Retirement savings ....Yikes !

[newbury]

And the latest news on this, "raid on uninsured Laiki depositors is expected to raise 4.2 billion euros" by freezing deposits above 100K euros.

Keith

/edit - right now 100K euros equals about 130K US dollars.

In the article (because I realize the vast percentage of TBN'ers never check a link) it points out:

Diplomats said the president had fought hard to preserve the country's business model as an offshore financial center drawing huge sums from wealthy Russians and Britons but had lost.

and

The tottering banks held 68 billion euros in deposits, including 38 billion in accounts of more than 100,000 euros - enormous sums for an island of 1.1 million people that could never sustain such a big financial system on its own.

I wonder how much political pressure was received from Russia and Britain in hopes some of those funds would come home and be taxed?

I'm sure all those who park their money in offshore accounts to avoid taxation at home are paying attention to this and vast sums are being switched around.

 

[MossRoad]

Sounds good. 30% loss, ugh. Glad you recovered. I just misread the 5% I guess and thought I was figuring it wrong. Agreed, doubling up every 7-8 years would be great.

Yeah. 30% loss was almost hard to take... I had visions of stock brokers jumping out of windows ala great stock market crash of 1929. However, settling down, remaining calm and realizing our house was paid off, our property taxes are low, we are debt free since 1995 or 1996, and we could survive with the necessities of life... you might have to give up the gravy, like sattelite TV, high speed internet, car, etc... but you will be warm and not hungry.... that's what's most important. Plan for the minimum existence, stock up the savings when you can, enjoy a little of the gravy like sending the kids to better schools when you can afford it, take some nice vacations, better used car, etc... but don't be a hog on the luxuries just because you can.

 

[aczlan]

I wonder how much political pressure was received from Russia and Britain in hopes some of those funds would come home and be taxed?

It depends on how much money Putin and friends have deposited in the banks there vs his non-friends and enemies...
If Cyprus falls into Putin's grip, the West will have lost the first battle in the new Cold War | Mail Online
Cyprus: Was Putin in on the deal?

Aaron Z

 

[mjarrels]

I bet there was at least one Russian submarine setting off the coast of Cypris to make the banks go away if a agreement was not made.

mark

 

[Travelover]

One option to to just invest at Vanguard in their Wellesley or Wellington accounts. They are automatically rebalanced between stocks and bonds, so as stocks go up, your gains are locked in as bonds. One is two thirds stock, 1/3 bonds, the other is 1/3 stocks two thirds bonds. By owning both, you can adjust your stock / bond ratio to anything in between the two. Wellington was founded in 1929, so it has a long history. With their low expense ratios you can save a lot on fees that eat into your stash over time.

 

[keegs]

Yeah. 30% loss was almost hard to take... I had visions of stock brokers jumping out of windows ala great stock market crash of 1929. However, settling down, remaining calm and realizing our house was paid off, our property taxes are low, we are debt free since 1995 or 1996, and we could survive with the necessities of life... you might have to give up the gravy, like sattelite TV, high speed internet, car, etc... but you will be warm and not hungry.... that's what's most important. Plan for the minimum existence, stock up the savings when you can, enjoy a little of the gravy like sending the kids to better schools when you can afford it, take some nice vacations, better used car, etc... but don't be a hog on the luxuries just because you can.

for me ...more a disappointment than a "hard to take".... They say it's important to know your volatility threshold when deciding your asset allocation. If these last five years didn't rattle me, then I'm thinking my threshold is pretty high....

 

[dmccarty]

... 30% loss, ugh. Glad you recovered. I just misread the 5% I guess and thought I was figuring it wrong. Agreed, doubling up every 7-8 years would be great.

That was a paper loss or at least it was for me. Back around 2008 when the market crashed our investment value fell dramatically.

So what? Who cares? It was, and is, just a bump in the market. The value popped right back up in a year or so and the value has been increasing since that time. If one does not sell, it is only a paper loss. We have decades to go before we can retire and our investments should double 2-3 times before then.

If one wants a high percentage return, then one has to take on more risk. If one wants a certain return, then that is low risk and low return. If we could make money with no risk and large returns everyone would do it.

There are VERY, VERY few people who can time the market and pick stocks. Some of the people who have been good stock pickers than fail which makes one wonder if they were not just lucky. The WSJ used to do a story at the first of the year where stock pickers would pick stocks and then at the end of the year the paper would review the picks. It was not pretty. How many Warren Buffets are there?

Later,
Dan

 

[PsRumors]

That was a paper loss or at least it was for me. Back around 2008 when the market crashed our investment value fell dramatically.

So what? Who cares? It was, and is, just a bump in the market. The value popped right back up in a year or so and the value has been increasing since that time. If one does not sell, it is only a paper loss. We have decades to go before we can retire and our investments should double 2-3 times before then.

If one wants a high percentage return, then one has to take on more risk. If one wants a certain return, then that is low risk and low return. If we could make money with no risk and large returns everyone would do it.

There are VERY, VERY few people who can time the market and pick stocks. Some of the people who have been good stock pickers than fail which makes one wonder if they were not just lucky. The WSJ used to do a story at the first of the year where stock pickers would pick stocks and then at the end of the year the paper would review the picks. It was not pretty. How many Warren Buffets are there?

Later,
Dan

The bold is not 100% accurate. Take GM for instance, all their stock became worthless and many lost quite a bit without selling. The same thing happened with WorldCom, Enron, etc in the early 2000s.

Some losses cannot be recouped.

 

[Ridgewalker]

You guys are freaking me out! I am a tail end baby boomer who came up poor and I have always worked and saved
as much as I could. I think my wife and I are going to be OK but it's still pretty scary when you think where this country is going.

I am 51 and I have almost 500K in a 401k, I rode out 08 because that's what I was taught to do and the 401K has recovered
and then some since then. I am starting to think about moving some of the money into safer investments but when I looked at the mix recently
its already pretty conservative. I have thought about cashing it out but that 20% hit has me wary of that and if I did
what would I do with the cash?

I'm in a house that we bought a year ago, we got a great price and a 3.375% rate. It's a 30 year note and we are paying it in such
a way that it would be paid in 20 years if we stay here that long. I used to think paying off your house was critical, now I am not so sure.
I already have enough equity in this house to be able to sell it and pay cash for a 100-150K place if needed so cashing out the 401k to pay
off the house doesn't make sense to me.

I do have other investments; land, a rental house and I jumped into PM's last fall. Considering I only have a high school education I feel like I have
done pretty well but I still have a long road ahead God willing.

How do you know when you have enough put away?

 

[Furu]

There have been several references to failed corporations walking away with folks retirements leaving them with nothing. That is indeed true. That has happened to a lot of folks. In some cases there has not been enough left of those corporations to do anything with; but in many cases the courts have allowed, under bankruptcy laws that the lawmakers have passed, raids on pension funds to fix the bankrupt corporations. The PBGC picks up the pensions at cents on the dollar and the retiree suffers immensely with a pension that they worked years for, evaporating to little or nothing. This is the courts applying the laws that have been passed by the lawmakers. We desperately need bankruptcy reform, as we need tort reform and many others types as well, but do not hold your breath on that occurring. Companies like normal folks in most cases follow the law and what it allows. Because it is legal does not make it ethical or just. Those that do not follow the law have long term prison sentences. Enron for example. The problems is that some of the laws are not just and need to be fixed. Don't blame an individual who is in compliance with the law for following it, blame the law and then fix the law. Improvements have been made but special interests keep the problem from being resolved. One man's justice can sometimes be another man's injustice, it depends upon where you are sitting as to how it is viewed.

If a company goes into bankruptcy and a DB plan is raided under court ordered reorganization and 10,000 retirees effectively lose their benefits is that more or less "JUST" than protecting the DB for the retirees and causing liquidation of the company, resulting in 10,000- 15,000 current employees losing their job as the company is liquidated? Not everyone sees it the same and that is one of the thorns in "fixing" the bankruptcy laws.

If the bankruptcy laws were "fixed" to prevent pension fund raids (yes there have been improvements but there is so much room to improve still) that would be much more equitable. When pensions were first started it was a form a deferred compensation. Basically money that you earned that you would be paid in retirement. Some say it was because folks could not do it on their own, others because the value cost of a DB money in the future is less than today and thus it saved corporations money. Now that DB (defined benefit) plans are on the wane and DC (defined contribution) plans have become the norm the theory is that folks are better off not being tied to the company's health if the company fails. That is true but there are drawbacks. Companies do it to get out from under the risk of DB plans. The problem is the company "match" is not quite adequate in many cases to off set the former DB gain. The other problem is what has been brought up here over and over is that folks do not know how to save unless it is forced upon them. We have forgotten how to do that as a society. In my company there has been a recent change-over from DB to DC plans with a good match. For an employee hired at a normal age with a 5% annualized growth (conservative estimate in the long-term) they have significantly more retirement money at 65 years of age than the previous DB plan provided. If however the employee does not choose to fund the DC plan it fails miserably. And we are right back to where this thread started with folks not saving for retirement but spend, spend, spend, spend.