This annoys the hell out of me. "Retirement account" here is a tax deferred account like a 401k or an IRA, right? There are limits to how much you can put into accounts like these, and in today's world it can be difficult to adequately fund a comfortable retirement on these savings alone.
If you make a modest income but are careful about your spending, it's not unreasonable to have leftover after-tax money that you can invest in other ways. That doesn't mean it somehow ceases to be retirement money.
> where they could use it for things other than retirement
Retirement isn't some thing you just go to the store and buy. There's no clear split between buying goods and services that are "retirement things" and "non retirement things."
Some people retire by quitting their job once they reach some magic number in an account, and then hope that they die before their balance goes to zero. This is increasingly harder to do if you don't want to be working past 70.
The age threshold for withdrawal from some of these tax deferred accounts can be a significant hindrance if you plan to fund your retirement in other ways such as by buying a rental property. You don't want to be buying the property at 60, you want to have already bought it, done maintenance, allowed it to depreciate a bit, etc. so that you can actually make a reasonable profit by the time you're 60.
But your concern of their limitations applies to so few people.
Roughly 30% of people have less than $1000 saved for retirement, in any kind of account [1]
Roughly 55% of people have less than $25K saved, in any kind of account
The 401k personal contribution limit is $17,500 this year, and if someone had a 50% match form their company, they could top that in just ONE single year.
Yes, I know that the vast majority of people don't/can't/won't plan for retirement at all. But we're already talking about "parents with modest incomes but a lot of savings from planning their own retirement." Many of these people could fall into this category.
If you make a modest income but are careful about your spending, it's not unreasonable to have leftover after-tax money that you can invest in other ways. That doesn't mean it somehow ceases to be retirement money.
> where they could use it for things other than retirement
Retirement isn't some thing you just go to the store and buy. There's no clear split between buying goods and services that are "retirement things" and "non retirement things."
Some people retire by quitting their job once they reach some magic number in an account, and then hope that they die before their balance goes to zero. This is increasingly harder to do if you don't want to be working past 70.
The age threshold for withdrawal from some of these tax deferred accounts can be a significant hindrance if you plan to fund your retirement in other ways such as by buying a rental property. You don't want to be buying the property at 60, you want to have already bought it, done maintenance, allowed it to depreciate a bit, etc. so that you can actually make a reasonable profit by the time you're 60.