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why 401ks fail

March 30th, 2016 at 10:35 pm

Seriously I wrote a long piece that got lost about why 401ks fail. They fail because people don't save in them. Think I'm joking? I think right now people are talking about how difficult retirement is. But the reality of the lack of pensions hasn't even started to hit. When? I think when the first of Generation X starts to retire we'll see truly what the 401k is worth. I think the majority of Baby Boomers still had pension. I don't think that's the case for Generation X (I'm one) and very few of my friends have pensions.

So the other day at lunch with my DK2 preschool friends and their moms the talk turned to retirement savings. A few women asked about talking to a financial advisor. They were wondering about retirement savings. These women were asking about Roth IRAs and investing 401k. I guess its good they were asking. But seriously?

They went and bought expensive homes and cars (denali, audi, benz, infiniti) but are now asking about retirement? I think we're in big trouble if people who supposedly are "educated" have no idea about retirement savings. I wanted to hit my hit head on the table because more than a few said "oh I leave it to my husband." Um okay, chances are hubby is as clueless as the wife. I don't think people who have no idea how to save or invest probably haven't been doing it.

And no I did not open my mouth, I couldn't. What could I say? That you should have thought about trying to save for retirement before you bought a house so it could fit in the budget? That it should work out before and not after when you put it so low on the priority list that many are in their 30s!!! without any or minimal. I haven't meet anyone I would guess has 6 figures in retirement and they've had pretty good incomes for a long time.

But seriously have you ever spoken up in a conversation when people begin talking about retirement and saving? I find that now that DH and I aren't working I shut my mouth even more. I've never been asked "how are you affording to live?" Only two people we've meet has asked me did you inherit a lot of money or the lotto? Nope. But no one has ever assumed or asked if I were mustachian and did we save a lot? Do we live frugally?

I think soon enough the real problem of 401ks and people not saving retirement will become apparent when the majority of retirees lack a pension. I don't think it's occured yet because many boomers have pensions, but it will.

Have you ever told anyone you were on a budget? Or how to save for retirement?

5 Responses to “why 401ks fail”

  1. Kiki Says:

    I have a pension-or will when I retire if I stay working for my current employer. Not sure if i will-15 years to go until 55.

  2. VS_ozgirl Says:

    I don't really talk much about it but I do wonder how some people afford to have the things that they have; and I get over hearing about brands and how good this thing is and how good that thing is. I think so many people have the mentality that they work to buy "stuff". When it comes to retirement it is compulsory in Australia if you earn over $450 per month your employer must contribute to your superannuation fund so there is not much talk of that really; because people generally think that as long as you are working when you are at retirement age you will have your superannuation fund to pay you a pension. (Of course if you happen to take a decade off work to have a child or two you will not have as big a retirement fund as somebody who has worked solidly - husbands can contribute to their spouse's fund though). It's so amazing though that people will just go to work every day without thinking of what they are working for; and find it easy to blow what they just worked 40 hours in a week for.

  3. creditcardfree Says:

    Every once in awhile on Facebook I will put something out there about retirement and places to start. May start that up again. Kind of want to copy your post and share that. Smile I don't many people with a pension, maybe my Uncle. We expect my husband will have one IF he stays in the army for another 7 years. However, we are trying to save as much as we can now so we have choices. He can get out of army and we'll be fine.

  4. Ima saver Says:

    I have often talaked to young people about the importance of starting to save for retirement in mutual funds and IRA's. I don't think anyone listened seriously.
    My husband has always been self employed, so no pensions for either of us, ever.
    It was up to us to save, even tho both our incomes were very low.
    I just always put away a percentage of everything we made, every pay day, no matter how little.

  5. LivingAlmostLarge Says:

    I can't believe people say oh I think we contribute to the match. The match? How do people expect to fund their retirement if they are used to living on 97% of their income? Part of saving that 15% people suggest is to get use to living on 85% of their income.

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