Retirement = no money

[easyrider]

Some other factors that could be somewhat bearish for retirees are underlying economic factors such as consumer confidence and inflation. Consumer spending accounts for alot of the economic activity in the USA. When spending declines because of higher cost of needed items such as gas, food and taxes people don't spend as much. This causes the economy to slow. A slow economy can lead to a recession. Soon in the USA we will be in a situation where everyone will be participating in health insurance. The people that didn't buy this before will be buying it in 2014, shrinking some of these peoples ability to spend. This is especially true for retirees on fixed incomes as their medicare plans change.

 

[ondeadlin]

http://www.marketwatch.com/story/do...stock-crash-by-year-end-2013-06-05?link=kiosk

87% chance of stock market crash by year end predicted

Hard to take a prediction like that seriously when the person doesn't give you any idea what it is based on.

 

[pgnewarkboy]

Articles like this are designed to lure people like me, within a 5 to 7 year retirement age window, to pump even more money into the stock market. Empty Nester's with good salaries are spending too much on vacations and dinner, so lets cause a fake crisis to get those cheap *B* to give us more money. Bull, If I can't live on SS and my retirement fund, then I'm an absolute idiot and I deserve to starve. Just sayin.

I don't know your age or the amount of your retirement fund but the greatest threat to a reasonable retirement for most people is inflation. Hopefully you will live many years after retirement. Even low inflation takes its toll over time. Your fund should be able to keep up with inflation. Social Security does not keep up with inflation in large part because of the high cost of medical care -particularly for the elderly. Retirement planning should take that into account.

 

[ciscogizmo1]

Amazing... these are statistics for applying to Medical School in the US. It tells you how many applicants and how many get in. It is definitely WOW. I can understand why it is so selective but I was shocked at the number of people who think they are going to Med School.

https://www.aamc.org/download/321442/data/2012factstable1.pdf

 

[geekette]

Articles like this are designed to lure people like me, within a 5 to 7 year retirement age window, to pump even more money into the stock market. Empty Nester's with good salaries are spending too much on vacations and dinner, so lets cause a fake crisis to get those cheap *B* to give us more money. Bull, If I can't live on SS and my retirement fund, then I'm an absolute idiot and I deserve to starve. Just sayin.

I actually thought it was opposite,designed to inspire panic selling. I do intend to live off my retirement and non-retirement accts with ss a bonus.

 

[bogey21]

I don't know your age or the amount of your retirement fund but the greatest threat to a reasonable retirement for most people is inflation.

I'm living on a nice annuity and social security. My big fear is inflation and the solvency of the entity providing my annuity. So far (12 years), so good, but I definitely think about it every day.

George

 

[spirits]

This is my retirement plan

I am 62 years old and love driving my Acura TL to my teaching job. Yup, I am 1/2 time on the paycheque but I teach high school English and spend just as much time marking and planning as I do in the classroom.....so technically I work full time If my eyesight holds up I hope to be as sharp as this lady and still teaching students....as long as the kids, parents and principal think I am still effective I plan on being there....I spent 300 hours planning new curriculum this year and want to fine tune it by teaching the courses!!!!


http://autos.aol.com/article/102-year-old-woman-still-drives-her-82-year-old-car/

 

[MuranoJo]

I'm surprised that no one has commented on this. What happened in my friend's case is that the first lawyer we went to declined to represent him on the basis that his claim was too small. He did, however, recommend another lawyer just starting out in the field who was willing to take the case and was successful to the tune of $100,000.

George

I was impressed that your friend actually was successful in this. In my aunt's case, it was water under the bridge by the time we heard of what happened to her. And her son was her POA and Executor and obviously had no interest in it while she was alive nor after she was gone.

 

[MuranoJo]

While some of the rules have changed, I don't think it is so doom-and-gloom as you seem to put it. The main difference as I see it is that people are now more individually in charge.

We need to directly manage our retirement accounts (401k, IRA, etc.) vs. relying on a company pension.

We need to own our professional development (education, skills) vs. being loyal to "the company" and expect they will do what is best for our careers.

We need to be smart with buying homes: the old "purchase the largest house you could possible afford, since real estate always goes up" doesn't work.

In general, you can't just be on auto-pilot to be successful. You need to be smart, flexible, and adjust "the rules" to fit you.

When I started my professional career ~25 years ago, I had no expectation of Social Security or a company pension, even though it looks like I will probably get some of each. I have invested from the start with the mindset that I was in charge. I didn't buy the biggest house on the block. I don't drive a car that costs half my annual salary (and I drive it for 10 years). I never purchased something on a credit card that I could not pay off when the monthly bill came. Etc., etc.

"Retirement = no money" will certainly NOT be a true statement for me, because I will not let it be true.

Kurt

This is something that should have mandatory coverage in our school system, somehow--and starting at a very young age.

Stock market roller coasters will happen, Mother Nature will have her way, corporations will be corrupt, etc. But all of this has happened for years and years. Somehow, those who took accountability for their future in spite of all the doom & gloom are likely moving along quite nicely.

Anyone know someone who's almost SS age and has no retirement savings and no pension?
We do.

 

[vacationhopeful]

This is something that should have mandatory coverage in our school system, somehow--and starting at a very young age.

....

Except in my state, teachers and administrators have GOVERNMENT pensions and little interest in anything other than demanding more and more from the taxpayers (property owners). Why teach saving for retirement - it is NOT something they do (or need to do)?

My one good friend - an elementary school principal (early job was middle school teacher) for 40+ years - brags about his low paying career which came with very nice health coverage and a steady government pension. When he retired 10+ years ago, his ending salary was over $120K and his pension started at about $70K plus social security (at 65 when he started that).

Suburban police officers start at over $90K (plus overtime) and after 20 years get full pensions (and they then retire). A local grassroots organization setup a website and planted around hundred white vinyl signs in frontyards pointing to the website disclosing the local government's pay scale for all the towns job classifications. First Fall election - XYZTruth.org signs - looked like the standard - support our candidate. Only the signs did not come down and for the next year, MORE signs keep appearing in more yards. Second Fall election, the current & entrenched for 35 years ruling party's candidates were voted OUT. All the website showed was the payscales for all the town's classification of jobs and number of employees at each classification.

 

[rapmarks]

Except in my state, teachers and administrators have GOVERNMENT pensions and little interest in anything other than demanding more and more from the taxpayers (property owners). Why teach saving for retirement - it is NOT something they do (or need to do)?

My one good friend - an elementary school principal (early job was middle school teacher) for 40+ years - brags about his low paying career which came with very nice health coverage and a steady government pension. When he retired 10+ years ago, his ending salary was over $120K and his pension started at about $70K plus social security (at 65 when he started that).

Suburban police officers start at over $90K (plus overtime) and after 20 years get full pensions (and they then retire). A local grassroots organization setup a website and planted around hundred white vinyl signs in frontyards pointing to the website disclosing the local government's pay scale for all the towns job classifications. First Fall election - XYZTruth.org signs - looked like the standard - support our candidate. Only the signs did not come down and for the next year, MORE signs keep appearing in more yards. Second Fall election, the current & entrenched for 35 years ruling party's candidates were voted OUT. All the website showed was the payscales for all the town's classification of jobs and number of employees at each classification.

In my state, they want to take away our pensions. We put in over ten percent of our salary (betwen us worked for 65 years) the state never matches, as they would have had to do if we paid social security. they borrowed our money, now since they owe too much to ever pay if back, they want to change the system. somehow, the teachers are the culprits. and we are not getting social security , one of the states that won't allow both. plus when we retired, we had to pay the retirement system and extra 30,000 and an extra 87,000 for not teaching 38 years each. sorry, we spent that money on other things is what we are told.

I believe in New jersey the pension is paid by the teacher's salaries. that principal probably had much more than a master's degree, made very low salary for years, and worked many more hours than you think, as do any teachers who are worth keeping.

 

[geekette]

This is something that should have mandatory coverage in our school system, somehow--and starting at a very young age.

Stock market roller coasters will happen, Mother Nature will have her way, corporations will be corrupt, etc. But all of this has happened for years and years. Somehow, those who took accountability for their future in spite of all the doom & gloom are likely moving along quite nicely.

Anyone know someone who's almost SS age and has no retirement savings and no pension?
We do.

I also know a few in that category. Few options at this point for the 2 people I have in mind.

One has so very much done it to himself by being self-employed for a very long time and keeping it off the books. he completely shot himself in the foot as far as SS. Bigger problem would be someone ratting him out to IRS for non-file. he sealed his fate a few decades ago when he cashed out his retirement plan around age 40 at a layoff. Not the biggest shock to find he never saved a penny more towards retirement.

The other lady, been off and on unemployed last few years, has health issues, often no insurance (she is a legal secretary). She's past 60 so very close to being able to claim SS. Has recently moved back in with her mother after another illness-related job loss. Any savings she may have had has been used up in surviving the past few years. I think there are MANY people in her kind of situation. so much beyond her control.

 

[singlemalt_18]

While some of the rules have changed, I don't think it is so doom-and-gloom as you seem to put it. The main difference as I see it is that people are now more individually in charge.

We need to directly manage our retirement accounts (401k, IRA, etc.) vs. relying on a company pension.

We need to own our professional development (education, skills) vs. being loyal to "the company" and expect they will do what is best for our careers.

We need to be smart with buying homes: the old "purchase the largest house you could possible afford, since real estate always goes up" doesn't work.

In general, you can't just be on auto-pilot to be successful. You need to be smart, flexible, and adjust "the rules" to fit you.

When I started my professional career ~25 years ago, I had no expectation of Social Security or a company pension, even though it looks like I will probably get some of each. I have invested from the start with the mindset that I was in charge. I didn't buy the biggest house on the block. I don't drive a car that costs half my annual salary (and I drive it for 10 years). I never purchased something on a credit card that I could not pay off when the monthly bill came. Etc., etc.

"Retirement = no money" will certainly NOT be a true statement for me, because I will not let it be true.

Kurt

Excellent post. (Hopefully Pigschildren listen to their Dad!)

Like it or not, research has shown that what we think and know about money we learn from our parents. In some cases that example may teach us what NOT to do, but family “values” are a primary driver or our financial habits and attitudes. In addition, research also shows that the emotional and psychological aspects of money and investing are counter-intuitive, often resulting in false confidence and misinterpreting risk. The field of Behavioral Finance has become its own specialized area of study.

As a private practice financial planner I saw things up close. The first client I ever fired was a guy who (at that time) made over $140k a year. He was always coming to meetings saying the dog ate his homework, and he didn’t have two nickels to rub together because he was spending at least $150k a year. One of my best clients was a guy who worked a blue collar job earning no more than $40k in his best years and he didn’t know much about investing, but he had over $500,000 in savings by age 52. Only about a third of that was in traditional retirement type accounts.

There was a terrific book written almost 20 years ago by two researchers who attempted to understand the dynamics behind examples like the two people I just described. The Millionaire Next Door is a great read even today and it should be required reading. Stanley and Danko’s work is thought by many to have been the inception of modern Behavioral Finance studies.

The bottom line: you have two guys living on the same street. One lives in the newer house with finished landscaping and lawn, has two European cars, goes to work in fashionable clothing, and has kids that think their Mom and Dad are rich. The other lives at the other end of the street in the older house. It may need a few repairs, the landscaping is of no particular fuss and some dandelions grow in the grass. In the driveway is an older domestic car and an even older panel van with “Smith Plumbing” painted on the sides. Which one is the likely millionaire?

Hint: the plumber's kids have no idea how much money their parents have.

 

[vacationhopeful]

...I believe in New jersey the pension is paid by the teacher's salaries. that principal probably had much more than a master's degree, made very low salary for years, and worked many more hours than you think, as do any teachers who are worth keeping.

Had a Master's Degree. Period.

Yes, he worked many hours - but I as a salaried employee worked many extra hours and had out of town job assigments for several years.

And I don't think that is totally correct as to who pays the pension. The NJEA is extremely political and very well financed. Every November, the NJ schools are shut down for a 2 day NJEA Convention - same week as elections close the schools. When WDW recognizes that week as NJ Week, you know it has a major effect on the education of the children.

The NJEA biggest target for the past 2+ years is our current governor - a governor who has an almost 80% approval rating by the states' voters.

 

[rapmarks]

yes, i heard the gov. christie is targeting the teachers, did away with the cola for retirees, but my friends who taught in nj said pension was funded by teachers, and it is based on base salaries, not coaching or any extracurricular.
My new york friends claim they never paid a penny toward retirement, get great pension, social security, and paid medical.
In fact I know NJ took out of teacher's salary because my friends said what are florida teachers crying about having to pay 3 percent for the first time toward retirement when she paid ten percent her whole teaching career.

anyhow, i fully expect my pension to be severely curtailed in Illinois, and I feel bad for those near retirement. the money the teachers put in would keep it going for 18 years, but lots of money is gone . blagovich had to pay lot of state bills before he went to prison to join other former govs.
If and when we lose our pension, no social security, and will live off savings, and will probably lose the retirement medical insurance we paid into while we were teaching, which would be like canceling medicare.

 

[pgnewarkboy]

Mad at teachers? Why? Yes, you PAY THEIR SALARIES. Perhaps some pay and some pension provisions are not warranted but some of these posts are downright nasty. Teachers have a hard job. They are just like everyone else trying to make a living and looking to better themselves. Write your state legislature if you don't like it.

Does it make you mad to subsidize WalMart execs big salaries with your tax dollars? Here is how it works. As many as one third of WalMart employee's are paid so little that the workers , with families, need help to feed their children and get them medical care. You, the taxpayers, pay for that so WalMart execs can keep their fancy lifestyles and big incomes -far bigger then teachers. We should fix that too. Now, I won't belittle WalMart execs either . They are trying to maximize their earnings like everyone else. We should, however, fix this situation.

 

[rapmarks]

Excellent post. (Hopefully Pigschildren listen to their Dad!)

Like it or not, research has shown that what we think and know about money we learn from our parents. In some cases that example may teach us what NOT to do, but family “values” are a primary driver or our financial habits and attitudes. In addition, research also shows that the emotional and psychological aspects of money and investing are counter-intuitive, often resulting in false confidence and misinterpreting risk. The field of Behavioral Finance has become its own specialized area of study.

As a private practice financial planner I saw things up close. The first client I ever fired was a guy who (at that time) made over $140k a year. He was always coming to meetings saying the dog ate his homework, and he didn’t have two nickels to rub together because he was spending at least $150k a year. One of my best clients was a guy who worked a blue collar job earning no more than $40k in his best years and he didn’t know much about investing, but he had over $500,000 in savings by age 52. Only about a third of that was in traditional retirement type accounts.

There was a terrific book written almost 20 years ago by two researchers who attempted to understand the dynamics behind examples like the two people I just described. The Millionaire Next Door is a great read even today and it should be required reading. Stanley and Danko’s work is thought by many to have been the inception of modern Behavioral Finance studies.

The bottom line: you have two guys living on the same street. One lives in the newer house with finished landscaping and lawn, has two European cars, goes to work in fashionable clothing, and has kids that think their Mom and Dad are rich. The other lives at the other end of the street in the older house. It may need a few repairs, the landscaping is of no particular fuss and some dandelions grow in the grass. In the driveway is an older domestic car and an even older panel van with “Smith Plumbing” painted on the sides. Which one is the likely millionaire?

Hint: the plumber's kids have no idea how much money their parents have.

You are so right. My family (the older generation) meets the second guy standard. My aunt passed away at 90. she worked for 44 years at the same place, low salary, $400 a month pension from them, and finally up to 1000 a month SS. Lived in assisted living the last 8 years out of pocket, and still managed to leave behind almost a million dollars.
then i have friends who have pensions over 250,000 and are deeply in debt and can't make ends meet. Here is irony, nursing home insurance for 30 years, and got a check for $64 when i filed a claim a few months before she died (I did not leave off any zeroes)
If you think that $400 a month pension is bad, my father worked same place for 40 years and he only got 200 a month so my mother would get it after he died. Despite this, my parents never got any assistance, even when my mother went into a nursing home.

 

[Janette]

My hubby and I paid into teacher retirement in Georgia and paid social security. Yes, we draw both now, but we paid into them. We both have advanced degrees and enjoyed our years as educators. We see the results of our hard work in the lives of our former students. I assume all of you probably had a teacher who influenced your life. Thank them today and don't complain because they have income. I don't have any idea of how hard you worked and I only wish the best for you in your retirement.

 

[momeason]

This is something that should have mandatory coverage in our school system, somehow--and starting at a very young age.

Stock market roller coasters will happen, Mother Nature will have her way, corporations will be corrupt, etc. But all of this has happened for years and years. Somehow, those who took accountability for their future in spite of all the doom & gloom are likely moving along quite nicely.

Anyone know someone who's almost SS age and has no retirement savings and no pension?
We do.

Yes, my Brother in law. He had a matching 401K plan and has never contributed a cent. He is 64 yrs old. My sister kept trying to get him to save. He threw away the free matching.

 

[MuranoJo]

I also know a few in that category. Few options at this point for the 2 people I have in mind.

One has so very much done it to himself by being self-employed for a very long time and keeping it off the books. he completely shot himself in the foot as far as SS. Bigger problem would be someone ratting him out to IRS for non-file. he sealed his fate a few decades ago when he cashed out his retirement plan around age 40 at a layoff. Not the biggest shock to find he never saved a penny more towards retirement.

The other lady, been off and on unemployed last few years, has health issues, often no insurance (she is a legal secretary). She's past 60 so very close to being able to claim SS. Has recently moved back in with her mother after another illness-related job loss. Any savings she may have had has been used up in surviving the past few years. I think there are MANY people in her kind of situation. so much beyond her control.

Yes, there are certainly exceptions, like those who have legitimate reasons which prevent them from working or exhausting savings for health reasons. But it's hard to understand those situations where someone who is gainfully employed for years and never saves a cent or (as momeason mentioned) leaves money on the table because they don't even take advantage of an employer-sponsored 401k.

Similar to what others have posted, some of our neighbors and friends who were frugal and had blue-collar jobs are very well set for their retirement. Others have waterfront vacation homes, kids going to the top schools, drive the best cars and live only in the best neighborhoods. But they're broke.

 

[geekette]

Yes, my Brother in law. He had a matching 401K plan and has never contributed a cent. He is 64 yrs old. My sister kept trying to get him to save. He threw away the free matching.

Terrible!

The job I have now does matching quite differently, it's once a year profit-sharing, so will vary each year.

One young lady in the benefits group I was in didn't want to contribute if she couldn't be sure what the match was. After the meeting I took her aside and made sure she understood that the match is Gravy, that the Meat and Potatoes need to come from her.

Free money is great, and it's hard to understand why some people won't take that little step THAT IS BENEFICIAL TO THEM to get it.

 

[Passepartout]

I used to write a monthly article or our company newsletter. One month I entitled it something like, "Getting (the co's) Freebies". I went on about how it was their offer. Didn't cost the employee a cent they wouldn't get back. I added that inside each worker who wants to spend his or her entire paycheck is a person who wants to retire. What the worker does with his money depends on who wins the 'who's most important' argument.

Hard to know if the phones rung or there was a rush to Human Resources to enroll in the matching 401(k). And while I'm on my soapbox, 401(k)'s should be mandatory with 'opt out' instead of requiring the employee to opt in.

Soapbox mode: off.

Jim

 

[geekette]

...And while I'm on my soapbox, 401(k)'s should be mandatory with 'opt out' instead of requiring the employee to opt in.

I agree. I think the % should be 1 in that scenario, hardly noticeable.

I am glad that now there is a small amount of guidance that can be given to new enrollees. It was always a bit of a problem for the non-financially-literate to suddenly be Investors with no clue at all as to what might fit them. Easier to not deal with it at all.

 

[bogey21]

Mad at teachers? Why? Yes, you PAY THEIR SALARIES. Perhaps some pay and some pension provisions are not warranted but some of these posts are downright nasty.

In the old days teacher salaries weren't all that great which was somewhat compensated for with decent pension plans. Problem is that often the public views teacher in the same light as other municipal employees whose pension plans are sometimes outrageous.

George

 

[PigsDad]

And while I'm on my soapbox, 401(k)'s should be mandatory with 'opt out' instead of requiring the employee to opt in.

That is changing. The company I work for automatically enrolls new employees into the 401k at something like 2 or 4 percent, unless they opt out. Not much, but better than nothing -- and they get matching $$.

Kurt