30 years too late and $20B short

[Duffer]

Originally Posted by SirVLCIV

I have a close view of what's common in this country. My two parents, 48 years old, have $80k of 401(k) money between them (and $0 in other assets).

That is reasonable for people who are now through educating their children and starting their serious savings years. If they choose to go on extended vacations instead of investing for the next 12 years, then you get to fund their retirement (add a room for grannie), but if they do what other adult, responsible people do, they will make solid financial plans to go max on their 401(k) deposits, save on frivolous expenses, and try not to be a burden to others.

I hope they do, and you are the one to support that effort intellectually and emotionally.

[limabeanactuary]

48 years old? That's still young. I'd tell them to expect to work for at least another 20 years.

I think they could build up savings pretty well over such a period.

[Duffer]

Originally Posted by JMO

Yep. It was ALWAYS supposed to be based on risk assessment.

But the major risk in found in ruin theory. The risk is that you are ruined, and must bail out.

If the stockholders have money in the bet, then they don't want to have the PBGC grab their equity. If their stock price goes near to zero (even temporarily), the moral hazard in the PBGC system is that they must dump the burden on the state to protect their own interests.

It worked for all the biggest PBGC failures, airline, steel, energy, auto...

Real risk assessment needs to be matched with real disincentives to the moral hazards. PPA went a long way, but there are still more issues to address. I would like to see the PBGC make a public case for better ways to prevent dumping. How can the PBGC better manage that?

[SirVLCIV]

Originally Posted by Duffer

That is reasonable for people who are now through educating their children and starting their serious savings years. If they choose to go on extended vacations instead of investing for the next 12 years, then you get to fund their retirement (add a room for grannie), but if they do what other adult, responsible people do, they will make solid financial plans to go max on their 401(k) deposits, save on frivolous expenses, and try not to be a burden to others.

I hope they do, and you are the one to support that effort intellectually and emotionally.

Well, my mother's probably going to eat into a lot of hers over the next year or two, and the fact that she makes $25k in the best of years....

[Duffer]

Originally Posted by SirVLCIV

Well, my mother's probably going to eat into a lot of hers over the next year or two, and the fact that she makes $25k in the best of years....

About $10,000 more than my father made in his best year. And they were a one-income family.

[JMO]

Originally Posted by SirVLCIV

Well, my mother's probably going to eat into a lot of hers over the next year or two, and the fact that she makes $25k in the best of years....

Some people seem to think that an actuarial salary is the norm. Suprise, suprise.! There are a lot of people who make less than that, and it's not for lack of work ethic.

[limabeanactuary]

People need to revise their expectations.

With regards to retirement age. With regards to how they will get to live in retirement.

If they have not prepared for it, there will be consequences. Assuming that someone else will take care of it is dangerous.

[WWSituation]

Supporting extended family isn't the end of the world. It is how life is done in most of the world.

[SirVLCIV]

Originally Posted by Duffer

About $10,000 more than my father made in his best year. And they were a one-income family.

Inflation-adjusted?

[SirVLCIV]

Originally Posted by WWSituation

Supporting extended family isn't the end of the world. It is how life is done in most of the world.

I'd prefer not to be forced to do that against my will. Planning for two people is hard enough.