Are you "lucky"if you have a secure retirement?

[JDgreen227]

I recently reconnected with a guy I graduated with and hung out with during high school and afterwards, and the years have not been kind to him. He never found a job that satisfied him during his prime working years from 1970-2010, meaning he never stayed in one position long enough to earn a pension or retirement benefits. Nor did he try to save or invest anything so at age 63 he is working as a Wal-Mart associate and collecting the bare minimum in Social Security. I have an older sister who is basically in the same position because she too never wanted to work full time....just coast along.

Not trying to brag here, but when I began working I tried to find a career that offered a decent pension and other retirement perks, and gradually moved up the ladder over 31 years and tried to invest, as well as renovate a pair of run-down houses that became rentals and I sold at the right time because I followed market conditions. I was able to retire at age 51 when my employer offered an enhanced early retirement...because I had so much home equity built up I got by until SS kicked in at age 62...today I have a pension, SS, and interest income as well as no mortgage.

Invited my recently discovered old classmate over for dinner, and while I think he is happy for me much of what he said made me sad. Quote: "Why didn't my parents tell me that I needed to find a job with a pension, or encourage me to save for retirement? Or it should have been taught to me in school...."

This from a man who has a BA in business....!!!!! You would think he would know the basic facts.

As he left, his parting words were to the effect that I had been very lucky in being able to retire at age 51, perhaps he was trying to make me feel good. Or perhaps not. Pondering over what he said, I began to wonder IF it is actually the responsibility of parents or the school system to advise us about such things. Well....I was an average student in high school and the only real financial advice my dad gave me was "Money in the bank is nice to have but it really does you no good except provide security" yet somehow this C student managed to have enough financial savvy to retire at age 51.

Tell me...am I as "lucky" as my former classmate thinks I am? Thank you for the input.


DISCLAIMER HERE: I am not seeking personal advice, just opinions.

 

[mikehaugen]

I think it's both luck and knowledge. I know a guy that has very little financial sense, or really has no clue what's going on in the world around him. He has worked hard, though, and the cards have fallen right for him as far as buying and selling his last house and he now has a very nice house with very little owed, he is in his early forties. This is all while raising 5 boys, and his wife does not work. None of this was part of any planning process by him, and had the circumstances in his life been different I think he would barely be getting by. It's really not just this example either, it just seems that everything happens to work out to his favor.

This is not to say that he doesn't deserve it, as I said he works hard and is a very good person- treats everyone with respect, even the ones that don't deserve it. So maybe it's just karma.

I do believe it should be discussed with young adults by parents. How else is anyone going to know? Maybe it seems like common sense to some, but is it?

 

[mikim]

as I said he works hard LUCK is a 4 letter word ....spelled WORK ....

 

[phiferpharm]

It's a two-way street I guess. I took the path of working for the same two entities for most of my working career at a lesser salary for many years, BUT a building retirement package. My brother, rest his soul, did contract work that paid extremely well until the type of work he did moved overseas.

I ended up drawing more income when I retired than I did working; he struggled his last years, and I can't help but think it contributed to his failed health. My kids know exactly what both approaches mean, yet each has taken different paths that reflect both what my brother did, and my approach.

I spent considerable time in my military capacity talking to young and mid-career Soldiers about the importance of working towards a retirement. Some get it, but I do think the new generation is more attuned to what's in it for me now versus later.

 

[JDgreen227]

And as mikehaugen says: "it just seems that everything happens to work out in his favor" YUP...sometimes that was my situation too...a favorable investment market, my employer offering a special retirement deal, etc. Yes, it can be called luck in some ways...

I wanted to bring this subject up as many of today's younger folks don't get the opportunity to earn a pension and for them SS may not be there or offer much.

 

[Gary Fowler]

I think it's both luck and knowledge. I know a guy that has very little financial sense, or really has no clue what's going on in the world around him. He has worked hard, though, and the cards have fallen right for him as far as buying and selling his last house and he now has a very nice house with very little owed, he is in his early forties. This is all while raising 5 boys, and his wife does not work. None of this was part of any planning process by him, and had the circumstances in his life been different I think he would barely be getting by. It's really not just this example either, it just seems that everything happens to work out to his favor.

This is not to say that he doesn't deserve it, as I said he works hard and is a very good person- treats everyone with respect, even the ones that don't deserve it. So maybe it's just karma.

I do believe it should be discussed with young adults by parents. How else is anyone going to know? Maybe it seems like common sense to some, but is it?

I don't think many (most) parents are qualified to give their child financial advise. This being said because over 50% (perhaps more) of retirement age folks don't have a secure retirement because they didn't plan for it so I don't think those folks would qualify to be able to give their children or grandchildren financial advice.
Schools should be teaching some sort of structured schooling to high school students so that those that didn't get parental advice when younger can at least know that they should be saving for retirement no later than their first real job.

Some children are natural spend thrifts and others are frugal as I have seen siblings that one would save every penny they got while the sister or brother would spend every cent. I think some of the need to save is genetically built into us, at least some of us, at birth.

 

[mddorange]

What I have discovered is that you can tell someone and show them all the examples but it very rarely changes them and even if it does it is only on the edges. You either have the ability to make the right decisions and willingness to work at it built in or not.

 

[Parkanzky]

I suspect that you just started this thread to pat yourself on the back, but in a way you've earned it. The key is not the pension, but the preparation. Your company could have offered a 401k with a decent match and you'd be drawing from your seven figure retirement account right now. You cared about your retirement and planned for it, while your high-school mate lived in the moment.

In today's world, I'd much rather have a job with a generous 401k match than one that offers a great pension. I've been in three jobs over the past ten years. If these jobs offered pensions, I'd have almost nothing to show for that time. On top of that, corporate bankruptcies routinely modify retiree benefits nowadays. But with a 401k, between my sacrifice (considerable contributions from my check), a good 401k match, and profit sharing, I have a significant amount of money put away for retirement. If I leave this job (I hope I don't have to, I really like it here), I can take it all with me. If the company fails, the money is still sitting in my brokerage account waiting for me to get old enough to draw on it.

I want to stress that sacrifice/delayed-gratification is the key. My previous job did not pay very well at all, so my contribution to my 401k was over 20% of my gross income during that time. It meant taking even less of my already modest pay home, but I made retirement savings a priority over our lifestyle and that will pay dividends (literally) later.

 

[jeff9366]

It is a statistical fact that 40% of the US workforce changes jobs voluntarily or involuntarily, on average, once every two years. Never move beyond starting pay. Rarely qualify for company benefits.

I was twenty-six years old when the original (now called "Traditional") IRA became law. I was working as a cashier for Safeway Food Stores and completing a BA degree on the GI Bill in Washington, D.C. I thought, man, this tax-deductible IRA is a good deal. Road my motorcycle up to T. Rowe Price HQ in Baltimore and opened an IRA a week or so later with $500. Funded it every year in stock mutual funds, 'buy and hold' and retired at fifty-eight years. I will start Social Security in two years, at age seventy.

You always have to have a PLAN. Most people do not.

The last two companies I worked for had 401-K plans. During the lectures it was always emphasized "Pay yourself first." I figured that out before age twenty-six.

Being able to 'get along' with all kinds of people is an important skill. This includes one's spouse.

 

[Parkanzky]

What I have discovered is that you can tell someone and show them all the examples but it very rarely changes them and even if it does it is only on the edges. You either have the ability to make the right decisions and willingness to work at it built in or not.

A dear friend of mine has made a lot of financial mistakes over the years. Several years ago he started following Dave Ramsey and even lead a group dedicated to personal finance at his base (he was also Air Force). He's doing much better, but has continued to do things that make me shake my head. I think that some people are stuck in a "living for the moment" mindset and have a very hard time accepting short-term pain for long-term gain.

I have to admit that I have the opposite tendency. Left to my own devices I'd have a simple (but nice) home, a few really nice cars (my vice) and I'd die with eight figures in the bank (and no heirs). I have to remind myself to do some living for now. Luckily, I'm married to a great woman that will remind me that we should enjoy ourselves once in awhile...