I've got to question any analysis that concludes that it takes 14 years to overcome $15,000 worth of debt.
This is, no doubt, a great point. The MMM worldview needs to be more widely disseminated by the news media that seems more interested in promoting consumerism over retirement security now. Here's how the rest of the soft, undisciplined world lives...
http://retireby40.org/2013/08/retirement-saving-crisis/The median retirement account balance for people 55-64 (who has retirement accounts) is only $100,000. That might sound like a lot of money, but it could be gone in just a few years. What about those folks without retirement accounts? Their median balance is just $12,000. That’s not even close to being enough for one year of retirement. If you have only $12,000 saved up at 64, then you are going to be in for a very frugal retirement.
It’s a tough situation for the working class. When you’re not making a lot of money, saving for retirement is put on the back burner. I remember when my family immigrated to the US. My parents barely made enough money to pay the bills and they couldn’t save any money for a long time. Today, they don’t have a lot of retirement saving, but their expense is pretty low so it’s not too bad. My dad is still making money from his rental condos and day trading, so they are doing fine for now. They also live in Thailand so their expense is a magnitude lower than here in the US.
The key research findings are as follows: (from NIRS’s website)
Account ownership rates are closely correlated with income and wealth. More than 38 million working-age households (45 percent) do not own any retirement account assets, whether in an employer-sponsored 401(k) type plan or an IRA. Households that do own retirement accounts have significantly higher income and wealth—more than double the income and five times the non-retirement assets—than households that do not own a retirement account.
The average working household has virtually no retirement savings. When all households are included— not just households with retirement accounts—the median retirement account balance is $3,000 for all working-age households and $12,000 for near-retirement households. Two-thirds of working households age 55-64 with at least one earner have retirement savings less than one times their annual income, which is far below what they will need to maintain their standard of living in retirement.
The collective retirement savings gap among working households age 25-64 ranges from $6.8 to $14 trillion, depending on the financial measure. A large majority of households fall short of conservative retirement savings targets for their age and income based on working until age 67. Based on retirement account assets, 92 percent of working households do not meet targets. Under broader measures, most households still have insufficient assets: 90 percent fall short based on retirement account balances and estimated DB pension assets combined, 84 percent fall short based on total financial assets, and 65 percent fall short based on net worth.
The median retirement account balance for people 55-64 (who has retirement accounts) is only $100,000. That might sound like a lot of money, but it could be gone in just a few years. What about those folks without retirement accounts? Their median balance is just $12,000. That’s not even close to being enough for one year of retirement. If you have only $12,000 saved up at 64, then you are going to be in for a very frugal retirement.