57% of US workers have less than $25 in investments

[DTEJD1997]

Hey all:

The WSJ reported today that 57% of US workers have less than $25k in savings and investments (excluding their home). This was compared to only 49% in 2008.

The survey also found that 20% of Americans have no confidence that they will have enough money to retire comfortably-the highest level in the study's 23 year history.

I am also skeptical of surveys and things reported in the news. I am not too surprised by this though.

I was talking with a friend the other night about investing & such. He knows I am a good investor, who has good ideas...he has seen several of my trades in the past. He knows I know what I talking about and have made several correct calls. I was telling him about a stock that I've pinpointed that is SEVERELY undervalued due to real estate it owns being worth a LOT more than what it is carried for. I have the facts & figures to back this up...I also have other facts that indicate this is undervalued...This company has operations in our hometown, and he can verify all these facts & figures for himself.

I work hundreds of hours for months to find opportunities like this.

SO HERE IS THE POINT. I said it will probably worth 3X what it is trading for in about 3 years or so...

HE WAS NOT INTERESTED!!!

I asked him why? He said that 3 years is too long to wait and that it is not enough of a return.

I was going to argue with him, but what is the point? If he doesn't think this is a good investment, what is? I guess this is why he has nothing saved for his retirement. Perhaps this shows why people have no savings & investments. They don't understand good returns & good possibilities.

If you can reliably find opportunities where you can make 3X on your money in 3 years (even if it is 50% chance of success) you are going to be very rich in a couple of decades...

[barrytrot]

Wow, this is actually much better than I would have guessed.

I would have expected more like 80% of people to have a technical negative net worth including their home. I didn't know what the number was ever, of course, but it seems refreshingly high to me.

43% of the people have some sense -> That blew my mind! Seriously!

[beauanderos]

43% of the people have some sense -> That blew my mind! Seriously!

All it's implying is that 43% have more than $25,000 invested. Doesn't indicate how much more, and articles are always written to be provacative... so my guess would be the largest cohort falls within that first $25,000... and probably drops off rapidly after that. I'll bet less than 10% have more than $100,000 invested, for instance, and fewer still that could comfortably retire (more than $2,000,000) in their "bank." Ok, comfortably is the wrong word... but they'll be able to scrape by better than the other 98%.

[Mossy]

Oops. The title says $25, not $25K.

[Copper Catcher]

So, 57% of Americans had less than $25,000 in savings and investments. Yet only 28% thought they would not have enough money to retire comfortably. I’d say there is a real disconnect here! I guess the other 29% think the Tooth Fairy is going to come through after all....

[thedrifter]

I have $0 in investments but if I did have investments they would be in tangibles like, gold silver, copper, lead, food etc. If I did have investments. Which I do not.

[DTEJD1997]

Yes, I made a mistake.

It would be a catastrophe of biblical proportions if 57% of Americans didn't even have $25!

That should read $25k.

[Mossy]

Yes, I made a mistake.

It would be a catastrophe of biblical proportions if 57% of Americans didn't even have $25!

That should read $25k.

I'd not be at all surprised if over half the workers had less than $25 net value.

[nabzy28]

I think, contrary to what the mass media would have you believe, is that the vast majority of the population remains skeptical of the markets. I'm with the others who have posted that they think that number of 43% with more than $25k is high. It does say "workers" though, right? If that's the case, the numbers are pretty much quite relative. Inclusion of any other part of the potential workforce that is not working currently will dramatically increase that number to something very scary I would estimate...

[Engineer]

How many of those 43% are people with the money tied up in 401k's or other vehicles they can't get out of (without a big penalty)?

The number of people willingly in the market is much lower.

[Treetop]

Does this factor in credit card or student loan debt? I know several who have their 25k plus in investments who dont even own homes and have debt far surpassing their investments.

[barrytrot]

How many of those 43% are people with the money tied up in 401k's or other vehicles they can't get out of (without a big penalty)?

The number of people willingly in the market is much lower.

Timing-wise since the market is on (theoretical) all time highs I'm guessing that the number that want to take their money out of 401k but cannot is NOT very high. Some, sure, but I doubt it would make a substantial change to the 43% (although I doubt that number is really that high, I would be shocked if the real number were 20%).

[DTEJD1997]

If people are in their 50's and still have student loans, something has gone terribly, terribly wrong.

If someone does not have a POSITIVE net worth by their 50's, something has gone terribly wrong.

I have a friend who probably has a NEGATIVE net worth when you factor in his house and his car leases, he is 53. The crazy thing is...he makes good money. His wife works part time and she probably makes $15k to $20k a year. The thing is, they LITERALLY spend EVERY PENNY that they have, and then some.

A good example is his daughter is now 14 and she wants a car. I thought I was hearing something wrong or did not understand correctly, their daughter, WHO IS 14 wants a car? and it can't be just anything either. She wants a Range Rover, but they can't afford that...so he is looking for a Jeep Cherokee. I asked him how she would be able to drive it. He said she could move it around the driveway for a a few months, and then she could her learner's permit when she is 15. But, you know, a lot of kids want their car waiting for them when they are 14. You could have knocked me over with a feather. I've never heard of such non-sense....

I guess this is REASON #2 why they don't have two nickels of net worth...

ON ANOTHER SUBJECT:

It is my understanding that if someone is in a 401k, don't they have the choice to go to money market funds or short term bond funds? If you think the market is too high, you can move to cash or short term bonds?

[barrytrot]

I asked him how she would be able to drive it. He said she could move it around the driveway for a a few months, and then she could her learner's permit when she is 15. But, you know, a lot of kids want their car waiting for them when they are 14. You could have knocked me over with a feather. I've never heard of such non-sense....

"want"

Somehow "want" matters to people. And you know what? That's the worst thing for a kid to learn that "want" = "need".

This kid is doomed even more than her ignorant parents.

If anyone wants they can quote this and check back in 13 years for when my daughter is 16 -> I will never spend 1 cent on a car for my daughter.

[DTEJD1997]

barrytrot:

You bring up a very good point...those daughters are going to be screwed up...

Imagine trying to date one or have a relationship with one. She is going to DEMAND everything...no work ethic...a "princess". Additionally, the USA that they grow up in is probably going to be more difficult place than it was 10, 15 or 20 years ago.

This is the time for people to get tough, to batten down the hatches...not to be engaged in such frivolity.

I feel bad for young folks today. I think there is good chance they will have a LOWER standard of living than their parents.

I hope I am wrong.

[IdahoCopper]

Here is the difference between "Want" and "Need":

If you NEED it, you can find it in Wal-Mart or Home Depot.

Everything else is a WANT.

[nabzy28]

ON ANOTHER SUBJECT:

It is my understanding that if someone is in a 401k, don't they have the choice to go to money market funds or short term bond funds? If you think the market is too high, you can move to cash or short term bonds?

Yes, this is easily done if you monitor your accounts. Fortunately, my plan includes a self-directed brokerage account, so I have full control over all investment options that fall outside of their usual 10 to 15 cookie-cutter fund options. Just have to set trailing stop loss orders to prevent damage from any sudden market move downward. Also, it's very simple to just have any new funds, or funds from sales, go directly into a money market cash fund. While not everyone may have the self directed account option, every one of them should have an option for a MM account and/or bond selection in the offered options.

[Treetop]

Most of the people I was talking about are in their 30s to very early 40s. although a few are indeed into their 50s that I know who still have debt well above their investments. My parents for one. I try to talk to them about these issues all the time. Only good thing I can say about their finances is watching them do so horribly inspired me to do better for myself and now my kids. Well my dad is drawing retirement but he owes more on his house now then he did in 1991 when he first bought it. Several other major items as well. Officially he has over 25k in investments and his retirement and despite that he has little prospect of paying off his debts in his lifespan, and if things changed in the economy, such as 40% higher food in coming years to pick a random variable they would be in major trouble, having lived paycheck to paycheck his whole working life and now into retirement. My mom will never retire with a pension she started to late in life.

I know others like that as well at those ages. Heck when I first moved to this town and my wife and I were working at the hotels the first few years w met DOZENS of people with NO investments all the way up into their 70s many of whom could barely keep their jobs at a hotel. You basically could keep the job if you didnt steal, showed up daily and had basic math skills and smiled at guests most of the time.

You also have people like my aunt and her husband. He used to make 100s of thousands a year. A different scenario for sure, but he lost all he had saved in the stock market to the point it drove him across the country chasing 80k and a modest 100k home.

So running the gammut I personally know people who at one point had many multiples of 25k several who have that much but debts surpassing that and sadly many who have no savings or plans AT ALL, beyond I guess government programs. I only know a few that I would be willing to bet have decently solid financial futures and plans. Freaks me out honestly. In an age when so many feel it is perfectly fine to vote themselves other peoples things. I dont see how these mindsets and issues can end well for our country. I hope desperately Im wrong

[beauanderos]

I see people at work, who I know are living paycheck to paycheck, gazing dreamily at craigslist on the computer, coveting all sorts of crap they don't need... but think they can't live without. And they think I'm crazy because I dump every paycheck, every week... into more silver and gold. There are a few at least (not Americans) ... an Indian girl at work who has Kitco open before I can ever check it... and she tracks the price of gold and can tell you the daily movements and trends... but she is a rarity. And even then, she is looking for investment opportunities (liquor stores) for her and her husband, rather than waiting for gold price pullbacks in order to buy more.

[barrytrot]

I see people at work, who I know are living paycheck to paycheck, gazing dreamily at craigslist on the computer, coveting all sorts of crap they don't need... but think they can't live without. And they think I'm crazy because I dump every paycheck, every week... into more silver and gold. There are a few at least (not Americans) ... an Indian girl at work who has Kitco open before I can ever check it... and she tracks the price of gold and can tell you the daily movements and trends... but she is a rarity. And even then, she is looking for investment opportunities (liquor stores) for her and her husband, rather than waiting for gold price pullbacks in order to buy more.

Remember: As long as you work you CAN live paycheck to paycheck. There is nothing wrong with it!

In today's day and age working your whole life isn't so bad! That's my plan! We just have this notion of "retirement" as the ultimate "dream". How about just finding a fulfilling place to work?

[Treetop]

Id argue barry the the vast bulk of people (atleast that Ive known) who are not able or willing to have savings in todays climate arent the ones who are fulfilled by their work. Ive lived in many states and have ha entry level jobs in many fields. Its a rare person Ive met who liked doing what they do. heck my wife is a teacher, a field many claim is filled with people who are there because they care and my wife is seemingly thought of as a bit off for liking her work. this came from two different districts shes worked in.

In my experience it seems even many who will likely never retire put so much stock in it BECAUSE they hate their work so much. I was there the day my grandfather got a letter in the mail telling him he had his 30 years in and some paperwork going over options and how things change as he accrues more years with the company. He didnt even know! he was surprised. not a man counting the days until he can tell off his boss and pass out on the couch as so many Ive known. But in my experience anyway such people are very rare.

I will agree with yo in that there is nothing wrong with working until the end, specifically if you like what you do. (why anyone neglects to set themselves up to do something that doesnt fulfill them is beyond me) But living paycheck to paycheck is a horrible idea!

granted Ive never lived in any expensive areas, but Ive lived in several states and always made little money but I never lived paycheck to paycheck. what a horrifying thought! We live like kings as far as we are concerned now on my wifes meager income as a teacher and what I save with the animals and garden for food. But never have we lived paycheck to paycheck.

the issue is you cant KNOW that if your living paycheck to paycheck today that you will be able to sustain it. Wages dont appear to track embedded inflation. I watched my parents do this my whole life and watched reality knock them down over and over. even small issues can send the families expenses reeling in such a scenario.

[beauanderos]

according to one of the Elizabeth Ann Warren books I read sometime in the past, the most likely candidate to declare bankruptcy are single mothers... and the most likely reason given was not loss of a job, but incurring unexpected catastrophic medical expenses. People with discretionary income can plan their futures, if they have the foresight to do so... those who live paycheck to paycheck can only do so with their fingers crossed and credit cards ready for further debt. Until debt do us part.

[68Camaro]

a) For the record, regardless of any complaining that might happen - which is allowed as part of business - I love my job. I'm in an unusal place, maybe, but most of the people that I know personally also love their jobs. As does my wife. (However, I'm aware that many do not.)

b) People that live paycheck to paycheck, by and large, have chosen to do so. I see this happen to over and over again, and it is regardless of net income, whether 20K a year or 500K a year. There are exceptions, of course, but they are far too few and just prove the rule. At the lower end, I constantly see people who are cash-poor squandering it on lotto tickets, alcohol, expensive (per serving) prepared foods, restaurants, cigarettes and other recreational drugs, sugary drinks, and/or many other poorly thought-out purchases. If they used wise discernment, which is freely available to all (though uncommonly used), they could easily create a significant savings and pull themselves up by their bootstraps. That's what America was always about back in the day (from it's founding up to about 30 years ago). And it's still possible, just far less likely. At the upper end I also constantly see people with huge incomes squandering their money just as illogically - buying ridiculously expensive homes and cars then trading them out for the next newest model while the paint is still drying, wasting money on clothes and spas and expensive vacations, spending way too much on their kids, including sending them to $15K secondary schools when home-schooling would create a better result, or to $40K/year colleges when still reasonable public schools are available. At the end of their day many are net just as worthless as the low income people. Neither of these two types have anyone to blame but themselves (though they will attempt to blame anyone but themselves).

[Engineer]

And even then, she is looking for investment opportunities (liquor stores) for her and her husband, rather than waiting for gold price pullbacks in order to buy more.

I was thinking of starting a liquor store a couple nights ago...with a BoozeStar™ to collect coins. How sweet would THAT be?

[barrytrot]

a) For the record, regardless of any complaining that might happen - which is allowed as part of business - I love my job. I'm in an unusal place, maybe, but most of the people that I know personally also love their jobs. As does my wife. (However, I'm aware that many do not.)

b) People that live paycheck to paycheck, by and large, have chosen to do so. I see this happen to over and over again, and it is regardless of net income, whether 20K a year or 500K a year. There are exceptions, of course, but they are far too few and just prove the rule. At the lower end, I constantly see people who are cash-poor squandering it on lotto tickets, alcohol, expensive (per serving) prepared foods, restaurants, cigarettes and other recreational drugs, sugary drinks, and/or many other poorly thought-out purchases. If they used wise discernment, which is freely available to all (though uncommonly used), they could easily create a significant savings and pull themselves up by their bootstraps. That's what America was always about back in the day (from it's founding up to about 30 years ago). And it's still possible, just far less likely. At the upper end I also constantly see people with huge incomes squandering their money just as illogically - buying ridiculously expensive homes and cars then trading them out for the next newest model while the paint is still drying, wasting money on clothes and spas and expensive vacations, spending way too much on their kids, including sending them to $15K secondary schools when home-schooling would create a better result, or to $40K/year colleges when still reasonable public schools are available. At the end of their day many are net just as worthless as the low income people. Neither of these two types have anyone to blame but themselves (though they will attempt to blame anyone but themselves).

Perfectly said.