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

[LSUmiss]

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.
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.
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.
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.
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.
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.
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.
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 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.
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.
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.

I know when I was in college which isn’t all that long ago (but long enough), ppl’s parents were affording them these luxuries. In Louisiana, there is a program with very minimal qualifications that makes public college tuition basically free. There is no income cap so average to wealthy families basically get free tuition for their kids & then are able to foot the bill for nice apartments/condos, etc. It only applies to undergrad so the only ppl I know with student loans are doctors or other ppl with advanced degrees. But most ppl I knew paid for luxuries by having just minimal jobs b/c tuition was paid & their parents paid their rent or bought them a condo or some nonsense,

 

[NYCgrrl]

We, as a nation, have one of the lowest savings rate comparative to other 1st world nations w/ similar GDP. However we also have a higher consumption rate of goods.
This is not how it used to be. In the 60's the saving rate was 10% and it currently hovers around 7.5%.
In a nutshell, you can't have it both ways.

 

[LSUmiss]

We, as a nation, have one of the lowest savings rate comparative to other 1st world nations w/ similar GDP. However we also have a higher consumption rate of goods.
This is not how it used to be. In the 60's the saving rate was 10% and it currently hovers around 7.5%.
In a nutshell, you can't have it both ways.

We also pay more for necessities like healthcare that other ppl don’t pay for.

 

[NYCgrrl]

We also pay more for necessities like healthcare that other ppl don’t pay for.

Most other countries have higher taxes and national health plans so to a certain extent it's a wash. Still, Americans, pay more for healthcare hence the "cottage" industry of medical tourism.
When it comes to healthcare everyone pays.

 

[RamblingMad]

We also pay more for necessities like healthcare that other ppl don’t pay for.

They pay higher taxes. We have ridiculously high deductibles. But they have better cost control. I think the grass is greener elsewhere.

 

[disykat]

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.

And I truly hope that works for you. My mother in law felt the same way because she lost her parents young. It's working for her, but only because we pay her utilities every month and are her backup for any emergencies that come up.

 

[barkley]

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.

my dad was a young adult during the depression and it definitely impacted the way he lived his life/raised us. i don't know that it was what formulated his mindset on vacations but as far as he was concerned since his employer would let him bank it up for years on end it was another form of savings 'in case', the few times i remember him taking more than a day or two off it was to go visit family or tackle a big list of household to-do's that weekends never afforded enough time to accomplish. maybe it was because he was raised in a large family so the boys were expected to get after school and summer jobs as soon as they were old enough so he didn't have the mindset of 'yeah, schools out for christmas/summer it's free time to enjoy'. this is'nt to say he didn't enjoy getting away from it all, but he preferred a handful of inexpensive 2 or 3 day weekend getaways per year to any kind of big extended trip.

now that i'm thinking about it i kind of recognize this same mentality among my friends who were hardest hit in the recession. many of them out of necessity downsized their lifestyle's considerably and even though things have greatly rebounded financially for them-those elimination and downsizing habits are kind of sticking with them (don't know that they even realize it cuz it's become a habit vs. a hardship for them).

 

[ronandannette]

We also pay more for necessities like healthcare that other ppl don’t pay for.

This is true in our case and not having that particular pressure makes retirement planning quite a different ballgame. Both healthcare and subsidized seniors’ living, assisted living and end-of-life facilities are provided through our tax dollars. Of course more luxurious private facilities abound and are objectively “better” but at least the safety-net is there.

I am always astonished at the amounts Americans pay for healthcare, whenever the discussion comes up. There must be some piece of the puzzle I’m not understanding, since it would superficially appear “middle-class” lifestyles in the US and Canada are very similar. Are your taxes and/or COL that much lower than ours? Are your wages that much higher? Are you just a bunch of wizards who have figured out how to spin straw into gold? If we had the additional expense of health insurance equal to a small mortgage every month we would basically have no discretionary income at all and saving for retirement or anything else would be very difficult.

 

[LSUmiss]

This is true in our case and not having that particular pressure makes retirement planning quite a different ballgame. Both healthcare and subsidized seniors’ living, assisted living and end-of-life facilities are provided through our tax dollars. Of course more luxurious private facilities abound and are objectively “better” but at least the safety-net is there.

I am always astonished at the amounts Americans pay for healthcare, whenever the discussion comes up. There must be some piece of the puzzle I’m not understanding, since it would superficially appear “middle-class” lifestyles in the US and Canada are very similar. Are your taxes and/or COL that much lower than ours? Are your wages that much higher? Are you just a bunch of wizards who have figured out how to spin straw into gold? If we had the additional expense of health insurance equal to a small mortgage every month we would basically have no discretionary income at all and saving for retirement or anything else would be very difficult.

I don’t know the actual numbers, but I think the answer in that’s partly why so many don’t have enough savings & live today check-to-check.

 

[SaintsManiac]

This is true in our case and not having that particular pressure makes retirement planning quite a different ballgame. Both healthcare and subsidized seniors’ living, assisted living and end-of-life facilities are provided through our tax dollars. Of course more luxurious private facilities abound and are objectively “better” but at least the safety-net is there.

I am always astonished at the amounts Americans pay for healthcare, whenever the discussion comes up. There must be some piece of the puzzle I’m not understanding, since it would superficially appear “middle-class” lifestyles in the US and Canada are very similar. Are your taxes and/or COL that much lower than ours? Are your wages that much higher? Are you just a bunch of wizards who have figured out how to spin straw into gold? If we had the additional expense of health insurance equal to a small mortgage every month we would basically have no discretionary income at all and saving for retirement or anything else would be very difficult.

Premiums, deductibles, and copays are hefty here. Our COL where we live is lower than some of the country and my husband makes a good salary after busting his butt for 15 years. However, our premiums and copays go up every year.

Many people I know prefer paying those high costs, because they don't want government involved in their healthcare, although they talk about getting on Medicare when they can.

 

[ronandannette]

Premiums, deductibles, and copays are hefty here. Our COL where we live is lower than some of the country and my husband makes a good salary after busting his butt for 15 years. However, our premiums and copays go up every year.

Many people I know prefer paying those high costs, because they don't want government involved in their healthcare, although they talk about getting on Medicare when they can.

I understand and didn’t imply that either system is entirely superior to the other - both have their problems. Just that I don’t know what my life, or the lives of my family and friends would look like if we had the added expense.

 

[SaintsManiac]

I understand and didn’t imply that either system is entirely superior to the other - both have their problems. Just that I don’t know what my life, or the lives of my family and friends would look like if we had the added expense.

Oh I know. It's just such a touchy subject here, because politicians use it against people. We max out our FSA every year and that helps cover the OOP expenses. Last year we ran out of FSA money due to my husband needing an MRI and we paid so many copays OOP I wanted to cry.

 

[Christine]

This is true in our case and not having that particular pressure makes retirement planning quite a different ballgame. Both healthcare and subsidized seniors’ living, assisted living and end-of-life facilities are provided through our tax dollars. Of course more luxurious private facilities abound and are objectively “better” but at least the safety-net is there.

I am always astonished at the amounts Americans pay for healthcare, whenever the discussion comes up. There must be some piece of the puzzle I’m not understanding, since it would superficially appear “middle-class” lifestyles in the US and Canada are very similar. Are your taxes and/or COL that much lower than ours? Are your wages that much higher? Are you just a bunch of wizards who have figured out how to spin straw into gold? If we had the additional expense of health insurance equal to a small mortgage every month we would basically have no discretionary income at all and saving for retirement or anything else would be very difficult.

I'm sure someone has done an analysis of it. It's really hard to get a handle on it because our taxes can be so different from person to person based on income. And of course, there's the state taxes. I have no idea what your tax rates are on your income. Politically, that gets a spin on it and we sometimes hear that you countries with government managed healthcare pay about 50% in income taxes. I have often heard that gasoline is also taxed extremely high to cover various social-type programs. I am not sure how much any of that is the truth.

To give you an example, due to where I live salaries are high and I get taxed fairly high (I think) but overall, my effective federal tax rate is about 18% of my income. So is that lower or higher than your federal tax. I get taxed more from my state and those taxes are used to fund things that are solely the responsibility of the state (state roads, schools, etc). So not sure what that really is added on, but I don't thing government health care would come from that pot.

The argument has been made to people that while our taxes may go up (and go up significantly) with managed care, the volatility of our premiums and pricing would become stable. But people are very afraid to have the government step in and manage care and they are very afraid they will lose control of their healthcare options. Although, I feel the second part has already happened or is well on its way.

 

[LSUmiss]

I'm sure someone has done an analysis of it. It's really hard to get a handle on it because our taxes can be so different from person to person based on income. And of course, there's the state taxes. I have no idea what your tax rates are on your income. Politically, that gets a spin on it and we sometimes hear that you countries with government managed healthcare pay about 50% in income taxes. I have often heard that gasoline is also taxed extremely high to cover various social-type programs. I am not sure how much any of that is the truth.

To give you an example, due to where I live salaries are high and I get taxed fairly high (I think) but overall, my effective federal tax rate is about 18% of my income. So is that lower or higher than your federal tax. I get taxed more from my state and those taxes are used to fund things that are solely the responsibility of the state (state roads, schools, etc). So not sure what that really is added on, but I don't thing government health care would come from that pot.

The argument has been made to people that while our taxes may go up (and go up significantly) with managed care, the volatility of our premiums and pricing would become stable. But people are very afraid to have the government step in and manage care and they are very afraid they will lose control of their healthcare options. Although, I feel the second part has already happened or is well on its way.

That’s the thing the though is that a lot of ppl pay. about 30% of their income already without the extra benefits. It’s only the wealthy that don’t & they have convinced many ppl to vote against their own interests with fear mongering.

 

[nkereina]

I didn't get to read the whole thread, but I agree with those that suggested sitting down with a financial advisor. You may be doing better than you give yourself credit for. My parents were always diligent about saving money and always feared they weren't doing enough. Their financial advisor has tried for years to calm their fears, assuring them they are doing just fine and actually encourages them to spend money on things, like travelling. Maybe having that reassurance from a professional will help you feel less "guilty" about spending now.

I'm very much on the fence between save responsibly and YOLO. I have seen many people whose lives were cut short and all the "what ifs" that came with it. But I also see my 74 year old great aunt who still works full time because her social security isn't enough to cover her bills and she has no other savings. When you're younger and healthy, its tough to find middle ground that balances both potential scenarios.

 

[Kennywood]

For reasons on which I won't elaborate, my goal is to retire at 62. That's when I can start taking Social Security. (Yes, I know that if I wait longer to claim Social Security, the more I'll get. As I said, I have reasons for wanting to retire at 62.)

Using the "4% Rule" as a guide, it looks like my 401k account should be sufficient to allow my early retirement. And while I sincerely hope to enjoy many, many years of retirement, that's not my mindset. My foremost responsibility is to ensure that my wife will have a long and financially stress-free retirement. If I'm there to enjoy it with her, all the better. But as a husband, I need to make certain that she's (and hopefully we're) financially secure.

Yes, we do enjoy the moment too. In fact, we'll be taking our first trip to Hawaii this summer. But when we do things like that, we save and budget for it.

 

[RamblingMad]

That’s the thing the though is that a lot of ppl pay. about 30% of their income already without the extra benefits. It’s only the wealthy that don’t & they have convinced many ppl to vote against their own interests with fear mongering.

Then you have sales tax, payroll tax, and property tax too. Most people forget about payroll tax. And it’s not a small amount.

 

[Searc]

This is true in our case and not having that particular pressure makes retirement planning quite a different ballgame. Both healthcare and subsidized seniors’ living, assisted living and end-of-life facilities are provided through our tax dollars. Of course more luxurious private facilities abound and are objectively “better” but at least the safety-net is there.

I am always astonished at the amounts Americans pay for healthcare, whenever the discussion comes up. There must be some piece of the puzzle I’m not understanding, since it would superficially appear “middle-class” lifestyles in the US and Canada are very similar. Are your taxes and/or COL that much lower than ours? Are your wages that much higher? Are you just a bunch of wizards who have figured out how to spin straw into gold? If we had the additional expense of health insurance equal to a small mortgage every month we would basically have no discretionary income at all and saving for retirement or anything else would be very difficult.

The answer is no to all of your questions.

 

[nkereina]

I am always astonished at the amounts Americans pay for healthcare, whenever the discussion comes up. There must be some piece of the puzzle I’m not understanding, since it would superficially appear “middle-class” lifestyles in the US and Canada are very similar. Are your taxes and/or COL that much lower than ours? Are your wages that much higher? Are you just a bunch of wizards who have figured out how to spin straw into gold? If we had the additional expense of health insurance equal to a small mortgage every month we would basically have no discretionary income at all and saving for retirement or anything else would be very difficult.

Many people receive healthcare through their employer at a subsidized cost. DH and I pay about $500 a month for both of us, which is taken out of his paycheck in installments each week pre-tax. Of course, a family would pay more. This price seems to fall in line with what our families and friends pay through their employer. Its certainly not free, but its manageable. At age 65, people become eligible for Medicare which is essentially free, save for optional supplemental plans that provide additional coverage at a sometimes nominal cost, depending on the plan.

Could we save more for retirement if we didn't have this expense? Certainly, but that's not what we're working with in America. To your point, this is part of the reason why many Americans are in debt and/or don't have enough in savings. Things like healthcare, taxes, high costs of living, low wages all add up and take their toll.

 

[Allison]

Then you have sales tax, payroll tax, and property tax too. Most people forget about payroll tax. And it’s not a small amount.

What do you mean by payroll tax? The amount withheld from your payroll is for federal, state and FICA taxes. I'm not sure how people forget about that.