Jen gets a big, dumb earful about retirement planning at the diner

Neon diner sign

I just had a late lunch at my hometown diner, a New Jersey classic where the waitress always carries a fresh pot of coffee and calls you "hon."

Next to me was a group of very loud older patrons who had THEORIES!

Many of them were about no-good siblings, taxes, politicians and how kids should "just get jobs."

Then they started talking about retirement.

The conversation was dominated by an older gentleman who said he's ready to retire but can't yet because he doesn't have enough money.

"I did what I was supposed to do," he said. "I put the max into my Roth IRA for the last 20 years. And it's still not enough!"

Well, duh.

I don't want anyone I know to be this guy, sitting in the same diner booth a couple of decades from now, trying to figure out where their retirement plan went wrong.

So let's deconstruct his saving history, starting with the fact that the Roth IRA hasn't been around for 20 years. Only 15.

And we'll assume that he was 50 years old when he started dropping money into his Roth Individual Retirement Account.

The maximum you can contribute today if you're over 50 is $6,000 a year.

That's not bad compared to the limits from when the Roth IRA was first created. From 1998 to 2001, you could only drop in $2,000, and the cap inched up from there.

If he put the max into the Roth IRA every year it was available, he'd have invested $63,000.

That's a lot. But for retirement? Not even close to enough.

Our retirement calculator can tell you exactly how much you'll need.

If you make $65,000 a year and want to replace 70% of your income in retirement, you'll need a nest egg of about $2 million to do so.

I fear he's an example of how little people know about how much they really need to save, and how unprepared most Americans are for do-it-yourself retirement.

It's why a growing number of people are convinced that this great experiment of letting people plan for their own retirement instead of getting a pension has failed.

Look at what this guy did.

Where does anyone say that maxing out a Roth IRA every year for 15 years is what you're "supposed to do"?

Just because the government limits the maximum amount you can contribute to a tax-deferred retirement plan doesn't mean that's all you need to save.

Hitting contribution limits on an IRA or 401(k) plan doesn't win a government stamp of approval that you're doing everything you need to do for a secure and happy retirement.

Those are limits for tax purposes. Nothing more, nothing less.'s 10 secrets to successful retirement savings can help.

Start looking at this now, when you still have plenty of time to change your strategy, not when you're 65.

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