Author Topic: It's Not Your Fault You're Not Saving For Retirement  (Read 4141 times)

RapmasterD

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It's Not Your Fault You're Not Saving For Retirement
« on: April 11, 2014, 08:53:15 AM »
Don't shoot the messenger. This article is making my head explode. Is this the ultimate anti-MMM pap? Am I delusional? Or both? LINK: http://www.marketwatch.com/story/its-not-your-fault-you-arent-saving-for-retirement-2014-04-11?pagenumber=2

Insanity

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Re: It's Not Your Fault You're Not Saving For Retirement
« Reply #1 on: April 11, 2014, 09:20:03 AM »
Time to come off as Anti-MMM.

He's not wrong. 

It has been proven that the more decisions one has to make in a day, the more draining it can become and the more decisions that seem "unimportant" a the time are put off.

Pensions, Social Security and even the "opt out" 401Ks are more successful because people don't have to think about it.  That's why the recommendation of "put the 401K in first day" is always stressed.  But, even then you have to make the decision to do it.  This is the same thing as why the "opt out" of marketing e-mails is always un-checked and you are forced to check it.   It makes you make a decision and there are SOO many decisions made in any given day right now that it can be overwhelming to a LOT of people.

Just look at my Decisions,Decisions post.  I've been struggling through this for weeks - even after making a decision, that focusing on my current contract has been very difficult.  Not that I haven't been doing the work.  Just that I am distracted by that decision.

If people were required to put in X% into a retirement account, there would be no decision.  They wouldn't have to think about keeping up with the Jones' and feeding the ego.  It is purely psychological.

That isn't to say it should be that way or the other.  Just that it is.

deborah

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Re: It's Not Your Fault You're Not Saving For Retirement
« Reply #2 on: April 11, 2014, 09:38:26 AM »
The article just has a sensationalist headline. What it says is basically correct - people are not saving for their retirement, and are pulling savings out of retirement whenever they can.

However, he says the Australian system is a good model!! Ha Ha.

Yes, it is almost impossible to get retirement savings out of our system before preservation age (we have two ages: preservation age (approx 60) - when you can access your retirement savings; and retirement age (approx 67) - when you can be paid social security - but only if you don't have many assets or much income). So people spend up big after preservation age so they can get social security at pension age.

The net result has been that the financial system is the biggest recipients in Australia of government subsidies of ANY part of the Australian economy. The financial system has responded by charging hefty fees for retirement savings and by getting the government to mandate more and more that you need a financial adviser to do things. For instance, I had to get sign off by a financial adviser to increase my retirement savings at work! And, the finance industry is currently getting the government to repeal legislation that a financial advisor should put your interests first!

Jamesqf

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Re: It's Not Your Fault You're Not Saving For Retirement
« Reply #3 on: April 11, 2014, 10:05:51 AM »
He's not wrong. 

It has been proven that the more decisions one has to make in a day, the more draining it can become and the more decisions that seem "unimportant" a the time are put off.

The 'too many decisions' argument doesn't really make sense.  There are two separate things here, 'saving' and 'for retirement'.  So forget the 'for retirement' part, and just look at saving.  Saving = income - spending, and if you make more than enough to cover basic necessities, you have to make a large number of decisions about what to spend the excess on.  Whereas if you just get the money direct-deposited into a checking account and let it sit there (the worst case), you have no need to make decisions at all.  (This actually happened to me, back when I first started making decent money.) 

If you automatically direct some to a 401k, that's basically one decision per job.  Even periodic mutual fund investing means (for me, anyway) maybe one or two extra decisions per month: Do I have too much in the checking acccount?  OK, which fund(s) should I put it in?

As for the article itself, it seems like the same old nanny state thing: because some people make stupid decisions, the government has to treat everyone as though they're stupid.  Completely overlooking the fact that, according to all available evidence, the people making decisions for the government are far from being the best and the brightest themselves :-)

lexie2000

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Re: It's Not Your Fault You're Not Saving For Retirement
« Reply #4 on: April 11, 2014, 10:41:44 AM »
First off, I don't like the title of the article.  I understand what the author is saying and don't disagree that there are problems with the system, but the title alone relieves people of the personal responsibility that people must take regarding their retirement.  Many people know that they should be saving or saving more for retirement, but aren't.  Is the system perfect?  No; but not doing anything is no alternative.  This article and ones like it, give people the sense that the fact that they're not participating/saving is "okay".

RapmasterD

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Re: It's Not Your Fault You're Not Saving For Retirement
« Reply #5 on: April 11, 2014, 01:00:44 PM »
lexie2000 nailed it. PERSONAL RESPONSIBILITY. Save even 20%.

Put 60% in SPY and 40% in BND. Is it really that hard? The "It's Not Your Fault..." movement kills me.

Insanity

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Re: It's Not Your Fault You're Not Saving For Retirement
« Reply #6 on: April 11, 2014, 02:04:00 PM »
lexie2000 nailed it. PERSONAL RESPONSIBILITY. Save even 20%.

Put 60% in SPY and 40% in BND. Is it really that hard? The "It's Not Your Fault..." movement kills me.

Again, I am not disagreeing with the principle but the expectation from here and elsewhere that people can make that decision when given tons of different options of things they don't understand or at a time when they think they can't afford it because they have to keep up with the Jones'.

Again, it boils down to having to make that decision.

I'll be honest, when I was a kid, I used to have two bowls of cheerios for breakfast, 2 PB&J sandwiches with pudding and a fruit drink and usually chicken/hamburgers/tuna/steak, salad, and a veggie for dinner.  Now, I have lots of choices and decisions and half the time I hate it.  I sit there staring or thinking about it or not wanting to go for it.   Having a routine makes things easier than having a decision and when you have to make a decision emotions and psychology play a part of it.  Consumerism impacts that greatly.