Why it's so difficult to save for retirement these days
After years of living high, many boomers are approaching their retirement years with little or no savings. Despitye this, many have a laissez-faire attitude when it comes to managing their money, critics are quick to point out.
But, while certainly guilty of excess, baby boomers aren't as profligate as many think, argues advisor Adrian Larson.
They're just a bit too generous, he suggests, citing a recent report from the National Center for Policy Analysis which analyzed how spending habits have changed over the decades by comparing how middle-aged workers spend today to their counterparts 20 years ago.
The report identified the top three areas in which boomers are spending more than the prior generations aged 45 to 54 and 55 to 64.
* Spending on education (for their kids, not themselves) has increased by 80 per cent for 45-to-54-year-olds and by 22 per cent for 55-to-64-year-olds.
* Spending on adult children has jumped sharply as well, with 59 per cent of parents providing financial support to adult children who are no longer in school.
* Spending on housing has increased by 25 per cent for both age groups, largely due to house size and rising expenses. The median house increased in size from 2,080 square feet in 1990 to 2,392 square feet in 2010.
The solution? "Choosing a college for your children that won’t break the bank, and also kicking your adult children off the payroll," Larson says.
Do these numbers reflect your experience? Are your spending habits putting your retirement in jeopardy?
By Gordon Powers, MSN Money
Posted by: Paul | Oct 11, 2021 2:41:56 PM
To much House. Along with the huge houses are huge insurance bills, property taxes and untilities. Once you retire If? you'll have eight rooms you won't need. You can't eat your house and you can't sleep outside. After your dead those kids you couldn't get out of the house will sell it and have a big party on the million dollars your worth, but your dead thats just great. Build smaller houses. The compounding value of excess taxes utilities etc. for 35 years in that house could be worth 1/2 million in savings.
Posted by: Mr. Negative | Oct 12, 2021 12:07:20 PM
Pretty simple, "they" don't leave you with much money to save these days. The cost of living is through the roof and salaries aren't growing. Each year the average person is actually making less money than they did the year before.
Oh well, what can you do.
Posted by: Anonymous | Oct 14, 2021 5:35:02 PM
this is all bull, everyone is too greedy and MUST have everything, instead of a NICE to HAVE.
Posted by: Barry Kone | Oct 14, 2021 8:40:00 PM
I"m not quite sure why,but I have pretty much lived below my means.I buy new or late model cars and drive them till they are ready for car heaven. I Live in a nice house and have updated it. I could afford a Larger home but I don't have a need to keep up to the Chins the Chans and the Joneses. I am my own financial advisor. If I had a financial advisor during the 2008 financial meltdown ,and even if he/she had me in a balanced portifolio I would have lost 25 to40% of my portifolio.Oh and I don't pay $200 for restaurant meals on a regular basis. The banks are always advertizing that we live now and borrow for cars ,renovations,vacations etc. They are the worst culprits and need to be brought to their knees.
Posted by: Ken Hedger | Oct 15, 2021 9:29:42 AM
Most people are simply stupid. They want a large house etc to impress others. They buy videos instead of renting. They spoil the kids by giving them everything they ask for. Mainly, they do not have a clue how to budget. Finaly they earn too much money. When I retired at 60, a VP said "I wish I could do that " to which I responded, "you make too much money to retire"
Posted by: Freedom 75 | Oct 15, 2021 11:28:12 AM
Baby boomers will leverage their retirement as they have their standard of living during their working years. They will be fine. Many of the boomers will be in line for inheritances from parents who worked, saved and invested.
The rules have changed, as the whole world is highly leveraged. A first in history. Not saying it's better, it's just different. It will be the generation after Boomers who will pay the piper. (MAYBE).
Posted by: sjrw11 | Oct 15, 2021 12:15:44 PM
Happy is the family that earns $30,000 and spends $29,000.
Unhappy is the family that earns $60,000 and spends $61,000.
Posted by: RM | Oct 15, 2021 8:00:12 PM
Live below your means. Save moeny by paying yourself first (monthly deduction from pay cheque or bank account) Get a secured Line of Credit and only use it to pay your Credit Card Bill when you can't completely pay the Credit Card Bill. Always pay off your Credit Card. Pay down the LOC when you can.
Cook your own meals! Make your own work lunch. Don't eat fast food. Make your own coffee, make Starbucks a treat not a regular coffee stop. My children have almost left the nest so they don't cost so much anymore.
I will retire in a couple of years with a comfortable retirement income. My mortgage is paid off, no consumer debt. Currently I am able to save 30% of my Gross Income.
Posted by: Doug Miller | Oct 16, 2021 9:46:32 AM
Well it is true that wages may be shrinking, but so are mortgage costs, at least for the near future. That's a whole different issue, and the sh.. will hit the fan in spades when, not if, rates start to rise.
Take a look around; every kid over the age of 12 including, their parents, and everyone else are walking around with a $400 plus i phone(or equivalent), some with an i pad to go with it...plus its nothing to spend $5 per day on a souped up cup of coffee, live on the edge of a cliff with a debt to income ratio that now exceeds 1.5, and rising, an appetite for ilicit drugs that is 10 times what it was 25 years ago, and a mind set that refuses to comprehend the consequences of spending beyond our means. China is obliterating manufacturing in ALL first world countries, and doing it by stealing our intellectual resources, artifically keeping their currency below what it would be if allowed to float freely, and with the knowledge of every country they are sticking it to. We do nothing. Politicians are wimps with the guts of a worm.
Posted by: chris | Oct 18, 2021 3:34:00 PM
Speaking for myself, part of the difficulty is not having the funds to invest/save; the other thing is just feeling overwhelmed by all of the 'news' reports and advertising hype around what to invest in and when. The financial industry has me nervous about getting into the market (the housing market may burst at any time and the debt crisis in Europe is sure to come here soon according to the talking heads)but they also have me nervous about missing out (buy gold, invest in oil)While fear can be a useful motivator, in this case it has create a sort of paralysis. Just my 2 cents
Posted by: Alicia@PaydayLoansAt | Oct 26, 2021 8:15:14 AM
Prove me wrong but I am more than sure that it is all about self-control that leads to a proper budget management. I am not trying to deny that fact that we do have a certain instability in our financial lives. But I do not get it why people got used to blame everything but themselves. Have you ever noticed that a family with a less income can afford more than the other one with a larger income. There is no secret about that. People with low income ( well not everybody unfortunately) know how to budget: where to make cuts, where to put aside a few bucks and finally where to resist temptation of buying stuff they can live without. This is how it works for those who really want to save money. And does not matter if it pensions they are putting aside for or maybe a vacation trip to Thailand or whatsoever.