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  • A lot of people ask me, how do they know

  • if they're on track, to be ready for retirement?

  • If you want to maintain

  • your living standards that you have now

  • or you'll have throughout your life... in the American system,

  • by the time you're 30,

  • you should have about one times your current salary.

  • by the time you're 40, you should have about two

  • and a half or three times your salary.

  • in your, sixties, you should have 8 to 10 times

  • your annual salary.

  • What's your reaction to that?

  • You can see I'm laughing

  • because who could save that much?

  • I'm sorry.

  • I think those numbers are very abstract.

  • Okay.

  • All right.

  • So I have some work to do.

  • And the reason I'm wincing when I say these numbers

  • is that I know that real Americans just don't have it.

  • The math of what you're supposed to have

  • and what people actually do have, is a huge gap.

  • At the median

  • people have saved approximately $45,000.

  • That means half the population

  • have saved less than $45,000.

  • And that also means that there's quite a few people,

  • that haven't saved anything

  • What is your work status right now?

  • Retired.

  • Totally retired.

  • I was a nurse.

  • my income was probably 100,000...120,000...around there.

  • Retirement, it's probably around the same thing,

  • so my annual income is 140,000

  • I lived in the UK for six years

  • our retirement savings was put into a pension,

  • now it's about 15 - 16,000. In my current job

  • putting away for my 401(k)

  • and putting a little bit aside for a Roth IRA.

  • With the playwriting I can make

  • between 40 and $50,000. But often I make zero, bupkis.

  • The professor job.

  • I make about 135 (thousand.)

  • So that's not bad.

  • And then in savings, I have about a quarter

  • million there, which isn't so bad.

  • Plus, I have a TIAA Cref

  • if I keep working for a few more years,

  • it'll get to a half million.

  • So I'm close actually, now, now that I think about it.

  • I earn $105,000 a year.

  • So right now I only have two plans,

  • as far as I know. I have the one for my first job, my 401(k),

  • and the one from my current

  • my current job, which is a pension.

  • The reason why a coal miner and a lawyer

  • could expect to retire is because of the design

  • of our pension system, which we don't have anymore.

  • Your employer would put money aside for your retirement

  • and that money couldn't be accessed by you.

  • So the dollar that the employer put in

  • on your behalf was put into a big pool of money

  • and it was professionally invested

  • And at the end of your working life,

  • that money would be translated into a lifetime benefit.

  • We had unions negotiating it.

  • And then that all changed about 40 years ago.

  • We changed the federal pension laws

  • so you had the traditional pension

  • becoming less attractive to employers.

  • At the same time,

  • at the end of the 1970s,

  • Congress passed a law

  • that allowed people to effectively make a choice

  • whether they want to receive some of their wages as wages

  • or defer those wages into a savings program.

  • We now call it a 401(k). It was supposed to be

  • a secondary saving system for mainly higher

  • income people in big firms. A 401(k)

  • plan is sponsored by an employer.

  • So it's tied to your job.

  • Your employer can make contributions

  • or you can make contributions.

  • And what you receive at retirement

  • is what you've saved into that individualized account.

  • an individual retirement account is just for individuals

  • and it's only funded by individuals

  • At the same time, worker power decreased.

  • I'm talking to you in 2024.

  • Half of the people are covered by a retirement plan,

  • But the vast majority, if they have a retirement

  • plan, are covered by a 401(k).

  • the American system just breaks down

  • on the three basic design elements.

  • And the first one, the most important one

  • is that we don't have universal access.

  • half of workers don't have a way to save for retirement,

  • and that means they miss out on all that accumulated savings.

  • every other country who is our peer, have automatic enrollment

  • in a pension plan in different ways.

  • You're in a union or you're in a government plan, whatever.

  • the detail that matters is they are automatically enrolled

  • and everybody who works gets access to it.

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  • Now back to the video.

  • Not all of us have training to be a professional investor,

  • and it shows. How to set up a retirement account?

  • how much money to put in it?

  • when should you make those contributions?

  • Should you do it every week? or once a year? and then

  • where are you going to invest that money?

  • There are literally thousands of investment choices

  • within an individual retirement account

  • if you open it at a mainstream financial institution.

  • That's why the money is sitting in a savings account,

  • because I don't know what percentage

  • is supposed to be in the stock market,

  • or a Roth or any of that.

  • usually whenever I start a job,

  • if there is a retirement option,

  • there is someone who is a specialist who could give advice,

  • but usually it would be either coworkers

  • or doing my own research to see what I think is best for me.

  • I navigated my twenties

  • and my finances pretty much in a vacuum.

  • And I made some mistakes and, you know,

  • stumbled along the way.

  • I think that's really the key difference...

  • what other societies have learned versus

  • the experience in the United States.

  • Investments are chosen for you.

  • The point is that

  • if you don't want to educate yourself --and some people do --

  • but if you don't,

  • choices will be made for you to make it easy to save.

  • The United States, unlike every other country

  • that has their workers accumulate money

  • for their retirement...we let people take money out.

  • Having to dip into it all the time

  • because I was paying two mortgages.

  • That was very difficult.

  • because I feel like it wiped me out.

  • Between the ages of 22 and 26,

  • wasn't thinking about what was I going to need at 68

  • when I was just trying to pay my rent.

  • oftentimes when I would leave one job,

  • the little bit of money that I had in a 401(k)

  • that can be used to pay off a credit card debt

  • or used to help me pay pay down a student loan.

  • When you need money,

  • You don't care that this might be earmarked for your retirement.

  • If you have a crisis today,

  • you need to take care of that crisis.

  • And that's just a basic violation of design,

  • Long-term savings should be attached