Author Topic: Savings Rate Best Explains "Retirement Crisis"  (Read 2745 times)

DarkandStormy

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Savings Rate Best Explains "Retirement Crisis"
« on: August 04, 2017, 07:07:58 AM »
https://finance.yahoo.com/news/one-variable-best-explains-retirement-crisis-144546566.html

The one variable that best explains the retirement crisis

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As returns in the markets grew stronger throughout the í80s and into the í90s the savings rates continued to plunge. After a sharp rise following the financial crisis, itís once again on the decline. If I had to point to one variable that could explain why so many are so ill-prepared for retirement it would be this.

A retirement article that actually mentions savings rate, imagine that.
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talltexan

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Re: Savings Rate Best Explains "Retirement Crisis"
« Reply #1 on: August 05, 2017, 01:58:40 PM »
But doesn't failure to save come from unplanned expenses appearing? Baby boomers would have been able to save more if housing and educating their children hadn't turned out to be much more expensive than they anticipated because of the long-term moderation in interest rates.

Joeko

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Re: Savings Rate Best Explains "Retirement Crisis"
« Reply #2 on: August 05, 2017, 02:37:37 PM »
Made the mistake of reading some of the comments...Wow a lot of complainypants

Roland of Gilead

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Re: Savings Rate Best Explains "Retirement Crisis"
« Reply #3 on: August 05, 2017, 02:54:07 PM »
On a side note, do you think it is best to say Savings Rate or Saving Rate?

Is it a bank saving account or a savings account?

Julie has $100,000 in retirement savings or Julie has $100,000 in retirement saving?

nnls

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Re: Savings Rate Best Explains "Retirement Crisis"
« Reply #4 on: August 05, 2017, 07:05:34 PM »
On a side note, do you think it is best to say Savings Rate or Saving Rate?

Is it a bank saving account or a savings account?

Julie has $100,000 in retirement savings or Julie has $100,000 in retirement saving?

Savings Rate, Savings Account.

I am Australian though, and we say maths not math so it may be a similar logic?

Travis

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Re: Savings Rate Best Explains "Retirement Crisis"
« Reply #5 on: August 05, 2017, 07:59:09 PM »
On a side note, do you think it is best to say Savings Rate or Saving Rate?

Is it a bank saving account or a savings account?

Julie has $100,000 in retirement savings or Julie has $100,000 in retirement saving?

I would say "savings" since it can be used as shorthand.  If you say "my savings" we know you're talking about a bank account. If you say "my saving" we're going to stand here waiting for you to finish the sentence you started.
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Maenad

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Re: Savings Rate Best Explains "Retirement Crisis"
« Reply #6 on: August 06, 2017, 07:18:05 AM »
But doesn't failure to save come from unplanned expenses appearing? Baby boomers would have been able to save more if housing and educating their children hadn't turned out to be much more expensive than they anticipated because of the long-term moderation in interest rates.

I doubt it. From the baby boomers I've seen (in-laws, aunts and uncles), it was just plain old lifestyle inflation over the years. Most of the boomers' kids are the Gen-Xers, like me, and college costs didn't get really scary until after my time. Housing cost increases were just them succumbing to marketing for the Biggest, Shiniest Thing.

Zamboni

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Re: Savings Rate Best Explains "Retirement Crisis"
« Reply #7 on: August 06, 2017, 07:31:43 AM »
^ I agree.

FrugalFisherman10

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Re: Savings Rate Best Explains "Retirement Crisis"
« Reply #8 on: August 08, 2017, 10:45:41 AM »
Made the mistake of reading some of the comments...Wow a lot of complainypants
yah, there's one in this thread.

talltexan

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Re: Savings Rate Best Explains "Retirement Crisis"
« Reply #9 on: August 09, 2017, 09:35:48 AM »
Made the mistake of reading some of the comments...Wow a lot of complainypants
yah, there's one in this thread.

I see you there, FrugalFisherman.

velocistar237

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Re: Savings Rate Best Explains "Retirement Crisis"
« Reply #10 on: August 10, 2017, 11:32:42 AM »
On a side note, do you think it is best to say Savings Rate or Saving Rate?

Quote from: en.wiktionary.org
2. (countable, usually in the plural) Something (usually money) that is saved, particularly money that has been set aside for the future.

Usually plural, but apparently can be singular.

But doesn't failure to save come from unplanned expenses appearing? Baby boomers would have been able to save more if housing and educating their children hadn't turned out to be much more expensive than they anticipated because of the long-term moderation in interest rates.

Housing is not really an issue. The boomers had access to housing at reasonable prices. As much as education costs, it's small compared to even minimally reasonable retirement savings. Maybe health care is an issue, but that shouldn't have affected the ability to put money away during the 80s and 90s. I think the main problem is that people spent most of their money on goods and services instead of saving it for retirement, and the entire culture shifted to support poor personal finance choices. Baby boomers should have been able to save. It's worse for most of us, and we manage to do it.

A Definite Beta Guy

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Re: Savings Rate Best Explains "Retirement Crisis"
« Reply #11 on: August 11, 2017, 01:59:04 PM »
On a side note, do you think it is best to say Savings Rate or Saving Rate?

Quote from: en.wiktionary.org
2. (countable, usually in the plural) Something (usually money) that is saved, particularly money that has been set aside for the future.

Usually plural, but apparently can be singular.

But doesn't failure to save come from unplanned expenses appearing? Baby boomers would have been able to save more if housing and educating their children hadn't turned out to be much more expensive than they anticipated because of the long-term moderation in interest rates.

Housing is not really an issue. The boomers had access to housing at reasonable prices. As much as education costs, it's small compared to even minimally reasonable retirement savings. Maybe health care is an issue, but that shouldn't have affected the ability to put money away during the 80s and 90s. I think the main problem is that people spent most of their money on goods and services instead of saving it for retirement, and the entire culture shifted to support poor personal finance choices. Baby boomers should have been able to save. It's worse for most of us, and we manage to do it.

Taking out loans at the beginning of your career hurts you a lot. You forego all the returns of that money working for you over years.

Cassie

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Re: Savings Rate Best Explains "Retirement Crisis"
« Reply #12 on: August 11, 2017, 03:54:33 PM »
As a baby boomer we always lived below our means, saved $ etc as did most of our friends. However, for many of us we got married young and were at lower paying jobs until college/training was obtained and then because the sheer numbers of our generation many did not end up getting promotions, etc. There can only be so many chiefs. Many people lost a third to half of their investments when the market went down.  Divorces have cost our generation a ton of $. The people I know with the most $ never got divorced.  Helping adult kids get established also took their toll in this generations ability to save. Some people lost good jobs during the recession and were never able to replace them so had to work survival jobs instead. Age discrimination is a real thing. With all that being said some people never save and don't look to the future. However, I did want to cover some of the things that happened to this generation to impede their savings rate.

SwordGuy

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Re: Savings Rate Best Explains "Retirement Crisis"
« Reply #13 on: August 11, 2017, 06:17:14 PM »
However, for many of us we got married young and were at lower paying jobs until college/training was obtained and then because the sheer numbers of our generation many did not end up getting promotions, etc. There can only be so many chiefs.
This might come as a surprise, but EVERY generation has the problem of there being more regular jobs than chief's jobs.

As for the getting married early part, that's a choice one does not have to make.   IMO, getting married saves money just like getting a roommate does.  It's having children when you're young that's expensive.  Which, incidentally, is also usually a choice.

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Many people lost a third to half of their investments when the market went down.

Actually, most that lost money lost their investments when they panicked and sold when the market was down.  Again, a choice to (a) panic and (b) not educate themselves on how the market works.

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Divorces have cost our generation a ton of $. The people I know with the most $ never got divorced. 

Divorces are not like hurricanes.  They don't just show up.  Setting aside adult-onset mental illness, they are the result of choices that one or both parties to the marriage made. 

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Helping adult kids get established also took their toll in this generations ability to save.

Raising one's children to be adult adults would have been a better choice than raising them to be adult kids.
And not just for the money savings.

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Some people lost good jobs during the recession and were never able to replace them so had to work survival jobs instead. Age discrimination is a real thing.
 

Absolutely true.  Some did.  But why?   Was it really age discrimination or had the people just "retired in place" and ceased keeping up with the times by keeping their skills current and relevant?

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With all that being said some people never save and don't look to the future.
Which would be why most don't accumulate wealth.

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However, I did want to cover some of the things that happened to this generation to impede their savings rate.
Every generation has challenges.   I think the Baby Boomers in the USA had it easier than any generation in the history of the world.   
« Last Edit: August 12, 2017, 07:17:16 AM by SwordGuy »

aceyou

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Re: Savings Rate Best Explains "Retirement Crisis"
« Reply #14 on: August 14, 2017, 09:46:54 PM »
I do and don't agree with the knocking of the baby boomers.  On one hand, I have 33 aunts and uncles who are all baby boomers...my mom is one of 8 and my dad one of 11.  Most of them spend their money, and lots more than I'd suggest, on many things that the younger generation definitely wouldn't.  And most of my aunts and uncles are still working into and through their 60's despite mostly having well paying jobs.  They could pretty much all be retired in style 15 years ago or more if they lived anything like the people on this board.

That said, people my age seem to spend money at just as high of a clip, just on different things.  Birch boxes, tech, lots of monthly subscriptions, stuff like that.  And SUV's, and super long commutes.  So, it looks different for each generation, but people are people.  Most people will spend almost all their money and save virtually nothing. 

talltexan

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Re: Savings Rate Best Explains "Retirement Crisis"
« Reply #15 on: August 15, 2017, 09:21:20 AM »
Baby boomers were affected by two accidents of timing, one favorable and one unfavorable:

Many of them were able to build the early parts of their careers (from 1975-1990) in Pre-NAFTA US, in which they were largely protected from the global forces that ravaged American manufacturing.

But then many of them suffered through the twin bear markets of 2000 and 2007.