Retirement - Chicago,IL

Updated on July 09, 2012
J.G. asks from Chicago, IL
14 answers

Do you really try to save for retirement? Or do you put off saving to buy things in the NOW?

I have a friend whose kids want for nothing. They must own over 200 movie dvds, her son has enough geotracks to fill the whole first floor of my small ranch home, etc. This same friend said to me recently, "what's the point of saving for retirement, it's not like you'd ever have enough!"

I was a bit shocked by her words. We save, a lot. 15%, and I'm hopeful of increasing it another 2% next year. This equates into maxing out ONE 401k and putting a little in an IRA. I wish we had two 401k and two incomes, so we could at least work towards maximizing two accounts, but based on most of the calculations I've run, we stand a good chance of having enough money in retirement.

So again, I am a bit surprised by my friends words. My question again is, do you really try to save for retirement or do you just put aside a little and live more in the now? Do you think saving for retirement is a waste of time or something you really try to do?

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answers from Charlotte on

She just lives in the "now", doesn't she. Reminds me of the old story of the grasshopper and the ant.

She is one of those who just hopes that someone will take care of her later - one of the kids or the government.

Pull out Aesop's Fable about the grasshopper and give it to her. Tell her you thought she might like to add it to her "collection". I wonder if she'll get the hint?


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answers from Chicago on

Saving for retirement is a HUGE priority for us. We max out everything that we can... his 401k, my Roth, investment acct and a modest monthly amount for 2 college accounts. It's adding up nicely but we know that anything can happen to bump us out of the comfortable zone into the danger zone (health crisis, death, disability etc).

As mentioned in earlier posts, most Americans are seriously under saving for retirement although the last few years have been a slight improvement. Statistically speaking, I will outlive my husband. Why wouldn't I want to focus on retirement savings? I plan to reenter the workforce soon and I'm looking forward to putting more money aside.

Great question. Keep putting it away and forgot what your 'friends' are doing with their money. Focus on your family and your priorities.

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answers from Dallas on

Our retirement and our daughter's college has been a priority for us.

We save the max plus more on retirement and daughter has a solid college fund.

We own our company now and don't have a company match 401K right now but who in their right mind would not participate in a program where a company matches your investment... That is free money. Even without a company match due to us owning our company, we still contribute the max yearly plus more.

We are fortunate to not "need" anything and be able to have some "wants" here and there. However we are very disciplined when it comes to finances.

I see people in my upscale neighborhood put in lavish patios, pools, etc and know they have not done 1 thing to maintain the house as far as upgrade AC, paint, etc. It takes a lot of planning and I think a lot of people just fly by night as far as financial planning and make some stupid decisions.

Bottom line, my responsibility is my family so we make sure we have everything we need plus more and maintain responsibilities. No one knows if they may be forced into early retirement, need to take disability, etc... we are planners.

Those who don't plan are not being responsible, live in the now and will be sorry later.

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answers from Chicago on

Wow, that is INCREDIBLY irresponsible!! Yes, you CAN save enough for retirement.

We max out my husband's contribution limit for his 401K each year, and the employer match. I have a small 401k from my old job, and once I start working again after the kids are in school, I will max out my contribution on that too, and use the rest of the income to pay off my student loans. We also have a cash value life insurance policy (I know, they are not the best use of money, but it is just a method of diversification).

We are also investing in some rental properties which we will use to finance our sons' college, since we know that we make too much to get any FAFSA aid.

Your friend is going to end up being reliant on 1) the government and 2) her adult children when the time comes. She has no clue how many years she'll be able to work. My in-laws are in their late 60s and have very little retirement, as they came to this country 20 years ago and started from scratch. Their retirement plan is my husband, but they had no choice in the matter. Your friend is being irresponsible and naive.

ETA: Does she realize that if she is foregoing an employer-match program she is saying "No" to FREE money?? Who does that?

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answers from Eugene on

Saving is not just for retirement but for a rainy day. Your friend who said that "you'd never have enough" has an all or nothing mentality. In this economy, many of us are getting by on the "not enough" that we saved when times were good. I may not have enough to retire, but I'm grateful to have some savings to fall back on til I get back on my feet again.

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answers from Boston on

I have been saving for retirement since my first post-college job, 15 years ago. It is a big priority for me and even in down times, I have been able to save something. Even if it was only 2% of my income, I saved. My husband has been severely under-employed for almost 4 years (as in makes half of what he used to, which was less than what I make, which isn't a lot) so right now we're just at 6% (company match max). He is taking a new job that should get us up to about 75% of his old income and is going to school to train for a new career, so things should be better in about 18 months, God willing. I hope to get up to 10% then and bump up college savings.

Your friend is woefully uninformed. It really doesn't take much to get started on retirement savings and if she does save, she can have enough.

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answers from Norfolk on

My husband and I both work and we both maxed out our 401k contributions right from the start.
I have also have an old fashioned pension I'm vested in, plus some bonds, CDs and a few small investments.
We have a college account for our son which should help, but he's going to have to work and earn some scholarships, too.
Our only debt is one mortgage, which should be paid off when the housing market rebounds enough so we can sell our old house to pay the new one off.
In the mean time we rent the old one out so it's bringing in some income.
I've only had one raise once in the last 5 years (even though the CEO's compensations has tripled to $15 million a year in this same time).
I work a 30 hr work week, which is considered full time for benefits but part time for FTE's.
This has saved my job on occasion since they can fit a 30 hr a week person into places in the budget where a 40 hr a week person would not fit in.
For social security purposes, since they calculate based on your 3 highest earning years, I'll return to a 40 hr work week for my 3 final years before retirement in 15-17 years.
If we're careful, we should be fairly comfortable in retirement.

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answers from Los Angeles on

Yes, my wife and I save for retirement.

When we first got married, we lived hand to mouth and spent everything we made. We bought a hide-a-bed couch for $25 and that was our only bedroom and livingroom furniture for a while.

When I got my first real job, US Army, 2nd Lieutenant, we still couldn't save any money. So when we got our first raise, we saved all of that (after taxes). When we got our second raise we saved half of that and spent the other half. We continued on that course until we were saving 10% of my gross, not net, income.

I read an article in "Money " magazine, a while back, that said the average 45 year old had less than $4000 saved for retirement. Because of our frugal ways and always watching for the sales, my wife and I had our home paid off by the time we were 45 and had a nice upper 5 figure IRA. And all that on a wage that was within $50 or less per month of qualifying for welfare.

What really irks me is the non-savers and live-for-the-moment over-spenders get more opportunities at scholarships than do savers.

BTW, The ONLY real estatre investment that has paid off was when I bought a home. The other real estate property i bought for rentals all were horrible, not bad, but horrible!

Good luck to you and yours.

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answers from Austin on

I wish we could save for retirement.... hubby was laid off 3 years ago, and was out of work for 2 1/2 years.... we cashed out his 401K (not that there was that much in it), and really struggled to get by.

Americans save far too little.... what are they planning on using for resources when retirement DOES come along? It looks like they are pretty much into instant gratification.....

Social Security will help some, but not much..... hubby does have a pension coming from one company, but that will only be about $350 a month.....

We are both getting close to "retirement" age, but can't afford to retire.......

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answers from Washington DC on

We saved for retirement but not for college as was suggested by our financial consultant. This was based on my husband's age when the kids were born.
We save and we hope that someday my husband will retire.
We also don't purchase what we can't afford.

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answers from Oklahoma City on

My hubby finally reached 55 so he can pull his money out of his retirement plans if he wants to. It surprised me at how much of it they take out for fees and such. We lose nearly half of it, some of it has to do with his age of course. If he waits longer to take it out he gets more.

Right now he can start drawing on it and get a couple of hundred a month. If he just takes it out in total we could make a nice down payment on a house or buy a new vehicle and a not so nice down payment on a house.

I don't know. Life threw curve balls at us. Hubby had a heart attack about 6 years ago and had quadruple bypass surgery to go around the 100% blockages and aneurysms. He just is not going to ever be 100% again.

Being on SSDI has changed our lives. We lost everything I thought was important, like our home, both of our nice cars, although I didn't miss the $1100 every 6 months for full coverage insurance, our credit cards, savings, collections, everything was gone over the period of 2 years waiting to get on the SSDI.

Life changes up. Do I wish we had more money in the bank? Of course I do but it would be gone by now just like everything else. It would have made life a bit easier but it would have still been spent.

Just because you are saving a lot of money does not mean you will get to use it when you are older and both retired. It would be nice for you if that happened but life happens. He could get hurt, he could die, he could have a wreck and lose his mobility, you could do that too. Having money in the bank is not a bad thing.

It is just not a priority for everyone. I never had any plans where I worked to save money so I never really learned about how to do it. I just figured I would work until I was old enough to get SS. I have never lived an extravagant lifestyle so a moderate income is fine with me.

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answers from Washington DC on

it wasn't an option for us for years. there was just nothing left over paycheck to paycheck. we started our 401K in our early 40s. it got cut in half last year. i don't trust social security to be there and i sure don't trust the stock market. so we're looking at other avenues to fund our retirement, primarily breaking into real estate investment. clearly we need to do something to take care of ourselves.
but i also understand the POV that scrimping and doing without for some big future payoff can be short-sighted. anyone can pop off at any time, and life is to be lived in the present.
i think most people can find a reasonable balance between instant gratification and future planning. i'm more of a Now person and my husband is more of a planner. between us it SEEMS to be working. i'll let you know down the road a little when it's time to retire<G>.

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answers from Dallas on

Since I want to retire eventually, I absolutely save for retirement I also save for college funds and short-term needs/wants. I also believe there needs to be a healthy balance between saving and living in the moment.

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answers from Cleveland on

I really have never had a job that I could put money aside... we have always been lower income, but find a way to make do with what little we have. We have managed to get a house or three - although if something doesn't change soon we are looking at loosing them all of them :(

You see I have been out of work for 3 yrs & now have medical issues that are preventing me from working. We are trying to make it on what LITTLE hubby makes, but that is not working anymore... so who knows what the future hold for us. One of the extra house were bought to rent out... but we didn't know when we got it that it had a no live order on it - it was not disclosed by the seller & since it was bank-owned they don't have to. So, we have attempted to repair the orders on it, but still have some to do & can't rent it till it is done. No job = No repairs = No renters = No income from it only more bills... kinda stuck there! The other house which is condemened was won in a lawsuite/settlement... hubby had done a lot of work to try to get the work orders off it (the list of offences went for 35 to 12) & we paid out a lot to cover materials... the owner refused to pay us for work complete, supplies & other expences as was agreed before work was started - so we suite for the money. Long story short - she did settle and was to pay us the settlement by the end of Jan 2012 or would loose the title to the property as compensation for our out of pocket for supplies & expences... she didn't pay - so we ended up with the house... which still needs work. Believe me we would have rather had the money, but we can't sell the houses to even cover what we have put into them in this market :(

So retirement... right now we are living day to day - I don't even want to think about retirement!!

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