Stumbled across this tweet. The scary part is I don't think this is uncommon. In fact, I think the vast majority of Americans are in the same boat.
When I thought about what her options are, I immediately thought, "She needs to find a rich, gullible man." which as a guy, I hate having thought that. Most men don't have that kind of luxury and have to work for our own money. To be fair, I imagine most women would prefer having their own money as well.
In desperate times though, and with limited options, what do you think? Should she try to find and marry a rich, gullible guy?
September 19th, 2024 at 11:30 pm 1726788656
I think that this woman ought to get serious about taking responsibility for herself. Being dependent on someone else for your financial well-being is not a good situation to be in.
September 20th, 2024 at 02:14 am 1726798456
But--age 49, assume she is halfway through the year. If she starts today putting aside $100 a week and retires at age 70, she would have amassed $185,715 assuming a 5% rate of return. If she took $175,000 of this at age 70 and invested in an immediate annuity, that would generate $1,203 in monthly income for the rest of her life. (The other $10k is her emergency fund.)
Assuming an average worker's benefit at Full Retirement Age of $1,907 (which is the current average), if she defers collecting SS until 70, with the Delayed Retirement Credits, she would get $2,402 per month in 2024$. $1,203 + $2,402 = $3,605 per month or $43,260 per year. That's 2.87 times the Federal Poverty Level income for a single person. If she lives frugally and invests more along the way, say $200 a week, she gets to an annual income of $58,524. Not rich but certainly survivable. With hard work, she could increase her current income and her current savings and do even better.
I actually started tracking my net worth when I was 49. I'm now 64. I had more than $900 back then (about $158k), and today (two professional designations and several jobs later), my net worth hit a million for the first time and my salary has more than tripled. It can be done.
It starts with awareness, and then, as Petunia said, taking responsibility.
September 20th, 2024 at 05:17 am 1726809432
I completely agree with the both of you that everyone should learn to be financially responsible, both men and women alike. I certainly wish I had started earlier myself.
September 20th, 2024 at 02:41 pm 1726843289
September 20th, 2024 at 11:59 pm 1726876767
Saving for retirement for most people is a decades-long endeavor. It takes a lot of sacrifices. I'm not sure she's up to the task.
September 21st, 2024 at 01:22 am 1726881779
PatientSaver: Yeah, I do think a lot of people do this to themselves in the end. Luckily for some like her, at least she is realizing the dangers, later rather than never.
I am not trying to be critical or anything, but I did find Dido's estimates to be a bit uh optimistic. It kind of assumes that nothing goes wrong and that she lives only 20 more years? However, I do agree that so long as one becomes aware and seriously works on it, they still have a fighting chance somehow. Certainly, I have nothing against whoever she is. I wish her the very best, and that she survives in the end.
September 21st, 2024 at 01:00 pm 1726923646
The 20 years is NOT for lifetime, it's for working years. Actually, I used 20.5 years in my calculations. If you know Time Value of Money calculations, I calculated Future Value using Payment of $100 a week, Interest at 5% (5%/52 for calculations, since it's weekly), Time Frame of 20.5 years (again, x 52 because it's weekly). That yields a future value (starting from $0) of $185,715.20. I assumed she saved about 10k of that for an emergency fund and then priced the value of an immediate annuity on immediateannuities.com for a 70 year old single woman.
In fact, my calculations were focused on guaranteed lifetime income, which both Social Security and Annuities are. SS has the annual COLA. I did not include an inflation rider on the annuity payment calculation but you can add inflation protection riders, since the annuity payment (fixed once started unless the inflation rider is added) are determined by interest rates. I ran that calculation before the Fed rate cut, and today it shows as $1,188 per month, a $15 decrease.
So it doesn't matter how long she lives--I was assuming 20 years of work, not life!
September 21st, 2024 at 01:10 pm 1726924229
September 21st, 2024 at 01:27 pm 1726925264
I'm not the most concise writer, so assumptions probably get lost in the verbiage. When I write for work, I always benefit from a good editor!
September 24th, 2024 at 12:10 am 1727136658