Three out of four members of Generation X wish they could turn back the clock and get another shot at planning for retirement. One in three baby boomers say don’t think they’ll ever be able to retire.
“Overwhelmingly, Americans are stressed about their current – and future – financial situation,” the National Association of Personal Financial Advisors said about these new survey results.
Regrets about not planning and saving enough are enmeshed in our thinking about retirement. But it is really all your fault that you’re not getting it done?
The honest answer to that question is “no.” There are big gaps in the U.S. retirement system that make it very difficult for many to carry the responsibility it places on workers’ shoulders.
I predict some of our readers will send a comment into this blog saying, “I worked hard and planned and am comfortable about my retirement. Why can’t you?”
Granted, we should all strive to do as much as possible to prepare for old age, and many people have made enormous sacrifices in preparation for retiring. The hard truth is that some people are much better-positioned than others. Obvious examples include a public employee with a pension waiting for him at the end of his career, or a well-paid biotechnology worker with an employer that contributes 10 percent of every paycheck to her retirement savings account. These workers frequently also have employer-sponsored health insurance, which limits their out-of-pocket spending on medical care. This leaves more money for retirement saving than someone who pays their entire premium and has a $5,000 deductible.
Sure, we could all do a better job of planning out our careers when we’re first starting out. But my husband, as a Boston public school teacher, started accruing pension credits before he could’ve imagined ever getting old. He recently retired, and his pension, accumulated during 27 years of teaching, is making our life a lot easier.
But pensions are on the wane in the private sector, and more than half of U.S. workers have neither a pension nor a 401(k) in their current job – this makes it pretty hard to save. IRAs are an option available to anyone, but human inertia makes that an imperfect solution to the problem, because people tend to procrastinate and don’t set them up. Further, working couples in which only one spouse has a 401(k) aren’t saving enough for both of them, one analysis found. …Learn More
Half of the workers who have an employer retirement plan haven’t saved enough to ensure they can retire comfortably.
This 17-minute video might be just the ticket for them.
Kevin Bracker, a finance professor at Pittsburg State University in Kansas, presents a solid retirement strategy to workers with limited resources who need to get smart about saving and investing.
While not exactly a lively speaker, Bracker explains the most important concepts clearly – why starting to save early is important, why index funds are often better than actively managed investments, the difference between Roth and traditional IRAs, etc.
Some of his figures are somewhat different than the data generated by the Center for Retirement Research, which sponsors this blog. But both agree on this: the retirement outlook is worrisome.
The Center estimates that the typical baby boomer household who has an employer 401(k) and is approaching retirement age has only $135,000 in its 401(k)s and IRAs combined. That translates to about $600 a month in retirement.
Future generations who follow Bracker’s basic rules should be better off when they get old. …Learn More
Decisions about which college to attend or degree to pursue are increasingly driven at least in part by this consideration: will I be able to pay back my student loans?
Countless things determine how much someone earns – smarts, rich or poor parents, high school or graduate degree, being in the right place at the right time. But LendEdu’s new ranking of starting salaries for graduates with bachelor’s degrees from some 1,650 U.S. colleges is essential information, especially when debt is the only option to finance college.
A degree is almost always worth the investment. Georgetown University estimates workers with a bachelor’s degree earn $1 million more over their lifetime than high school graduates. Post-secondary degrees have even bigger payoffs.
The salary rankings turned up some useful and quirky findings. LendEdu, a personal finance website for consumers that sells advertising to financial firms, compiled the salary data for the first five years of employment from payscale.com surveys.
Ever hear of Harvey Mudd College? The typical recent graduate of this engineering school 40 miles west of Los Angeles earns a bit more ($85,600) than an MIT graduate ($83,600). Harvey Mudd is Silicon Valley’s No. 2 feeder school.
Graduates overestimate what a degree is worth. The typical college student expects to earn $60,000 but earns only $48,400 in the work world. …
Motherhood, career anxiety, menopause – women, throughout their lives, move from one psychological stressor to the next.
Well, ladies, there’s hope: your stress should start to ease around age 60.
With the #MeToo movement against workplace abuse of young adult women dominating the headlines, there’s a quieter movement of baby boomer women exploring what it means to get old. Book publishers are flocking to writers of self-actualization books like “Women Rowing North: Navigating Life’s Currents and Flourishing as We Age” and “50 After 50: Reframing the Next Chapter of Your Life.”
Perhaps publishers sense a market for these books because women of all ages suffer depression at rates two to four times higher than men. But a study in the journal Maturitas finds that many women shed their depression as they move from their mid-40s into their 60s.
To pinpoint individuals’ psychological changes over time, this study analyzed the group of women who participated in a telephone survey from beginning to end, 1992 to 2012.
The women, who live Melbourne, Australia, were asked a battery of questions to determine whether they were depressed – questions about whether they felt optimistic or discontented, socially engaged or lonely, impatient or cheerful, clear thinking or confused.
They were also asked whether they suffered from bad moods, which can be a precursor to depression. The researchers found that the women’s moods improved significantly as they aged. …Learn More
This is young adults’ financial dilemma in a nutshell: you’re well aware you should be saving money, but you admit you’d rather spend it on the fun stuff.
Yes, paying the rent or student loans every month takes discipline. But it isn’t enough. Even more discipline must be summoned to save money, whether in an emergency fund or a retirement plan at work.
Tia Chambers, a financial coach in Indianapolis and certified financial education instructor (CFEI), has put some thought into how Millennials can overcome their high psychological hurdles to saving.
The 32-year-old lays out six doable steps on her website, Financially Fit & Fab, which she recently elaborated on during an interview.
Get in the right mindset. “It is the hardest part,” she said. “When I speak with clients, money is always personal, and it’s also emotional.” The best way to clear the emotional hurdles is to keep a specific, important goal in mind that continually motivates you, for example buying a house. Or create a detailed savings challenge, such as vowing to save $1 the first week, $2 the second week, $3 the third week, etc. This adds up to $1,378 at the end of the year, she said.
Cut expenses. Some cuts are no-brainers. Scrap cable for Hulu and Netflix subscriptions. Drop that gym membership you never use. The biggest challenge for young adults is saying no to friends who want to go out for dinner or drinks. Chambers suggests enlisting your friends to help – after all, they’re probably spending too much too. She and her friends have agreed to go out one weekend and save money the next weekend by hanging out at someone’s apartment. Another idea is happy hour once a week instead of twice. …Learn More
We’re kicking off 2019 with our periodic review of the most-read articles over the past year, based on the blog traffic tracked by Google Analytics.
Judging by the comments readers leave at the end of the blog posts, baby boomers are really diving into the nitty-gritty of preparing themselves mentally and financially for retirement. Financial advisers also frequently comment on Squared Away, and we hope some of our web traffic is because they’re sharing our blog with their clients.
Last year, Squared Away received recognition from other media. The Wall Street Journal recommended us to its readers for the blog’s “wonderful mix of topics.” The Los Angeles Times picked up our article, “Why Retirement Inequality is Rising.” MarketWatch published our posts about how pharmacists can help seniors reduce their prescription drug prices and about a Social Security reform to reduce elderly poverty.
The most popular blogs in 2018 fall into five categories: