Retirement Advice From Those Who Learned the Hard Way

[billymach4]

DW is 2 yrs older than me with high health care $$. She will likely retire in the next 2 years. My main concern is the cost of health care. So I will work until at least 67 FRA. If at 67 I am still in good shape and job happy I will consider pushing retirement to 70. Either way I will try to defer SS until 70 to max out the payments.

Then at 70 collecting max SS payments I will party like it's 1999.

 

[billymach4]

Then at 70 collecting max SS payments I will party like it's 1999.

Oh and not to worry. I have a great 401k with a fantastic match. So I am not going to depend on SS as my only source of income.

 

[easyrider]

There's a reason those generations don't buy into the same mantras and concepts that the older generations cling to - it's because they aren't working for those younger generations any longer.

I notice this in our family regarding few members of the under 35 age group especially after the pandemic. The members that aren't buying into getting things done while they are young are usually doing things that are fun. The majority of this under 35 age group are working for large companies with fantastic benefits. A few have gone the business route.

It will be interesting to see how things turn out. If it's anything like the group that I grew old with, the people in business will be retired first, the people that are working for good companies will retire well with some retiring early and the people that do not really work while they are young will be working forever but will have glory year memories.

Bill

 

[DrQ]

Of course it has everything to do with this or that generation.

Let's take some newly-minted college graduate entering the work force in 2023.

Let's also assume this graduate was born in 2000; the parents were born in 1975; and the grandparents were born in 1950. (They all start a family at the age of 25.)

Who has it better? The 2023 graduate? Or his or her grandfather, who entered the workforce after finishing university in 1962? It's not even close to the same.

'The 1962 graduate makes the average salary of $6,000 per year and buys the average house at $12,000. "Make half a house in salary every year? That's la-la land," says the 2023 graduate.

Austin is named best city to start a career, thanks to its burgeoning job market and quality of life - with Seattle, Salt Lake City, Indianapolis and Kansas City also making top 10​

• A new study by Bankrate ranks Austin as the No. 1 city to launch a career
• The study took into account a range of factors, such as rent prices in relation to affordability, the employment picture and quality of life
• The Austin-Round Rock-Georgetown, Texas, statistical area was rated No. 12 in affordability, No. 3 in employment opportunity and No. 1 in quality of life

Austin is named best city to start a career

A new study by the company Bankrate ranks Austin as the number one city to launch a career.

www.dailymail.co.uk

 

[louisianab]

We live in the Midwest, in a county with a low cost of living and a shorter life expectancy than average. Waiting to "do the fun stuff" often results in people dying before it happens. On the other hand, many people here work until the week of their death here because so many live below the poverty line.

 

[ScoopKona]

​

• A new study by Bankrate ranks Austin as the No. 1 city to launch a career

Now let's compare that to Copenhagen. Or Austin in 1972.

It doesn't surprise me that nobody will answer "start out in 1972 or 2023." I've explained my choice. Where are the opposing viewpoints? Would you like to graduate with six-figures of debt, make an average salary of around $70K, and looking $400K average house prices in the face?

Or 1972. Seeing as most of the people here already did 1972, I'm truly surprised nobody is going with that choice.

 

[PigsDad]

Now let's compare that to Copenhagen. Or Austin in 1972.

It doesn't surprise me that nobody will answer "start out in 1972 or 2023." I've explained my choice. Where are the opposing viewpoints? Would you like to graduate with six-figures of debt, make an average salary of around $70K, and looking $400K average house prices in the face?

Or 1972. Seeing as most of the people here already did 1972, I'm truly surprised nobody is going with that choice.

It's a stupid question, since no one can travel back in time. Plus, wasn't your original comparison w/ 1962, not 1972? You seem a bit confused. Not sure what "point" you are trying to make. The article that @DrQ posted at least has some good information for people living in the real world today.

As for your hypothetical comparison, in 1962, women for the most part didn't work. They got married and became housewives and the man had to support the family. Two-income families were very rare, so your salary comparison is not valid. The majority of young people coming out of college didn't stay single, and those who did stay single didn't buy homes. Also, when you are comparing average home costs, the average home in 1962 was much smaller, so that is not a valid comparison. In fact, the average new home size in 1960 was 1200 sq. ft., and in 2020 it was 2,522 -- more than double the size!

Taking those two points into consideration, two people out of college, both with $70K jobs (seems a bit low for college grads these days, but I'll go with it) for a total household income of $140K and looking to buy a 1962-sized home (which would be way less than the average $400K home today), I would say is not all that different than in 1962. As a matter of fact, it is probably very close to the home costing 2X of the household income that you stated.

BTW, not sure where you got the "six-figure" college loan debt -- according to real data, only 55% of students graduate with student loans, and the average total loan amount for a 25-34 y.o. is just over $32K. While that is still significant, it is a far cry from your six-figure baseless claim.

I have a daughter who is just graduating college, and I think she has a bright future and certainly don't see everything as doom and gloom as you. I am absolutely positive she will have a better life than if she was graduating in 1962. But go ahead and hunker down on your "farm", wait for the apocalypse and pine for those "good old days" if that makes you happy. Just don't expect everyone to agree with you.

Kurt

 

[slip]

I agree with PigsDad, it's a stupid question. I said you should take earlier generations into account and you said you don't worry about the dead but then you stack a silly scenario together and that's OK. No one can travel back in time but you don't get an answer and you think it's because you are correct.

 

[DrQ]

Now let's compare that to Copenhagen. Or Austin in 1972.

It doesn't surprise me that nobody will answer "start out in 1972 or 2023." I've explained my choice. Where are the opposing viewpoints? Would you like to graduate with six-figures of debt, make an average salary of around $70K, and looking $400K average house prices in the face?

Or 1972. Seeing as most of the people here already did 1972, I'm truly surprised nobody is going with that choice.

Who’s the ‘Enviest’ of Them All?​

Research suggests young adults are more envious than their elders – and about more things​

Who’s the ‘Enviest’ of Them All?

“Mirror, mirror, on the wall – who’s the fairest of them all?” New research doesn’t have an answer to that. But it does give clues as to who is the “enviest” and would have been more likely to pester (and fester) with the question in the first place: Snow White, not her stepmother. If only fairy...

today.ucsd.edu

Charlie Munger Says Hardships Faced In His Day Were 'Unbelievable,' But People Today Are Miserable, Despite Having it Easy — He Blames Envy​

Charlie Munger Says Hardships Faced In His Day Were 'Unbelievable,' But People Today Are Miserable, Despite Having it Easy — He Blames Envy

Billionaire Charlie Munger, the renowned investment partner of Berkshire Hathaway Inc. CEO Warren Buffett, says people should strive for greater happiness. Expressing his perplexity toward the current lack of contentment among people, Munger emphasized the disparity between present circumstances...

finance.yahoo.com

 

[Big Matt]

And on the other hand, many people end up with health issues soon after they retire and are not able to do all those expensive things they had imagined. I've seen way too many people who have lived so frugally just to end up dying or have serious health issues soon after they retired. It is a balance, but don't forget to live and do some things while you are young and not push everything off to "when you have time to enjoy it", because you may not.

Kurt

Kurt, I agree completely. Your example was my dad. Worked until 68, retired and died five years later. My example earlier is more about how folks spend literally millions of dollars and save nothing. Probably an extreme example, but it's real. Folks lease Maseratti's and put everything on credit cards here.

 

[Patri]

No one can travel back in time but you don't get an answer and you think it's because you are correct.

I thought Scoop was right about everything.

 

[Ralph Sir Edward]

previous response - 1962 to 2023

"1962 or 2023? As a person who graduated in 1980, with 18 percent inflation and then 18% mortgage rates, I'm not certain I had it much better than those in 2023.

2023 has a higher standard of living than 1962. Much higher. I say that in objective terms. Look at what you wouldn't have in 1962.
Cell phones - smart and otherwise.
Computers - unless you were a big company.
Ability to time shift (or store) video entertainment.
Most of the modern pharmacopia.
Cars that last 10+ years with minimal maintenance.
Cheap air travel.
Free long distance phone calling.
Printers.
Copy machines - if you weren't a big business (anybody remember mimeographs?)
Shall I go on?"

You changed the goal posts to 1972. Ok, I'll revise.

1972 or 2023? As a person who graduated in 1980, with 18 percent inflation and then 18% mortgage rates, I'm not certain I had it much better than those in 2023.
2023 has a higher standard of living than 1972. Much higher. I say that in objective terms. Look at what you wouldn't have in 1972.
Cell phones - smart and otherwise.
Computers - unless you were a big company. However, you could then buy a pocket calculator (add, subtract, multiply, and divide) for $400 from TI.
Ability to time shift (or store) video entertainment. (The SONY Betamax did not come out until 1974.)
Most of the modern pharmacopia.
Cars that last 10+ years with minimal maintenance. (starting to change, there were Toyotas available then.)
Cheap air travel.
Free long distance phone calling.
Printers.
Copy machines were then available as coin operated machines.
Shall I go on?

If you want to go for 1982 - I've already covered that. 18% mortgage rates and 12% unemployment?

RSE

 

[PigsDad]

Kurt, I agree completely. Your example was my dad. Worked until 68, retired and died five years later. My example earlier is more about how folks spend literally millions of dollars and save nothing. Probably an extreme example, but it's real. Folks lease Maseratti's and put everything on credit cards here.

Yes, I know those people as well. I had a next door neighbor -- very nice guy, worked for the local police department and was head of the swat team. His wife didn't work, had three kids, and she always drove a new Cadillac Escalade (found out later that they always leased those, so got a new one every two years). Our houses were very similar, built at the same time and we were both original owners.

One day, about 10 years after we moved here, I was talking w/ him over the fence line, and asked him about his "for sale" sign out front. He still had two kids in school; I knew several neighbors that downsized after their kids were out of the house so I didn't think that was the reason he was selling. Turned out they were planning to sell and move into a smaller / less expensive place. He said he had re-financed several times already, and was looking to reduce their housing costs but he was a bit worried because he was close to being underwater after 10 years. He had a great job, but they just spent like crazy -- their kids always had the latest and greatest toys, electronic gadgets, etc. and w/ the new Escalade every 2 years they obviously overextended their budget. I didn't have the heart to tell them (and remember, we bought our homes at the same time) that we were getting very close to having our mortgage paid off.

I run into him every once in a while around town, as they moved away about 8 years ago. He was a couple years older than me, and I just retired last year at 56. I doubt he will be retiring any time soon. So sad, when simply living within their means could have resulted in a much different life for them.

Kurt

 

[rapmarks]

Yes, I know those people as well. I had a next door neighbor -- very nice guy, worked for the local police department and was head of the swat team. His wife didn't work, had three kids, and she always drove a new Cadillac Escalade (found out later that they always leased those, so got a new one every two years). Our houses were very similar, built at the same time and we were both original owners.

One day, about 10 years after we moved here, I was talking w/ him over the fence line, and asked him about his "for sale" sign out front. He still had two kids in school; I knew several neighbors that downsized after their kids were out of the house so I didn't think that was the reason he was selling. Turned out they were planning to sell and move into a smaller / less expensive place. He said he had re-financed several times already, and was looking to reduce their housing costs but he was a bit worried because he was close to being underwater after 10 years. He had a great job, but they just spent like crazy -- their kids always had the latest and greatest toys, electronic gadgets, etc. and w/ the new Escalade every 2 years they obviously overextended their budget. I didn't have the heart to tell them (and remember, we bought our homes at the same time) that we were getting very close to having our mortgage paid off.

I run into him every once in a while around town, as they moved away about 8 years ago. He was a couple years older than me, and I just retired last year at 56. I doubt he will be retiring any time soon. So sad, when simply living within their means could have resulted in a much different life for them.

Kurt

Similar friends. They built a new house near me and remodeled it three times in the next two years. Neighbors used to like to drive by on garbage day to see the boxes of all the new things she bought that week, we are under the same pension system and they both taught in the highest paying school district in the state. Their combined pension is over 200k and they are deep in debt. They ate out at least two meals a day. When he had to go to assisted living, she thought she would not have to pay a penny because she hadn’t saved anything, and was shocked that they wanted to take money out of his pension.

years ago,they bought a condo in Florida for 60k, they later refinanced it for 150k. They spent all that money and two years later they declared bankruptcy and walked away from it, then they rented there the next winter and got the cold shoulder from their neighbors

 

[am1]

Now let's compare that to Copenhagen. Or Austin in 1972.

It doesn't surprise me that nobody will answer "start out in 1972 or 2023." I've explained my choice. Where are the opposing viewpoints? Would you like to graduate with six-figures of debt, make an average salary of around $70K, and looking $400K average house prices in the face?

Or 1972. Seeing as most of the people here already did 1972, I'm truly surprised nobody is going with that choice.

I did graduates with a masters degree and undergrad in 2006. Debt free and enough seed money and risk tolerance to buy Wyndham timeshares and rent the points for the next 3 years for more than the fees. Then in 2012 bought my current house in cash after buying two condos and renting them out for 15 times my cost to rent where I was living at the time.

Give me any era and I hopefully can make it work. But prefer now for the security and advances in civilization.

 

[1Melanie]

when working we deferred the max allowed by IRS and lived within our means. ( That’s why we bought timeshare so we could have nice vacations at a reasonable cost.) learned to squeeze every possible benefit from credit cards without ever going into debt. This resulted in more disposable income in retirement than when working. No real change in our lifestyle except we now have more time to vacation.

 

[ScoopKona]

You changed the goal posts to 1972. Ok, I'll revise.

1972 or 2023? As a person who graduated in 1980, with 18 percent inflation and then 18% mortgage rates, I'm not certain I had it much better than those in 2023.
2023 has a higher standard of living than 1972. Much higher. I say that in objective terms. Look at what you wouldn't have in 1972.
Cell phones - smart and otherwise.
Computers - unless you were a big company. However, you could then buy a pocket calculator (add, subtract, multiply, and divide) for $400 from TI.
Ability to time shift (or store) video entertainment. (The SONY Betamax did not come out until 1974.)
Most of the modern pharmacopia.
Cars that last 10+ years with minimal maintenance. (starting to change, there were Toyotas available then.)
Cheap air travel.
Free long distance phone calling.
Printers.
Copy machines were then available as coin operated machines.
Shall I go on?

I really only care about the economic numbers -- how much does a house cost? How much does a college degree cost? What are wages?

You're acting as if there was absolutely nothing to do in 1972, lacking smart phones and internet access.

Let's just take university as an example:

An English major wants to attend my school. If this student attends today, it will cost between $150-250K for four years. Let's go with the lowest possible number. Luckily for this student, minimum wage was increased to $15/hr this year. (I'm going to give this student the full fifteen. Not the $11.61 after taxes for the typical starving student. But I'm also not giving this student any Pell grants or scholarships. Just one of the unlucky students who's family was just wealthy enough not to qualify for anything. But too poor to pay for their child's tuition.)

So it will take 10,000 hours of labor to graduate debt free. That translates to working 48 hours a week, plus going to school full time.

Same school with 1972 numbers.

Tuition, room, board and books for the exact same English degree equals $4,200 and the minimum wage was $1.85 That means 2,270 hours to pay for an education, which is just under 11 hours a week. A student could work summers and pay for school. A student could work summers, attend summer class, and be out in three.

Which would you choose?

And now compare the average price of a house with salaries. Same thing. Here comes, "But VIETNAM!" Great. Attend school longer. At least they could afford to.

 

[rapmarks]

I really only care about the economic numbers -- how much does a house cost? How much does a college degree cost? What are wages?

You're acting as if there was absolutely nothing to do in 1972, lacking smart phones and internet access.

Let's just take university as an example:

An English major wants to attend my school. If this student attends today, it will cost between $150-250K for four years. Let's go with the lowest possible number. Luckily for this student, minimum wage was increased to $15/hr this year. (I'm going to give this student the full fifteen. Not the $11.61 after taxes for the typical starving student. But I'm also not giving this student any Pell grants or scholarships. Just one of the unlucky students who's family was just wealthy enough not to qualify for anything. But too poor to pay for their child's tuition.)

So it will take 10,000 hours of labor to graduate debt free. That translates to working 48 hours a week, plus going to school full time.

Same school with 1972 numbers.

Tuition, room, board and books for the exact same English degree equals $4,200 and the minimum wage was $1.85 That means 2,270 hours to pay for an education, which is just under 11 hours a week. A student could work summers and pay for school. A student could work summers, attend summer class, and be out in three.

Which would you choose?

And now compare the average price of a house with salaries. Same thing. Here comes, "But VIETNAM!" Great. Attend school longer. At least they could afford to.

I was able to work summers and save enough to pay for college, but your numbers are wrong. I went to college in early sixties. It cost about $4500 for my English major. I worked all summer at offices in downtown Chicago and saved the money. I know it was a lot higher in 1972, because my husband was getting his post masters credits then.

 

[ScoopKona]

I was able to work summers and save enough to pay for college, but your numbers are wrong. I went to college in early sixties. It cost about $4500 for my English major. I worked all summer at offices in downtown Chicago and saved the money. I know it was a lot higher in 1972, because my husband was getting his post masters credits then.

I got my numbers from the school. I was paying $5,500 in the 1980s. Those numbers are absolutely correct for the university I attended. By the time I graduated, tuition, room, board and books had jumped so high I was working 60-hour weeks my senior year, and doing work-study programs at the school. It was the only way I was able to graduate debt free. I'm the very tail end of the last generation able to do this. I saw what it was like when I started (easy and fun). I saw what it was like when I graduated (miserable). And I see how kids have it today (impossible).

Not a whole lot of empathy for what should be people's grandchildren, obviously.

 

[ScoopKona]

Average cost of a house, 1972: $26,800.

Average salary, 1972: $11,200.

Who cares what the interest rates are with those numbers?

My wife and I would have our first house paid off in three years with those kind of numbers. (This is a safe thing to say because we paid our current house in five, with much worse numbers.) If I had the kind of economic numbers 1972 offered, I would have been able to retire at 30 instead of 50. Anyone who couldn't make the numbers work in 1972 couldn't make the numbers work, ever. Wages compared to buying power were four years removed from the best they ever were in human history -- any civilization, any year.

 

[rapmarks]

Average cost of a house, 1972: $26,800.

Average salary, 1972: $11,200.

Who cares what the interest rates are with those numbers?

My wife and I would have our first house paid off in three years with those kind of numbers. (This is a safe thing to say because we paid our current house in five, with much worse numbers.) If I had the kind of economic numbers 1972 offered, I would have been able to retire at 30 instead of 50. Anyone who couldn't make the numbers work in 1972 couldn't make the numbers work, ever. Wages compared to buying power were four years removed from the best they ever were in human history -- any civilization, any year.

Your numbers must be very regional. We paid $35000 in 1972 for a very small house and not in a good neighborhood I made that salary in one of the highest paying school districts in Illinois with a masters degree and many years of teaching experience and my husband actually made less with even more experience.

 

[ScoopKona]

Your numbers must be very regional. We paid $35000 in 1972 for a very small house and not in a good neighborhood I made that salary in one of the highest paying school districts in Illinois with a masters degree and many years of teaching experience and my husband actually made less with even more experience.

I'm just going with the national averages.

Everyone is demanding "I had it so hard," when the numbers say they had it much easier than anyone who came before or after them. Yes, yes -- Vietnam. Discrimination. Sexism. Really bad gas mileage. It wasn't all wine and roses.

But from a sheer personal finance perspective, that generation had it easier than any other. Frankly, it's surprising that they don't want to hear that. I don't see what the problem is. "A dollar was worth a dollar. We were a year away from the first oil crisis. And the music was really good. We could graduate from high school and buy a house a year later."

There's no shame in that. What IS a shame is that nobody can say that today. A grocery store manager isn't going to provide for a family of four and own a nice house in 2023. That reality is gone. And the manager needs a degree today. That wasn't the case back then. Ending formal education at high school was an absolutely valid option. Not so today -- it's no longer much of a choice, and the debt necessary to obtain a degree is simply brutal.

 

[DrQ]

I'm just going with the national averages.

Everyone is demanding "I had it so hard," when the numbers say they had it much easier than anyone who came before or after them. Yes, yes -- Vietnam. Discrimination. Sexism. Really bad gas mileage. It wasn't all wine and roses.

I had a 1974 Chevy Vega THEN a 1981 Chevy Citation, two crap cars. Oh hell no do I wan't to go back.

The only change I would make is that when we got married, I would have worn a kilt instead of a tuxedo.

 

[ScoopKona]

I had a 1974 Chevy Vega THEN a 1981 Chevy Citation, two crap cars. Oh hell no do I wan't to go back.

The only change I would make is that when we got married, I would have worn a kilt instead of a tuxedo.

When I visit my school and talk to the students today (my wife attended the same school and she just visited), I don't tell them "I graduated debt free and so should you! Just bootstrap harder!"

Why? It's ridiculous. The numbers don't work. It's stupid to expect a student to carry a full course load and work 50-hour weeks in addition. That doesn't leave any time for schoolwork, or sleep -- I know because I've done it. I took the only job which would allow me to do course work on the job. So I was a night security guard. I'd take a four hour nap before classes and arrive looking like death-warmed-over. It was a brutal year. I also sold food out of my dorm room on weekends (dorm food sucked). Tell them about the days when a student actually could work their way through, and it's like teaching an ancient history course. It's hard for them to wrap their heads around the concept of graduating debt free without a full scholarship or the military being involved.

As for the car -- I'd have a Beetle. I know this because that's what I had then, too. Cheap and easy to fix. The worst problem could be solved in a day with a few hundred dollars and basic tools. Of course, they always seemed to break at the worst possible time.

 

[HitchHiker71]

Graduating debt free and going into the work force where you could buy your first house the first year you worked? And then that house appreciates by 7.5% annually for 50 years? Now worth $412K? Sign me up.

Again, I'll take that every single time compared to 2023's numbers. Furthermore -- who cares about the internet or laser printers if you're one paycheck away from homelessness?

Make the choice: 1962 with zero debt, making the average $6K salary with the average $12K house. Or 2023 with $120K in student loan debt, making the average $75K salary with the average $412K house. Choose one or the other.

I'm taking 1962 every time. And best of all, the music on the radio is absolutely superior compated to 2023. I'd be able to see roughly half of my favorite jazz acts. I'd live in New York. Buy a brownstone near the Greenwich Village jazz clubs -- which today would be worth a gazillion dollars. Golden age of air travel. Just being a US citizen means international cachet. Even if I didn't know exactly what stocks to buy, my buying strategy would mean I'd end up with blue-chips which today would also be worth a gazillion dollars.

And since I don't smoke, I'm not worried about 1960s medical problems. Worst case scenario, those rear their head in the 1990s -- and medicine is still pretty good.

Being born in 1950 was like being born on third base -- a bunch of those people are crowing about hitting a triple.

Now let's add the reality of stagnant wage growth since 1970 to this decision:

So real estate is 3-4 times more expensive, tens of thousands of dollars in student debt vs zero or near zero, and hardly any real wage growth since 1970. That is unsustainable - no matter how anyone argues against it or looks at it - facts matter - and the fact is - younger generations don't have much to look forward to - and it's easy to see why. Unfortunately, the older generations in power now have, on some level, chosen to burden the younger generations with massive loads of debt - rather than doing what the Greatest Generation did for their children - creating various methods (GI bill for example) for their children to get ahead without breaking the bank. Somewhere along the line we've lost that sense of duty to our children - we're perfectly OK loading up our kids with 1TT+ in student loan debt. Meanwhile the BB generation collectively sits on top of the largest amount of wealth of any generation in the history of this country. Eventually this wealth will transfer to the younger generations as the BB generation dies off, but that's going to take time, and in the interim the youngest generations - particularly Gen Y/Z - are left struggling with devalued currency issues, massive personal and public debts, no affordable housing, and a rather grim financial future especially when compared to Gen X and older. Sure there are always anecdotal exceptions that everyone can point to - but it's hard to argue with the macroeconomics in play here.