dagblog - Comments for "The Retirement Crisis 2: Everybody Ought To Be Rich"

I guess the other point to

Peter Schwartz — Sat, 23 Nov 2013 21:41:51 +0000

In reply to You're right, you can start

I guess the other point to keep note of is: How much or whether you can save also has to do with what you're willing to do without.

Or, to put it another way, what is your baseline lifestyle going to be? If it includes BMWs, then you may need more, but if you don't need a car at all, then you will probably need a lot less. Also, if you decide not to have kids.

Another small point: The

Peter Schwartz — Sat, 23 Nov 2013 19:39:43 +0000

In reply to You're right, you can start

Another small point: The $40,000 per year should vary with location. Might be more in NYC and less in Des Moines.

Starting to save at 20 or 25

CVille Dem — Sat, 23 Nov 2013 02:19:01 +0000

In reply to Good post! Small point: You

Starting to save at 20 or 25 is unrealistic. At 20 no one is finished with college. At 25 no one has paid off student loans; if they are in graduate school, they are looking at the mid-thirties before the CONCEPT of saving introduces itself. And those who don't go to grad school are using every cent to get by...buying a house, having children, etc.

I was raised with the absolute FEAR of debt, and even when I got my first official loan for furniture I paid it off way before it was due. I use credit cards to pay for everything, but I pay off the monthly total every month and NEVER pay interest. (I love it when people say that credit card companies hate people like me -- why do they send me offers every week? They consider me a challenge, and keep offering special deals so that I will eventually borrow more than I can pay). Credit cards should be used to get miles, and to get a monthly loan that is paid off interest-free EVERY MONTH because I pay it off on time.

But I digress...If we let the Republicans gut Social Security and Medicare we may as well just give up. The Common Good is not something they believe in because they absolutely despise everyone who is not a one percenter.

Oh, I could go on, but I would just be repeating myself, as usual.

You're right, you can start

Michael Maiello — Sat, 23 Nov 2013 00:10:53 +0000

In reply to Good post! Small point: You

You're right, you can start saving with your first job. My first job paid $23,000 a year and had no 401(k) plan or health insurance. When I was 25 I got my first career job with 401(k). I made $33,000 a year in New York City. I did save some money, largely because there was an employer match at the time.

I used 30 years because those are the old pension terms 30 years and you're out. If the 401(k) method means working 15 more years, then that is yet another compromise.

This is why "market

Peter Schwartz — Fri, 22 Nov 2013 21:44:40 +0000

In reply to Good post! Small point: You

This is why "market solutions" to safety net problems ultimately don't work for the great mass of people.

Good post! Small point: You

Peter Schwartz — Fri, 22 Nov 2013 21:42:16 +0000

In reply to The Retirement Crisis 2: Everybody Ought To Be Rich

Good post!

Small point: You seem to be assuming that people start saving at age 35.

35 + 30 = 60.

They need to start saving at 20 or 25. Not going to do the math, but that gives you 15 more years and/or allows you to save less per year, but for more years. Time is your greatest asset and hedge against loss.

On the other side, I think you give short shrift to (or just understate) "present needs," which could easily include rearing a family and buying a home. Not cheap. And, as you point out, doesn't include emergencies.

"From a macroeconomic standpoint, what would happen to the U.S. economy if consumers were to suddenly sock away 40% of their income every year? It was a problem when the savings rate climbed to 5% after the crisis. If people saved 40%, there would be a Depression, people would lose their jobs and they would have nothing to save at all."

This is an interesting point, but I sometimes hear people say: Why not cut your expenses? Do you really need that flat screen TV or smart phone or the $4.00 latte or new clothes or a new car?

Orthodox friends of mine owned their own home, had 12 kids, and lived on the guy's $50,000 a year salary. It can be done. But as you say above, "What happens to the economy if everyone lives that way?" If everyone lived that way could anyone live that way? I don't know, but I have my doubts.

Conservatives always want you to look at problems like this from the standpoint of the individual, and an individual could make this work. But not "all of us individuals" could make it work at the same time, I suspect.

It's the same point I make to people who say, "Think of what we could all save if we didn't have to pay into Social Security. Look at the lousy return." Aside from the fact that SS is an insurance policy and not an investment, what works for the individual potentially doesn't work for everyone doing it at once.

The market depends on winners and losers; it won't let us all advance at the same time. Michael Kinsley wrote an interesting article on the mathematical impossibility of everyone winning in the market at the same time.

So when conservatives say they don't want the government picking winners and losers, I think they really mean they don't want the government eliminating or blurring the distinction between winners and losers. Both for emotional status reasons and for economic reasons.