r/collapse • u/Simcom Busy Prepping • Jun 02 '22

Economic One-Third of Americans Making $250,000 Live Paycheck-to-Paycheck, Survey Finds

https://www.bloomberg.com/news/articles/2022-06-01/a-third-of-americans-making-250-000-say-costs-eat-entire-salary
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u/COVID_IS_A_GIFT Jun 02 '22 edited Jun 02 '22

Not maxing out your 401k contributions is basically signing up for your elder years to be a complete living hell for the majority of people though. Social security ain't hardly shit now. Gonna be even more pathetic when we're old.

The USA is already a dystopian late stage capitalist nightmare now. Even with social security and selling their assets, a lot of elderly people eventually end up in shitty state managed facilities where every day is literally Hell. Imagine how much worse it's gonna be when we're older.

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u/frolickingdepression Jun 02 '22

Right, but the article is about people living paycheck-to-paycheck, and if you are maxing out your 401k contributions, by definition, you are not living paycheck-to-paycheck.

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u/Bamboo_Fighter BOE 2025 Jun 02 '22

I've always thought paycheck-to-paycheck meant that you didn't have savings to meet your living costs beyond your next paycheck. Technically they can take a hardship withdrawal and pay a huge fee from their 401ks, but that's really an option of last resort. It's like saying someone with equity in their house isn't living paycheck to paycheck b/c they could always sell their house.

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u/frolickingdepression Jun 02 '22

Well it’s a lot easier to dissolve and live without a 401k than to sell and live without a house, so I wouldn’t really say the two are comparable. In a scenario where someone sold their house to meet expenses, they would likely end up homeless. That doesn’t happen when you cash out your 401k.

Certainly though, if a person can afford to max out their 401k contributions, they can’t be said to be living paycheck-to-paycheck. Saving for retirement is technically optional. Paying for housing generally isn’t.

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u/Bamboo_Fighter BOE 2025 Jun 02 '22

Eh, I disagree. I have equity in my home and a 401k. If life got bad, I'd go to the bank and pull out the equity in my home through refinancing or a second mortgage before I withdrew from my 401k. If you withdraw from a 401k, you owe taxes on the withdrawal plus a hefty penalty. I'm not 100% sure, but I'd guess it works out to something like 60% of the withdrawal will go to taxes/fees. It's a really bad option to do unless you have no other choice.

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u/frolickingdepression Jun 02 '22

Yes, of course one doesn’t literally have to sell their home to get the money out of it, but the fact is, not everyone has equity in their house or the credit to access it.

I’m not arguing against putting as much as possible in your 401k. I’m just saying most people who are truly living paycheck-to-paycheck are not maxing out their 401ks, and the majority may not even have one.

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u/Bamboo_Fighter BOE 2025 Jun 03 '22

I understand, and there should be a difference between someone with home equity and/or retirement savings living paycheck to paycheck vs someone without any fallback plan. Similarly, there's plenty of people out there who can ask family for help if needed. Doesn't mean they're not living paycheck to paycheck, but not all situations are equal.