Retirement Advice From Those Who Learned the Hard Way

[1Melanie]

One thing I can clearly say about retirement; "Every day Is a Saturday".




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Isn’t that the truth? The first few months after retiring, I still got up at 4:30, did my workout then got ready…only thing is…I wasn’t sure what I got ready for. Not too terribly long after that it dawned on me I could sleep in every day AND take naps if I want to. Now I get up about 7, have coffee, workout sometime before noon then go about my day at my leisure. Oh what a feeling. Occasionally I have to remind myself that it’s not Saturday.

 

[1Melanie]

No one thinks about long term care insurance until they need it and then it is too late.

It’s a good idea if you’re not a planner and a saver. If you start building a foundation when you’re young, you’ll be covered if LTC is needed and, of course, have prepaid or have enough for the inevitable thereby alleviating any financial hardship for your loved ones.

 

[1Melanie]

I certainly agree the disparity between the haves and have-nots is going to get wider as we go down the generations. Since I have essentially no political power, all I can really do is try to make sure my kids end up on the "have" side of that line...

Although I do think there are things people can do to improve their lot. IMO the biggest one is car payments. They are an absolute money-suck. My wife and I had only a single vehicle between the two of us until we had kids. The 7-8 years of no capital cost, insurance, maintenance etc in our twenties, even when deducting what I spent commuting by transit, is a really significant amount of money if you compound it until age 65. Vehicles are extremely reliable now - buying used, keeping until the vehicle hits 15 years, etc can make a huge financial difference. Maybe not as fun as the story upthread of a new Escalade leased every 2 years, but way better in the long run.

A guy I worked with bought new cars every couple of years. He liked the new car smell. I lamented with another like minded coworker, wishing I could trade my 10 year old car in for a new one. He stopped me and said, “ask him how much he puts away into deferred compensation.” I knew the answer already …. Nothing.

 

[RENTER]

I agree that most people live in financial la-la land. That isn't just young people. It's all people. And they've been like that throughout history.

Economics sets the curve. An individual then reaches his or her level on that curve. Some people are going to do well regardless of what economy you plop them into. Others are going to fail no matter what economy they find themselves in. Average people behave in average ways -- that is why the curve matters.

But there's no arguing with numbers. Purchasing power has plummeted in the past 40 years, and all the bootstrapping in the world doesn't fix that. Costs on the big-deal items (an education and property) have skyrocketed above inflation. No amount of "lazy entitled kids" changes that, either. Even the kids who don't understand the economics behind it understand that they are being screwed over in away that previous generations were not.

(Only a handful have any living relatives from the Depression era.) And that number decreases every single day. Soon it will be zero. So we can stop with the Boomers in the comparison. If you want to stretch and include the Silents, that's fine. Their numbers were just as good. The best year to be a wage earner, any country, any point in history was "America, 1968." Nothing changes that fact, either.)

I guess you missed the series, We Went To The Moon when Houston was reading congratulations messages to the crew of Apollo 8. They told the crew that this message was from someone they did not know. The message read, "Thank You Apollo 8. You saved 1968." 1968 sucked. There was poverty everywhere and the working class was struggling. We did not have designation weddings. We did not have gender reveal parties. We did not have bachelor or bachelorette parties in Vegas. We did not go to Mexico for spring break. We did not have hundreds of dollars a month cable bills to watch sports. Wedding receptions were held in the local American Legion Halls or in the back of the church. There were no stupid college majors that people went into debt and could not find jobs when they graduated. Teachers were poorly paid. Yes your right, there are not a lot of people around today who lived during the depression. But there are plenty still around who lived during the stagflation era of the 70's, the gas crisis of the 70's, the crash of 87, 00 and 08, the real estate crash of the 90's and 00;s. And you know what, many of these people warned the younger generation not to waste money on such things and start at community college and take a serious major. They were laughed at and the phase OK BOOMER became common. So I for one do not feel sorry for them.

 

[ScoopKona]

So I for one do not feel sorry for them.

OK, Boomer.

 

[rapmarks]

I haven’t done anything since my husband passed. I do take my grandsons places, but we have quite different tastes

 

[slip]

People have retired, people have just retired and people will continue to retire and every story is different and things will continue to change.

 

[DrQ]

A guy I worked with bought new cars every couple of years. He liked the new car smell. I lamented with another like minded coworker, wishing I could trade my 10 year old car in for a new one. He stopped me and said, “ask him how much he puts away into deferred compensation.” I knew the answer already …. Nothing.

If you want to drive new cars, leasing is the way to go, but you need to look for the some factors:

• Subverted interest rates (money factor)
• High residual value
• Know your mileage usage
• Sales tax credits (a Texas thing)

If the residual is higher, you can pocket the equity (depending on the lease structure), if the residual is lower, the writer on the lease (many times the manufacturer) will eat the loss.

The only way I would drive a Mercedes, BMW, Jaguar, LandRover ... etc, would be on a lease to account for the depreciation upfront and those cars, I would not own past warranty,

 

[ScoopKona]

The only way I would drive a Mercedes, BMW, Jaguar, LandRover ... etc, would be on a lease to account for the depreciation upfront and those cars, I would not own past warranty,

I think it's a better plan to buy a classic which is on its way up (any air-cooled Porsche, back when they could be had for almost nothing, for instance), and buy that instead.

And since someone will undoubtedly say, "How do you know it's going to go up? You don't have a crystal ball!"

Here's the answer. In my youth, they were basically giving away Porsche 356s. It would need work -- in many cases a LOT of work. But the parts weren't horrible and the work was straightforward. Dirty, rusty, learn-to-weld. But straightforward. In my young-adult life, those cars shot into the stratosphere.

Early 911s and especially 912s were still at giveaway prices in my young-adult life. People wanted the 930 whale-tail turbo. They didn't want a Porsche which didn't have flares or a whale tail. You could pick one up for far less than any new car. By middle age, those cars had shot into the stratosphere. Only multi-millionaires can afford a "doesn't need anything" original RS-Touring today. I remember when one could be had for less than the price of any new Ford pickup sold at the time. Now people are buying cars which were "converted" to 930 turbos -- and putting them back to stock. It makes financial sense to do so.

914, the maligned Porsche, could be bought for basically nothing well into my middle age. Now a 914-6 is a $100K car. Even a beat to crap example is worth a fortune because someone with deep pockets will pay to have it restored. And 4-cylinder 914s push into the six-figure boundary, for a pristine-enough example.

Just follow the price trend, and know a great deal about cars. Otherwise you'll be the guy with that flooded McLaren.

 

[RENTER]

OK, Boomer.

ask the tech snobs of the 90's what happened to them when they blew off the warnings of old timers.

 

[ScoopKona]

ask the tech snobs of the 90's what happened to them when they blew off the warnings of old timers.

No, I ask those kids if they'd like any dirt on the annoying relative in their life. Because I have plenty and am willing to share.

"Go ask Uncle Annoyance about the time he got hair plugs, a Member's Only jacket, a gold razor-blade on a chain, a brand new Camaro, and then divorced his wife and ran off with the babysitter."

Uncle Annoyance was always a royal pain. Just because the only thing we said at the time was "yeah, whatever," doesn't mean we weren't paying attention.

 

[Everett J Smith]

With all these stories I am looking forward to retirement. New wife, new life, and TUG Timeshares lol

 

[winger]

Indeed - that's a big part of why we bought into timesharing - to boost our quality of life as of 2018 as we entered our fifties and to place more of an emphasis on leisure time together with friends and family while not breaking the bank so to speak.

We bought into timeshares many years ago. One of the TS benefits the sales lady of our first timeshare mentioned which has resonated with us over the years is the 'forced vacations' aspect of ownership. Looking in the rear view mirror, this is the one very rare times when a sales person's lips are moving and he is NOT lying.

 

[HitchHiker71]

A guy I worked with bought new cars every couple of years. He liked the new car smell. I lamented with another like minded coworker, wishing I could trade my 10 year old car in for a new one. He stopped me and said, “ask him how much he puts away into deferred compensation.” I knew the answer already …. Nothing.

1st rule in investing - always pay yourself first! Except for a period in our 30's when we were at the heights of paying for private school for our kids and had maximum child rearing expenses and were living predominantly on a single income - we have always maxxed out our voluntary retirement savings plans every year. We continue to do so today. This year the maximum with the catch-up contributions (since we are over age 50) is 30k per plan (22.5k max plus 7.5k catchup) - for a total of 60k into our 401k plans. We do have one consolidated mortgage debt on one of our three rental properties - and one car payment at this time - but other than that - we have no debt to speak of at present. Our home is paid in full - and we have an active HELOC against our home for 350k so that if we want to invest in anything (like more rental properties for example - or other major home improvements) we can do so at any time. We are in our early 50's right now and I don't anticipate retirement as an option until age 65 at present, all things being equal, which they rarely are over time.

On the subject of macro retirement savings, I am somewhat shocked at the number of people who don't invest into their voluntary retirement plans at all - especially those in the BB generation that don't have anywhere near enough savings to survive in retirement in reality.

New Data Reveal Inequality in Retirement Account Ownership

The Survey of Income and Program Participation shows how many people are saving for retirement.

www.census.gov

 

[ScoopKona]

We bought into timeshares many years ago. One of the TS benefits the sales lady of our first timeshare mentioned which has resonated with us over the years is the 'forced vacations' aspect of ownership. Looking in the rear view mirror, this is the one very rare times when a sales person's lips are moving and he is NOT lying.

One of the worst timeshare tours I ever had was a older couple. The wife desperately wanted to travel. The husband's only interest in life was maintaining his lawn. I think half the neighborhoods in North America have some version of this man. He was the most stultifyingly dull person I have ever encountered. Money was on autopilot. They didn't have a care or a responsibility in the world. And he was going to mow his law and care for his lawn -- and not his wife -- until he dropped dead.

That isn't a marriage. It's a prison sentence.

 

[elaine]

Imho, people without means will have to go to multi-generational housing. Not a bad idea: elderly at home caring for younger kids, adult kids working, sharing cost of housing that elders own or that they pooled their $ to purchase, and lower childcare expenses. I see this model in immigrant families in DC area (including affluent neighborhoods) and in Europe.

 

[Ralph Sir Edward]

No, I ask those kids if they'd like any dirt on the annoying relative in their life. Because I have plenty and am willing to share.

"Go ask Uncle Annoyance about the time he got hair plugs, a Member's Only jacket, a gold razor-blade on a chain, a brand new Camaro, and then divorced his wife and ran off with the babysitter."

Uncle Annoyance was always a royal pain. Just because the only thing we said at the time was "yeah, whatever," doesn't mean we weren't paying attention.

Then why do you post like "Uncle Annoyance"?

 

[HitchHiker71]

Imho, people without means will have to go to multi-generational housing. Not a bad idea: elderly at home caring for younger kids, adult kids working, sharing cost of housing that elders own or that they pooled their $ to purchase, and lower childcare expenses. I see this model in immigrant families in DC area (including affluent neighborhoods) and in Europe.

I was just going to say the same thing - multi-generational housing is cultural with many ethnic groups, including Latinos, Indians (from India), Asians, etc. The only ethnic group where this isn't the norm is with Caucasian Americans for the most part - which I think is primarily related to their overall wealth/status that inherently provides options not to have to live under one roof.

 

[ScoopKona]

Then why do you post like "Uncle Annoyance"?

Because I don't suffer fools gladly.

 

[ScoopKona]

I was just going to say the same thing - multi-generational housing is cultural with many ethnic groups, including Latinos, Indians (from India), Asians, etc. The only ethnic group where this isn't the norm is with Caucasian Americans for the most part - which I think is primarily related to their overall wealth/status that inherently provides options not to have to live under one roof.

Part of that norm, though, is the eldest son paying the bills for the elderly family members -- who mind the children. And since that culture also has the philosophy of "the oldest person is always right," they get to decide what's on television, what's for dinner and similar. It's a decent financial deal. But a bad lifestyle deal.

 

[bizaro86]

Part of that norm, though, is the eldest son paying the bills for the elderly family members -- who mind the children. And since that culture also has the philosophy of "the oldest person is always right," they get to decide what's on television, what's for dinner and similar. It's a decent financial deal. But a bad lifestyle deal.

My father in law, who is a widower, lived with us for nearly a year due to delays in the closing of the senior living condo he was downsizing into.

We had to have a few frank conversations about how he wasn't in charge of everything. The Bluetooth headphones so he could watch TV on loud while the kids were sleeping might have saved a life.

 

[joestein]

I live in a pretty wealthy part of Northern Virginia. I have many friends who spend money on cars, trips, eating out, etc. Many have very little saved. It will be a huge adjustment trying to retire and give up that lifestyle. On the other hand, if you save your money before retirement you can do all of the expensive stuff when you have time to enjoy it

Or you can try to balance the two - enjoy your life - but not to an excess that will not allow you to save.

 

[joestein]

Fixed it for you. ;-)

After the contribution limit is reached, then I recommend a diverse bunch of ETFs and REITs. Anything that isn't precious metals, crypto, or "magic beans being sold by a hobo in the park."

I would go with more than just raises and bonuses -- especially in this lousy economy. I lived on 20% and invested the rest.

I thought I got a good return on the magic beans. During COVID they were the hot item on Ebay.

 

[joestein]

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

View attachment 78992

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.

Maybe I don't understand this chart, but it seems that wages have stayed constant with prices. So, if wages went up 11X (if I read the chart correctly) then anything that went up less than 11X should be a relative deal while things that increased more 11X are harder to afford.

Average house in 1964 - $18,900
Average house in 2018 - $326,400 (17X) - certainly less affordable

However, I am sure that the vast majority of homeowners in 1964 were single earners. So, if you have a dual earner (which many families have today) - does that change the equation? I never would have bought my first home in 2001 if it was only my salary.

 

[Ralph Sir Edward]

Planning for retirement, when you are just starting out.

Use capital to minimize cashflow needs - as a plan and a habit.

Learn to cook - and do it! You may cook in a larger quantity and freeze the excess. Not enough time? Buy a crockpot and learn to use it. There are many other time savers.

Little bills add up. Minimize those little bills.

Get a education in a subject with clear and obvious economic value. Don't follow your heart - follow your wallet.

There are many free things in life. Find them out and enjoy them.

Learn to bargain hunt. Bargains are not cheap things, per se, They are things of value that for temporary reasons, are out of favor. This also holds true for investments. Recessions and bear markets are great times to buy core holdings.

Ignore the Jones. You'll pass them in middle age and have a better second half of life.

AND REMEMBER THIS - Money today is a fiat currency. Inflation will always occur to a greater or lesser extent. Don't take my word for it, read the historical charts.