Anyone feel like they're not "keeping up with the Jonses"?

[mjkacmom]

I think the changes on college campuses are mostly b/c parents are paying their kids’ way through school more than they did when I went to college and before that.

That’s not what I’ve found, at all, and I have 2 in college and a college graduate. College is SUCH more expensive that people who would want to pay for all college expenses just can’t. Kids had student loans when I was in college, but maybe for $10,000 vs. $100,000. I do think parents contribute a lot of the time, and unfortunately some are sacrificing their retirement accounts.

 

[tzolkin]

Life is organized differently now - but it's organized in a way that makes it easy to start to feel like extras are necessities.
... Now we have another class of people who are just plain living beyond what they can afford -and those come from all three of the original classes.

This is something that I have thought about quite a bit lately. It's amazing how many things people believe they "need" today. There are so many luxuries that have become the norm that if you were to say "but everyone else has ___" , it would often be fairly accurate. So people start to think that because those things are normal that they must have/do them.

Probably every family I know have cell phones, eat out (at least fast food) multiple times per week, have more than one car, have internet/cable/streaming services, etc. The vast majority of people I know go to Starbucks, have professional family photo shoots, regularly update their homes, go on vacations, etc. These are certainly not bad things on their own, but if they are outside of your means and you do them anyway because you have been led to believe that they are necessities, then that can be a problem.

I've also noticed that there's a big "treat yourself"/I deserve a vacation mentality in our culture that I don't remember when I was younger. Even my parents have taken this on in recent years (they definitely did not think that way before).

Kids had student loans when I was in college, but maybe for $10,000 vs. $100,000.

I think the loans are actually a factor in the college lifestyle change that poster was talking about. It's completely normal now to have a ton of student loan debt (and debt in general), so many college students think its fine to splurge on things like expensive coffee and dining out because they'll just pay it off later anyway. (This isn't even necessarily an age thing. I know quite a few adults who have taken out the max student loans when going back to school and used that money for whatever they wanted. They figured they were going to have student loan debt anyway, so what's the difference of a few thousand dollars?)

 

[Christine]

I think it is great that some can "fully fund" their 401k & IRA. But I think for A LOT that is not possible . I know for me that would take over 50% of my annual income.

I fully expect to have to work after "retirement."

Well, the OP of this thread made a statement that they take several vacations a year. Now that's a very vague statement and gives no clue at all what they are spending, but if you take several vacations a year (what are vacations in my mind), then I'm betting you could get pretty close to fully funding your 401K and just take one vacation. But it's a choice and one that they can obviously live with.

 

[DLgal]

Because you sure as heck can't make it work on Social Security alone, and "working" when you get to older ages isn't easy at all.

Plenty of people make it on Social Security alone. Both my parents and my MIL are doing well on essentially just SS (my parents are taking RMD from their retirement accounts, which doesn't add a lot to their monthly income.

My dad was a high earner in CA and they retired to central Florida. Their SS income is approximately $4000 month, which has proven to be more than enough over the last 5 years. My dad's 401k balance is higher than it was when he retired. The investments make more than the RMD.

 

[hopemax]

I find it interesting that any parent of an adult child would think that their adult children are to be responsible for taking care of them in their old age. Blows my mind.

That's the way it worked for millennia. If you reached an age advanced enough where you could be what we would call "retired" you would have been cared for by your children and your community. But most people never got that far. They worked until they died.

Retirement is an entirely modern concept. So I find myself rolling my eyes at the notion of "what people should do." As if it is somehow supposed to be ingrained. We had a generation that found themselves the first recipients of Social Security, a generation that thought it was so important that pensions were a necessary part of the employment process, a generation where things had started to slip and so there is a mix of pensions/401Ks but matching was common, and now we're down to what?

The person who said, "Who knows what retirement will look like in 30 years," is right. We can't even keep things stable one generation to another after 2-3 generations. We're all betting our 401Ks are going to be there, when we've learned that pensions can disappear and Social Security is on death's door. That's a lot of trust we're expecting people to have in systems that aren't what I would call reliable. The last 150 years, when banking became open to regular people as a regular thing, are riddled with examples of how lower economic classes have been screwed over and taken advantage of by the financial systems. There is a lot of work that will need to be done on a societal level about values and priorities, beyond retirement but health care, coping with climate change, etc. before we can settle on "what people should do." I can't shake the feeling that we're mostly just throwing darts at a moving target and calling it a plan. An untested plan, because we're relying on stuff that barely is even reaching a full life cycle (meaning people started using it in their 20's have used it throughout their retirement).

Personally, we try to do what we can. And I think we are doing better than most, as we started putting money in retirement savings in our 20s, and my DH works in tech. But mostly, my goal is just to enter the retirement phase with no debt, including a paid off mortgage, and some savings. Everything else is bonus. I saw how beneficial that was to my parents to have their house paid off by the time my Dad retired at 59 vs others. But my Mom is one who died at 61 with leaving a lot of dreams unfulfilled. So we are mindful to take some of the dream vacations now, DH got his dream car now, etc.

 

[Christine]

Plenty of people make it on Social Security alone. Both my parents and my MIL are doing well on essentially just SS (my parents are taking RMD from their retirement accounts, which doesn't add a lot to their monthly income.

My dad was a high earner in CA and they retired to central Florida. Their SS income is approximately $4000 month, which has proven to be more than enough over the last 5 years. My dad's 401k balance is higher than it was when he retired. The investments make more than the RMD.

I agree that it works if you can relocate to a lower COL area and you have two of you.

Unfortunately, my aunt and uncle *never* saved one penny. They lived in the moment and treated their family to gifts, dinners out, they refinanced their house several times to pay for trips and buy the grandchildren cars.

My uncle had a military retirement and a lot of his other payments, unfortunately, were disability due to the war and another on the job injury. That income stopped when he died. My aunt gets some very small SS check and a portion of the pension. She is unable to live on her own in any apartment etc because the area is so expensive. She also has too many issues to relocate to a cheaper state when her entire family lives here. So she lives with one of her children in a very tiny spare bedroom they had. I mean, it's all working out but not ideal. When my uncle (her husband) was dying he made the statement to his daughter (I feel so bad, we didn't plan well enough to take care of your mother, I never thought I would go before her). So it's a real lesson there.

Edited to add: she also couldn't keep the house when my uncle died. While they had lived in it for 30 years, it had been refinanced so that it was fully mortgaged to it's value. She barely got it sold without paying at the settlement table.

As for my parents, they were huge savers, but they are doing pretty well on their combined social security, but I can't say that's it. My mother gets a pension from her job that's a nice supplement (not a great pension, but it's something). They don't really need their RMDs, but they moved to Florida where it's much cheaper.

 

[hopemax]

Plenty of people make it on Social Security alone. Both my parents and my MIL are doing well on essentially just SS (my parents are taking RMD from their retirement accounts, which doesn't add a lot to their monthly income.

My dad was a high earner in CA and they retired to central Florida. Their SS income is approximately $4000 month, which has proven to be more than enough over the last 5 years. My dad's 401k balance is higher than it was when he retired. The investments make more than the RMD.

The key being "high earner." "As of September 2019, the average Social Security check benefit for retired workers was $1,474.77 per month." If your spouse is still living, that's one thing. But for singles, that doesn't stretch very far. My Dad is so used to his, high earner, based check, he was really taken aback when he found out a friend, widowed, is only getting about $1000. Which is why she needs to keep working her low salary, retail job, and has to have a roommate.

 

[disneychrista]

Well, the OP of this thread made a statement that they take several vacations a year. Now that's a very vague statement and gives no clue at all what they are spending, but if you take several vacations a year (what are vacations in my mind), then I'm betting you could get pretty close to fully funding your 401K and just take one vacation. But it's a choice and one that they can obviously live with.

As with anything it is choice.

Now for me personally, I had been taking ONE 3 - 5 day "road trip" a year and spent $500 - $1,000. No where near the $19,000 ($19,500 in 2020) needed to max a 401k.

 

[disykat]

Yes, it's possible for many people to live on two people's social security income. It's very hard to live on one persons.

DH's parents lived on theirs, but now that FIL has passed Dh's mom lives on hers - with help from her kids.

My parents lived on theirs, along with their RDMs, for many years but now live on way more than that due to their care needs. We're so very thankful they have the money sitting there to help. It's worth way more than any vacation.

 

[LSUmiss]

This is something that I have thought about quite a bit lately. It's amazing how many things people believe they "need" today. There are so many luxuries that have become the norm that if you were to say "but everyone else has ___" , it would often be fairly accurate. So people start to think that because those things are normal that they must have/do them.

Probably every family I know have cell phones, eat out (at least fast food) multiple times per week, have more than one car, have internet/cable/streaming services, etc. The vast majority of people I know go to Starbucks, have professional family photo shoots, regularly update their homes, go on vacations, etc. These are certainly not bad things on their own, but if they are outside of your means and you do them anyway because you have been led to believe that they are necessities, then that can be a problem.

I've also noticed that there's a big "treat yourself"/I deserve a vacation mentality in our culture that I don't remember when I was younger. Even my parents have taken this on in recent years (they definitely did not think that way before).



I think the loans are actually a factor in the college lifestyle change that poster was talking about. It's completely normal now to have a ton of student loan debt (and debt in general), so many college students think its fine to splurge on things like expensive coffee and dining out because they'll just pay it off later anyway. (This isn't even necessarily an age thing. I know quite a few adults who have taken out the max student loans when going back to school and used that money for whatever they wanted. They figured they were going to have student loan debt anyway, so what's the difference of a few thousand dollars?)

I think that’s part of why wdw is so crowded. Ppl in economic classes who would have never considered a wdw vacation when I was a kid find a way to go now. Part of that is Disney marketing & payment plans etc. I’ve worked with many low income families & have been shocked by the number of them that have been to Disney.

 

[LSUmiss]

Yes, it's possible for many people to live on two people's social security income. It's very hard to live on one persons.

DH's parents lived on theirs, but now that FIL has passed Dh's mom lives on hers - with help from her kids.

My parents lived on theirs, along with their RDMs, for many years but now live on way more than that due to their care needs. We're so very thankful they have the money sitting there to help. It's worth way more than any vacation.

It wouldn’t be if they had not survived as long. I didn’t get to vacation with my dad b/c he was always worried about saving. Those memories would be much more valuable to me than $ in the bank now since he’s dead. My sister & I got to split his $ when died. So what. We both wanted more time with him. It just all depends on your experiences. If things work out like they’re “supposed” to, then it feels like the right thing; but when they don’t, it colors your perspective.

 

[Christine]

I think that’s part of why wdw is so crowded. Ppl in economic classes who would have never considered a wdw vacation when I was a kid find a way to go now. Part of that is Disney marketing & payment plans etc. I’ve worked with many low income families & have been shocked by the number of them that have been to Disney.

I went to Disney the first time when I was 12 in 1975. My mother was working at a bank and my father was a police officer. One of the reasons we got to go and none of my other friends/family members did was because I was an only child and my parents expenses were just not as high (and my mother could work where some of the other mothers couldn't/didn't). I grew up strictly in a working class level. My friend's parents (dads) were plumbers, electricians, policemen, teachers, and so on. I didn't know anyone who went to Disney. This was a HUGE deal for my parents and I can't tell you how much they said this was a "once in a lifetime" thing and this isn't something we'd ever do again. As it was, I didn't get back to Disney until I was in my 30s and we were in Florida for some other reason and did a day at Epcot.

So yeah, the outlook toward vacationing is way different than it used to be.

 

[Christine]

It wouldn’t be if they had not survived as long. I didn’t get to vacation with my dad b/c he was always worried about saving. Those memories would be much more valuable to me than $ in the bank now since he’s dead. My sister & I got to split his $ when died. So what. We both wanted more time with him. It just all depends on your experiences. If things work out like they’re “supposed” to, then it feels like the right thing; but when they don’t, it colors your perspective.

One thing I have noticed about people who did the same things as your dad (and not saying your dad was this way) is that sometimes people like that just didn't want to do things like "vacation." It wasn't how they were raised and it's not something that comes easily to them. Often times they will use money/saving as the excuse for not going, when it reality even when they get a ton of money, they still can't do it. It is often when it's all passed them by that they think about it. But it's like a lot of those people that lived through the Depression era. Even when they were financially set and even rich, they couldn't stop living like it was the Depression.

 

[disykat]

It wouldn’t be if they had not survived as long. I didn’t get to vacation with my dad b/c he was always worried about saving. Those memories would be much more valuable to me than $ in the bank now since he’s dead. My sister & I got to split his $ when died. So what. We both wanted more time with him. It just all depends on your experiences. If things work out like they’re “supposed” to, then it feels like the right thing; but when they don’t, it colors your perspective.

I'm so sorry about your experience. My comment is definitely colored by my perspective but I have to respond to you thinking things working out like they are "supposed" to for me. I reacted very strongly to that - though I do know you meant no offense. My dad was not supposed to live many years of his life with Alzheimer's (fourteen years so far.) His struggles have been hell and I'd give up any vacation we ever took for him not to have to go through this. Crap happens and being prepared financially has been a HUGE blessing. I really feel for the people who have to go through this without a safety net. Even with being pretty well financially prepared, it's been brutal for them and frankly also a huge financial burden for me.

Like everything, it's a balance. No one here has said to never take a vacation or live a quality life. You can't predict how life will go. Wouldn't everyone love to die even? But it doesn't work that way. The only way to be prepared is to plan for the bad stuff.

 

[tzolkin]

I think that’s part of why wdw is so crowded. Ppl in economic classes who would have never considered a wdw vacation when I was a kid find a way to go now. Part of that is Disney marketing & payment plans etc. I’ve worked with many low income families & have been shocked by the number of them that have been to Disney.

This is definitely true. I know this is the Disboards so some things can be skewed here, but even IRL most people I know have been to Disney (lots of them have been multiple times). And, I'm talking about people below the median US income, not the wealthy. It's perfectly "normal" to go on a Disney vacation now, but I don't think that was the case for most middle class and lower income families in the past.

 

[mnrose]

Plenty of people make it on Social Security alone. Both my parents and my MIL are doing well on essentially just SS (my parents are taking RMD from their retirement accounts, which doesn't add a lot to their monthly income.

My dad was a high earner in CA and they retired to central Florida. Their SS income is approximately $4000 month, which has proven to be more than enough over the last 5 years. My dad's 401k balance is higher than it was when he retired. The investments make more than the RMD.

Then they are lucky. My MIL is living on Social Security "alone" (with a very very small savings) and she would not be "making it" unless we bought her a house that we rent to her well below market, and my BIL also permits her to sell the "day old" bread for his bakery, which nets her spending money when she sells it at the senior center. Without those two things, she would not be "making it" at all. And, she is scared to death of the day she can no longer live on her own because she cannot afford assisted living, and certainly cannot afford nursing home care. Sure, once she's broke, she could get Medicaid to pay for a nursing home, but that's not much of an option. I think my MIL is much more typical of seniors than the situation you describe.

 

[LSUmiss]

One thing I have noticed about people who did the same things as your dad (and not saying your dad was this way) is that sometimes people like that just didn't want to do things like "vacation." It wasn't how they were raised and it's not something that comes easily to them. Often times they will use money/saving as the excuse for not going, when it reality even when they get a ton of money, they still can't do it. It is often when it's all passed them by that they think about it. But it's like a lot of those people that lived through the Depression era. Even when they were financially set and even rich, they couldn't stop living like it was the Depression.

You’re correct to some extent. My dad grew up with depression era parents so that was part of it. But when he was dying he talked about missing out on things b/c he could not shake that mindset. It was a regret for him. I refuse to have that same regret.

 

[MrsPete]

Funny to see this thread today. My daughter had a couple of friends over Saturday for the first time. Our house is MUCH smaller than these kids' homes. We don't have a pool. We don't live in a fancy subdivision. I admit I was feeling weird at first, but as I thought about it more I realize I don't care anymore.

Most of the time I don't care. More often I look at a younger co-worker driving a new SUV, eating leftovers from dinner out last night, and talking about an expensive upcoming vacation, and I think, "You can't be saving enough." Obviously, I keep my mouth shut.

Don’t know your age, but my dad was like that & then suddenly got diagnosed with pancreatic cancer at age 62 & died w/in 3 weeks of the diagnosis. So, I’m still very much of the mindset of tomorrow is not guaranteed. The money in the bank didn’t do him any good. My sister & I got the $, but we would much rather have had our dad.

Yeah, it happens. People save and don't get to enjoy the fruits of their labor; however, I'm in my 50s now, and -- like the OP -- I've lost a few friends. But only a few. The vast majority of the people I know are still alive and doing fine.

It's all about balance. I am sixty and have enough cash to go three years without work, plus a decent 401 K. We have spent the last 27 years showing our son the world instead of buying stuff; these experiences cannot be traded for anything. I was diagnosed with early stage cancer in August and have no income this year; thank goodness I saved for that rainy day. I plan to ramp up our travel even more once my treatment is over. We are all one step away from a scary medical diagnosis, accident, job loss, etc.

Yes, balance is a good word when it comes to saving and financial planning. One thing that makes "balance possible" -- something I'm surprised hasn't been mentioned yet:

One of the best ways to find "balance" is to start saving young. I'm sure you've seen those calculations: If you start saving in your early 20s, you need to save relatively little each month to retire rich; whereas, if you wait only a couple years, you must put way a good bit more each month to reach the same goal. If you start saving while compound interest is on your side, saving is a whole lot easier.

I'll add something to your comment that we're all one illness away from an emergency: We shouldn't assume that we'll be able to work until 62, 65, or whatever. I know more than a few people who've been laid off /unable to re-enter the professional world at the same pay level. I read somewhere that 1/4 of all Americans will leave the work force at a time not of their own choosing. That is, they'll leave because of a lay-off or because of an illness. Another reason to front-load your retirement savings.

Pensions were so much better than 401ks.

I have both a pension (well, I'm a year away from fully earning it) and a 401K.
The pension is great in that I can't "outlive my money", but it has some shortcomings:
- I earned it (well, will have earned it) by staying with the same employer for 30 years. Younger people don't stay in the same job /companies go out of business. If you leave the company after 10 or 15 years, you either get nothing or you get a vastly reduced amount.
- My pension is tied to MY life. If I live to be 102, I will win; however, it's possible that I'll retire and live only a couple years -- and, if I am unfortunate in this way, I can find some comfort in leaving my 401K to my children, but I can't leave them my pension. So, in this way, a pension is a gamble just like other forms of retirement plans.
- Pensions are typically attached to relatively low-paying jobs. It's a trade-off: you'll never get a big paycheck, but we'll invest for you, and you'll have a guaranteed income stream in retirement.
- Pensions come with the "is it secure" worry. Consider Detroit.

Unfortunately retirement savings are a gamble, a practical one but definitely not guaranteed. I think overall more people outlive their savings than not, though.

Yes, since you cannot know how many years you will live (and so many other details), it's a gamble -- but I do think outiving one's savings is more common than dying young /never enjoying retirement.

The best thing you can do to reduce the possibility of a bad outcome: Inform yourself. Stay on top of your finances, check your balances often, and be realistic about your needs. Personally, I'm kinda surprised at how little attention most of my co-workers pay to their retirement savings. One of my co-workers told me last year (just before I retired) that our pension is less than our paycheck! Yeah, I knew that. I know -- down to the penny -- what my pension is expected to pay.

I do think you should DEFINITELY fund your own retirement before funding your child's education. Kids can take out loans for college but no one is going to let you take out loans to fund your retirement.

Disagree. Both retirement and education are worthwhile goals, and you should work to fund both -- if you start early and live modestly, this is possible.
If it comes down to making choices, kids can start at community college and trim their bills in any number of ways. Failing to save for them AT ALL just puts them behind the 8-ball and gives them a poor start in life.

Isn't strange how women were able to stay home "back in the day" and tend to the children and house. And then, like your mom, be financially set for the rest of their lives. My grandmother was like this. A homemaker. She loved it and thrived. Amazing baker and cook. Made us the most beautiful dresses. We were at her house constantly. Just sitting in her kitchen with her. I could cry thinking about that comforting time in my life.

My Grandfather died in his 60s. But her life was untouched. House was paid off. Pension was flowing. And like your mother, she then started to travel. She never remarried. But lived a great life.

I can relate to that, but consider that people in those days lived differently: 2-bedroom house, no air conditioning, no eating out, one car per family, hanging the wash out on the line, canning your own vegetables. It's hard to compare that lifestyle to our more modern life.

This is how US economics works out. It’s why folks living in Nordic countries are much happier. I know my friend in Norway doesn’t have to deal with this decision. But he does pay higher taxes than I do. Is the trade off worth it? I sometimes wonder.

And if the state's taking care of retirement, your friend faces the same issue as my pension: if I die young, I lose what's been put away for me.
What you describe may be a better option in that it removes the need for self-discipline, but it's still a gamble.

I find it interesting that any parent of an adult child would think that their adult children are to be responsible for taking care of them in their old age. Blows my mind.

I helped my grandmother in her old age: I did heavy cleaning that she couldn't manage, and I drove her places -- but she had her own money.
I expect the same situation in my old age.

Yes, having 2 incomes makes a huge difference.

Two incomes can be a blessing or a curse:
- Two can allow you the "balance" many people have discussed here; that is, the ability to save and still enjoy vacations, etc.
- Two can also allow you to increase your lifestyle to the point that you'd be lost if one spouse looses a job.

I think the changes on college campuses are mostly b/c parents are paying their kids’ way through school more than they did when I went to college and before that.

Nah, I think it's because it's so easy to borrow these days. I'm sure you've heard people say, "If you're going to borrow, you might as well have what you want." I think it's just so easy to say, "If I'm borrowing for school anyway, I'm going to live in a nice apartment instead of a dorm, and I'm going to enjoy a spring break trip."

Final thoughts: Personally, we've planned our retirement finances in several stages: A paid-for house, money in the bank, money invested, my pension, health insurance, and a small-but-effortless income stream. Don't count on any one item.

 

[mnrose]

The key being "high earner." "As of September 2019, the average Social Security check benefit for retired workers was $1,474.77 per month." If your spouse is still living, that's one thing. But for singles, that doesn't stretch very far. My Dad is so used to his, high earner, based check, he was really taken aback when he found out a friend, widowed, is only getting about $1000. Which is why she needs to keep working her low salary, retail job, and has to have a roommate.

An excellent point. Two higher earning people who can pool their SS checks to pay living expenses (rent, utilities, etc) can do ok on just SS. But a single person? Good luck with that. My MIL collects roughly 1200 a month in her SS. Her rent is $560 of that. She also pays something every month for Medicare, and her Medicare supplement plan. She has to insure her ancient car (a 1996 car), repairs for it, and her utilities (which average over $150 a month). She lives very frugally. Very. Market rate rent for the place she is living would be 900, plus utilities. You see the problem? A one bedroom apartment in our area would be very hard to find for less than $850-900. She would never make it on her check alone. And, even two people with $2500 would have a hard time when you are paying for TWO Medicare monthly fees (135 x 2) plus the Medicare supplement (at least the same as Medicare Part B) for two people. So rent, at 900, health care at another $540 a month (two people for both Part B and Supplement), and you've spent way more than 1/2 your income. A single person would NEVER make it. Two people who are relatively healthy *might* make it (because that $540 a month of course does not pay for all your medical care...you have OOP on top of that).

 

[LSUmiss]

I'm so sorry about your experience. My comment is definitely colored by my perspective but I have to respond to you thinking things working out like they are "supposed" to for me. I reacted very strongly to that - though I do know you meant no offense. My dad was not supposed to live many years of his life with Alzheimer's (fourteen years so far.) His struggles have been hell and I'd give up any vacation we ever took for him not to have to go through this. Crap happens and being prepared financially has been a blessing. I really feel for the people who have to go through this without a safety net.

Like everything, it's a balance. No one here has said to never take a vacation or live a quality life. You can't predict how life will go. Wouldn't everyone love to die even? But it doesn't work that way. The only way to be prepared is to plan for the bad stuff.

But that’s the thing, you can’t always plan for the bad stuff. I’m sorry about your dad. I know that sucks too. And I didn’t mean things working out how they are “supposed to” would necessarily be better or more pleasant than my experience. I probably should have used the words “expected to”. But your earlier posts sound like being financially prepared is more valuable than any life experience & that’s true for YOU b/c that’s how it worked out. But, in my case, that $ just went into a bank account that already had $ in it...so what. That’s why I added our opinions are shaped by experiences. What your parents did feels like the right thing to do b/c it was a blessing for your family. My dad explicitly expressed what he did as a regret & that makes me bitter, angry & sad b/c I feel like he had that mindset b/c it was ingrained in him that it was the “responsible” thing to do. And, so for me & my family, I refuse to have that regret. I try to live life to the fullest & still save modestly for my future in case I’m allowed to have one.