$/acre, it is now selling around here for 6-7$k/acre, so I think I have you beat pretty good on the 10 year return. As for what I plan on selling. That really made me laugh, because i am betting on you and the Fourth Turning being right. Food. We are busting our butts trying to set up a sustainable farm to sell food. So in a couple of years when things are really bad, you bring me your gold certificates and I’ll trade you a wormy apple for them 🙂 Then tell my grandkids “look what people used to think had value, a piece of paper.”

Winter is coming.

CavTanker
CavTanker

A little bit of all really. The farm has been in the family for over 100 years. I bought it after my dad died.

Kill Bill
Kill Bill

The $2.86 we kick in for our golf matches was to enable the golf shop to charge us an even $20 for the cart fee and the 2 bucks we pay for the bet. -SSS

I didnt ask =)

Kill Bill
Kill Bill

A little bit of all really. The farm has been in the family for over 100 years. I bought it after my dad died. -CT

I suppose then that the bank owned the title to the land.

SSS

CavTanker

You got lucky. Farm in the family for 100 years, now yours. It still takes a prudent lifestyle to keep it that way.

CavTanker
CavTanker

I worry about the FSA too. But pretending that all is well is not an option. We all make the our best guess on what the future will bring and then chart a course.

Maybe you can stop by and take care of the FSA so i can sleep in for a change.

Kill Bill
Kill Bill

Cav, after all, is a saver.

Good on you Cav,

Kill Bill
Kill Bill

Maybe you can stop by and take care of the FSA so i can sleep in for a change. -Cav

Our debt is so large it cant be paid. Adam Smith noted this that no country has ever paid its debts.

Sleep well Cav.

I do.

ThePessimisticChemist
ThePessimisticChemist

SSS – Aw shucks! Time to fire up the lawnmower and drive through my neighbors farm then! Shit stormy enough for ya? 😀

Cav: I have a similar opportunity here, however as the Admin says “shit goes wrong”. (so sue me, paraphrasing is one of the few things still not taxable in this country!)

I’m not going to bank on my martial prowess being enough to keep hungry people at bay. Part of my “build a resume and get rid of debt” scheme includes scoping out other countries to immigrate to.

Barring an extreme situation change (someone rises to straighten this country out) I will be one of the first rats out of this country. You can have your wormy apples. I’ll be living happily ever after in my new country, regretting only that I was born too late to affect any changes that may have made a difference.

Shit is supposed to get hairy somewhere between 2030-2050. I turn 26 this year, and begin building my professional contacts in networks beyond this (relatively) small town. In theory I could begin affecting change in as little as four years. In reality I would be lucky to begin influencing even this area in nine years. That would give me ~15 years to A) Build up not only my credentials, but my political position as well, and B) Solidify my standing with the rank and file. Gotta win those votes to affect real change.

This is the big question the leaders of my generation need to ask themselves: Can we pull together and save this ship before it sinks? Or is it even worth it? After all, we will have to fight off the Boomers (how they hate us) as well as ourselves (the ignorant hate the educated/critical thinkers) in addition to running our own lives.

I guess time will tell. All I know is this country needs a fucking miracle.

sensetti
sensetti

CT
I did the same thing ten years ago. And also have the same plan. The transportation of cheap food will end. And if the government is ever successful at controlling the population they will use food to accomplish that. I am not trying to make any money with my farm; it’s only 52 acres, just keep adding and building. I modeled my farm after the Amish, all horse power; I sold my construction company to pay for my place and went back to school, and totally changed careers.
I just came in from working on one of the horse’s front hoofs he started getting white line disease, nothing I can’t treat but it’s a pain in the ass to deal with, I do all my own farrier work, learned everything from books and the net. I also have many books that apply to my farm, just in case the net goes down.
If shit goes south will have room for many more that’s my new strategy, I am going to build a community, will take on as many people as I can, I am not going to worry about others eating my stored food, have access to river in the back yard that is full of fish and hunting game would last a few months, maybe get us to the growing season. The free shit army might get sensetti but I damn well betcha I lay a bunch down first.
The best laid plans of mice and men, I am Irish and must go down fighting its in my blood, I can’t stand the thought of being a victim., a bad plan is better than no plan.

sensetti
sensetti

PC
2030-2050 ? We have less than ten years tops, extend and pretend is running out of road. Kyle Bass who made billions in the 08 crash say’s we have 3-5 years tops. Bass has some real good interviews on U tube and Read this http://theeconomiccollapseblog.com/archives/in-debt-up-to-our-eyeballs

ThePessimisticChemist
ThePessimisticChemist

Heh, almost makes me want to defer my student loans until the shit hits the fan, and then run like hell to another country.

sensetti
sensetti

PC
Might be a plan, the world will not end and your generation will have to rebuild, shit will be tough for about 20 years if history is any guide, You will see good times again in your life time but it will be after the Boomers are all gone, the python will have to shit the proverbial pig. Keep going to school knowledge is power. And don’t forget to enjoy today, I will post something Stucky posted some time back, I try to read this everyday to remind myself.
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Darwin

This notion of aging American workers never leaving the workforce mixed with a declining fertility rate (barely anyone to fund THEIR SS needs) and of course, no actual growth in the net number of jobs in the country for over a decade spells a complete nightmare for today’s young Americans looking out into their future. They have no idea just how screwed they are. I suggest they save every damn penny, Depression-survivor style.

ron
ron

efarmer and admin. You dumbasses just dont get it,people now arent in the same boat you were in.
The jobs arent there.Houses dont appretiate like they did.If you really think americans can save and retire like you did your fckin kidding yourself.Also im thinking about the vast majority of dumfcks out there.Not hard workers from anouther era.
I already have all my crap paid for.I dont have a morgage or a car payment.So im not the problem.
Im not worried about peak oil or the price of gold.or much of anything.
Admin you sound real tight,get laid or drunk or something.

efarmer

Ron,

Gosh, thanks for setting me straight. I can see so clearly now.

One thing though, if times are so different and things aren’t working out like they used to, how did you do it?? Why do you not have a mortgage or car payment?? Why is it different for you than for the “vast majority of dumfcks out there”?

EF

flash
flash

Whats makes youse’ guys think the yutes of today want save Social Security for US the elder?

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https://encrypted-tbn3.google.com/images?q=tbn:ANd9GcRzsCenZ-CWQ5cnlIzoi7JpJV6h7vFGyzPoxxiFqUhqU38O818crA

sensetti
sensetti

Flash one small hitch in the whole dilemma, the Boomers are the largest voting bloc. I have predicted that going forward the Boomers (77 Million) will vote together to keep their Benefits, no more Red vs. Blue for the Greys. AARP is a very strong coalition and will tell the Boomers where the enemy is hiding and direct the fire, the youth are into it.

But who’s to say we will be voting going forward.

flash
flash

sensetti

boomers can vote , but a vote for bread and circuses when there is no wheat available and the elephants had to be butchered for last winters meal is merely an exercise in futility.

sensetti
sensetti

Flash
Agreed, I guess it comes down to who gets the Elephant meat and who’s gnawing on a bone. Somebody’s gonna get cold and hungry.

flash
flash

sensetti

A friend of mine says if it comes down to it ,there are way too many fat ,stupid and slow people in the FSA for him to starve.
And I think he means it..damn heluva woodsmen

Ron
Ron

Same warm thoughts to you admin.
Efarmer,im not retired yet,im ill and trying to get back in the work force.I can speak about the future of retiring beacause i dont think people have the same situation as people did in the past.I plan on retiring and living on little.Ive never owned a home,i didnt think i made enough to pay for one.even though the banks offered me the loan if i would just sign the paperwork.A payed for vehicle is easy.
Im not impressed with much of the population,ive had jobs where i went in peoples homes.One thing that always stood out,no books.Mabe a tv guide.Ive traveled the world.And ive met many people,its amazing how many people have never traveled more than a hundred miles from theyre house in theyre life.Growing up i pictured life with a more civil advanced society.What did i get?people lieing and stealing for money,even if it destroys society.lousy music and the thug culture..Each of us lives with our own little world in our head.

Thunderbird
Thunderbird

ron says: “The jobs arent there. Houses don’t appreciate like they did. If you really think americans can save and retire like you did your fckn kidding yourself.”

I tend to agree with you. What just blows my mind is why so many young people are taking student loans and going to college to get degrees in subjects that lead to no jobs? They remind me of mechanical robots marching off a cliff. Where is the critical thinking? What I see in these colleges is assembly lines kept active by student loans. What good is an education to one that can’t use it? The jobs arent there. Why is this so hard to see? And why arent the jobs there? Because we have created a closed economic system where almost all production is controlled and regulated by the government and a few large corporations working in tandom with the government on all levels. Until this monopoly is broken the jobs won’t be there.

We now have 21st century ghost towns; or now neighborhoods. And what is the answer from the banks and city councils? Tear them down. Talk about deadwood running our cities. Why not let people move into them just to keep them up? How about offering homesteading the homes that are abandoned? If people live in them for 5 years and improve them; then they can have ownership of them. Instead we have city government letting them rot in their place rather than letting someone move in for free. Talk about regressive thinking?

And you are right, people can no longer trust saving their fiat money because this money was not created for saving; it was created for spending. Nothing is safe right now except skills. We are entering a new era. Let’s look for the new opportunities in this era. You seem to have done the right thing and you will see many selfstyled million & billionaires become humbled when they lose the proceeds of their life work of screwing others out of their money. My vision of the american dream was not of becoming filthy rich but rather living a happy and prosperous life. What I have not liked about almost all the investments is how they have been devised to milk production for the benefit of those who don’t work for a living. Notice how labor is taxed so high while there is so many ways to avoid tax on investments. And all those tax free municiple bond sales for questionable projects while the taxpayer is stuck with the payments. Hedge funds, speculations, corraling commodities to make them go up just to squeeze unjustified profits from them. I could go on and on with the corruption; but in the end the reconcilliation will come and it is going to cause a gnashing of teeth to those that have milked the system.

I know this may pissoff many on this sight that have lived and saved the old fashioned way, didn’t go into debt; but your old way is dead. The new era is going to be different. I expect to see a new work week of 24 hours with the same pay as 40 hours work. People really don’t have to work so much anymore because of technology. Debt is going to be discharged on all levels. Yes many old people with large bank accounts are going to lose them because of this. There are solutions to our apparent problems but many old people knowing the old ways are not going to like them. But really; it is time for the old to move along to the pasture and the young to take over. It is there world now. So be happy. The world ends for us when we die; which isn’t far away. So be happy and let the next generation have the world. Our remaining time is worth more than money.

matt
matt

What I find funny is the credit repair companies that have slogans like “it’s not your fault you are in debt, it’s been a tough time for many” or “there are lot’s of reasons why people get in over their head, we can help” I tell my kids who are watching these commercials how much crap that is. I tell them there is only one reason people get into debt, they spend more than they earn, it’s that simple. Unless there is a medical emergency that bankrupts some families, and I feel sorry for those people, there is no reason to be in debt and not save money.

Thunderbird
Thunderbird

matt says: “there is no reason to be in debt and not save money.”

Fiat money or FRNs are debt instuments. Many people have used up their savings and gotten into debt because of the contracting economy. I can name many reasons for getting into debt; like job loss, unexpected medical bills, kids to feed, car payments going unpaid because of job loss, and on and on.

IndenturedServant

ron said: “If you really think americans can save and retire like you did your fckin kidding yourself.”

If you look at “retirement” throughout human history you find that it was very rare for anyone but the very rich “retire”. Retirement as we know in the USA is an anomaly. It was easier (in relative terms) to save and retire for people that retired in the first half of 1900’s because our money had not been devalued as much as it has in the latter half.

I doubt that people in the future will be able to retire in the same sense that we think of it now. Opportunities will always exist to get ahead and better yourself but full retirement is unlikely for the masses. Having sound money that cannot be devalued will help but even then, it is unrealistic.

More millionaires were created during the depression than at any other time in US history. A similar thing will happen during this collapse. I believe the trick will be to chart a course that leaves you as flexible as possible to adapt to what are sure to be a rapidly changing circumstances. Opportunities will abound and those that can recognize and capitalize on them. With a dramatically reduced work ethic among the population compared to the Great Depression, more opportunities per hard working citizen may exist this time.

One thing is certain though, taking advantage of opportunities from a starting point of being debt, will not be possible.
I_S

SSS

Comment #100. I win. What’s my prize? Oh, here it is.

http://t3.gstatic.com/images?q=tbn:ANd9GcRZh8jgWe9FliieABuSF08nfjcIaaKIZFHpTFGEVHHX3bjk7Tsw

matt
matt

T-bird,
I lived it, the economy killed my business and forced me to sell my house. I have kids to feed as well, but luckily my family is in good health. What I learned over the past 4 years is to consider worst case scenarios before making any expensive purchases. Maybe that is why I am still renting, I can’t wrap my head around a mortgage payment that would be hard to pay if the economy tanks again. See, I have a “choice” after all.

Thundrbird
Thundrbird

Administrator says: “You act like human beings aren’t rational creatures who make decisions.”

What is rational in a herd mentality? I am surprized you said that. I consider you a rational being that thinks outside the herd mentality. That is why I read and appreciate your articles.

ThePessimisticChemist
ThePessimisticChemist

“Most people have gotten into debt because they made poor life choices.”

Pretty much. Even with all the bad shit that has occurred in my life, I still only have student loans to pay off…and about 2k on a credit card when I had to fix my car.

Rule of thumb: People are stupid.

PS: Salma Hayek, how I love thee

Thunderbird
Thunderbird

After WW2 the herd was told to save and invest in bonds building golden calves. When wall street got hold of the golden calves people were told to go into debt and were helped by the banks. This cycle is not over. It is not that people are stupid; but rather it is the herd mentality to follow the advice of their leaders. In America those that don’t follow the advice of their leaders and think for themselves make out. But don’t blame the herd for their mentality because they are the work horses that produce the wealth. Just don’t piss off the herd by taking too much. Bees make honey and we take it for our own profit. But they keep on producing honey. Just don’t take it all.

There will come a time when Moses will come down off the mountain and break these golden calves to pieces. What will that mean? Many will lose their nesteggs. But many will again have opportunity.

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