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

[mnrose]

So thread has gone many OTs so I will add my .02 which is also a bit off topic.. I think a lot of being able to retire and live comfortably has a lot to do with cost of living. Keeping up with the Jones' is one thing but in the end being able to afford any lifestyle "Jones" or not will be struggle for many due to cost of living ( housing) increases. This really hit me today let explain.

I am an expat living in Germany and when I do homeoffice I have MSNBC on in the background.. Typical political discussion on how well the economy is doing now.. Discussion started with how the stock market is really no indicator of how the lower or middle class are doing as less than 50% of Americans dont have any hand in the stock market in way.. ( 401k, mutal funds etc..).. It was argued how great the economy is as lower incomes rate of increases has significantyl grown over the past years as other income brackets... that American Middle class families have an average 11,000 more in disposable income than a German family. And the political comment from the commentator was basically see how bad "socialistic" countries are... Which I had to laugh as I think many need an education on what socialism, capitalism, communism is.. Anywaysss... this statement, as being in Germany, raised my head and made me think.

I make significantly less than a person in the USA for the same job but live more comfortably mainly as cost of living is much lower. Another colleague worked in our NY office made 30% more and took that pay cut moving to Frankfurt. He states though he has less income now his standard of living is sooo much better as the cost of living is less. "Disposable" income is a funny thing. I assume MSNBC meant the true definition, income after income taxes... Yes American make much more have more "Cash" due to paying less taxes but what they pay to live is scary... What many American families for for groceries a month 500-800 dollars is what many germans pay for rent in a nice, safe, clean place.

So what I really wanted to say is that when I heard this I check rental prices for my old neighborhood back in the USA . For a while back in 2008 I rented my old condo - 1 bedroom 850 monthly rent.. I checked now for the same building and rates are now 1300-1400!!! I am not an expert, but that is a huge increase and I know my income from back then would not have increased that much unless I changed jobs... I am sure a lower skilled person wouldnt have that option.

I really don't have a point for all this rambling, but I would think it's harder for many to even try and keep up or plan for retirement when for some increases in cost of living are getting high..

When we were in Germany visiting my exchange daughter, I was struck by how much less things cost. Meals out in restaurants, a bottle of good wine, a beer, a pound of fresh fruit, a hotel room, mass transit...just about everything. Things that I noticed that cost more: junk food in the grocery store, bananas (the only fruit that I saw that cost a bit more than what we pay). I pay attention to those things. Plus the quality of life was so amazing...just day to day things. How easy it was to get around via mass transit, how walkable the cities were...sigh. I fell in love. There's way more to living than how much money you take home in your paycheck. (And, I live in a low cost of living area, relatively speaking, by American standards....the comparison would be even more striking if you lived in San Francisco or New York).

 

[mousefan73]

double

 

[mousefan73]

I'll ramble back... I think you've got the definition of "disposable income" wrong. Net income is what's left after taxes. Disposable income is what's left of your net income after all necessities of life have been paid for. Money that can be saved or spent on luxuries, at one's own discretion. Sadly, many have no disposable income and possibly even struggle to cover life's basic needs like housing, utilities, food, education or child care for minors and transportation. Sometimes they sacrifice these things for luxuries or go into debt, and many prioritize spending over saving with the money they do have. Others find ways to control their spending on necessities to the point where their frugality in certain areas allows a bit of margin to save or spend.

MSNBC was referring to the DPI. Disposable income index and that is net income after taxes. Disposable income when used financially is gross- taxes ( income, state, whatever that all in a region equally HAVE to pay ). Variable expenses healthcare, housing etc. not part of that index. Layman‘s terms for disposable as yours above makes no sense to make investment statements / comparisons as your definition explains how ones spends their living expenses, correctly, can be variable to what „extra“ „ discretionaryp“ income the have.

many confuse disposable with discretionary income. That is what you refer to. The fun money after living expenses are paid. As you were stating how one spends this can make a difference being more frugal living within means makes a huge difference. Going beyond this to keep up is a disaster waiting to happen

 

[QueenIsabella]

If the OP (or anyone else) is interested, here's a link to a Forbes article that talks about (roughly) how much you should have saved for retirement, based on your age:

https://www.forbes.com/advisor/personal-finance/how-much-should-you-have-saved-by-age/
Of course, there are mitigating factors--if you have a pension, you can save less. If you have a special needs child, you should save more.

For the YOLO/"my dad died at 50" type people--I understand where you're coming from. The only problem with this thinking is, there's no way to know if you'll have a stroke at 50 or live to be 95. Worse than actually dying is becoming debilitated and needing expensive medical care. Hope for the best and expect the worst is my motto. My biggest fear is becoming debilitated and then becoming a burden to my children because I didn't plan ahead.

 

[LSUmiss]

For the YOLO/"my dad died at 50" type people--I understand where you're coming from. The only problem with this thinking is, there's no way to know if you'll have a stroke at 50 or live to be 95. Worse than actually dying is becoming debilitated and needing expensive medical care. Hope for the best and expect the worst is my motto. My biggest fear is becoming debilitated and then becoming a burden to my children because I didn't plan ahead.
[/QUOTE]
Actually I don’t think you do “get it” unless you have lived it. I find your comment flippant especially for someone who is still very much dealing with the raw grief of losing a parent early to a horrible disease. And DH lost his dad when he was age 11. So it’s even more important to him to share as much of his life with DS as he can. I do have a pension so my situation is different than some others. DH has a 401k. We aren’t spending every dime we get. We don’t spend frivolously on day-to-day luxuries. I drive a 7 yr old car. I’m not interested in buying “stuff”. I’m talking about bigger type things like vacations & experiences. I’m not going to obsess about saving like some of you describe. My dad did that & EXPLICITLY talked about that being a regret b/c it didn’t matter in the end. His exact quote was “in the end all that mattered was spending time with family”. He didn’t regret not having things but experiences. And not all experiences cost money & some are cheaper than others. I don’t want to be a burden to DS either (and shouldn’t be b/c of what we do have saved), but I also was extremely sad & am still haunted by my dad’s regrets & don’t want DS to feel that either. There has to be a balance. And for those who seem to be obsessing over the savings, exactly when do you enjoy it??? It seems most of you are just preparing for when you will inevitably be in a nursing home.

 

[Searc]

It doesn't matter what you spend money on, it's still gone. People need to find a balance. Spend some, save some. If they don't, they will be literally old and destitute. If you can live with that type of future, more power to you. I can't.

 

[QueenIsabella]

For the YOLO/"my dad died at 50" type people--I understand where you're coming from. The only problem with this thinking is, there's no way to know if you'll have a stroke at 50 or live to be 95. Worse than actually dying is becoming debilitated and needing expensive medical care. Hope for the best and expect the worst is my motto. My biggest fear is becoming debilitated and then becoming a burden to my children because I didn't plan ahead.

Actually I don’t think you do “get it” unless you have lived it. I find your comment flippant especially for someone who is still very much dealing with the raw grief of losing a parent early to a horrible disease. And DH lost his dad when he was age 11. So it’s even more important to him to share as much of his life with DS as he can. I do have a pension so my situation is different than some others. DH has a 401k. We aren’t spending every dime we get. We don’t spend frivolously on day-to-day luxuries. I drive a 7 yr old car. I’m not interested in buying “stuff”. I’m talking about bigger type things like vacations & experiences. I’m not going to obsess about saving like some of you describe. My dad did that & EXPLICITLY talked about that being a regret b/c it didn’t matter in the end. His exact quote was “in the end all that mattered was spending time with family”. He didn’t regret not having things but experiences. And not all experiences cost money & some are cheaper than others. I don’t want to be a burden to DS either (and shouldn’t be b/c of what we do have saved), but I also was extremely sad & am still haunted by my dad’s regrets & don’t want DS to feel that either. There has to be a balance. And for those who seem to be obsessing over the savings, exactly when do you enjoy it??? It seems most of you are just preparing for when you will inevitably be in a nursing home.
[/QUOTE]

Actually, I HAVE lived it. I do agree with you about balance, though. And I'm really not addressing people like you, who do some experiences but also plan for the future. I was thinking more of the people who say that a parent died young, so they don't save a dime for the future, because they want to live only for today.

 

[ronandannette]

...I don’t want to be a burden to DS either (and shouldn’t be b/c of what we do have saved), but I also was extremely sad & am still haunted by my dad’s regrets & don’t want DS to feel that either. There has to be a balance. And for those who seem to be obsessing over the savings, exactly when do you enjoy it??? It seems most of you are just preparing for when you will inevitably be in a nursing home.

Given that this discussion is taking place on a platform existing so travelers can discuss their Disney vacations, your question is probably rhetorical for most of the crowd. Going back through, most of the posters (not all) are careful to explain how their discretionary spending** on luxuries (thanks for the clarity @mousefan73 - it was a good point!) is not at the expense of their retirement planning. OK - no reason not to believe them.

I actually share your views, in a very "crap got real" kind of way. I'm 53 and my DH is 65. 11 years ago we suffered complete and utter financial collapse - we unexpectedly lost everything. Everything including my DH's earning power, which at that point was at his lifetime peak. I was a SAHM at the time and re-entered the workforce as our main breadwinner, a role I maintain to this day. DH has been unemployed and under-employed ever since but he has managed to pretty consistently bring in about 50% of what I make and we are thankful for it.

Rebuilding what we had is simply impossible - not even on the table. We had to forge a new plan. By God's grace and the luck of a mid-5-figure inheritance, we got back into the real estate market 5 years ago. COL here is high; our modest condo in a fabulous neighbourhood cost us $400K. Aggressively paying it off is our main financial goal, which at this rate should take about 12 more years. This depends on my DH working until he's 70 - God willing. Our only retirement savings vehicle is my work-sponsored plan and it's coming along - I intend to work for another 15 years (again, God willing) at which point it should hold around $200K before taxes.

Our intention at that point would be to sell the house, put the proceeds and the RRSP balance into something relatively liquid, and live off of those funds, in addition to our government pensions. If current rates hold, the pensions will total about $4,000/month. It should be doable, given that we don't have the burden of health care to consider.

The catch is that by that point, my DH will be over 80 if he lives that long (or if I do, for that matter). We simply cannot and will not defer everything that makes life worth living in the meantime. Discretionary dollars that could go into savings are being spent on vacations, things for ourselves and our home, entertainment and generosity to those in need around us. From time to time we carry credit-card debt and {{gasp}} we lease our vehicles to drive something nice and reliable. To us, these are conscious decisions we've grappled to make and part of the "balance" you describe. We are devoutly religious and believe our provision, be it much or little, comes from God. We are grateful, happy and at peace with our situation. Also, FWIW, if unforeseen circumstances left us in dire need in our old-age, we would absolutely expect our kids to help us if they could, just as they've seen us care for our own parents and all the generations before them.

 

[Christine]

Given that this discussion is taking place on a platform existing so travelers can discuss their Disney vacations, your question is probably rhetorical for most of the crowd. Going back through, most of the posters (not all) are careful to explain how their discretionary spending** on luxuries (thanks for the clarity @mousefan73 - it was a good point!) is not at the expense of their retirement planning. OK - no reason not to believe them.

I actually share your views, in a very "crap got real" kind of way. I'm 53 and my DH is 65. 11 years ago we suffered complete and utter financial collapse - we unexpectedly lost everything. Everything including my DH's earning power, which at that point was at his lifetime peak. I was a SAHM at the time and re-entered the workforce as our main breadwinner, a role I maintain to this day. DH has been unemployed and under-employed ever since but he has managed to pretty consistently bring in about 50% of what I make and we are thankful for it.

Rebuilding what we had is simply impossible - not even on the table. We had to forge a new plan. By God's grace and the luck of a mid-5-figure inheritance, we got back into the real estate market 5 years ago. COL here is high; our modest condo in a fabulous neighbourhood cost us $400K. Aggressively paying it off is our main financial goal, which at this rate should take about 12 more years. This depends on my DH working until he's 70 - God willing. Our only retirement savings vehicle is my work-sponsored plan and it's coming along - I intend to work for another 15 years (again, God willing) at which point it should hold around $200K before taxes.

Our intention at that point would be to sell the house, put the proceeds and the RRSP balance into something relatively liquid, and live off of those funds, in addition to our government pensions. If current rates hold, the pensions will total about $4,000/month. It should be doable, given that we don't have the burden of health care to consider.

The catch is that by that point, my DH will be over 80 if he lives that long (or if I do, for that matter). We simply cannot and will not defer everything that makes life worth living in the meantime. Discretionary dollars that could go into savings are being spent on vacations, things for ourselves and our home, entertainment and generosity to those in need around us. From time to time we carry credit-card debt and {{gasp}} we lease our vehicles to drive something nice and reliable. To us, these are conscious decisions we've grappled to make and part of the "balance" you describe. We are devoutly religious and believe our provision, be it much or little, comes from God. We are grateful, happy and at peace with our situation. Also, FWIW, if unforeseen circumstances left us in dire need in our old-age, we would absolutely expect our kids to help us if they could, just as they've seen us care for our own parents and all the generations before them.

I would probably do the same thing in your situation. But I think you differ from many people in the U.S. (not all though). Both of you have pensions which are guaranteed income and worth their weight in gold. That's $4,000 per month that's never going away. And the big one: health care. This is a huge worry/expense for elderly people here on a fixed income. Even though we have Medicare, it's not free and if you want more than the absolute minimums covered, you need to pay for a supplemental plan.

 

[ronandannette]

I would probably do the same thing in your situation. But I think you differ from many people in the U.S. (not all though). Both of you have pensions which are guaranteed income and worth their weight in gold. That's $4,000 per month that's never going away. And the big one: health care. This is a huge worry/expense for elderly people here on a fixed income. Even though we have Medicare, it's not free and if you want more than the absolute minimums covered, you need to pay for a supplemental plan.

These are government pensions. It's a two-tier system that includes a smaller portion called Old Age Security (flat-rate paid to every senior in the country) and a portion called Canada Pension Plan which is paid to those who have been wage-earners only and is based on your life-time contributions (these contributions are mandatory and automatically deducted from every paycheque a Canadian ever earns). There are those who express the fear that the funds "won't be there when we need them" but hey, I'm not that cynical. Counting on them seems like a reasonable enough thing to do.

 

[skyblue17]

It doesn't matter what you spend money on, it's still gone. People need to find a balance. Spend some, save some. If they don't, they will be literally old and destitute. If you can live with that type of future, more power to you. I can't.

A lot of friends my age (mid 30s) still have student loan debt. One of my friends is close to finally paying off her student loans, and then she can finally start on the credit card debt she acquired while paying those off in order to live a life. I genuinely not sure what some in this thread think people like this should do in situations like this. It's been 15 years. Should people who are still dealing with debt from a very messed up higher education system simply sit in their (rented) homes, never enjoy going out to eat, never travel, never purchase anything that isn't out of necessity? And this is before saving for the future? Being able to save for retirement, or at all, is not a reality for a lot of young adults, even some with reliable income.

It seems like some older adults don't really grasp that young adults are entering adulthood already in debt, and when you start out that way, saving for retirement seems so distant that taking some money to do something for yourself and keep up with the Jones in THAT way is as important.

 

[disneychrista]

Canada Pension Plan which is paid to those who have been wage-earners only and is based on your life-time contributions (these contributions are mandatory and automatically deducted from every paycheque a Canadian ever earns). There are those who express the fear that the funds "won't be there when we need them" but hey...

So basically Social Security in the US. Many feel the same about it not be around when they retire. I am 20+ years from retirement and don't have a crystal ball to know if it will be or not.

 

[barkley]

A lot of friends my age (mid 30s) still have student loan debt. One of my friends is close to finally paying off her student loans, and then she can finally start on the credit card debt she acquired while paying those off in order to live a life. I genuinely not sure what some in this thread think people like this should do in situations like this. It's been 15 years. Should people who are still dealing with debt from a very messed up higher education system simply sit in their (rented) homes, never enjoy going out to eat, never travel, never purchase anything that isn't out of necessity? And this is before saving for the future? Being able to save for retirement, or at all, is not a reality for a lot of young adults, even some with reliable income.

It seems like some older adults don't really grasp that young adults are entering adulthood already in debt, and when you start out that way, saving for retirement seems so distant that taking some money to do something for yourself and keep up with the Jones in THAT way is as important

i guess i'm considered an 'older adult' (58), and at least for the friends i hung out with back then-none of us managed to start saving for retirement at a young age (some still have not), and many of us also started out as adulthood in debt. granted-a college education wasn't as expensive back then but wages were much lower so even if they managed to work part time during college it wasn't outside the norm to have student loans. a significant number of my friends couldn't afford to work part time so they had to pass on going to college and they did until there was greater availability for the evening/weekend private college programs for 'working students' and they started becoming popular. i didn't know a single person who had any employer footing the bill in whole or part for these costs let alone anyone with a college fund (i don't think 529 plans were even around until the mid 90's), and since my dh's degree is from one that he attended in his early 30's i can say with certainty that the excessive tuition/fees they charged us in the 90's were comparable to what my dd paid to attend to attend our public university within the last couple of years.

so yeah, some of us older adult had (still have) student debt. others didn't. there were some who ate out and traveled in both circumstances (though among my friends most never traveled anywhere a car couldn't go until maybe their 40's if then-seemed like when the kids were born they were more willing to spend/incur more debt for this). starting out in adulthood in debt in not an alien concept to us. maybe some of us that are older are more conservative in what we feel we need (not nesc. want) to spend our limited funds on b/c the option of working or not due to aging is staring us in the face and in allot of cases we've either seen our parents live their final years in less than ideal financial circumstances or at the extreme end, outlive all their financial means and finding ourselves in the position of being unable to meet them for them (i don't wish upon anyone to have to choose between meeting the basic needs of their own children or an elderly parent but i've known those in that circumstance).

there are some of us who don't understand, but believe when i say that there are plenty that do.

 

[DLgal]

So basically Social Security in the US. Many feel the same about it not be around when they retire. I am 20+ years from retirement and don't have a crystal ball to know if it will be or not.

It will still be around, although the projections are that the payouts will decrease by about 25% across the board by that point.

We are 25 years from collecting SS and are expecting it to be sort of bonus money. We aren't using it in our planning. Luckily we will have a significant military pension and associated healthcare for life, which is a huge relief.

 

[Searc]

A lot of friends my age (mid 30s) still have student loan debt. One of my friends is close to finally paying off her student loans, and then she can finally start on the credit card debt she acquired while paying those off in order to live a life. I genuinely not sure what some in this thread think people like this should do in situations like this. It's been 15 years. Should people who are still dealing with debt from a very messed up higher education system simply sit in their (rented) homes, never enjoy going out to eat, never travel, never purchase anything that isn't out of necessity? And this is before saving for the future? Being able to save for retirement, or at all, is not a reality for a lot of young adults, even some with reliable income.

It seems like some older adults don't really grasp that young adults are entering adulthood already in debt, and when you start out that way, saving for retirement seems so distant that taking some money to do something for yourself and keep up with the Jones in THAT way is as important.

I had student loans and yep, we did the adult thing and lived lean until we paid them off in 10 years (on one income). It can be done, but some are too spoiled to want to do that. I'm only 45, so don't try to tell me I'm out of touch with what college costs, since we made our last tuition payment a couple weeks ago for our son.

 

[SaintsManiac]

I had student loans and yep, we did the adult thing and lived lean until we paid them off in 10 years (on one income). It can be done, but some are too spoiled to want to do that. I'm only 45, so don't try to tell me I'm out of touch with what college costs, since we made our last tuition payment a couple weeks ago for our son.

I consolidated at 1% so I pay the minimum they let me get away with. Lol

 

[skyblue17]

I had student loans and yep, we did the adult thing and lived lean until we paid them off in 10 years (on one income). It can be done, but some are too spoiled to want to do that. I'm only 45, so don't try to tell me I'm out of touch with what college costs, since we made our last tuition payment a couple weeks ago for our son.

I'm curious what your definition of "spoiled" is? I'm not talking spending $400 on shoes. I'm talking about little things, like being able to go to brunch with your friends instead of having to say no every single time. Or spending $50 to see your favorite band live instead of having to miss out yet again.

I do think it's interesting that you call people who don't live lean "spoiled" in the same paragraph that you point out that your son is getting assistance from you to pay his college tuition. And trust me, I think that's great and it makes a huge difference when starting out after college. It just made me laugh a little, how you're judging other adults in the same breath as tossing that in. I actually find it a little offensive, to be frank. You're not less of an adult if you choose to live a little.

 

[mnrose]

And for those who seem to be obsessing over the savings, exactly when do you enjoy it??? It seems most of you are just preparing for when you will inevitably be in a nursing home.

I think we've ALWAYS had a balance. There's never been a time in our marriage (except for the first few years out of law school when things were really lean) when we've not traveled, for example. We made it a priority to save the maximum allowed in our 401K plans (which was beyond the amount our employers would "match"), and also saved 75+% of every bonus check I got (the net amount). We'd spend some of it as "mad money", but the rest went straight into either savings or the kids' college funds. What enabled us to do that? Well, for one thing, always living below our economic means. The money that went into savings was never available to spend. What was left was. So, we matched the houses/mortgages to THAT amount of money, instead of the higher amount. Which meant living in smaller, less grand homes than some of my contemporaries. Did that affect my day to day life? Nope. Not one little bit. And, we drove reliable, practical vehicles (and then into the ground) rather than flashy expensive cars. Again, no affect on my day to day life. Eating out...we do that once a week or so. We chose mid-priced restaurants rather than more expensive ones. We still eat out. Just more frugally. Does that matter? Only in how much we spend. We still enjoy ourselves. And, I have never had the latest and greatest tech that is out there. Etc. It's a mindset. I have no problem "enjoying" my life AND saving for the future. With the proper balance, you CAN do both (provided you are gainfully employed and in good health...if either of those aren't true, it's much harder).

 

[QueenIsabella]

Well, I had to pay all my own college costs--every dime--and graduated with a lot of loans and no safety net. I lived cheap to pay off my loans. DH also had loans--much less than I did--and a bit of cushion. We lived in a cheap apartment, used our wedding money to put a down payment on a cheap house, and we scrimped for years. Dates would be picnics or other cheap things. I also put money in a 401k from age 21--I didn't even know what one was, and it sounded like a scam at the time. No, I didn't put in a lot, maybe 2-3%, but I did START.

Now, compare that to my DD24. She also graduated with some loans, which she's paying off. She shares an apartment with 2 other people, drives a 16yo car (a gift from her late grandmother), and manages to go on cheap vacations that she pays for. She also puts money into her 457 (I think? she's a teacher...). She and her boyfriend date on the cheap--they cook together and do stuff like hiking and go to thrift stores together. He's as cheap as she is.

My point is, it could be done 35 years ago, and it can be done now. Honestly, I think a lot of it is attitude--if you think, "I can't go to brunch because I'm poor!", well, you're going to feel poor. If you think, "Why don't I host brunch--everyone can bring a dish!", then it becomes a fun get-together.

 

[skyblue17]

My point is, it could be done 35 years ago, and it can be done now. Honestly, I think a lot of it is attitude--if you think, "I can't go to brunch because I'm poor!", well, you're going to feel poor. If you think, "Why don't I host brunch--everyone can bring a dish!", then it becomes a fun get-together.

Some of this is true! But I'm noticing people mentioning things like the size home they own, and the size car they own, and wedding money. Even THAT is a jumping off point that some people can't get to.

I live in NYC and a number of my friends have apartments that would never work for hosting events unless everyone was sitting on each other's laps. I only just moved into an apartment where I can host people again (more due to roommate situation than size). And maybe this gives me a unique perspective on how not having money can affect so much more than budget. Being constantly surrounded by things so out of reach that your peers are enjoying can make you feel poor. I agree that a good attitude can help but it certainly is not only mindset that makes you feel poor. I think anyone who has struggled to get going in a city can agree with that.

Again, I am not begrudging that people have different circumstances, it just seems like some circumstances aren't even considered when discussing this. Not everything I speak of applies to me personally, it's just stuff that I am familiar with based on what others my age are or have gone through. I know it can be done, because when I moved here, I lived very lean myself. My apartment was 7 feet wide and didn't have a bathroom OR a kitchen (made it a little challenging to not eat out though). I still don't splurge on certain things so that I CAN splurge on things I value more (travel, experiences, etc.). I don't consider myself spoiled because I was able to start out here at all, but I do recognize what about my situation was a privilege that not all have.

Anyway. tl;dr everyone has their own unique circumstances and challenges but we all end up dead in the end. I'd rather value the whole journey than the last leg.