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low wages + rising COL + irresponsible spending/debt=people living pay check to paycheck.
I have a co-worker/friend who just purchased a car. Her car payments is 200 a month. The bad thing is that everyone in the room was gloating and amazed that her payment was "only 200 a month"....like that's some type of great thing! Car payments are a waste IMO.
nonsense . the cost of living for what seniors is up 40% in two years ?
retirees are less effected by inflation than you think .
study after study show we spend less and do less as we age .what we no longer buy or do offsets losts of costs in what went up.
i am retired more than 3 years now in one of the most expensive places to live , nyc and i still have not needed an inflation raise .
as kitces said "
EXECUTIVE SUMMARY
The very essence of saving for retirement is to accumulate a nest egg sufficiently large enough to replace the retiree’s employment income and sustain a stable standard of living throughout retirement. If the prospective retiree doesn’t have enough saved up to maintain his/her lifestyle for the next several decades, it’s not yet time to retire.
Yet a growing volume of research studying the actual spending habits of retirees is revealing that this traditional approach may not be entirely appropriate after all. Because as it turns out, retirees don’t actually maintain a stable lifestyle in retirement; instead, spending levels tend to decline (in real terms), as the retiree goes from the “Go-Go” early years of retirement, to the “Slow-Go” years, and eventually the “No-Go” years.
In addition, not only does retirement spending slow in the later years, but the underlying composition of the retirement spending begins to shift as well as clients cross through these “age bands”, as spending on housing and entertainment activities fall significantly in the later years, while health care expenses are rising. Still, though, discretionary spending tends to fall by more than health care expenses rise – leading to an overall decrease in retiree spending as retirees proceed through the age bands.
Ultimately, this suggests that rather than merely assuming a stable standard of living throughout retirement, a better approach may be to look more directly at not just the composition of the retiree’s spending goals, but also how those particular types of expenses tend to change as the retiree moves through the different age bands. In other words, projecting retirement expenses using an age-banding approach may allow for a more nuanced and accurate representation of how spending will change over time. Which is important, because the data indicating that retiree expenses tend to fall throughout retirement – especially in some categories – implies that retirees may not actually need to be saving as much, or accumulating as large of a nest egg, to retire in the first place!
there are always those who will never do well no matter what . it is like a friend we know that we joke about who is always complaining about his sex life . hookers tell him they just want to be friends ....
We believe in freedom. That includes the freedom to do stupid things, freedom to remain ignorant in spite of 12 years of mandatory education, freedom to function at a low level and not strive to succeed in life, freedom to spent money as fast or faster than they can earn it. When people exercise their freedoms to make poor choices with poor consequences, should we feel sorry for them? Should we give up some of our resources to help them? Or should we take away some of their freedoms?
Excellent post. Most importantly, American have the freedom to be lazy. If you drop out of high school or study an unmarketable degree in college, that's your fault. Shouldn't have been lazy.
You get life, liberty, and the pursuit of happiness. Not the pursuit of free crap because you're too lazy.
I am not sensing this big COL increase. A loaf of bread, gallon of gas, gallon of milk, more or less has been constant over the last decade IMO.
I think that they are counting home prices in the COL, which have gone up, and are a symptom in the short term of a healthy economy. Auto prices have gone up because people have the money and the willingness to buy $50k F150's, again a symptom of a healthy economy.
You know, I can see this. I am on a very tight budget (self imposed) and I've noticed that inflation isn't keeping up with pay.
I save a third of my income. Every time I get a pay raise, I get the maximum amount allowed by my company --3%. I keep a little of it for spending, but save about a third of that raise, adding it to my 401k. This year was the first year I didn't save any of the raise because costs have gone up and I can't. Groceries cost more (same price but the sizes are smaller so you are are paying more per unit), gas is up, and my property taxes went up (just to name a few things).
I am fine, I have a lot of wiggle room. But I also make more than the average American ($90k a year as opposed to $60k median household income for the rest of the US). I can see where someone earning less would be squeezed a little harder because they don't have that great big savings cushion I have. If I were to fall and break my leg, even with my insurance it would cost me several thousand out of pocket. I have the luxury of pulling that from savings if I have to or stopping savings temporarily to pay the bills. Someone who is living my lifestyle (which isn't luxurious or wasteful) who only makes the median household income who also breaks a leg would have financial issues.
Because people are optimistic. Joe Schmoe might not have two dimes to rub together, but when he sees the stock market is up, despite having zero investments, he thinks, great, things are getting better! He doesn't think, "except that I am still making $10/hour and I have no investments, so the stock market rising does not affect me at all." It's the same mentality that makes poor people think that a politician (any politician) is going to make their lives better. Spoiler: It isn't going to happen.
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