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mendoman:"Actually, what I find interesting is that the original intent of the 401K was to be part of a "three legged stool" for retirement: social security, pension and 401K."

Actually, no. You had IRA's back in the 1970s.....usually separate from a company, and usually run by banks where you had to put CDs into them. Not great savings vehicles.

And in the 1970s, you could not easily invest in stocks....the era of Vanguard was yet to be for most.

The 401K basically replaced the pension in nearly half of the 'big companies' right around 1990s. that's when the tax laws and the gov't accounting standards for pensions meant ANNUAL top offs of the pension funds - which could be near zero (if stock returns were good) or sky high - (when the market went down that year).

Only those with so many years of service plus age = X, where X was determined by the company (in my case about 55) to keep their pension plan. Everyone else had their 'accumulated pension credits' stuffed into a separate category in their IRAs which they could not touch till they left the company or could move part only after age 55.

It was part of what was supposed to be 'your assets' other than SS and maybe a grandfathered pension.


" When I was working back in the 70’s, at one time besides the pension I was entitled to, I was funding an IRA and a 401K provided by my employer."

I don't even think 401Ks existed back then. IRA's yes...but I think you were limited to 2000 bucks a year then. Piddling money..or maybe it was $1000/yr. Not a lot

My company 401K didn't start till 1990 or so.


" Unfortunately, industry (with lawmaker’s tacit if not full support) has essentially negated the pension and most Americans don't fund their 401Ks."

The pension became a liability in two ways. One, the 'annual contributions' were unpredictable a year out. Companies could not do a budget and could get zinged with billions of dollars of 'expenditures' at the end of the year.

Second, if you had a fully paid up pension plan, raiders would eye that. If you had 'excess' pension money, the company couldn't touch it, but a raider could take over the company, and 'combine' that with its own plan....freeing it up. It made you a take over target.


" This leaves social security as the only available retirement option for most. "

Only for the foolish. Many people still accumulate a 'paid for house' by the time they retire. Maybe bought some company stock? Maybe have some CDs?

And , what you do mean, most? SS is never going to provide you a luxurious retirement. But half of all retirees live on SS in FL so it can be done.


"However, even if Americans fully funded their 401Ks, it likely wouldn't be enough for a comfortable retirement (about 80% of pre-retirement income) even if you waited for your full social security benefit. "

Says who? I only contributed to my 401K for 8 or so years...didn't start early enough. I could take out 20K/yr from it at a 'safe rate' or maybe even 25K a year.

For someone making a 'middle income' salary and contributing to 401K for every company they work for.....many should have a million bucks waiting for them at retirement with 'normal expected stock market growth'.

You just have to convince them to save.

it's not my job to provide them a 'living retirement' at the level they are accustomed to.


Bklyn"I imagine that most people want to retire and keep the same lifestyle they had before"

Well, I'd like to retire with a yacht, houses around the world, and a million a year income to pay for it. So?

Yes, many would LIKE to .....that's a WANT...not a NEED.


Brklyn:"we retired a year ago with a tiny pension, social security and a draw down of 1200 a month from our 401K. we live better than we did on an almost $200,000 a year salary. we sold our apartment in one of the wealthiest neighborhoods in brooklyn, bought a small house in a coastal community in MA and we are living a wonderful life on an income that amounts to about $60,000 a year. Food here is much much cheaper as are utilities."

I am not great at math but I believe we retired on 30% of my husband's former salary and we are just fine. "

Wow...I kept my house, and I have a hard time spending 60K a year. More like 40-50K and that's doing everything I want. Glad you are having fun. 60K is likely more than 80% of retirees so you are doing quite well. I could take more, but I don't enjoy spending more. I'm a sort of LBYM type.

When I first looked at retiring, I had 3 budgets. One was 'bare survival' - staying my my current house, but cutting back to the bone on travel, eating 99% of the time at home, getting rid of cable TV, etc. That was about 22K at the time (15 years ago). If I sold my house, maybe I could cut that to $18K/yr....renting a small apartment. Cut out magazine subscriptions, etc and the newspaper. Still health insurance which was a couple thousand a year.

the next was a middle budget. Stay in my house, do some fun travel and things, cable TV, newspaper, magazines, eating out at budget places 2-3 times a week...that came in at about 33K.

then there was the 'have lots of fun' budget....10-20K travel, international trips, car every 5 or 7 years if I wanted it. That was 50K plus.

I retired early at 52.5. I had to make it to 62 to collect SS ($20K/yr), plus i got a $4500/yr pension from a former employer starting at age 60 - not inflation indexed. So....I had after that 2/3rds my survival budget satisfied and I would have to tap my portfolio for only a couple thousand worst case.

well, delightfully, the portfolio spins off some nice I got a few CDs.....and GNMA I'm not hurting.

I never made more than 90K salary (1998) an senior engineer. that was 15 years ago.....when I left the company....

Never looked back.....

Actually, never had to go to the middle level budget...the stock market and investments have been good to me.


But folks are going to have to stash money in private and 401K/IRA ....starting when they start working. And NOT TOUCH IT...if they expect to have a decent retirement now.

At least 10%.....every month...from the day of their first job till they retire.

Otherwise, they'll be joining the trailer, er, mobile home folks in FL....or in South TX......not bad living, but not living in NYC for sure! they'll be surviving on SS. Many couples do quite well, especially if both worked 25 or 30 years or more.

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