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katy @ ngenius.com

Disparity

Enormous disparity in sibling's retirement


How thoroughly do you know the financial circumstances of even your own family members?

I was recently invited to a party and as the guests dwindled, the five siblings ended up openly sharing with each other (apparently for the first time) what their retirement years would look like from a monetary perspective.

Three of the five siblings have traditional pensions in place, which would essentially replace nearly their full incomes upon retirement. When two of them stated how much money they’d be receiving, I saw another sibling start to appear awestruck.

“I’ll only have however much I’ve put into my 401K. I don’t even understand what a pension is.”

A fifth sibling joined 401K-only girl, but this last sibling was in much more favorable current circumstances and would have the opportunity to invest much more money than Sibling Four. In fact, anything Sibling Five said to try to comfort Sibling Four did not hit its mark. The only thing they really shared in common was the lack of pension.

It was when Pension Number Three got specific that Sibling Four nearly lost it. Because Number Three not only has an extremely adequate pension, but already had a huge 401K in place at a young age.

“I think we’ll be able to live on our pension pretty well, but it might be a little tight,” Number Three said. And then Number Three went ahead and named the guaranteed monthly amount. It’s more than four times the monthly amount Sibling Four earns WHILE WORKING.

Sibling Four looked truly shocked. And amazed. And dismayed. “You mean, they’ll pay you that much for not going to work?”

Five siblings. All started out relatively (ha!) equal in life—-with the same advantages and disadvantages. And yet in their so-called Golden Years, an enormous disparity will exist among them.

It made me sad, but I’ve got to wonder how often this happens across America every day?

And if siblings very often share the particulars of their situation with each other like those kids did?

Do you know how well-off your siblings will be when they retire? Is it better not to know?

Posted by Katy on 06/03/08}
in Personal FinanceRetirement



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