H’s employer - company was sold and they went from having both a company paid pension and 401k (with matching) to just having the 401k (H received stock, some cash, and a $100/month annuity as his pension settlement which received gov’t oversight/approval). He also lost a week of vacation, as ceiling went from 5 wks/year to 4 weeks/year. However he has very good health insurance benefits - and was able to hold onto his job through thick and thin years, which was super important when I had to fight aggressive stage III cancer - one chemo session was $20k (I had 16), and 14 additional infusions of Herceptin (I believe $4 or $5K each), along with surgeries, radiation (35 treatments 5 days/week for 7 weeks), etc.
There was a significant trend going from pension plans to 401k and many companies phasing out pension plan for new employees if they had both pension plan and 401k plan. Some companies match 401k better than others.
Many, many people do not ‘get it’ and never can afford to quit working because they don’t plan/start saving and investing early for retirement. Totally agree how costly it is to cash out as @CountingDown has said
‘From the plan administration side, I am sick when I see >50% of the plan participants cash out their 401k accounts when they leave their jobs. They don’t have pensions and most contribute just enough to get a match. I know times are tough, but that $25,000 distribution at age 35 is costing the participant far more than that.’
I haven’t studied CC well enough to learn how to put that in the pretty copy box…
Saving money steadily to use time to help grow the funds is a key lesson; of course how to keep the money working well in investments working out the risk/reward is another.
Being comfortable with where one is as they approach retirement really helps keep more joy in life!
I don’t work in HR in my current job, but talking to other employees about contributing 3% to 401k to gain the 3% company match - and they are in a low tax bracket and really won’t miss the money once they start.
I was trying to explain to D about her flex fund for medical expenses. She needs to have dental work done and is worried about the expense. I explained that she might not see much difference in her take home pay because it’s pre tax dollars. @SOSConcern it’s so good of you to explain things to your co workers about 401k’s. That pre tax benefit is big.
My H has a pension. We are very lucky. His company no longer offers pensions to new hires. Both of my kids work for big companies that have done the same thing for new hires. Neither kid has one.
My parents and DH’s parents had no money to save. What they did have wasn’t managed very well. DH and I were zero EFC kids and first gen college students.
My dad’s and FIL’s pensions/SS will not cover the full cost of AL or significant home care.
I have four other siblings; all are married. One sib and her H have retirement savings. All are in their 50s. The others have saved nothing.
To our surprise and relief, my folks did manage to save enough to get into a top tier community that provides from independent living thru memory care/assisted living/full nursing home care. It has gourmet dining and they are happy there with many of the folks who are members of their country club and it is a short drive from all of our homes to visit them.
We have enough that we will not be a burden on our kids and can even support our D and S if they need it (but it doesn’t appear S will need it). I believe all my 6 sibs (5 of whom are married) will all have enough retirement savings so that they won’t need to be a burden on anyone (if not, they can all sell their homes and rent and be able to live on the equity for a very, very long time). My H’s only sib should also be financially secure as well.
No, sadly company just has 401k. H’s company doesn’t offer Roth 401k either.
We moved the money we had in IRA’s to Roth IRAs, and paid the taxes on it. But that is the money that will grow the most with the investments - we are taking more risks with those funds/investments.
It is incredible the number of people who do not think of their own financial future.
It is very scary how many people don’t plan and don’t save. Many are homeless in our state, as housing prices are VERY high or living in a multi-family unit that is NOT intended to be multi-family (creating much higher density than intended).
The discussion of people not saving reminds me of our conversations about Neal Gabler about a year ago, the writer from Long Island with no savings. There are many people like that.
I’m surprised of the pension talk because, absent those working in public service, I thought most pensions went by the wayside more than a decade ago.
Yes, I remember the article about the writer with little if no savings. Living below your means isn’t sexy or glamorous but it sure beats poverty in old age.
DH and I live well below our means because of what we experienced growing up. (DH is even more frugal than I am, which can cause issues, but it’s better than the alternative.) We don’t have enough to support parents and sibs, though.
My brother and his wife both in their mid 50’s have very little saved for retirement. My brother basically says he will work until he dies. His wife does not work and never really has. They had their children very young (my oldest niece when they were 18) and just got by for many years. Their youngest child is now 31, but somehow they have never made saving a priority. My parents helped them financially a lot when their children were young and even gave them a large no interest loan within the last 10 years to pay off high interest debt. I can see them being a burden on their children one day.
" Living below your means isn’t sexy or glamorous but it sure beats poverty in old age." - Of course it’s easier the higher your means. So it surprises me to learn of some case where people live large but have not saved. (It’s more understandable in families where there is hardly enough to pay the basic no-frills
bills.)
Yes, it certainly is easier to understand where there’s not much to go around but harder to muster sympathy for folks who appear to have healthy incomes and just seem to enjoy “living large.”
I don’t know if this is living large, but might be living in large spaces. We were looking to downsize here. We thought about moving back into the city but really like the proximity to country (hiking, cycling, kayaking, cross-country skiing and snowshoeing) where we live. We won’t find our dream house as we want a contemporary house (in an old town) in walking distance of a town center with an expansive view (pond, river or field) and enough land to build a studio next to it. We can find two or maybe three of the four things but not all.
We found a house that already has a monstrous studio attached to it (2280 sf including storage) with magnificent light and unbelievably high ceilings (it used to be the basketball court from a private school gym. ShawWife is in heaven. The house is pretty large. Two very large bedrooms and baths and another bed, bath and TV room or study, I guess. On the main floor, in addition to a kitchen and dining room and screened porch, there are a living room, a family room and a sitting room. Did old-time folks need to do a lot of sitting? We’re thinking of converting the family room and sitting room into a ground floor master BR/bath so it could be our East Coast house for next 20 years. But, the kicker is another 2000 sf below the studio of what is now used as office space, but clearly had been used for other stuff over the years. Our job: if we want this house, figuring out what to do with it. We think we might set up a residential rental unit in part of it and use it to bring my office (and save rent at an office building) although the latter might not work for zoning purposes. Alas, the house while extremely grand (ceilings must be way over 10’ and lovely woodworking) is far from contemporary and the landscaping on an acre is very nice but it is a lot of trees and the view is not expansive.
We think the house is hard to sell because most people don’t have a use for the second building with the studio and office spaces. It has been on the market since May despite the market being very hot. They would cost something to heat and maintain and would be a big negative to a lot of people. The question – if we buy it – how do we guard against the same problem. I think we would need to a) buy low because we might have to sell low; and b) figure out ways to use the space for income that others could replicate.
“We think we might set up a residential rental unit in part of it and use it to bring my office (and save rent at an office building) although the latter might not work for zoning purposes.”
Is the home office just you or employees as well?
“Alas, the house while extremely grand (ceilings must be way over 10’ and lovely woodworking) is far from contemporary and the landscaping on an acre is very nice but it is a lot of trees and the view is not expansive.”
You could do some updating, especially if you do the master bedroom redo. Open up some spaces/walls especially with high ceilings. I really like the combo of old and new when done well and tastefully.
“They would cost something to heat and maintain and would be a big negative to a lot of people. The question – if we buy it – how do we guard against the same problem. I think we would need to a) buy low because we might have to sell low; and b) figure out ways to use the space for income that others could replicate.”
Go solar so heating cost isn’t an issue for the next buyer.
Very nice property! I managed to find it (no I won’t out the location B-) ) I see what you mean about lots of sitting space… was this house part of the school as well? Maybe that’s why there are so many spaces.
The kitchen looks a little odd to me in the pictures.
I’d be surprised if the town this is in actually let you carve an apartment out of that space. Most towns will let you have a business in your house as long as it doesn’t generate a lot of traffic. If you don’t tell them, they might never even know.
That is a lot of space to heat, though… is the gym space even heated? I don’t see any ductwork in the pictures in the gym part.
You are right about the garage @notrichenough. Alas, we haven’t had a garage in years as we always end up replacing the garage with a studio. I have 2 employees in that office, so it would be hard to do (one employee is probably OK). Rental units may actually be easier to put in. Question for us: Do we want to do this much work?
@shawbridge – Do you want that much house at this point in your life? This may just be a CT issue as the state is struggling, but empty-nesters are looking to downsize, get out from under the property management expenses (lawn, leaves, trees, snow, etc). Local zoning would never allow rental units in one acre zoning where I live, but it sounds as though this property is close to town center, so perhaps more liberal zoning laws?
