Retirement planning

[RedNeckGeek]

I worked with a lot of scientists, too. Some were so smart the Lab had to get a crossing guard at noon to keep people safe on their way to the cafeteria. That's a long winded way of saying that just because someone is smart doesn't mean they're equipped with the skills and knowledge needed to manage their money. After all, personal money management is still not taught in high school! Life has a way of not working out as planned. All a person can do is try to prepare for the worst and hope for the best. But a lot of people don't prepare, don't even give that kind if thing any thought at all. And even those who do will need a healthy dose of luck to come out OK in the end.

When I was a kid, gasoline was $0.25/gallon, and during gas wars could be had for a dime. Last year, 43 years later, I paid over $4.00/gallon, sixteen times as much. I'm planning to live at least another 30 years; how am I going to afford gasoline at $36.00/gallon living on a fixed income? Think my savings will compound as fast as gasoline? Think Social Security will make up the difference? I'm betting it won't even survive the next fifteen years, at least not as we know it now.

The way I understand it, Social Security has grown far beyond the original intention, and in my opinion left any kind of sound financial basis in the dust many years ago. I've never counted on it, and have resented every penny I've been forced to contribute. It's very likely I'll never collect enough even to match my payments, let alone any inflation adjusted or average return amount. But that's how it has to work if those that don't contribute are also paid benefits. I just think it's grossly unfair that those that take responsibility for their financial welfare are limited to the same returns as those that do not. And that those in charge seem to think it's OK to keep moving the carrot farther away every year I get closer to claiming my piece of the pie. But what choice to our elected officials have? If they don't vote bread and circuses for the masses, they don't get reelected. And most have no qualms voting pay raises for themselves, just as most of the electorate happily vote to spend money the government doesn't have, especially if it furthers their favorite cause or helps line their pockets at other's expense. Yep, we've got the best government money can buy...

 

[RedNeckGeek]

Without SS, many of these people would be on some other government dole, paid for by us.

Maybe if people weren't given a false sense of security by having Social Security, they'd have better prepared for their retirement years?

 

[Duwop]

I worked with a lot of scientists, too. Some were so smart the Lab had to get a crossing guard at noon to keep people safe on their way to the cafeteria. That's a long winded way of saying that just because someone is smart doesn't mean they're equipped with the skills and knowledge needed to manage their money. After all, personal money management is still not taught in high school! Life has a way of not working out as planned. All a person can do is try to prepare for the worst and hope for the best. But a lot of people don't prepare, don't even give that kind if thing any thought at all. And even those who do will need a healthy dose of luck to come out OK in the end.

When I was a kid, gasoline was $0.25/gallon, and during gas wars could be had for a dime. Last year, 43 years later, I paid over $4.00/gallon, sixteen times as much. I'm planning to live at least another 30 years; how am I going to afford gasoline at $36.00/gallon living on a fixed income? Think my savings will compound as fast as gasoline? Think Social Security will make up the difference? I'm betting it won't even survive the next fifteen years, at least not as we know it now.

The way I understand it, Social Security has grown far beyond the original intention, and in my opinion left any kind of sound financial basis in the dust many years ago. I've never counted on it, and have resented every penny I've been forced to contribute. It's very likely I'll never collect enough even to match my payments, let alone any inflation adjusted or average return amount. But that's how it has to work if those that don't contribute are also paid benefits. I just think it's grossly unfair that those that take responsibility for their financial welfare are limited to the same returns as those that do not. And that those in charge seem to think it's OK to keep moving the carrot farther away every year I get closer to claiming my piece of the pie. But what choice to our elected officials have? If they don't vote bread and circuses for the masses, they don't get reelected. And most have no qualms voting pay raises for themselves, just as most of the electorate happily vote to spend money the government doesn't have, especially if it furthers their favorite cause or helps line their pockets at other's expense. Yep, we've got the best government money can buy...

When I was younger say 20s-30s I too resented having those dollars removed from my pay thinking of all the lazy, sorry people who draw SSI. I never thought it would be there when I retired and as most I never made enough to set aside a nest egg for retirement. When they use to send out the SSI statements I would calculate my life's earnings and payments to SSI and the last time I looked at one several years ago, if memory serves me I think my contribution was somewhere in the range of 30-40K dollars without knowing how it's compounded with the investments made I thought heck I'll never be able to survive on that. Well now in my 50s and some severe accidents related to my chosen profession (Roofing) I am disabled. If not for SSDI and W/C insurance I would be one of the people I hear many people complain about the broke looking for handout, food from the food bank living on the dole. I proudly collect my SSDI and comp benefits ( due until death because of laws in place at the time of accident) and am not broke and on the dole.
You may resent paying in now, I assume your in good physical condition and healthy, but what if your life came crashing down today? It can happen you instantly become disabled you may be surprised at what you will need and where it will have to come from. I have been disabled for 5 years and feel I have collected my share minus what ever the compound interest earned on my contributions. To know many look down there noses at us on the dole without knowing our story is a shame. I would give my eye teeth to be able to return to work and gladly pay into a system that would benefit you if you needed to collect. That is how it was created. I can tell you if all I collected was the SSDI benefits I could survive but not as comfortably as I do today. I try to teach my children to save something even 10 bucks a week it adds up. Get serious about saving for retirement you will need it. SS may change some in the future but it has been an evolving program since inception, it will always be there short some societal crash. What would happen to all the elderly and disabled people if it were gone. What would happen to you?

 

[Ken]

I grew up in a world being cautioned not to trust Lawyers or Bankers The reason my Grand Father had borrowed money to purchase a farm and during the depression failed the payments .My Father borrowed from same banker to help his Father. the amount of $1200 dollars in errors the lawyers called it when banker called the note and took both farms.
So remember my Father working for the WPA system until could restart farming that grew into a Dairy and things
were improving financially and after WW11 the city of Denver expanded its city limits and grand fathered the farmers. EXCEPT until some one complained then notice to shut down farm and dairy. New Housing area was being built the taxes of home owners was more than farmers.

He moved with small amount of funds and bought a farm in Ark. not rich in standards of today but able to enjoy a life with income to be able enjoy a normal live. Soc. Sec at age of 65 was $13 bucks.
Covered the utilities and taxes of that period.

I now live on same farm and the annual taxes and cost of utilities is in excess of $600 a month.

I worked for a Natural Gas company that had their plans ruined by Pres. Carters Mid Night Summer dream of
going to be out of gas in couple of years. and shut down the pipelines.
No pipe line no need for employees so took my savings from company and returned to Ark.

Worked for Elec. power company again saving funds for retirement. then the economy caused company to offer a early buy out of for those age 55 above so at 59 had only reliable funds of what I had saved and started to enjoy the retirement living.

Now after 20 years retired have more funds and pay more taxes on my income than when working.

The value of dollars is less every time the Pres./ Congress meets and agrees to give away or spend on useless projects designed to return to there pockets funds rather than decrease the debit and return this country on a path of financial soundness.

Trust nothing on promises and watch where you place your money. only hogs look into a bucket on what is remaining rather that enjoy the food in the trough.
And above all never trust a family member to return a loan even if a Lawyer made a iron clad contract.
Federal Gov. by Chapter 7 bankruptcy will over ride all agreements.
And the IRS will take the frosting off the cake first.

such is life
ken

 

[wmonroe]

Just for clarification ... SS has NOT ONE PENNY in the bank. Taxes flow into the general fund and right back out again. The concept of a separate funded SS system ended when politicians violated the trust of the people and raided the account to fund their pet projects. If the government was held accountable to the law, the same as businesses and individuals, most of our politicians would be in prison.

Very true! I meant there is "supposed" to be money in the SS account.

 

[Spindifferent]

Something I haven't seen mentioned here yet is the Boeing Study, a correlation between retirement age and age at death.

Thanks for sharing this. My financial philosophy and practice are very similar to yours. I'm 50 now, and planning on early retirement at 55 if all goes according to my plan.

Regarding the Boeing Study, perhaps this will shed some light:

http://www.boeing.com/companyoffices/empinfo/benefits/pension/seminars/Rumor.pdf

 

[ultrarunner]

Never trusted paper... so the markets are something I have very little direct exposure.

I do like income property... not because it is easy... but because it is a way to leverage and also have some inflation protection.

As I get older... I've exchanged into some commercial property with long term leases... so far so good.

One of the best financial moves I've made was buying distressed homes, moving in, renovating and then moving to the next... keeping the one I just moved from as a rental...

Plan was one home every 18 to 24 months... worked well for 10 years and then I succumbed to accepting a job at the community Hospital with all the big company benefits... still have rentals and still have the job... the only thing that has changed is the almost all the big company benefits are long gone... including the pension plan...

 

[RedNeckGeek]

Thanks for sharing this. My financial philosophy and practice are very similar to yours. I'm 50 now, and planning on early retirement at 55 if all goes according to my plan.

Regarding the Boeing Study, perhaps this will shed some light:

http://www.boeing.com/companyoffices/empinfo/benefits/pension/seminars/Rumor.pdf

Mark Twain is often quoted as saying "There are lies, **** lies, and statistics."

If one googles for the actual study (“Actuarial study of life span vs. retirement age” by Ephrem Cheng), there are lots of papers that comment on the study, but I was unable to find the study itself. That struck me as odd for such a highly studied study. Without reading Cheng's article, it's not possible to understand what factors might have been at play in the population of Boeing employees he studied. But for me the take away was that negative factors in the work place can have a strong impact on one's health, and when that started happening in my own life, exposure to the idea espoused in the Boeing Study helped me appreciate the correlation and take action. Two employees at my workplace actually died at their desk during my career, further reinforcing my desire to make my retirement years as long as possible by starting them as soon as I was able. That led to not only focusing on understanding how my money was being spent (a major enabler of early retirement), but on how healthy I was (a huge quality of life factor) and how that healthy condition was maintained. Conditions at work deteriorated to the point where I no longer had time to exercise, cook healthy meals, and deal with work related stress issues, and I realized I had a choice of either staying on the downward spiral or making a change. Because I'd lived within my means and had learned some money management skills, early retirement was a possibility. My last two yearly physical exams were a nightmare of high blood pressure, overweight, cholesterol, and poor physical condition, issues I'd never had to deal with before but that I could correlate to my move to working longer hours and accepting more responsibility. Bottom line? When the writing on the wall told me it was time to retire, a history of good financial planning and management, along with a good dose of luck, enabled me to do so. For me at least that was the lesson I learned from the Boeing Study, and it really doesn't matter if the study conclusions are real or not.

 

[doxford jim]

Having been burnt and taken advantage of by both the banks and so-called advisors, I would not trust either of the afore mention completely. Guaranteed they are after one thing - your money, period. Sure listen to them and learn and also research as much as possible beforehand. Once money is lost using either "advisors or banks" there is no refunds for poor service - they don't give a ship.
Sorry if I sound jaded, but it is what it is.

My advice is don't believe anyone where your money is concerned - doubt and ask questions as needed and don't be afraid to offend the people/companies concerned. Remember, it is your money they are after and you will pay handsomely to let them handle it (10% - 20% etc.).

 

[ultrarunner]

Mark Twain is often quoted as saying "There are lies, **** lies, and statistics."

If one googles for the actual study (“Actuarial study of life span vs. retirement age” by Ephrem Cheng), there are lots of papers that comment on the study, but I was unable to find the study itself. That struck me as odd for such a highly studied study. Without reading Cheng's article, it's not possible to understand what factors might have been at play in the population of Boeing employees he studied. But for me the take away was that negative factors in the work place can have a strong impact on one's health, and when that started happening in my own life, exposure to the idea espoused in the Boeing Study helped me appreciate the correlation and take action. Two employees at my workplace actually died at their desk during my career, further reinforcing my desire to make my retirement years as long as possible by starting them as soon as I was able. That led to not only focusing on understanding how my money was being spent (a major enabler of early retirement), but on how healthy I was (a huge quality of life factor) and how that healthy condition was maintained. Conditions at work deteriorated to the point where I no longer had time to exercise, cook healthy meals, and deal with work related stress issues, and I realized I had a choice of either staying on the downward spiral or making a change. Because I'd lived within my means and had learned some money management skills, early retirement was a possibility. My last two yearly physical exams were a nightmare of high blood pressure, overweight, cholesterol, and poor physical condition, issues I'd never had to deal with before but that I could correlate to my move to working longer hours and accepting more responsibility. Bottom line? When the writing on the wall told me it was time to retire, a history of good financial planning and management, along with a good dose of luck, enabled me to do so. For me at least that was the lesson I learned from the Boeing Study, and it really doesn't matter if the study conclusions are real or not.

My friends at the lab experienced the same... quite a change going from loving your job go counting the days...