I thought I was clever in my early 20’s when I said to my car pool buddies, “How come there is so much month left at the end of the money?” As the month wore on, more brown paper sacks with peanut butter & jelly sandwiches appeared. Sometimes we traded snacks just like when we were kids.
We discussed how we felt like we were running on a treadmill but not making any progress. The most common fights were spouses nit-picking each other’s spending habits. Unexpected financial emergencies were catastrophes. The fear of an unexpected large expense always haunted you.
I was the company accounting manager and signed everyone’s paycheck. I looked at some of the top executives and thought to myself, “If I could just earn that kind of money I’d never have a money worry again.” Life is not quite as simple as I thought.
The Motley Fool article, “Older Americans Are More Afraid of Running Out of Money Than Death” does not paint a pretty picture. They cited several surveys concluding:
“Running out of money in retirement is a major concern for older Americans, especially since so many are considerably behind on savings.
…Here are some sobering statistics:
- A good 33% of Americans have zero retirement savings.
- Roughly 30% of Americans 55 and older have no retirement savings.
- 56% of Americans have less than $10,000 in retirement savings.
- Only 31% of seniors 65 and over have $200,000 in a retirement account.
- About 25% of Americans 65 and over rely on Social Security as their only source of retirement income.”
If running out of money in retirement is such a valid fear, why aren’t more people doing something about it?
| Are the majority of baby boomers destined to live from paycheck to paycheck, with the accompanying worry and stress, for their entire life? |
Saving is not easy, nor is it fun
Once your income begins to rise, the natural inclination is to spend. How cool is it to finally be able to buy a new car, giant screen television or bigger home in the upscale neighborhood?
The old saying, “Pay yourself first, and learn to live on the rest” is a terrific approach to saving and accumulating wealth. Be forewarned, it’s easier said than done.
When your priority is saving, you can’t save and spend the same money. It’s frustrating; you feel you are still living from paycheck to paycheck; making sacrifices and living on a budget.
Eventually saving becomes fun, but it may take several years for you to be excited when you review your monthly reports. Each time you hit a new savings goal, go have dinner with your spouse and celebrate, you earned it!
It’s tough when your friends are driving new cars, spending money, enjoying themselves while you choose to do without to build a better future.
The hard lesson is, if you want to not constantly worry about money, earn more and/or spend less and learn to enjoy what you have!
Are you willing to live below your means for several years to (hopefully) achieve a comfortable retirement? Are you willing to learn to accept, enjoy and be comfortable with what you have? If so, you are setting the stage for a better, stress-free financial future.
What’s the goal?
Most people never catch on to the secret; rich or poor, it’s still possible to enjoy a comfortable retirement.
Some of the happiest people we know never were high wage earners. They bought a modest home, raised a family and lived within their means for decades. They saved their money, their lifestyle is modest, but comfortable for them, and they don’t worry about being able to continue their lifestyle for the rest of their lives.
A CNBC article, “Here’s how much the average family has saved for retirement at every age” highlights data from an Economic Policy Institute (EPI) data survey. Since 2007, the average savings for people aged 56-61 has dropped from $211,885 down to $163,557.
While $163,557 might get you a “C” in the classroom, it’s not going to cut it – unless you have one heck of a guaranteed, well-funded pension plan.
Saving is tough. To achieve your goal of financial independence you must do a lot better than average.
Personally, I find it sad. In the 1990’s our economy experienced one of the greatest economic booms in human history. The baby boomer generation earned exceptionally good money, yet they are standing by the finish line and have little to show for it.
CNBC outlined the Fidelity timeline for hitting your saving magic number:
- By 30: Have the equivalent of your salary saved
- By 40: Have three times your salary saved
- By 50: Have six times your salary saved
- By 60: Have eight times your salary saved
- By 67: Have 10 times your salary saved
Note that they do not provide a dollar figure. My wife Jo comes from a rural town in Indiana. Families can live comfortably with a $50,000 lifestyle and don’t have to accumulate nearly as much money as those living in high-cost urban areas. Many boomers are selling their homes and exiting California, Illinois, and New York, heading to other areas, (inside and outside of the US) where their money will last much longer.
Keeping things on track
Regardless of your age, it’s never too late to get a clear look at your situation and make the necessary adjustments – the sooner the better. No one wants to constantly worry about money until the day they die.
Let’s take a hypothetical example of Ozzie and Harriet Smith; both are 67. They earn a combined $75,000 and are saving $9,000 annually. If they retire today, they will receive a combined social security benefit of $3,000/month. They have managed to save $300,000 in their respective 401K accounts.
Can they afford to retire? How long will their nest eggs last?
Smart 401K provides a terrific Retirement Income Calculator that will help us answer the question.
Their projected needs are $4,000/month in income. The tool suggests 3% for inflation. We entered $3,000/month for social security income. Under Annual Social Security Increases, they are conservative entering 0%, fearing Congress will eliminate the cost of living increases. (Something they are already considering.)
They have no other monthly income or pensions. Their current account balance is $300,000 and they anticipate it will continue to earn 4% annually. Hit the “submit” button and Bingo! The tool calculates they will run out of money in 16.9 years – around age 84.
They don’t like that and have some tough choices. They can work longer and/or downsize and spend less.
| NOTE: If you change the Annual Social Security Increases from 0% to 2%, the computer calculates their money will last 21.8 years, around 28% longer. Use 0%, Americans will be lucky if their benefits are not cut. |
Ozzie and Harriet decide to take their social security benefits now and work five more years. They plan to save their social security, increasing their savings to $45,000 annually, $3,750/month. Where will that leave them in five years?
We will use the Investor.gov Compound Interest Calculator to see where they will be in five years.
They are starting with $300,000 and saving $3,750/month. Over a 5-year period, they anticipate earning 4%. Hit “Calculate” and Bingo! “In 5 years, they will have $608,730.
Change the Current Account Balance in the Retirement Income Calculator to $608,730. The revised calculations estimate their money will last almost 30 years; they will be 102 years old. They both agree that barring any major catastrophe; if they work until age 72, they are probably going to be OK.
| NOTE: Much of the retirement funding challenge is the result of the Federal Reserve dropping interest rates. Prior to the 2008 bank bailout, had Ozzie & Harriet worked just two more years, earning a (then realistic) 7% return, they would have $436,620. With a 7% return, at age 100, they would still have $504,082 – they would have been set for life! It’s no wonder most all pension funds are now woefully underfunded. |
What does this mean?
Regardless of your age, I urge all readers to run the retirement calculations NOW, using conservative estimates. If you are home free, great! Carry on and enjoy.
If you feel you will come up short, the sooner you get started making the necessary adjustments, the easier it will be. “How come there is so much life left at the end of the money” is not the least bit funny. Fearing running out of money worse than death has to be terrible. With a little effort and sacrifice, you can eliminate those fears and have some fun!
And Finally…
“A government big enough to give you everything you want is strong enough to take everything you have.” – Thomas Jefferson
For more information, check out my website.
Download our FREE special reports:
An Honest Person’s Guide to Social Security
10 Easy Steps To The Ultimate Worry-Free Retirement Plan
10 Things You Need To Know, That Brokers Won’t Tell You About Dividend Paying Stocks!
A 7-Step Questionnaire – Am I A Candidate For An Annuity?
Until next time…
Dennis
www.MillerOnTheMoney.com
Obviously does not have a clue that you get nothing from your savings when the rates are ARTIFICIALLY held low by the FED. Obviously does not have a clue that when CEO’s get paid 1000’s of times more for a job that anyone with some brains can do, it has to come from the “little” guy.
Obviously does not get that shipping your good paying jobs overseas, so that the CEO can demand more money from the corporation in stock options……..
Until this shit stops, it won’t get any better
Everything will be OK. The elderly will just move into an RV and tour the national parks.
Likewise; the young will move into an RV and park it in fron a rental where illegals are renting 5 to a room.
Do the math .
If you retire with NO DEBT you can manage a decent retirement. Move to where living is cheap. Get lucky.
I figured out 50 years ago that the only way to really be able to save was to pay no taxes. I never paid a dime in taxes since 1973 as a result.
There are a few ways to totally avoid paying income tax. #1 is, of course, don’t have any declarable income. One can get hungry after a month or two of not working (above the line). #2 is to work overseas and that is the way I chose. I worked from one end of the globe to the other, taking my family along (I told my boss that they went or I didn’t) and I took advantage of the overseas tax break that, at the time was $50,000 and is probably bigger now.
And I did that, moving every 18 months to three years, from there to Timbuktu. My children benefited from changing schools and I managed to spend 7 years out on Kwajalein in the Marshall Islands (look them up) that even had a U.S. Army paid for school system where both girls graduated from high school. That’s the job where I flew Otters and Beavers, DC4’s and finally DC6’s back and forth to work on outer islands around Kwajalein Atoll.
And the whole time there, I never paid a dime in taxes and earned a nice bonus for overseas work at the same time. Oh yes.. Housing, electricity and telephone were furnished and your only expense was groceries at an Army subsidized grocery called, appropriately enough, “Surfway”. Also no cars.. The only transportation expenses I had were bicycles for wife and daughters. Let me tell you it was tough living..
The work was a bitch, but I’ve always worked on volcanos, high mountains or deserts so I was pre-broken in for 7 years on a desert island 2400 miles S.W. of Hawaii on the dateline and 8 degrees N. Latitude..
But I could save. Could I ever save. Did I? Damn straight – with bank accounts in three countries just to spread it around.
Am I glad I did it? Again, the answer is yes. It was work. Hard work. But then remember TANSTAAFL. Do the hard work when young, tough and relatively able to stand the gaff. Now, at 80, I’m still more afraid of running out of money (thanks to zero interest rates and a disinclination to gambling in a fixed by the FED stock market) than of dying..
But Ol’ Muck will hang in there – if the funds run low, then my standard of living will go lower with them. I still pay no taxes and owe no one a thin dime (also I may have a few pre-1964 thin dimes tucked around here and there!), and that’s the way I want it and it will be until my time runs out on the this veil of tears and my work (of whatever kind) is done..
muck
Question: Does this mean the taxpayers did the heavy lifting for all your freebies you mention? Just asking a question. Try to keep the fireball from exploding in your mouth.
If I’m wrong, please accept my apology.
Yes they did but what Muck describes is perfectly legal and well within the law. I did the same living overseas as the spouse of a military member. I could earn $100,000 a year income tax free. I had to pay SS tax though. Made a killing as my housing, food and utilities were all paid for or subsidized by the sheople at the time.
I’m one of the biggest free shitters on TBP I’ll bet. My birth was paid for by the sheople. All of my health care up to age 22 was paid for by the sheople. My housing from birth to 22 was either provided by or subsidized by the sheople. My high school education was paid for by the sheople (DoDDS Schools). Every move I made including moving all our family possessions from birth to age 22 was paid for by the sheople (about 13-14 moves in total). The first 22 years of my life was one big worldwide vacation that was paid for by the sheople. Of course, I wasn’t really aware of this at the time, it was just how life in a nomadic military family was lived. I didn’t know any other way. Everyone I knew lived the same way.
You’d think I’d have grown up feeling very entitled but the thought never crossed my mind. Once I began to investigate the nature of our monetary system late in high school and beyond I quickly realized I was a free shitter and came to understand how unfair our system is. The fact that the US adopted a policy of maintaining a massive standing military force in peacetime is what allowed me to be a free shitter. I never even had a say in it. Sheople before me apparently voted for and approved it.
Any down voting assclowns including the ones who down voted Muck are kindly invited to write to your (s)elected representatives and voice your disapproval. Representative democracy baby! Get some!
My story should be ample proof that the stories of military families having to survive by eating dog food are complete bullshit. Military families generally aren’t rich but they’re not eating ALPO except by choice.
I assume you don’t have a problem with Laquisha either?
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Read for comprehension dipshit. It’s all there in the third and fourth paragraph above not to mention the years I’ve spent commenting here about the Laquishas of the world and our fiat monetary system that enables it all.
What’s wrong with Laquisha, doesn’t she deserve free shit?
None of us deserve free shit but everything is so broken that people grow up expecting and demanding free shit. End the fed and that crap comes to an end pronto along with the crap that allowed me to be a free shitter for 22 years.
If by taxpayers, do you mean the welfare queens, govt drones, and military complex? He was not here, so why should he have paid tax? He was overseas. He is now paying tax of some form.
The US is the only country that taxes citizens no matter where they live. That is immoral.
I think Eritrea taxes the citizens abroad also. Either way, the taxpayers paid for all that free shit. Millions and millions of taxpayers who do not get a pension.
Eritrea taxes 2% on expats earnings. The US taxes all income at standard marginal rates, save for the earned income credit. Not the same. Not to mention the horrid reporting form requirements required of US citizens abroad.
Congratulations Muck About and thanks for your service but please remember during your productive years of avoiding taxes and payments for various life experiences thanks to as you said the army paid for it . That was us covering your children’s education and subsidizing your life style as our government and banking system spiraled out of control pilliging and plundering average Americans . I find no fault with your decisions and wish you well just remember as you shopped the SURFWAY we got BOHICA and now we are FUBAR thanks to all the SNAFU’s you avoided !
P.S. @Dave: LUCK has nothing to do with it..
Muck: Wrong. I’m lucky I had my four kids early (by time I was 28) and got them all through college before the price took off. Most expensive was oldest son in final year at $12K. I’m lucky my father asked me to buy his house for $75K and 5 years later I sold it and four house lots for $275K and kept 8 acres for myself and built a big house for cash. I’m lucky that my kids finished school in 1991 and I started saving like crazy both in 403B’s and in taxable accounts so that in 1999 my wife and I could retire with my pension, her SS (three years later) and almost $500K in savings. I’m lucky I could give two of my kids house lots as wedding presents. The other two get the house I’m in now. I’m lucky I bought a house on Cape Cod when I retired for $212K (no agent) and sold it 5 years later for $430K (no agent). I’m lucky that I have a guaranteed pension with annual COLA’s and an excellent(and cheap) supplemental that covers everything medicare doesn’t except for $10 co-pays. And, we’ve been taking an average of about $13K per year from our savings and still have the same amount we started with 18 years later. And I can guarantee you that our largess didn’t come from investment skills or beating the IRS.
So Dave’s savings are down by half or more in real terms after 18 years. Great job there Dave.
Lipoh.
That’s only if you believe that my cost of living is the standard. And did you read the part where I’ve taken and spent about $234,000 out of those saving over the past 17 years? That would mean that my savings averaged a 2.75% increase per year. That’s pretty much in line with the average inflation rate over that time period, for a retiree.
And it means the value of your principle has declined by 2.75% each year. It would be worth lots less now than it was.
My calcs indicate you started with around $475k that is now worth around $300k in constant dollars. In another 17 years it will be worth around $180k, and so on.
So Dave you were born on third base and got driven home by inhereted wealth , that is lucky but please don’t strut about making comments about people demanding high wage scales due to cost of living . I did ok also and have a friend at 49 years old he and his sister split $2.5 MILLON from mom and dads property that is now a housing development . He knows he did well and lucky . He stashed some invested some and continued to work 10 more years and now retired and cruises on a nice motorcycle when he has the urge . He also knows he got lucky , dad was an oil burner mechanic and bought a little farm property on Long Island in 1947 by 2000 cha Ching $$$
Boat Load:
Where did you see my inheritance in what I posted? I got $40K from my father when he died. It went into savings. My wife got $40K when her mother died. It too went into savings. And where the fark did I say anything about people demanding high wage scales due to cost of living?
A house for $75k that bumped up to $275k in 5 years that had more than 8 acres and a retirement plan that sounds like a CEO or high grade federal is all fine your timing was well planed . Just sounds way to easy to be real these days . As for wages to working people your writing attitude gave me an impression of a who but I . Sorry for the misread on my part .
Boat Guy:
And that’s the point. It wasn’t planning, it was luck. It was the luck of all this happening in a time when it could happen. As for the house and buying. The house came with 12 acres. Half of it wetlands. I happened to be walking through the woods one day and saw surveyors tapes on the property next door and inquired of a friend as to whether my property could be subdivided. House building was booming at the time. He did all the work and bought four house lots. I kept the rest and had him build a house. And no, I was a High School teacher and my pension is now about $32K. As I stated above, it’s easier when you have no debt.
Muck ,your accomplishments have swollen your Pride to the point that eternal death is your certain fate.
Why are you publishing this dud?
Dennis Miller repeatedly writes the same kind of hokum as you can find in any mass-market financial magazine like Money and a thousand advice websites. He is living in a spaceship far from present reality.
Until the late ’90s his prescriptions would have been reasonable. Back when you could invest the money you saved, the multiplier effect might serve you well. Now the idea that you can beat the odds just by living frugally is absurd. In a near-zero-interest environment, with stocks (as always) subject to periodic bear markets, no “investment calculator” is going to change the futility of living one paycheck at a time when, for many, after-inflation pay raises can’t be expected. As Miller says, do the math.
With so many unprepared for retirement, there will have to be some kind of guaranteed retirement income beyond social security. I don’t like the idea of Americans being more than ever dependent on government, but I can’t see any alternative if there is not to be a bloody revolt in a country of the rich, by the rich, for the rich.
i like dennis & i also liked birch gold group–
the author is always identified b4 people read the article–it’s the reader’s choice whether or not to read the article–
Be interesting to see if older negroes will vote their race or their demographic. Of course many negro grandmothers are raising the children of their children so they benefit from government entitlement programs beyond those for the elderly. Still many are public sector retirees and if they want their local, state or federal pension benefits something is going to have be done about the benefits Tyrone and Lakeshia are receiving.
Again, everything in this article is measured in dollars. EVERYTHING.
So, how many dollars will I need to have a comfortable retirement 20-25 years from now?
A) $2 million
B) $10 million
C) $100 billion
D) What’s a ‘dollar?’
E) What is retirement?
E) by a mile….Im only 32
I don’t trust banks so I don’t use savings accounts or C.D.s. I also don’t put money in the stock market because it’s rigged. Gold and silver! Real money.
+ 100 Vic
It’s even less fun when you have NO paycheck. Speaking from experience here, we have no work left to do at work and I was expecting to lose my job tomorrow. And just found out the SO has a tumor or growth behind his tonsils. More tests are going to be done, hoping to NOT get the worst news possible. Great fing day, eh?
Sorry KaD. Hope it is nothing.
Also very sorry to hear that. Hoping with you that it’s not the worst news.
It’s another example of not knowing what tomorrow will bring, and God’s grace TODAY is sufficient enough.
We all comment , complain but staying healthy is always my wish for all , beat the reaper twice and one more battle coming up may your health issues be covered with ease and may you face them with determination and a little humor . We were all Born To Be Alive ! Good Luck
Pro tip: The federal government’s tax system is based on the dollar. That means, if you really want to earn real wealth, you need to earn wealth without using dollars.
Of course, how the hell do you do that?
For example, the radiator on my Honda Accord had a cracked badly. I took it to the dealer, who wanted 1000 dollars to fix it. Needless to say, I took it to another shop and they wanted 600 dollars. Instead, I ended up watching youtube videos on how to replace a radiator. I then went to Autozone and bought a radiator and anti-freeze for 100 dollars. It took me a few hours to replace the radiator and figure out a few things not in the video, but six months later the radiator works fine and I haven’t had any issues. If I expanded on that line of though, I could rebuild a car, pay virtually no money to have a working car, and end up with a working vehicle worth thousands of dollars.
The same idea can be used to build furniture, a house, a garden, or even a business. Use your brains and labor to make things of value. If you work for yourself and not get paid in dollars, you don’t get taxed.
Key point: You only pay income tax on your labor when you work for other people.
Econ 101: an over-supply of anything means low prices. This also applies to labor. The idiot Lefty voters who support unlimited mass immigration deserve their paycheck-to-paycheck financial condition.
Pedro and Maria send their thanks to the dumbfucks.
There’s a gigantic trainwreck of an assumption at the heart of this article.
Who said you get to retire?
You are probably going to work until you drop dead of a massive heart attack. If you actually survive to retirment age, I doubt your accumulated savings, if you have any, will be worth enough to pay for anything. Assuming the govt doesn’t raid them to pay off their or the banks’ bad bets.
A lot of smart comments here. I’m not convinced that Americans will continue to have the luxury of obsessing over how much money they have when they get old and can’t or won’t work. It seems to me that even if the money problems are adequately managed, health problems become even more of an obsession when we get old. Next up is the destruction of marriages (and hence families) of 50 somethings (maybe even earlier). I have a feeling survival is soon to take its historic and rightful place in modern society. I really doubt that money and happiness have that much to do with each other.
It’s not hard to prepare for retirement IF you start by age 35 (the age of some wisdom), put aside 10% of your take home pay. Take the bus for 30 years instead of having a car, carry groceries home one sack at a time on the bus after work, take your lunch in a brown paper bag, never go out to lunch or coffee with the gang at work, never take a real vacation, buy all your clothes at Goodwill, and limit your breeding to one child. Have no credit card debt (if you can’t afford to pay cash, save up til you can). Plan to have your modest home paid off before you retire, or buy a mobile home in an over-55 mobile home park. The problem is that people don’t want to do the hard stuff now, and by the time they smarten up, they figure its too late to catch up so they do nothing. As the late Sam Levenson said “you have to have a today without if you want to have a tomorrow with”.
Your stats are totally misleading, the only people that have guaranteed income are retired Federal employees, retired military, and our worthless PTSD veterans. Everyone else can and will lose all of their retirement in any collapse. The best advice I can give anyone is to stop making payments on anything, and I mean anything. Find someone to finance you a small piece of land on a land contract agreement with the seller then grow you on food. Live on the ground if necessary. Any family member that can’t live with you in this new life is a family member you don’t need and are better off without. Just go out in the country, find some owner finance land for sale and leave this shithole world behind. Yep you’ll have to work enough to pay for your land, but that’s all. Currently I am living completely off grid with a land payment of $300.25 monthly for 3.72 acres, while sleeping in a tent, and haven’t a problem in the world. A good neighbor is hard to beat, and I swap them vegetables for the web and a few other things and it works great. What you can accept, you will never change. Stop accepting the bullshit that you must work to meet payments on a way to ride to work. It is all a fucking joke and the joke is on you. Get out of it now. thanks
WTG Muck…pure Genius !
I hear B.S. all the time about folks and taxes . When I had my first meeting with my accountant I told him I wanted to pay the least amount in taxes from my business as legally possible…no funny stuff.