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This is What Life Without Retirement Savings Looks Like

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  • #16




    Sometimes these folks are parents of doctor children who have a boatload of debt and their own young children to think about and then have to literally fund their parents. Sometimes these parents are in poor health too. This comes up time to time in the FB Women’s group.
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    that's me, like if you took a dictionary and opened it up, that's where my picture would be.

    well except for the women's group part.

     

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    • #17




      Regardless of where you stand on “Nanny states” or whether you feel empathy for people who did not save enough for retirement, a trip around the world will show that countries who do not have adequate social support for all of their citizens have higher crime and the wealthy in those countries need to expend considerable resources to protect their wealth from the have-nots.  I would rather not have to live in a gated community with round the clock security guards to protect myself/my house.  I would also rather all Americans have some basic social safety net, to include the basics of healthcare, affordable housing, and affordable healthy food–I see too many patients whose problems I can’t fix because they stem from a lack of basic social resources.
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      This pretty much was going to be my response to q-school's comment (which may have been in jest).  Even the rich can't really escape the effects of poverty.

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      • #18




        I do wonder if universal basic income would be a more efficient alternative to our insolvent Social Security and broken disability/Medicaid systems we have today, which not only fail to encourage responsibility, but actually punish people for working.
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        I like the idea of not punishing people for working, but the problem with universal basic income is it doesn't keep people from misusing their money, so we can't count on it to keep Grandma from starving in the street.  The nice thing about Social Security is that participation isn't voluntary AND it can't be withdrawn early or foolishly "invested" by people who have no idea of what they are doing.  But right now it just doesn't pay out enough, and I see no practical way to fix that.

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        • #19




          You hear pundits decrying the “Nanny State”, but maybe its my chosen career that’s led me to become very pro-Nanny State.  Auto-enroll/Forced retirement savings, Auto-enroll basic state healthcare, automatic voter registration, soda tax, regulate & tax vices, and so on.  Our society clings so fiercely to independence in every aspect of public life – why?  Circumstances always point back to the majority of people thinking short-term and doing whatever feels good.  Then someday we wind up paying more to mend it after the fact than we would have just offering basic social welfare programs in the first place.  All these people who didn’t save for retirement, who will still be looking for paid work in their old age will most certainly vote.
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          I think it makes sense to have the "soft paternalism" of setting sensible default rules, then allowing the individual the freedom to make their own choices and earn their own consequences.

          For instance, set up 5% of a new hire's pay to go into a 401(k) invested in a low cost life cycle fund based upon the employee's year of birth.  Then set the contribution to increase by 1% per year.  You're still free to go all in on foreign stock or US government bonds, you can increase the withholding to max out your 401(k) your very first year at the company, or you can set the contribution to 0% and spend the money on booze and scratchers.  The individual still has the freedom to make wise or foolish decisions, but we set an anchor point or starting position somewhere in the realm of reasonable.  If people are lazy and fail to act, they're still on a reasonably prudent trajectory despite their inaction.

          On the other hand, if someone's too lazy or disinterested to check a simple box to register to vote when they're already spending half a day at the DMV, I don't particularly think it's a great idea to have this paragon of civic engagement registered to vote against their will.

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          • #20




            I have empathy, but little sympathy for these two women. I dispute the notion that people are typically in this situation through no fault of their own.

             
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            I have sympathy for both women in this article. Obviously it's much harder (though not impossible) to save for retirement with a low income. I don't think it's about personal responsibility; it's about economic opportunity.

            Is it possible for people in these situations to defy the odds and pull themselves up by the bootstraps to pursue higher education, a higher wage and retirement savings? Of course. But what kind of social safety net do we want for those who can't achieve that?

             

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            • #21
              they did survey some poor people.  their lives are surrounded by people who take whatever money appears, so they have been conditioned to spend it as fast as possible.  for their specific situation, they may be correct that their 'optimal' strategy to increase wealth/happiness is to spend it before anyone else can touch it.   to address the behaviors will take some effort to undo the myriad factors that are leading them to spend as fast as possible.

              I know you all know this, but figuring out how to truly help is hard.

               

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              • #22
                It's all about personal responsibility.  This country provides the most economic opportunity in the history of recorded civilization.  Literally. 

                You can absolutely save money making $20,000 a year.

                Yeah, you have to live with parents/roommates to do it, but you can do it.  No, you shouldn't afford a car, a cellphone, or cable TV.  No you probably can't afford the child support being garnished from your wages, either.

                At these low levels of income, not only are you essentially paying zero tax, you're getting money back.  Plus you're eligible for dozens of state, federal, private programs that throw more money at you or provide free benefits, such as housing, utilities, food, healthcare, telephone, etc.  Plus your kids can go to school for free, get one or two meals a day for free, etc.

                Like qschool said, resources are consumed immediately.  The have-nothings take whatever they can get from the have-somethings.  It's a series of bad personal choices by the individuals and those around them, all the time, everyday.

                 

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                • #23
                   

                  One thing that is actually a fairly interesting answer to this that I find more and more compelling is Universal Basic Income. It sounds absolutely bonkers on first glance but it actually has very reasonable arguments from the left (obvious) and from the right. The conservative arguments for it are that we clearly are going to be giving money to some subset of the population so let's stop making it piecemeal (medicaid, EBT, pell grants etc) and just value it as a monthly salary that you have to manage.

                  I don't believe in absolving people of consequences, but the problem with retirement savings is that consequences for decisions made during the prime of life don't become apparent until people are at a much more vulnerable stage. It's one thing to tell the 32 year old lady in the ED at 2am that she needs to skip her next iPhone upgrade and buy HCTZ, it's another to take care of the desperately poor elderly.

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                  • #24




                    One thing that is actually a fairly interesting answer to this that I find more and more compelling is Universal Basic Income. It sounds absolutely bonkers on first glance but it actually has very reasonable arguments from the left (obvious) and from the right. The conservative arguments for it are that we clearly are going to be giving money to some subset of the population so let’s stop making it piecemeal (medicaid, EBT, pell grants etc) and just value it as a monthly salary that you have to manage.

                    I don’t believe in absolving people of consequences, but the problem with retirement savings is that consequences for decisions made during the prime of life don’t become apparent until people are at a much more vulnerable stage.
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                    I agree, with a caveat.  The problem with Universal Basic Income is that some people are too mentally incapacitated or too foolish to properly manage their money.  What good does it do to give such a person $$$$/month if they spend it on beer, cigarettes, and lotto tickets, or are swindled out of the money by scammers and other predators, and end up without enough leftover to pay for their groceries and rent?  Either we have to be cold-heated and leave these people out on the street to die (which, let's face it, isn't going to happen - nor should it in the case of the mentally incapacitated), or we have to set up some sort of case manager system to protect these folks from themselves.

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                    • #25






                       
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                      I agree, with a caveat.  The problem with Universal Basic Income is that some people are too mentally incapacitated or too foolish to properly manage their money.  What good does it do to give such a person $$$$/month if they spend it on beer, cigarettes, and lotto tickets, or are swindled out of the money by scammers and other predators, and end up without enough leftover to pay for their groceries and rent?  Either we have to be cold-heated and leave these people out on the street to die (which, let’s face it, isn’t going to happen – nor should it in the case of the mentally incapacitated), or we have to set up some sort of case manager system to protect these folks from themselves.
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                      Well that's 2 issues. If you are mentally incapacitated then obviously no one is suggesting you receive money. Most people we would consider to be in that scenario have a guardian or a case manager already.

                      The second issue is those "too foolish." That is part of the appeal of UBL to conservatives, you get a chance to be responsible with a reasonable amount of money with the expectation of no more coming. If you do blow it on booze and cigarettes the idea is that you are more S.O.L. than under the current system.

                      I'm not wholeheartedly endorsing any specific policy, I just think it's interesting to consider.

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                      • #26




                        If you are mentally incapacitated then obviously no one is suggesting you receive money. Most people we would consider to be in that scenario have a guardian or a case manager already.

                         
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                        You'd be surprised at how many people falling into this category DON"T have anyone truly supervising them.  A visit to any large city will show you that.  Most of the long-term homeless have mental issues; that's why they're living on the streets.  They're marginally functional people, at best.

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                        • #27




                          People like to question whether or not it’s a good idea to retire using the 4% rule when you have 25 years’ worth of expenses saved. But the fact is many, many people don’t even have one year’s expenses covered.

                          If you’re wondering if your $2.5 Million in retirement savings is adequate, or if you should wait until you’re closer to $3.33 million, recognize that you’re in better shape than at least 95% of potential retirees, and more than $2 Million ahead of the average.

                          Cheers!

                          -PoF
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                          You aren't really setting the bar very high if you are using the average household making $70k/year as a benchmark to compare to an MD making on average 4x+ that amount.

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                          • #28
                            I could possibly get behind Universal Basic Income if it allowed for garnishment to pay for health insurance and/or unpaid medical bills and there were adequate measures to prevent fraud (show up for to an office once a year?).

                            There's also the not-so-novel idea of making it contingent on clean drug tests, but that gets pretty expensive and onerous.

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                            • #29
                              I could possibly get behind universal basic income if it was actually universal.  The UBI proposals I have read about all either phase it out or somehow leave it as taxable income.

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                              • #30







                                If you are mentally incapacitated then obviously no one is suggesting you receive money. Most people we would consider to be in that scenario have a guardian or a case manager already.

                                 
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                                You’d be surprised at how many people falling into this category DON”T have anyone truly supervising them.  A visit to any large city will show you that.  Most of the long-term homeless have mental issues; that’s why they’re living on the streets.  They’re marginally functional people, at best.
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                                Ha ha. I practice in the middle of downtown Chicago so I have to admit you're right on this one.

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