The chart below is simply horrifying. Not only are these median net worth figures scary, realize that 50% of the households in the country have less than these figures. Having a a net worth of less than $200,000 as you approach or enter retirement is a recipe for disaster. When 70% to 80% of that net worth is tied up in your house, you are nothing but a dead retiree walking. You should acquire a taste for cat food and learn how to panhandle for money.
The $25,000 to $45,000 of non-home related net worth would also include vehicles, furniture, electronics, and appliances. The amount of this net worth in usable cash or investments is microscopic. How can people expect survive for decades on virtually no savings? This chart reveals that a huge percentage of American households will face miserable retirement years and/or having to work until the day they die. They will have to sell their homes to live off the proceeds. Who will they sell to? You can see the younger generations don’t have a pot to piss in. This does not bode well for home prices over the next couple decades, despite the artificial boom engineered by the Fed and Wall Street since 2012.
The unequivocal facts in that chart are the result of globalizing good jobs to foreign lands, the utter failure of our educational system, the success of Wall Street/Mega-Corporation propaganda in convincing a vast swath of America to live for today using easy money credit, politicians squandering the national wealth on the welfare/warfare state, and a Federal Reserve that has debased our currency by 96% in just over 100 years.
This chart will look even worse when the stock/bond/housing bubble implodes for the third time in the last sixteen years. We are sitting down to a banquet of consequences.
I kinda like the looks of the Fancy Feast brand cat food, I’ll hold my pinky finger in the air as I chow down on Seafood Supper on water crackers in the years to come. Better than digging up dead folks like the Russians.
We are in the process of selling my wife’s condo. She bought it before we met, we lived there for a while before and after we were married, then moved into our new home. At the time (end of 2012) the condo was well under water and we have been renting it since. Now, we are getting offers that seem, quite frankly, ludicrous. There is no way I can even imagine paying 125k for the place, but we’ll get it and probably a little more. The irrational exuberance of a bubble’s top. We will benefit financially, but it gives me no joy to think of the coming, devastating collapse. Still, it is a far better option than eating the massive losses that are just over the horizon ourselves.
Given the intensity of the pain we felt so recently, we might expect that such a bubble would be psychologically impossible, but the data in Exhibit 1 speaks for itself. This is a classic echo bubble – i.e., driven partly by the feeling that the substantially higher prices in 2006 (with its three-sigma bubble) somehow justify today’s merely one and one-half-sigma prices. Prices have been rising rapidly recently and at this rate will reach one and three-quarters-sigma this summer. Thus, unlikely as it may sound, in 12 to 24 months U.S. house prices – much more dangerous than inflated stock prices in my opinion – might beat the U.S. equity market in the race to cause the next financial crisis.
Jeremy Grantham
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Most of you had better learn to enjoy dog food.I’ve got a head start. I have from time to time eaten some of little bb cat food .It’s really not that bad.That’s can cat food.
On the other hand you lazy son of bitches could keep working. That’s the answers . Work.No retirement.
The chart above needs no comments. I just shake my head at the disaster this country is heading into. The only thing scarier if that is possible is the thought that the govt. and pols will be eyeing the monies saved and sacrificed by and of the prudent savers. Can anyone say Cyprus?
Then toss in all the news lately of pension plans being in huge trouble.
“Here’s the bigger picture: The PBGC, the nation’s safety net for failed pension, has total assets of about $1.8 billion and liabilities of $44.2 billion for multiemployer plans such as the Central States fund.
A Central States failure would not only substantially reduce benefits for every worker, retiree and survivor in the Teamsters plan, but wipe out the safety net for all Americans. ”
Wheeeeeeeeeeeeeeeeeee
Get me another slice of failed government please.
apparently we bought the bs and have hung ourselves.
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Unfortunately, a lot of “net worth” is only on the books as that much till you try to cash it in.
At which time the real amount becomes apparent, and is usually worth far less than you expect it to be.
If you see a bubble in something you own, sell it. It may end up being a liability instead of an asset if you don’t.
The bed is made. Decades of stupid piled up into a tangled mess.
People scorn “old values”. Thrift, hard work, dedication to real education, family structures, self-reliance and responsibility have gone by the wayside, and are now seen as worthless.
I believe in those things, but when I bring them up, be it to the young or old, I am considered a lunatic at best, or some form of evil monster suggesting people work hard, save, be responsible for themselves and their actions. You see, most have come to believe they are owed something, that those things have no value, and that Bernie or Hillary or Trump or whoever will save them.
I hope those that read TBP are able to influence a few to prepare. That is the best we can do, I fear.
I must say I am totally confused by what to do. Put my savings into some form of real estate (farm. more substantial home with land, or get out totally?), and what to do with my liquid cash nest egg and what about the old 401K/Ira’s sitting at the brokerage, convenient for the govt/pols to swoop in and repatriate if the SHTF. The more I think about it, the more screwed I appear to be to myself, as almost any move could be the wrong move. Like a lot here, I have sat on and built up cash wary of another crash or apocalypse and quite franky it has cost me big time. It seems the prudent folks are in a no win siutation.
what is the source of the graph?
US CENSUS BUREAU
http://www.fool.com/investing/general/2015/05/17/americans-average-net-worth-by-age-how-do-you-comp.aspx
Ha ha ha. Like my dear old Grandad used to say “It’s a good life…. if you don’t weaken.” The weak go to the wall. Always have. Always will. Poor is weak. Dependent is weak. Expecting someone else to pay you after you stop doing anything for them is weak. Fend for yourself and the ones that you love. Choose the one’s you love with care.
Llpoh: bravo on your comments.
Let me take a different track on the bar graph posted by Admin. It all has to do with him and me, however minor our differences over the years here on TBP, and help explain why we are so much in synch. Here is the bottom line: I know for a FACT that he and I have wealth that far exceeds our age group on that graph. Admin will do just fine as he and Avalon age.
You don’t spend years on an Internet site without getting to know one another. We’re both pinch pennies. Here’s a few parallels.
1) We both get home haircuts. Laugh, but do the math.
2) We both drive sensible cars, and we drive them into the ground. He, a Honda Insight. Me, a Toyota RAV4. Paid for, both over 10 years old. No lease bullshit. No interest on a loan. Do the math.
3) We both saved and paid for, or are paying, for our children’s higher education. No student loans. Do the math.
4) He takes family vacations to Wildwood NJ, I take road trips in the West. Mine are probably a bit more expensive, but not much. Can I afford to stay at a Ritz Carlton? You bet. But why? I’d rather stay at a Mom and Pop inn and meet folks. Do the math.
5) We don’t buy shit we can’t pay for. Cash. Do the math.
6) Family. Do your best to cultivate good family relations. To paraphrase an old saying, you’re going to meet family members on the way up, and you’re going to meet them on the way down. No math involved here. It’s all about quality of life.
Life is choices. Choose carefully.
Thanks SSS. I have written many times about how I saved, invested, scrimped for many years, even when I was earning what most would consider a huge salary. When I was running a large mfg business, I drive a twenty year old car. My subordinates all has flash new cars. I never went out to eat – and by never I mean once in ten years. Then I became a business owner and ploughed every cent back into the business. My workers drove new cars – I drove the 20 year old Ford mentioned above a bit longer. Still did not eat away from home. Date night was pizza and a video. Thank God for my wife being on the same page.
Then one day I hit escape velocity. And now I can buy anything I want, eat at a Michelin starred restaurant every day,, take the Orient Express, fly first anywhere, or even get a suite at the Savoy every day for the rest of my life if want. I do not so want – your road trips are what I prefer, too! These days, anyway. The other things have lost their sparkle.
It required 25 years of delaying gratification, working probably 70 hours per week average during that time, and laying the foundation with a solid education. By the time I hit 50, I could have walked away (but then what would I do?).
Kudos to you, Admin, and the many other TBPers who are doing the right things. There will be a payoff to those that wait.
So for me, again I preach thrift, hard-work, education, family. I know those things matter. I know it.
Jim asks what to do. If someone knew they would rule the world.
So I would advise taking the advice of admin, SSS, llpoh, and others here.
Get rid of debt, save, learn a skill, learn self reliance, have strong ties to same minded family and friends. I remember watching a show on some of the wealthy Bernie Madoff victims who lost everything.
One was a Italian man, he commented his grandfather and father built wealth the old fashioned way.
He traded that for the promise of paper wealth and lost it all.
In San Diego, we are already at that high point again in home prices, but this time I do not believe it will only be the defaulting of mortgages that cause the crash but the trillion dollar debt owed in Student Loans.
The last crash was instigated by two simultaneous increases to family expenditures, that of gas prices jumping to almost $5 a gallon along with the interest increases on their mortgages. Two of the three most important income expenditures a family has to make jumped beyond their reach.
You have to get to work and that takes gas, so which of the three do you think people will give up first. Not food, not gas. They will stop paying their mortgages.
You must understand that not raising interest rates is the only alternative left the FED, because doing so, was one of the instigators of that last crash. Debt is strangling America and the only way out is to start over with a new system.
The chart is alarming but not a surprise. I see how people act and live. They are mere fools believing a lying and corrupt goobermint and see us who work and save as being the fools. When it all blows up in their face they will demand the same goobermint confiscate ours to give to them. They are the enablers and therefore the real enemy.
To Jim’s question above… Take Jim Sinclair’s advice(www.jsmineset.com) and get out of the system as much as possible. Minimize any “investment” with counter party risk. If you have a 401K or IRA get it out, pay the tax and be done with it. You will most likely come out ahead if you have any gains or employer contributions added to it. When I started moving mine out in 2006 my broker gave me hell and told me I wouldn’t have anything to retire on. I told him that I was moving it not spending it. Pay off any and all debt. If you have expensive vehicles get rid of them and get good used vehicles with cash. Same goes for a house. If you have a big expensive house get rid of it and get a nice older home with a few acres of good dirt. This illusion of wealth is coming to an end.
Buy what you NEED—not want— for the future while your dollars have purchasing value. From a bible eschatology point of view, have enough for 3.5 years after the imminent establishment of Palestine as a UN mandated state with the divided use of Jerusalem. Listen to the two witnesses of God who will preach His truth to the Jewish people and all of humanity from the temple mount, and realize it is the POWER OF GOD which will enable and insure and protect them and all of Israel for their 1260 day ministry. The demonically driven world and evil elite will be partially checkmated by God to keep them from their complete Rev.13 takeover, until that time is completed.
However, those years immediately ahead will be a time of TRIBULATION, as the ravages of the first 5 seals of Rev.6 will become fully manifested. Note seals 2-4 are a direct parallel to the summary of prophesied events in Matt.24:7, and to all who say all that prophecy happened in 70AD—you better wake up! The 6th seal of Rev.6:12-17 is when the WRATH of Jesus comes against the EVIL BEAST POLITICAL SYSTEM, by evil men under Lucifer’s guidance. It is then the remaining living faithful are removed/raptured and Jesus throws down Lucifer and his fallen angels (see Rev.12:9,10), and rescues the Jewish remnant (see Zech.2:8) and destroys end times Babylon/Babel II/NYC/USA/UN as described in Rev.18 and Isa.13,14,47 and Jer.50,51 and Rev.14:8.
That is why I advocated 3.5 years of NEEDS be provided for, because beyond that this country is toast as it is prophesied in Luke 17:28,29 when the end times Sodom, which Obama is creating, is dealt with by God. After Jesus destroys evil, there will be a global kingdom of righteousness and prosperity set up from the Lord’s capital of Jerusalem—not the NWO from Satan, the Jesuit led Vatican, and the Muslim barbaric insane asylum have in mind for their elite Satanist friends.
Even with everyone cheating
Our earnings have taken a beating
Kicking the can
Was a bad business plan
The crisis we’ll soon be repeating
The Limerick King
Remember one of you said ..you only own what you can carry on your back…you think this starving government is just going to let you guys retire in peace? You laugh at these people who don’t have much but you are the people the government is going to target for plunder.The criminals in Washington will eventually come after your pensions , your retirement accounts , your bank accounts and maybe your REAL estate holdings ,Gold , silver or anything else they can steal. You are not going to be able to disappear into the crowd and when the currency becomes electronic the criminals will have a financial record of everything you own and buy.Where are you going to hide your assets? Dig a ditch in your back yard ? I buried my gold and silver under my mom’s house. So far so good
Take a look at Steve Sailers Vdare column concering net worth of Los Anglos . Break down by ethnic groups. Its scary.
Now is the time to sell. Buy something in the sticks. God, gold, and guns.
We are going to have to go back to old school living. Most people would do fine, even with minimal savings, IF their house was paid off, the cost of educating and resettling their children was paid off, they had no debt, and their vehicles and toys were paid off. A simpler life. Paying off your house as quickly as you can is probably the single biggest advantage you can give yourself in life. You can survive lots of camamity from the sanctuary of a paid off house
Think of the infection that has been turned loose in american’s brains. Fifteen years ago you might have financed two things, a house, and maybe a car. Now i see advertisments with financing offers on coffeemakers. Great idea, buying depreciating junk and paying interest besides.
Jim & SSS hit it.
Llpoh, you can’t take it with you. I went for 10 years without going out to eat but nowadays my wife and I eat at modest restaurants about once a week. We don’t do McDonalds. Ever.
I can’t afford a lot of your list, but I am doing well. I never found a way to employ my aptitudes, so my situation is a little below my capacity. I tried to insure my kids didn’t have that condition.
My sons all graduated college with zero debt. All are doing well. I have three grandchildren now, and hope for more. My wife and I have enough to probably carry us the rest of our lives unless there’s an asteroid-sized disruption (bigger than SocSec and pensions all imploding).
My one big observation about that chart:
It lists values in CREDIT BUBBLE terms. If the credit bubble Hindenburg’s, cut all of that by 50-90%.
Yikes!
How I paid off $65,000 in debt in just 15 months
To an outsider, Durango, Colo., resident Matt Kelly, now 50, was the picture of success. He had a job in banking, a large condo (complete with a pool table in his son’s room) and frequent vacations (he traveled extensively to run marathons).
But inside, he was freaking out.
“In the daytime there was this false bravado, I pretended that I was more successful, making more money than I was,” he says. “I was trying to keep up with friends who were getting promotions and raises.” But “about two in the morning, I’d wake up, my heart palpitating, there was a lot of fear at night.”
The reason: He and his wife Cheri’s debt — a combination of credit cards (the bulk of it), student loans and medical bills — had ballooned up to about $65,000 by 2005. “It was terrifying,” he says. “I was afraid we couldn’t balance it all.”
The Kellys faced a situation familiar to millions of Americans: Roughly two in three Americans have consumer debt (excluding a mortgage), with nearly half carrying credit card debt (the average household has $15,762, according to NerdWallet) and one in five having student loan debt ($48,172), according to a survey of more than 3,000 American adults released in February by Gallup.
And like most of us, the Kellys, at least at first, simply paid the minimums (or a little more) on their debts, and then turned a blind eye to the problem. “Cheri and I stopped talking about it,” he says. “We didn’t confront our behavior.”
Similarly, many Americans engage in debt self-deception, whether intentional or not: Americans claim they have roughly 40% less credit card debt and 25% less student loan debt than they actually do, according to a 2015 study published by the New York Federal Reserve.
For the Kellys, the path out of debt wasn’t an easy one — but it does provide lessons that others can learn from. Here’s what they advise:
Slash your monthly expenses: One of the first things the Kellys did to dig out of debt was to cut their monthly food costs from about $500 per month to about $300 per month, using simple strategies like opting for more chicken and less beef, making lots of soups and lasagnas, drinking only water, and carefully planning their menus each week. They also drastically cut the money they spent on entertainment and extras — each member of the family got just $30 per week for those items — which saved them about $1,000 over the course of the year.
Have a garage sale: The Kellys held a garage sale that yielded them about $1,500. In doing so, Kelly says he realized that there was little in there that he had a true attachment to anyway.
Sell big-ticket items: In addition to the garage sale haul, the Kellys also sold their car for roughly $3,000.
Earn extra money to pay down debt: The Kellys put their tax refund and some other monies they earned —Cheri worked lots of extra hours as a speech therapist — towards paying down debt.
Downsize: While those smaller moves yielded thousands in extra money that the Kellys used towards tackling their debt, the biggest thing they did to cut the debt was to sell their large condo and purchase a much smaller condo. This cut their living expenses from about $1,300 per month to $685 per month.They used some of the proceeds from the sale of the first house to put a down payment on this smaller house and the rest of the money they netted to pay down a sizeable chunk of their credit, student loan and medical debt.
Kelly, who now writes a money column for The Durango Herald and is a personal finance coach, says that this was one of the bigger lessons he learned from his debt-reduction quest. If you can sell a big-ticket item, you can “dramatically increase the speed you get out of debt” he notes. The sale of the home allowed the Kellys to erase their $65,000 in credit card, student loan and medical debt in just 15 months; without that, it would have taken them significantly longer.
“I used to look for the next shiny thing that would make me happy,” Kelly says. Now, he says, he looks to bigger goals — like getting to travel with his family — for this happiness. “It’s been a transformation,” he says. There’s “a lightness, a freedom.”
admin said:
“They will have to sell their homes to live off the proceeds. Who will they sell to?”
Can you “Reverse Mortgage Companies”? I knew you could!
should be “can you say”
DC – nope, cannot take it wth me. But the freedom it has allowed me, and does allow me, or can allow me, is substantial. I am not Bill Gates for sure. And having been dirt poor, I assure you this is far, far better.
What I find hard to believe is people are again buying Top of Real Estate Market less than 10 years after last crash. Where I live we are about 2 years further along. Market has completely locked up. Sellers are holding on hoping it will break again upwards but I dont see it hapening. The only course now is to pay down debt. Batten down the hatches and weather the coming storm.
” Buy something in the sticks. God, gold, and guns.””
That’s what we did 18 years ago. We paid 30% down, took a 15 year note, and when rates fell we refinanced to a 10 year note at 2% less than the original note without taking anything out. We live on our 45+ acres of mostly woods an hours drive from the nearest city, and it was paid off 3 years ago.
I haven’t worked for anyone but myself for 20+years, and I still have a small business. My wife is an IT pro, and can take full retirement in a few more years. Nobody can build a house in sight of mine unless I sell them the land. My place is bordered on all sides with larger holdings, all in woods except for my road frontage.
The trouble I forsee is taxes on our property. That’s how government can take anything you have when they are ready. Being small time like I am is OK, but government will want what I have sooner or later.
Jim, the guy in your durango story made one huge mistake. He used money from the sale of his home to pay off unsecured debt. Paying off his new home would have been a much wiser move. You can tell credit card companies to fuck off if you need to, you can’t do that to a company that has your house as collateral.
Debt is a form of slavery, no question about it. The body remains free, but the mind and soul are beholden and that is a heavy burden to bear. I prefer taxing myself physically day by day to make ends meet to the anxiety and unease that living with debt places on us. Living without debt is a life changer, especially in the US. I’m not sure if it’s for everyone, but it is for us.
The ants and the grasshopper.
Younger Americans (Gen X and especially Millennials) are not saving for their old age/retirement because they have nothing left over to save. Further, they know they won’t live long enough to reach “retirement” anyway, and anything put away now will simply be inflated into irrelevance in a few decades.
….or stolen by the banksters/government in one form or another, ala Cyprus.
Life is hard, no one gets out alive.