For many liberals it’s a given that the struggling middle class can’t save for retirement, hence among other things, we need to increase Social Security benefits. I am a great believer in personal and life choices and their consequences. I’ve put together an arbitrary list of some of the things most people could do to save (almost painlessly) for their future retirement. I’ve assumed an average 7.5% return and retirement at age 65.
Perhaps you have other ideas. Note that in some of these examples only a one-time sacrifice is necessary.
- Don’t buy one Hoverboard (or similar useless purchase) at $400 to $800 and more: accumulate $12,000
- Skip one Tattoo @ $1500: accumulate $30,000 (imagine if some people skipped multiple ink
- Stop Smoking @ $240 a month and have a secure retirement with $730,000
- Don’t go to one NBA game and avoid a set of tickets for a family of four and you will have $16,000
- Regularly save only $50 a month and your retirement will be $152,000 better (what if each partner in a couple does this?)
- Skip one trip to Disney (or other vacation) with the family at age 40 and you will have $19,500 at age 65
- Switch from Starbucks cappuccino something daily to regular coffee and by 65 you will have $180,000
- Instead of buying the car of your dreams, buy the transportation you really need to get from here to there and save $150 a month in payments and by age 65 you could have $675,000
Despite the above, the left continues to insist the answer is not encouraging personal saving, but expanding Social Security. Consider this from a 1-3-16 editorial (a neatly worded one-sided editorial):
Currently, 36 percent of retirees rely on Social Security for 90 percent or more of their income; over all, 65 percent of retirees rely on it for more than half of their income. The average monthly benefit hovers around $1,300. Retirement security won’t be any better for those now in their 50s. The Government Accountability Office recently found that 52 percent of American households with someone 55 or older have nothing saved for retirement and that only half of that 52 percent will get anything from a company pension. For those ages 55 to 64 with retirement savings, the median amount is barely in the six figures.
That $1,300 average benefit is as misleading as the women earn 70% of what men earn scenario. The average Social Security benefit reflects nearly 40 million people, many who retired early and many who have been collecting benefits for decades. The number also does not reflect a household benefit and is meaningless unless you also know the income of the person before they retired.
Younger workers are arguably worse off, because saving has become increasingly difficult, or impossible, in the face of stagnating wages, high debt, high rents and the lack of employer-provided retirement benefits. In 2013, 44 percent of workers on the lower half of the income scale had a retirement plan at work, down from 54 percent in 1995, according to data from the Federal Reserve.
Some buying and spending may have become increasingjy difficult, but it’s a personal decision whether that means no saving or saving first and no something else. Clearly many people opt for the no saving alternative.