This story is two years old (but the information is still roughly accurate) and here is how "paycheck to paycheck" is defined:
Fewer than one in four Americans have enough money in their savings account to cover at least six months of expenses, enough to help cushion the blow of a job loss, medical emergency or some other unexpected event, according to the survey of 1,000 adults. Meanwhile, 50% of those surveyed have less than a three-month cushion and 27% had no savings at all.
Now here is some more recent information on the topic:
Only 48 percent said that they could easily handle an emergency expense of $400 without running a balance on their credit card. Almost a fifth said they simply could not come up with the funds, and a similar share said they would have to take on credit card debt. Others said they would either have to sell something (9 percent), ask a family member or friend for help (12 percent), or turn to a payday lender (4 percent) to come up with the money.
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That is kind of frightening.
Here is the American net worth by age bracket
And Almost 20 percent of people near retirement age have no retirement savings
Fewer than one in four Americans have enough money in their savings account to cover at least six months of expenses, enough to help cushion the blow of a job loss, medical emergency or some other unexpected event, according to the survey of 1,000 adults. Meanwhile, 50% of those surveyed have less than a three-month cushion and 27% had no savings at all.
Now here is some more recent information on the topic:
Only 48 percent said that they could easily handle an emergency expense of $400 without running a balance on their credit card. Almost a fifth said they simply could not come up with the funds, and a similar share said they would have to take on credit card debt. Others said they would either have to sell something (9 percent), ask a family member or friend for help (12 percent), or turn to a payday lender (4 percent) to come up with the money.
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That is kind of frightening.
Here is the American net worth by age bracket
And Almost 20 percent of people near retirement age have no retirement savings
I think more people than you realize are NOT saving anything for retirement. And that's because they are living paycheck to paycheck and don't have any extra to contribute (or they tell themselves that) and they keep saying they will start saving next year.
My wife and I both make great livings but I will say we don't have any more money month to month than we did when we made half of what we make now, bigger house, cars, boat, toys etc (but my retirement money continues to be increased). While I have plenty of money saved and I will be really set when I retire, if I lost my job tomorrow it's not like I wouldn't have to work and something would have to go if I didn't get a new job right away.
My wife and I both make great livings but I will say we don't have any more money month to month than we did when we made half of what we make now, bigger house, cars, boat, toys etc (but my retirement money continues to be increased). While I have plenty of money saved and I will be really set when I retire, if I lost my job tomorrow it's not like I wouldn't have to work and something would have to go if I didn't get a new job right away.
Good for you! Are you police or fire? I retired from a big city FD, and we have a DROP as well. I retired early, so I wasn't able to participate in the DROP, which is a shame. However, I will be the recipient of 3 pensions (fire, military, fed government). My only regret is I didn't get any years in the DROP.
Each city/agency can determine the length of the DROP, the percentage/interest rate earned, costs, etc.
When it was started in my city it was for 3 years, then went to 5 years. The interest rate is 8.4% but the city is fighting to lower it and the union just reached an agreement w/ them (it will now be variable, from 0% to 14% depending on the stock market). It's very, very lucrative if you can stay for the full term. I've seen a couple of cities that have DROP's as long at 10 years.
The good thing about the 457 plan is that you can draw on it immediately after retiring from your agency (i.e. you don't have to wait until you're 59 1/2)....if you want to start withdrawals, without penalty. Unlike the 401K, 403B, or Roth the 457 can be withdrawn early - as many police & fire employees retire well before 60 years old.
76% is a big number...wow
Yeah, our local fire department is capped at 15 years I believe. Our department doesn't have a cap, but like I mentioned in another post, DROP was taken away from new hires in 2005.
Those who entered DROP when it first began in the 1990's had no cap on interest rates, those guys were making 12 to 15 percent in some years. We now have a cap that says it can't go lower than 3% or higher than 7%. We're currently making 7% this year. We also get a COLA every year which helps as well.
I got lucky that my department has DROP. If it didn't I would still have a nice monthly pension check along with whatever else I had, but that DROP, when done, will be over 7 figures.
People should really start out saving for retirement as soon as possible, especially when they start their career.
im the poster boy of living paycheck to paycheck!
30 years old.. .single dad in New Jersey...Rents... i made around $400-450 a week until the beginning of this month when i finally got into the laborers union, my checks literally just tripled & ill finally have some sort of benefits & retirement .. saving money , what is that lol
30 years old.. .single dad in New Jersey...Rents... i made around $400-450 a week until the beginning of this month when i finally got into the laborers union, my checks literally just tripled & ill finally have some sort of benefits & retirement .. saving money , what is that lol
That is unbelievable! How many years do you have to do before you enter the DROP? We have to do 20 and you cannot exceed 30 (we get 3%/year for the first 20 years and 2%/year for the next 10, so the max you can get is 80%). Most members DROP at 20 or 25.
I put in 18+ years....but went on active duty and just didn't want to go back. The job has changed and it was no longer enjoyable. People call 911 like they are ordering a pizza and you see them at their worst. I would get off work and was ready to choke someone! Life has been good since I left. Like I said, my only regret is that I wasn't able to participate in the DROP. Hell, I would have liked to have gotten just 2 years (and then let it compound for 10+ years).
If it all works out and I manage to work until I'm 55 (I'll be 45 in August), I should draw around $90K/year between the 3 pensions (plus the TSP and Roth IRA. I rolled my 457 account into a ROTH a few years ago). I'm making more money than I ever have as a Federal employee, but the pension is only 1%. They do match up to 5% in the TSP (which is the Federal Government's form of a 401K).
Tfan, you're doing great. Good for you. The great thing about that DROP is that you can leave that money behind. Unless you (or me or whoever) takes the Survivor's Benefit option, the pension ends when you end!
Well, that's the problem. Why spend more when you make more? Live within your means and save/invest the rest. Having a car payment is sin #1. Try to pay that car off...keep it as long as you can....and put what you would be spending on a car payment into an investment account. It will add up quickly and you will never want to have a car payment ever again.
