Posted on 12/29/2011 5:44:15 AM PST by SeekAndFind
In between the happiness of Christmas and the promise of the New Year, permit me to introduce a sour note, a hint of a scold. If you're like, well, almost everybody, you're not saving enough. 15% of each paycheck into the 401(k) is the bare minimum you can get away with, not some aspirational level you can maybe hope to hit someday when you don't have all these problems.
I mean, obviously if one out of two workers in your household just lost their job, or has been stricken with some horrid cancer requiring all sorts of ancillary expenses, then it's okay to cut back on the retirement savings for a bit. But let's be honest: that doesn't describe most of us in those years when we don't save enough.
What describes most of those years when we aren't saving is normal life. We moved. We got married or had kids. The kids required entirely expected things like food, clothes, and schooling. Work was hard and we felt we wanted a really nice vacation. Friends and family went through the same normal life stages that we were, requesting that we travel and bring gifts to the happy events.
These things are not an excuse to stop saving, for all that I have used these excuses myself from time (and regretted it later, at length). The recession should have driven home some hard facts, but the nation's 3.5% personal savings rate indicates that these lessons haven't quite sunk in, so let me elaborate some of them.
1. You cannot count on high asset growth rates to bail out a low savings rate. In the 1990s, we believed that we could guarantee something like an 8% (average) annual return by pumping our money into the stock market and leaving it there.
(Excerpt) Read more at theatlantic.com ...
Sure people should save more but the rising cost of living is eating wages wholesale. A family of five has seen $50-$60 per week added to their grocery bill over the past year.
The middle class is taking a beating and when someone is trying to decide whether to run out of gas or groceries by this time of the week they really don’t want to be berated for not saving more.
Inflation is killing us. The cost of living and doing business in this country is skyrocketing.
Better to pay down debt and buy preps than dump money into a system that is going to collapse from its own weight.
I don’t think this holds true as a generalization. I have two parents who never saved 15%, but who ended up with plenty of assets and lived off their income and SS. My mother is 97 and my mother-in-law just passed on at 98 leaving a small estate. Both never spent their income.
The secret is, like in government, spending less. Once the kids are gone, the house is sold, what do you really need?
It helped that both were frugal, coming from a generation that survived the depression, and in reasonably good health all their lives. But then that was due to maintaining a healthy life style.
They are not alone either as I regularly see when visiting the retirement place where they both lived.
“The secret is, like in government, spending less”
Quite true and when the kids are gone most couples are able to live on less and do. But telling someone to save when they are losing their home or facing a layoff that wipes out savings is silly.
I doubt someone in that situation will be reading the Atlantic..
I would say that “core” inflation is a bogus number. The Fed is using the decline in housing prices to obscure the actual rise in food and energy. Food costs have risen significantly. Check how much coffee is in your “two-pound” can at the store and how much more it costs than it did a year ago.
Obama is using the printing presses at Treasury to suck the value out of our retirement savings and redistributing it to his “homies”.
The BLS uses rent instead of home sales to calculate that portion of the cpi. If they would have included home sales in the earlier part of the last decade, inflation would have been higher. The FED would have had to raise rate to knock it down and we probably wouldn't be in the mess we are in today..
Touche’ !!
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