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Laura Bult
Vox.com
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00:00:00
a lot of people ask me how do they know
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if they're on track to be ready for
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retirement if you want to maintain your
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living standards that you have now or
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you'll have throughout your life in the
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American system by the time you're 30
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you should have about one times your
00:00:15
current salary by the time you're 40 you
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should have about 2 and 1 half or three
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times your salary in your 60s you should
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have 8 to 10 times your annual salary
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what's your reaction to that
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you can see me laughing because who
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could save that much I'm sorry I think
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those numbers are very
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abstract okay all right so I have some
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work to
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do and the reason I'm wincing when I say
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these numbers is that I know that Real
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Americans just don't have it the math of
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what you're supposed to have and what
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people actually do have is a huge
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gap
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at the median people have saved
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approximately
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$45,000 that means half the population
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has saved less than
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$45,000 and that also means that there's
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quite a few people that haven't saved
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anything what is your work status right
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now retired totally retired I was a
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nurse my income was probably 100,000
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120,000 around there retirement is
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probably around the same thing so my
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annual income is 140,000 I lived in the
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UK for 6 years our retirement savings
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was put into a pension now it's about 15
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to 16,000 in my current job putting away
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um for my 401k and putting a little bit
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aside um for a Roth IRA with the
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playwriting I can make between $4 and
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$50,000 but often I make zero buus the
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professor job I make about
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135 so that's not bad and then in
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savings I have about A4 million there
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which isn't so bad plus I have a TIA C
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if I keep working for a few more years
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it'll get to a half million so I'm close
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actually now now that I think about it I
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earn $15,000 a year so right now I only
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have two plans as far as I know I have
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the one for my first job my 401k and the
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one for my current uh my current job
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which is a pension the reason why a coal
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miner and a lawyer could expect to
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retire is because of the design of our
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pension system which we don't have
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anymore your employer would put money
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aside for your retirement and that money
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couldn't be accessed by you so the
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dollar that the employer put in on your
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behalf was put into a big pool of money
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and it was professionally invested and
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at the end of your working life that
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money would be translated into a
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lifetime benefit we we had unions
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negotiating and then that all changed
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about 40 years ago we changed the
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federal pension laws so you had the
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traditional pension becoming less
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attractive to employers at the same time
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at the end of the 1970s Congress passed
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a law that allowed people to effectively
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make a choice whether they want to
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receive some of their wages as wages or
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defer those wages into a savings program
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we now call it a 401k it was supposed to
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be a secondary savings system for mainly
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higher income people in big firms a 41k
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plan is sponsored by an employer so it's
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tied to your job your employer can make
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contributions or you can make
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contributions and what you receive at
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retirement is what you've saved into
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that individualized account an
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individual retirement account is just
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for individuals and it's only funded by
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individuals at the same time worker
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power decreased I'm talking to you in
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2024 half of the people are covered by
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retirement plan but the vast majority
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that if they have a retirement plan are
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covered by 401K the American system just
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breaks down on on the three basic Design
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Elements and the first one the most
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important one is that we don't have
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universal access half of workers don't
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have a way to save for retirement and
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that means they miss out on all that
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accumulated saving every other country
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who is our peer have automatic
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enrollment in a pension plan different
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ways you're in a union or you're in a
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government plan whatever the detail that
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matters is that you're automatically
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enrolled and everybody who works gets
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access to
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it this episode is presented by Metro by
00:04:39
T-Mobile this tax season Metro wants to
00:04:41
help customers avoid wasting dollars by
00:04:43
using their tax refunds to catch up on
00:04:45
things that they want not on things they
00:04:47
don't according to Metro you don't take
00:04:49
yata in life so don't take yata from
00:04:51
your wireless provider Metro by T-Mobile
00:04:54
has no contracts no credit checks and no
00:04:56
surprises Metro does not influence the
00:04:59
editorial process of our videos but they
00:05:01
do help make videos like this possible
00:05:03
to learn more you can stop by one of
00:05:05
over 6,000 metro stores nationwide now
00:05:08
back to the
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video not all of us have training to be
00:05:14
a professional investor and it shows how
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to set up a retirement account um how
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much money to put in it when should you
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make those contributions should you do
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it every week or once a year and then
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where are you going to invest that money
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there are literally thousands of
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investment choices U within an
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individual retirement account if you
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open it at a mainstream financial
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institution that's why the money is
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sitting in a savings account because I
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don't know what percentage is supposed
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to be in the stock market or a Roth or
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any of that usually whenever I start a
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job if there was a retirement option
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there is someone who is a specialist who
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could give advice but usually it would
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be either uh co-workers or doing my own
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little research to see what I think is
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best for me I navigated my 20s and and
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my finances pretty much in a vacuum and
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I made some mistakes and you know
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stumbled along the way I think that's
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really the key difference U what other
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societies have learned versus the
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experience in the United States
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Investments are chosen for you the point
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is that if you don't want to educate
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yourself and some people do but if you
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don't choices will be made for you to
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make it easy to
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save
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the United States unlike every other
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country that has their workers
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accumulate money for their retirement we
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let people take money out having to dip
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into it all the time because I was
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paying two mortgages was very difficult
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because I feel like it wiped me out
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between the ages of 22 and 26 wasn't
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thinking about what was I going to need
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at 68 when I was just trying to pay my
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rent often times when I would leave one
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job the little bit of um money that I
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had in a 401 that can be used to pay off
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a credit card debt or used to help me
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pay um pay down a student loan when you
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need money you don't care that this
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might be earmarked for your retirement
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if you have a crisis today you need to
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take care of that crisis and that's like
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just a basic violation of design
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long-term savings should be attached to
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long-term accounts and to Safe
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accounts what people want the most is a
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time where they can control the the pace
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and content of their time while they're
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still healthy and people want to pay for
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it when they're working but they want to
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look forward to that time I go to senior
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centers and do different things sewing
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I'm learing to crochet Dance I'm sort of
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fixated on retiring uh it's kind of all
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I think about I guess I plan on working
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in a
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bookstore and uh going to a lot of
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baseball games there are social
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Assistance programs and income programs
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however for a lot of folks who might
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have been earning a certain amount of
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money could very well mean that they are
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not going to receive that kind of money
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in retirement and so they might need to
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go to other sources such as living with
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family or relying on the kindness of
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others or charity I can see myself maybe
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wanting to do like part-time engineering
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I don't know maybe I'll double down into
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my creativity I know I would like to
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keep busy yeah so I'll figure it out if
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you're 40 put a whole bunch of money in
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that account if you're 19 just start
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saving 5% but it's got to be protected
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from your your younger self I would love
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to teach I would love to do charity work
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I would love to probably retire in my
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early 60s gives me another 30 years to
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worry about how am I saving for
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retirement I hope that's enough time I
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hate to say you have to have or you
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should have a certain multiplier of your
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salary at a particular age I think the
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important thing is to keep contributing
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and take advantage of employer matches
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and do the best you can given your
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circumstances because that's really what
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the research shows that you do better
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when you consistently over time a period
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of decades really make
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[Music]
00:09:26
contributions

Description:

There’s a reason so many of us don’t have enough retirement savings. Subscribe to our channel and turn on notifications (🔔) so you don't miss any videos: https://www.youtube.com/user/voxdotcom?sub_confirmation=1 This video is presented by Metro by T-Mobile. Metro has no editorial influence on our videos, but their support makes videos like this possible. Vox sat down with people in our New York City studio to talk to them about the state of their retirement savings. By the standards of most financial experts, Americans are woefully behind on saving for retirement. The reason why is rooted in changes in policy to our retirement system with today's result being a flawed design in how people set aside money so they can one day stop working. In this video, we interviewed four people about their level of retirement preparedness and two experts about the state of retirement readiness more broadly in the US. One culprit lies in changes to the country’s pension system, which sets the US apart from countries like Australia and the UK; these places have systems which help more people save more money for retirement. Sources and further reading: Vanguard’s “How America Saves” report was recommended by one of our experts, John Scott, and provided some of the data in the video: https://institutional.vanguard.com/content/dam/inst/iig-transformation/has/2023/pdf/has-insights/how-america-saves-report-2023.pdf https://crr.bc.edu/the-national-retirement-risk-index-an-update-from-the-2022-scf/ John Scott’s work at the Pew Charitable Trusts includes how lack of retirement readiness impacts state and federal budgets: https://www.pewtrusts.org/en/research-and-analysis/articles/2023/06/01/states-face-334-billion-shortfall-over-20-years-due-to-insufficient-retirement-savings Teresa Ghilarducci has written extensively about retirement, including her book Work, Retire, Repeat: https://press.uchicago.edu/ucp/books/book/chicago/W/bo212888995.html Sen. Bernie Sanders has released a report about how the state of US retirement impacts low-income seniors: https://www.sanders.senate.gov/press-releases/news-ahead-of-hearing-chairman-sanders-releases-report-exposing-depth-of-retirement-crisis-facing-working-class-americans/ We used the TransAmerica Retirement survey for some of our data: https://transamericacenter.org/retirement-research/retirement-survey Vox.com is a news website that helps you cut through the noise and understand what's really driving the events in the headlines. Check out https://www.vox.com/ Help keep Vox free for everybody: https://www.vox.com/support-now Watch our full video catalog: https://www.youtube.com/voxdotcom/videos Follow Vox on Facebook: https://www.facebook.com/unsupportedbrowser Or Twitter: http://goo.gl/XFrZ5H

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