Retirement = no money

[simpsontruckdriver]

Retirees are going broke.

As a side note, [deleted to comply with TUG Posting Rules: "Individual users please note that messages promoting anything for which you may receive some personal gain are considered to be advertising, and are thus prohibited."]

TS

 

[lprstn]

At this rate I'll never be able to retire...

 

[am1]

No mention of net worth.

Downsize and sell the family home.
Invest savings in things that return more than inflation.
Spend less on kids college tuition.
Stop gambling.
Stop buying timeshares.

Any number of other things can help.

 

[geekette]

Start early and save save save. I can't retire today, but wasn't planning on it, so will continue to save save save for the next 10-20 years and pinpoint a retirement date 'later'.

It's a big problem when people consider SS To Be THE retirement income. I think this is going to get a lot worse in coming decades as the low-wage employees of today and tomorrow won't have 401ks and may not save into an IRA/Roth on their own.

I feel fortunate to have been offered a 401k at every job since my mid-20s, but have also funded my own IRA and Roth. I have a great fear of outliving my money, which I find to be a powerful motivator in saving.

 

[vacationhopeful]

Yet when the older defined pension plans seem to end in late 1982 in corporate American, and profits went up for those same corporations in 1983, most Yuppies just looked at their paychecks and some pitence Bonus Checks as better than sliced bread. Idiots.

And now those same Yuppies are looking at retirement - a much poorer retirement than their parents - wondering why?

And for selling the family home to fund retirement - refinancing for luxury cars, vacations, paying off credit cards, private high schools - there is very limited equity in those homes.

And who will be buying those (used and dated) McMansions? The college educated younger generation who have student loans balances of over $300-600K per couple?

 

[Passepartout]

Of all the wisdom passed to me from my parents, the BEST was 'PAY YOURSELF FIRST', followed closely by, 'Live beneath your means'. In other words don't live in the most expensive house you can afford, be happy with a reliable 10 year old car, and a State school gives a fine education.

Unless I live far beyond 100 ( very unlikely) or the value of investments or currency tank, I see no way to run out.

I am concerned about the majority of the next generation, but have counselled mine as I was. I think it took. They will be fine.

Jim

 

[vacationhopeful]

Of all the wisdom passed to me from my parents, the BEST was 'PAY YOURSELF FIRST', followed closely by, 'Live beneath your means'. In other words don't live in the most expensive house you can afford, be happy with a reliable 10 year old car, and a State school gives a fine education.

Unless I live far beyond 100 ( very unlikely) or the value of investments or currency tank, I see no way to run out.

I am concerned about the majority of the next generation, but have counselled mine as I was. I think it took. They will be fine.

Jim

Jim,
I agree that there are some parents who have passed on Financial Skills to their children -- all you can do is HOPE it sticks and as my BIL once said when asked how he could retire at 65, "One wife and one set of kids".

 

[geekette]

Yet when the older defined pension plans seem to end in late 1982 in corporate American, and profits went up for those same corporations in 1983, most Yuppies just looked at their paychecks and some pitence Bonus Checks as better than sliced bread. Idiots.

And now those same Yuppies are looking at retirement - a much poorer retirement than their parents - wondering why?

And for selling the family home to fund retirement - refinancing for luxury cars, vacations, paying off credit cards, private high schools - there is very limited equity in those homes.

And who will be buying those (used and dated) McMansions? The college educated younger generation who have student loans balances of over $300-600K per couple?

I think that running up 300-600 k in college loan debt is a bad idea to start with. One can ruin their chances of a decent retirement by starting out this way unless they have a very lucrative career and live beneath their means.

I also think a parent has no obligation to spend hundreds of thousands on a kid's education in order to ruin their own retirement.

 

[simpsontruckdriver]

My grandfather-in-law did everything right. He had investments and a pension, so he retired at 55 in the mid-80s. Up until he died in late 2011, money was not an issue. When my wife and I toured an assisted-living complex a couple weeks ago, a 90-ish (I don't remember her exact age) lady talked about retiring 30 years ago, and not having any issues with finances.

It's all about planning as early as possible, and budgeting for a 70% income cut at retirement. Another place people SHOULD NOT plan to get money is from home equity, as "Reverse Mortgages" can do more damage than good.

TS

 

[vacationhopeful]

My grandfather-in-law did everything right. He had investments and a pension, so he retired at 55 in the mid-80s. Up until he died in late 2011, money was not an issue. When my wife and I toured an assisted-living complex a couple weeks ago, a 90-ish (I don't remember her exact age) lady talked about retiring 30 years ago, and not having any issues with finances.

It's all about planning as early as possible, and budgeting for a 70% income cut at retirement. Another place people SHOULD NOT plan to get money is from home equity, as "Reverse Mortgages" can do more damage than good.

TS

Not totally true. Both of your examples involved PENSIONS of the old type - my father had 3 PENSIONs which did NOT reduce benefits plus his Social Security. VERY HARD to explain to my siblings that he was a CASH generating old person - PIA, but cash generating. He retired with his first pension in Nov 1982; retired with his second pension a little over 3 years later (using his last 3 years of FULLTIME employment with his 17 years of parttime municipal employment service) - his benefit was the HIGHEST 3 years of pay. Plus, he was a veteran with 20 years as a parttimer as an Army officier. Plus Social Security. I believe they even had COLA increases and medical benefits. He lived over 21 years after his first retirement.

He also took the MAX benefit without splitting it if his wife survived him - and he won on that too. My Mom predeceased him by 3+ years.

Family wealth is also removed from the next generation via dependant old age care. Unless your elderly relations have paid for Longterm Care Insurance, many upper middle class estates are drained dry (spent down to qualify for Medicaid). You can NOT have a working job and ever save enough to pay for 3+ years in a custorial care (nursing home) while allowing the functioning spouse keep the same standard of living for another 10+ years. To qualify for Medicaid (nursing home care), the assets have to be under $70K for both spouses.

And thing - inheritance taxes truly reduce family wealth MORE for the upper middle class than the wealthy. The wealthy have estate planning for multiple millions while a under multiple million dollar estates can not afford the fees to set up those trusts and manage them.

Getting old for us Baby Boomers is NOT GOING to be pretty. Most of us will be working into our 70s - fulltime.

 

[theo]

How so?

<snip> Another place people SHOULD NOT plan to get money is from home equity, as "Reverse Mortgages" can do more damage than good.

You may well be right; I don't claim to know much about (or plan to ever utilize) a "reverse mortgage".

That much being clearly acknowledged, what exactly do you mean by the blanket statement that "reverse mortgages can do more harm than good"?

 

[geekette]

Not totally true. Both of your examples involved PENSIONS of the old type - my father had 3 PENSIONs which did NOT reduce benefits plus his Social Security. VERY HARD to explain to my siblings that he was a CASH generating old person - PIA, but cash generating. He retired with his first pension in Nov 1982; retired with his second pension a little over 3 years later (using his last 3 years of FULLTIME employment with his 17 years of parttime municipal employment service) - his benefit was the HIGHEST 3 years of pay. Plus, he was a veteran with 20 years as a parttimer as an Army officier. Plus Social Security. I believe they even had COLA increases and medical benefits. He lived over 21 years after his first retirement.

He also took the MAX benefit without splitting it if his wife survived him - and he won on that too. My Mom predeceased him by 3+ years.

Family wealth is also removed from the next generation via dependant old age care. Unless your elderly relations have paid for Longterm Care Insurance, many upper middle class estates are drained dry (spent down to qualify for Medicaid). You can NOT have a working job and ever save enough to pay for 3+ years in a custorial care (nursing home) while allowing the functioning spouse keep the same standard of living for another 10+ years. To qualify for Medicaid (nursing home care), the assets have to be under $70K for both spouses.

And thing - inheritance taxes truly reduce family wealth MORE for the upper middle class than the wealthy. The wealthy have estate planning for multiple millions while a under multiple million dollar estates can not afford the fees to set up those trusts and manage them.

Getting old for us Baby Boomers is NOT GOING to be pretty. Most of us will be working into our 70s - fulltime.

Are there actually people expecting inheritances? I certainly don't know of any, but likely I simply do not run in those circles. It would certainly be hard to complain about Mom and Dad's money taking care of them in their old age with nothing left for me. That's crazy, the dough belongs to mom and dad, Not Me.

There will be no pension for me and any inheritance would more likely be a bill. I thought there were more people like me: sock it away your own self via 401k, IRA, and keep on working vs some kind of generational handout.

 

[vacationhopeful]

Are there actually people expecting inheritances? I certainly don't know of any, but likely I simply do not run in those circles. It would certainly be hard to complain about Mom and Dad's money taking care of them in their old age with nothing left for me. That's crazy, the dough belongs to mom and dad, Not Me.

There will be no pension for me and any inheritance would more likely be a bill. I thought there were more people like me: sock it away your own self via 401k, IRA, and keep on working vs some kind of generational handout.

Geekette - there are WAY more people like you. With my Dad as the last parent standing, his situation was he lived decently in the home he built in 1951 until he needed to be supervised for his own safety. With his pensions and LTC policy, the 19 months he needed assisted living was covered. His assets allowed his home to be maintained - in case he was ever able to return home. Or if he lived 20 years in assisted living or nursing homes.

Generation wealth transfer - an inheritance - occurs in the very wealthy only NOW. But my materal grandfather working a UNION job building cars for American Motors and died in 1959, left his wife with enough security to leave an inheritance for their 3 daughter when she died in 1983.

Your comments confirm that YOU, a professional employee, with a track record for saving for your retirement, expect to OWE money when you pass away.

My comments are regarding my family, who expects to pay their bills, to be able to enjoy life in their Golden Years and to not worry about a roof over their heads or food on the table. That requires an income whether they are 70 yo or 93 yo - but dying earlier than 93 should have an inheritance going to someone. (I picked 93 as that is the oldest any of my grandparents lived).

And living ONLY on social security will most likely include trips to the food bank, government housing, medcaid, heating & cooling assistance, riding the senior buses to go anywheres, etc. Being poor is very hard work.

 

[easyrider]

One reason why so many retire's are running out of money was they took such a big hit with their investments. Its not that these people didn't save for retirement but more that they lost income due to lower interest rates, housing crash and stock market declines while paying higher prices for every thing else.

For most of those retire's that lost half of their net worth there wasn't any time left to recoup as they were living off these investments.

 

[geekette]

Your comments confirm that YOU, a professional employee, with a track record for saving for your retirement, expect to OWE money when you pass away.

No, I expect my last living parent, my mother, to be significantly in debt (uncontrolled unnecessary spending without assets nor income to support it). I joked about receiving a bill as an inheritance, the very opposite of what beneficiaries usually receive.

Not me, I'm going for debt-free as soon as house is paid. I know it's all on me to look out for my golden years and I've had an eye towards that for most of my career. Old and Poor scares me more than spiders or tornados. young and poor sucked rocks - yes, it is hard work to be poor.

Easy, if someone lost that much value in the past few years, they were invested wrong for their assets, age and goals. If one does not pay attention to the risk side of the risk vs reward equation, they can shoot themselves in the foot. It's very difficult for me to blame the economy when in so many cases, the folks done it to themselves. Inappropriate investments or timeline will do that.

HOWEVER, the widespread job losses were not individual faults (in most cases). Plummeting home prices only matter if you want to sell, which I agree that some people simply HAD to do but most of us could stay right where we were, underwater or not. No one called in my loan to be paid in full. Plenty others did it out of fear or whatnot and really did not have to lock in at low prices.

Same with people bailing out on the stock market - if you sell for less than you bought in at, that's a loss that you yourself locked in. Had they held on they may have sold at much higher prices. Fear and greed are two powerful forces that can motivate people to make bad decisions. That is individual responsibility, not the duty of the economy to swing the right way to help boomers.

If one simply throws some money at an investment and neglects to keep tabs on what is going on in the world and their own steps towards retirement, it's hard for me to lay blame elsewhere. The stock market doesn't go up forever, interest rates don't go down forever. Any adult old enough to be thinking about retirement is old enough to know these things to be true. Failure to plan for CHANGE with diversification or other means is the fault of the investor.

 

[easyrider]

Geekette, you are right about these people being invested improperly when speaking about mutual funds and hot housing markets, but that doesn't change the circumstances of this group. They were and are forced to live off what ever was left. The thought was, and still is with many investors that you just ride these drops out but with 3 bust cycles in a decade and no time left these people are running out of money.

 

[geekette]

Geekette, you are right about these people being invested improperly when speaking about mutual funds and hot housing markets, but that doesn't change the circumstances of this group. They were and are forced to live off what ever was left. The thought was, and still is with many investors that you just ride these drops out but with 3 bust cycles in a decade and no time left these people are running out of money.

Absolutely, you can only invest or stretch what you have today. Or go back to work. Or decrease expenses further. They are indeed forced to live off what they have squirrelled away and that SS and/or pension will provide. Just like I will be. Just like you will be, just like everyone else. Nobody knows what the stock market will do in 2025. We won't even know that when it IS 2025.

But note that Not Everyone took a bath on their stock investments the past decade, regardless of sensationalistic articles claiming that We All Lost. How could this be, with all these retirees suddenly destitute? Diversification, dividends, not buying and selling frequently in order to avoid excessive fees, investing by research vs hearsay, avoiding sexy IPOs that nosedived ...

After all, I never pulled out of the stock market (because I do indeed have the time) and even tho my account values went down, like everyone elses, I have more than made up those dips. If half my money had been in the bank instead, my overall portfolio would not have dipped as much, but it also would not have climbed to where it is now. Yes, riding it out takes time.

Which is why maybe that money should not have been in the market when it was. If I were planning to live on that money (as in, I Required It To Be There), it would not have been mostly in the stock market. Greed would leave it in the market, which is likely what happened to a lot of these people (so, again, sadly, I find it hard to come up with sympathy).

It would be sad indeed if someone did not heed the first wakeup call and figured, oh, well,that's the last downer until I retire! But if you are going to be an investor, then you need to educate yourself about the ups and downs instead of becoming a statistic from which following generations learn. I'm sorry, they have only themselves to blame for not thinking about RISK.

If there remains anyone thinking they get guaranteed safe passage in the last decade of their work life, they need to be visiting with reality more frequently. Perhaps some of these retirees would have been better served by using the fear reflex to keep their money in a savings account vs expecting the stock market to provide gains only and never dips, or thinking that they would Just Know when to get out.

Diversification could have saved these people from piling mistake on top of mistake. Bucket method could have helped also.

But now? Learn to live with the mistakes (and not repeat them yet again) and within means. If they left themselves no safety net, I don't know why.

 

[tschwa2]

Of all the wisdom passed to me from my parents, the BEST was 'PAY YOURSELF FIRST', followed closely by, 'Live beneath your means'. In other words don't live in the most expensive house you can afford, be happy with a reliable 10 year old car, and a State school gives a fine education.

Unless I live far beyond 100 ( very unlikely) or the value of investments or currency tank, I see no way to run out.

I am concerned about the majority of the next generation, but have counselled mine as I was. I think it took. They will be fine.

Jim

The best advice I received was unsolicited from an old man with no teeth at a nursing home when I was visiting my great grandmother. He said "take care of your teeth when you are young. You will really regret it when your older if you do not."

 

[am1]

Even millionaires will suffer in retirement:

http://www.cnbc.com/id/100803102

 

[momeason]

Of all the wisdom passed to me from my parents, the BEST was 'PAY YOURSELF FIRST', followed closely by, 'Live beneath your means'. In other words don't live in the most expensive house you can afford, be happy with a reliable 10 year old car, and a State school gives a fine education.

Unless I live far beyond 100 ( very unlikely) or the value of investments or currency tank, I see no way to run out.

I am concerned about the majority of the next generation, but have counselled mine as I was. I think it took. They will be fine.

Jim

We did all of that also and are doing okay now. We travel a lot but still watch our pennies. Great advice.
We told our kids early on that we would pay for a state school college education. If they chose to go elsewhere they had to finance it. We also said, we would give them 1/2 of any savings they achieved from the costs of the state schools. They each received full tuition scholarships and we owed them some cash. Great deal for all of us.
It does not pay to hand over too much to your kids. Make them earn their way.

 

[simpsontruckdriver]

The reason I said Reverse Mortgages are a bad idea: when the equity is gone, the house is no longer owned by the person. In addition, some places claiming to do it are really frauds.

TS

 

[Talent312]

I'm facing early retirement (62) with a state pension and SS benefit that will result in more net income than I take home now. Different than most, sure. But heck, so is 30 years with the same employer! Added to that is a decent IRA portfolio.

My deepest fear is not living long enuff to use it all.
.

 

[ciscogizmo1]

As a parent researching colleges right now in California, State schools are not the easy solution they use to be. For example, you need to make the decision between being out of school in 4 years or out in 8 years. Did you know at CSU, State only 10% graduate in 4 years; 42% in 6 years? However, at a private University like USF, 58% graduate in 4 years; then, 70.2% in 6 years. Most of the State and Junior colleges in California are impacted and cannot offer all their students classes. It is pretty depressing.

Another factor is that more merit, financial aid is offer at the private school level. The retail price of USF is definitely more at $58k per year while Sac State is at $24k per year. But at the private school you'll probably cut that bill down to 1/3 to half off. Where very little will be saved by going to State school. You'll most likely pay the full retail rate. So, then, if you figure it takes your kid 8 years to graduate you could be spending up $200k for their education. But let's say your bill was $30K at USF and your are done in 4 years you only spent $120k.

Every state is different but education isn't as cheap as it use to be. I remember going to college 25 years ago and being able to work part-time and support myself full-time going to college. My tuition was $600 a year now at the same school it is $16k. I went to a State School too. I made $8.50 per hour working at an accounting firm. The minimum wage in CA is still only $8 per hour in 2013. My rent was $150 per month as I split it with room mates. I spent about $25 to 30 a week on groceries. The world is definitely different these days.

 

[bogey21]

Back in my working days (pre 2000) I ran a large Bank. I sat down with my key employees and we all agreed to accept less in current wages in exchange for a pretty lucrative Defined Benefit pension plan. It was a very conscious decision.

I retired on a nice pension as did many of my co-workers. After I left the new Management discontinued the Defined Benefit Plan almost immediately for all new hires. To their credit they left it in place for existing employees.

George

 

[bogey21]

As a parent researching colleges right now in California, State schools are not the easy solution they use to be.....Every state is different but education isn't as cheap as it use to be. I remember going to college 25 years ago.......My tuition was $600 a year now at the same school it is $16k. I went to a State School too.....The world is definitely different these days.

Same deal with me. Tuition, fees and book rental were $750 per year at a State University and I was an out of state student! My question is "Why have costs gotten so out of hand"?

George