The Cash Cow Roundup

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Welcome back to another edition of the Cash Cow Roundup, featuring the best online content from the previous two weeks.

A Retirement Savings Crisis

Americans have very little saved for retirement. Take a look at this report by the National Institute on Retirement Security, which showcases the desperate situation.

Jaw-dropping highlights that stand out:

  • The average American family has virtually no retirement savings, with a median retirement account balance of $3,000.
  • More than 80% of all working households have retirement savings less than one times their annual income
  • Nearly half of working-age households have NO assets in a retirement account

Other discouraging tidbits:

  • Only 52 percent of working-age households participate in workplace retirement plans
  • Pension Plans are going away in favor of defined contribution plans, like the 401k. Out of households with access to workplace retirement benefits, those between ages 55-64 are 2x more likely to have a pension plan than those aged 25-34.

According to the author, such issues are cause by two problems:

  1. Lack of access to retirement plans in and out of the workplace—particularly among low-income workers and families
  2. Low retirement savings

Can number two be more obvious? Apparently people don’t have enough saved for retirement…because they have low retirement savings…

But what are we to make of problem number one? Is the problem lack of access to retirement plans?

I don’t see it. Most employers offer a sponsored plan, and the IRA exists for everyone else.

It took me less than an hour to create and fund an IRA at Vanguard. The entire process was done online, for free. Where is the lack of access there?

 

 Other Interesting Reads:

  • Do you like the idea of multiple generations living under one roof? Not only does it make family bonding stronger, it also saves tons of money. Would you consider living in a multigenerational household?
  • Everyone’s Facebook feed has been overflowing, (no pun intended) with the ALS ice bucket challenge videos. Regardless of your personal feelings on the fundraising scheme, we could all learn a valuable marketing lesson from Jenika at Psychology for Photographers.
  • Ever thought that your ideas were too wacky to become a business? Think again. Both Dinner Lab and Steven Weinreb are recreating their chosen markets; restaurants and footwear respectively. Take a note from theses innovative companies and get your creative on.

 Health and Wellness:

  • Mr. Sisson shares nine reasons you aren’t effectively losing weight.
  • Have you ever wondered what type of fish to eat? Wild or farmed? Domestic or imported? The New York Times is on it.

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SyedAndrew@LivingRichCheaplyNatalie @ Financegirlmaria@moneyprincipleNate @ The Frugal Soldier Recent comment authors

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Syed
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Syed

Those retirement stats are sad but at least we know there’s a lot of room for improvement! If people just focused on keeping their housing and transportation costs reasonable, and avoiding consumer debt like the plague, that itself could provide a lot of relief. But we love our credit cards and big houses. Thanks for the great shares.

Andrew@LivingRichCheaply
Guest

Those stats about retirement are pretty sad. You’re right that everyone has access to IRA plans if their employer doesn’t provide a retirement plan. While some may have legitimate reasons for not saving enough for retirement, many just don’t have their priorities right. Thanks for the mention.

Natalie @ Financegirl
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Natalie @ Financegirl

I am shocked by those statistics. It also reminds me how lucky I am that I am learning so much in my 20s. I’m glad I made my money mistakes while I was young, with the hope the my financial future is solid and prosperous.

maria@moneyprinciple
Guest

Thanks for mentioning my article :). And I do find the statistics on pensions depressing; it is not better in the UK.

Nate @ The Frugal Soldier
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Nate @ The Frugal Soldier

Those statistics that you outline here is both scary and sad because one day soon those that are a part of those statistics will have to face the harsh reality of retirement. I do believe that frugality is alive and well but many people choose not to live with a frugal mentality. I do believe that living frugal is a mindset. It is not all about buying a cheap product or service in my opinion. It is so much more than that. It is about being economical and having a mentality of avoiding waste just to name of couple of… Read more »

Richard
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Richard

Wow – nice feature on BadCredit.org 🙂

Mrs. Frugalwoods
Guest
Mrs. Frugalwoods

Scary to see those low retirement savings stats! I’m always shocked by the low savings rates of the vast majority of the country. You’re right–frugality (in some form) really is supreme!

ArizonaTrader (@ArizonaTrader)
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ArizonaTrader (@ArizonaTrader)

Good point on retirement plans. People do have choices if their employer doesn’t provide any retirement options. I worked for a small business that offered nothing, but were willing to match whatever I contributed to a Roth or IRA. To be honest, the IRA’s are a better option because they offer much more investment vehicles. You can use stocks, ETF’s, mutual funds and even options. Most 401k ‘ s have a half dozen funds to choose from, have fees and other limitations.