Editorial: Retire in Pittsburgh with $1 million?
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Sometimes it isn’t how much money you’ve got.
It’s how you’re going to spend it.
Last week, SmartAsset released its third annual study showing how long a $1 million retirement nest egg would last in various U.S. cities. In Pittsburgh, you can stretch that pot of money to cover 23.14 years worth of food, housing, health care, lights and heat and more.
On the one hand, that’s 166th of 250 cities, which means you can muddle along 8.5 years longer in Harglingen, Texas, than you can in Allegheny County.
On the other, it might not matter because not enough people are saving that million in the first place.
Despite being a threshold that financial advisers suggest as a good goal line, not many people are preparing for their golden years by socking away some green. Money site The Motley Fool observes that growing chunks of the population may never know what retirement is, and if they do, it won’t be at 65. A 2019 GoBankingRates survey says 64% of Americans who do retire will be broke when they do it, with only 3.9% having $500,000 or more stashed away.
U.S. News & World Report recommends starting to save at 25 and putting aside $400 a month. In 40 years, principal plus interest will get you over the $1 million finish line.
But the median household income in Pittsburgh is $45,831, according to the U.S. Census Bureau. If you’re at that average, $400 is more than 10% of your monthly income, and that’s before taxes. After taxes? More like 20%. That’s a lot of money to pull out of your paycheck, even though most people would acknowledge it’s the right thing to do.
Maybe the goals should be smaller, more regular and start even younger because it seems like saving is a lost art.
Let’s not look 40 years down the road. Let’s look around an unexpected corner where a water heater bites the dust or the transmission goes out in your car. Another survey from Bankrate says people don’t have enough money saved to meet a $1,000 emergency.
More and more, people are stretching their paycheck hoping it makes it two weeks until the next one comes. The idea of a $1 million account rolling out over two or three decades can be almost unimaginable.
People have to start imagining it.
Parents should be teaching their kids the value of a dollar, and more importantly, the value of turning that dollar earned into a dollar saved. If we only focus on the value of what that dollar will buy rather than what it costs not to save it, we raise a generation that doesn’t understand the longevity of money.