Retirement = no money

[MuranoJo]

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.

I agree with you, but there are situations where the elderly can be exploited by their own "trusted" investment brokers. An elderly widowed aunt had a family broker who recommended she put a significant chunk of her late hubby's investments into a high-tech stock just before the dot.com bubble. (This was with the broker's full awareness that she got zip of late hubby's pension as he opted for non-spousal support, plus the fact that she was a SAHM through most of their marriage.) That particular high-tech stock tanked and never really made a come-back, and she ended up living on $700/mo. for the remainder of her life. She didn't consult with any of us until it was too late.

 

[bogey21]

I agree with you, but there are situations where the elderly can be exploited by their own "trusted" investment brokers. An elderly widowed aunt had a family broker who recommended she put a significant chunk of her late hubby's investments into a high-tech stock just before the dot.com bubble. (This was with the broker's full awareness that she got zip of late hubby's pension as he opted for non-spousal support, plus the fact that she was a SAHM through most of their marriage.) That particular high-tech stock tanked and never really made a come-back, and she ended up living on $700/mo. for the remainder of her life. She didn't consult with any of us until it was too late.

I had the same thing happen to a friend of mine. I suggested he file an arbitration claim against the broker and his firm. In truth I had to badger him to file the claim. He was awarded a little over $100,000. Lawyer took a percentage on a contingency. I think the key was a combination of his last 10 years of tax returns and his age. His tax returns showed zero investment activity ever. His age showed he should have been invested more conservatively.

George

 

[geekette]

I agree with you, but there are situations where the elderly can be exploited by their own "trusted" investment brokers. An elderly widowed aunt had a family broker who recommended she put a significant chunk of her late hubby's investments into a high-tech stock just before the dot.com bubble. (This was with the broker's full awareness that she got zip of late hubby's pension as he opted for non-spousal support, plus the fact that she was a SAHM through most of their marriage.) That particular high-tech stock tanked and never really made a come-back, and she ended up living on $700/mo. for the remainder of her life. She didn't consult with any of us until it was too late.

There is a special place in hell for those that take advantage of the elderly. Sick though it is, I know this is not a unique situation. My mother also has been taken advantage of by people she should not have trusted. Not to this level, thankfully.

I hope it serves as a warning to those who leave money management to others. Please educate yourself to at least a minimum level so that you will be better able to spot A Really Bad Idea suggested for your portfolio, like the very out of balance diversification above.

 

[x3 skier]

No clue why it would take more than five years if one is diligent in selecting a course of study. When I went to Engineering college, I was issued a schedule of courses totaling at a minimum, 21 credit hours for the quarter until my last two quarters my Senior year when I could select two electives each Quarter. If Someone flunked a course, they were out for a year which was a pretty good motivator. It is still that way today at my Alma Mater.

If one selects a major late or one that is oversubscribed, one pays the piper. Nobody in my time "pursued their dream" by taking 6,7 or more years taking a smorgasbord of courses. You took a course of study and if you didn't cut it, you were out the door.

We along with our kids have set up 529's for the Grandkids at a State School that will cover four years (or five it that is the standard course of study) and that's it.

End of soapbox speech.

Cheers

 

[smurfyblue]

I agree with you, but there are situations where the elderly can be exploited by their own "trusted" investment brokers. An elderly widowed aunt had a family broker who recommended she put a significant chunk of her late hubby's investments into a high-tech stock just before the dot.com bubble. (This was with the broker's full awareness that she got zip of late hubby's pension as he opted for non-spousal support, plus the fact that she was a SAHM through most of their marriage.) That particular high-tech stock tanked and never really made a come-back, and she ended up living on $700/mo. for the remainder of her life. She didn't consult with any of us until it was too late.

That is just scary. I will share this with my parents, I don't like the level of trust they have with their broker. We always have to ask and be quite nosey about their finances before we find out they are about to make a lousy decision. So far so good but they are getting tight mouth about what they are doing with their money.

 

[geekette]

No clue why it would take more than five years if one is diligent in selecting a course of study. When I went to Engineering college, I was issued a schedule of courses totaling at a minimum, 21 credit hours for the quarter until my last two quarters my Senior year when I could select two electives each Quarter. If Someone flunked a course, they were out for a year which was a pretty good motivator. It is still that way today at my Alma Mater.

If one selects a major late or one that is oversubscribed, one pays the piper. Nobody in my time "pursued their dream" by taking 6,7 or more years taking a smorgasbord of courses. You took a course of study and if you didn't cut it, you were out the door.

We along with our kids have set up 529's for the Grandkids at a State School that will cover four years (or five it that is the standard course of study) and that's it.

End of soapbox speech.

Cheers

A little weird to me, also, but since I decided late what I wanted to do, I did 5 years in 4 years by staying on campus summers.

I wouldn't put a lot of stock in college stats as far as % graduating in X time. Each kid is different. I sure wouldn't go in planning to stretch a Bachelor's degree to 8 years!!

Well, maybe I would, if I were on the bank of Mom and Dad and not keen on entering Real Life where I have to pay for stuff myself.

 

[easyrider]

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

 

[ciscogizmo1]

No clue why it would take more than five years if one is diligent in selecting a course of study. When I went to Engineering college, I was issued a schedule of courses totaling at a minimum, 21 credit hours for the quarter until my last two quarters my Senior year when I could select two electives each Quarter. If Someone flunked a course, they were out for a year which was a pretty good motivator. It is still that way today at my Alma Mater.

If one selects a major late or one that is oversubscribed, one pays the piper. Nobody in my time "pursued their dream" by taking 6,7 or more years taking a smorgasbord of courses. You took a course of study and if you didn't cut it, you were out the door.

We along with our kids have set up 529's for the Grandkids at a State School that will cover four years (or five it that is the standard course of study) and that's it.

End of soapbox speech.

Cheers

Actually, right now it has nothing to do with the kid it has to do with budget cuts especially in California. A typical freshman at a junior college may get 2 classes their first semster of school. At UC Santa Barbara as a freshman you are allowed to take only one class the first quarter. At least it is only one quarter so, 9 weeks or so. The schools have more students than they have available classes. You can check on http://collegerealitycheck.com/ for how well a typical school does. I'm just researching CA. It may different in your state. Also, here's a blog that talks about this issue in detail.

Trust me I've asked the very questions you are asking is the time to graduate related to major changes, poor grades, etc... No, it all budget cuts. Another way to look at it there are more applicants for Nursing school in California than there are spots. Some students wait 1 to 2 years before they get placed in a program.

 

[klpca]

Actually, right now it has nothing to do with the kid it has to do with budget cuts especially in California. A typical freshman at a junior college may get 2 classes their first semster of school. At UC Santa Barbara as a freshman you are allowed to take only one class the first quarter. At least it is only one quarter so, 9 weeks or so. The schools have more students than they have available classes. You can check on http://collegerealitycheck.com/ for how well a typical school does. I'm just researching CA. It may different in your state. Also, here's a blog that talks about this issue in detail.

Trust me I've asked the very questions you are asking is the time to graduate related to major changes, poor grades, etc... No, it all budget cuts. Another way to look at it there are more applicants for Nursing school in California than there are spots. Some students wait 1 to 2 years before they get placed in a program.

I agree with this - it's ridiculous. If anyone reading this has kids in high school my advice to you is do whatever you can to get them into some AP classes. My oldest didn't take any and it took 5 years to get her degree, but the university was upfront about science majors taking five years to finish, mostly due to course sequencing issues. My #2 and #3 kids each finished in 4 years, but their AP classes helped immensely. First of all they received "some" credit (some schools are stingier than others with AP credit), secondly they were registering as sophomores instead of freshmen so they were able to get into classes that filled up by the time the freshmen were registering. Not to mention how much money is in play here - $25,000+ in tuition/r&b for each year plus lost wages for the year that they are students instead of employees - maybe $40k+. That's a lot of reason to get those kids through school in four years.

 

[momeason]

The state schools in NC are very good and I do not think they ration classes. They do not over enroll..very selective. My son, however, considered University of Florida in 2002 and he was told he would have to sit out one fall or spring because of over-enrollment. He went to Clemson U in SC instead.

 

[Jennie]

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

Not necessarily true. So long as the home owner pays all the real estate taxes each year, and keeps the home in a habitable condition, they can continue to live in it until they die. I have a relative who has lived in her home for almost 15 years since she took a reverse mortgage. She invested the money wisely and now has assets worth far more than the current value of the house.

 

[pgnewarkboy]

Play by the Rules - Reap the Rewards- is Over

The idea that if you work hard, save,are loyal to your company or boss; or go to college, get good grades,; or buy a house, pay down the mortgage, AND EVERYTHING WILL BE FINE etc. etc. are long gone. We are living in a an ever changing no mans land where the game changes constantly.

 

[PigsDad]

The idea that if you work hard, save,are loyal to your company or boss; or go to college, get good grades,; or buy a house, pay down the mortgage, AND EVERYTHING WILL BE FINE etc. etc. are long gone. We are living in a an ever changing no mans land where the game changes constantly.

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

 

[geekette]

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

Exactly. "The Rules" my parents had fit their generation, not mine. There is no standard way to ensure a financially solvent life, but if one does not live beneath their means and save save save for retirement, there may not be a happy ending, and that is directly attributable to the individual. There is no other place to put the blame.

I remember dad wondering what was wrong with me, that I didn't just get A JOB and keep it for 10-40 years. The world is not that way, has not been that way for a very long time. It's even harder for the non-career workers as they may bounce around even more than I have and not get the bennies I did. Are these folks without 401k/pension going to save into IRAs on their own? I don't think so, not like they need to (and what is the deal with such low ceilings on IRA contributions, anyway??? If you don't get a 401k or pension, well, Good Luck, hope you started putting full $5k in starting at age 15 ...)

Kurt nailed it - the individual is in charge. There is no Company Family to give a crap about you, your loyalty is a donation, not an upfront payment on a promise fulfilled in your golden years.

The problem is that not enough people recognize the issue until too late, until they have spent years of potential tax shelter savings on new cars, fancy trips, latest gadgets, instead of putting that dough away. The idea that one can live on SS needs to get stomped out, not enough people understand that SS is NOT, was never intended to be, Your Full Retirement Income.

"Being good", playing by the rules, those were never guaranteed to see you through, but these days, it's not nearly enough to simply do the right thing.

I am determined to not be old and poor and was lucky enough to have that goal when I was young and poor. "The Struggle" is best done young. I will work until I can be reasonably confident that I will not outlive My Money, and plan to delay taking SS until age 70 to get as much monthly as possible, and not count on that seeing me through.

 

[planzfortomorrow]

So true!

The idea that if you work hard, save,are loyal to your company or boss; or go to college, get good grades,; or buy a house, pay down the mortgage, AND EVERYTHING WILL BE FINE etc. etc. are long gone. We are living in a an ever changing no mans land where the game changes constantly.

Yeah, what worked for the older generation isn't what will work for the baby boomers, and what's going to work for them doesn't necessarily work for generation X. My biggest fear is that because I've saved so well for my retirement, and have a decent job with good benefits (but less upfront pay) is that when I retire, my SS benefits will be cut. I'm a gen X'er. I love people who have 'made it', and say basically, it worked for me, it can work for you! But it's all a 25 to 40 year plan, and you don't get a do-over.

I also don't think I will encourage my young daughter to necessarily go to college. Come on--someone here is talking about paying out $125K to get a college degree. REALLY? What kind of money is this student planning on making? It would take SEVERAL years to make that money back. Sometimes, I think people would be better doing trade work that they can start right after high school.

 

[x3 skier]

I also don't think I will encourage my young daughter to necessarily go to college. Come on--someone here is talking about paying out $125K to get a college degree. REALLY? What kind of money is this student planning on making? It would take SEVERAL years to make that money back. Sometimes, I think people would be better doing trade work that they can start right after high school.

When I started college a thousand years ago, it was clear to me there were two kinds of experience. One was taking a course of study that led to a job in science, engineering, business, education, pharmacy, nursing, etc. Another was to get an education in some field that may or may not lead to a good paying job, like history, art, English or another Liberal Arts field.

It was true then and even more so today so it's pretty easy to me to see a $125000 or a $10000 or a $1000 expenditure in education as an investment in a a career. Students that get excellent training at a community college as a machinist, mechanic, pilot, or other field not needing a college degree can be as well off as any college grad. Apprenticing in a building trade field like plumbing, electrical work, HVAC or others is another choice.

Of course, if somebody wants to spend the money to learn something just for the hell of it, it's their (or their parents, grandparents whoever) money.

Not everybody needs or wants college to be happy and financially secure so it's best to figure which bin you belong in before laying anything out for any education.

Cheers

 

[pgnewarkboy]

Some individuals can exert control of their financial fate to varying degrees of success. All individuals, however, are subject to the actions and inactions of other individuals and institutions. The recent banking housing crash is just one example of many. How many people knew they would be harmed by derivatives scams -directly or indirectly? How many people who worked for the largest and best known companies in the world knew these companies would go bankrupt or move their jobs outside the country -causing them to lose their pensions? Instability reigns and there is a limit to how much any one individual can do to protect themselves. The younger you are the more daunting the task to ensure your financial present and future. Will my chosen career exist in 5 years or will my job be outsourced or done by a computer? What control does a person have over that? Constantly going to school is not the answer for most people.

 

[planzfortomorrow]

There's also environmental concerns. There was this older couple who had farmed/ranched their entire lifes. Money lean but land rich. Except there had been an oil & gas spill nearby, and all their cattle died, they got cancer, etc. Even if they had not been immediately affected, their home worth was next to zero (contaiminated ground water, oil/gas company wouldn't admit fault). Hurricane Katrina--same thing--you might be OK, but the economy around you isn't, and it'll drag you down.

The stock market can rapidly decline--in a matter of minutes, where the average investor in a 401(k) or Roth IRA or whatever just cannot get out of the market in time. And if you want to act like it's your fault because you shouldn't have been in the market in the first place, remember no matter what your age, you'll have to have soemthing in the market for growth to comp for inflation. What took YEARS to grow can be wiped out in seconds.

The bottom line is, even with the best planning, sometimes things just don't work out because it's outside of your control.

 

[bogey21]

I had the same thing happen to a friend of mine. I suggested he file an arbitration claim against the broker and his firm. In truth I had to badger him to file the claim. He was awarded a little over $100,000. Lawyer took a percentage on a contingency. I think the key was a combination of his last 10 years of tax returns and his age. His tax returns showed zero investment activity ever. His age showed he should have been invested more conservatively.

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

 

[geekette]

There's also environmental concerns. There was this older couple who had farmed/ranched their entire lifes. Money lean but land rich. Except there had been an oil & gas spill nearby, and all their cattle died, they got cancer, etc. Even if they had not been immediately affected, their home worth was next to zero (contaiminated ground water, oil/gas company wouldn't admit fault). Hurricane Katrina--same thing--you might be OK, but the economy around you isn't, and it'll drag you down.

The stock market can rapidly decline--in a matter of minutes, where the average investor in a 401(k) or Roth IRA or whatever just cannot get out of the market in time. And if you want to act like it's your fault because you shouldn't have been in the market in the first place, remember no matter what your age, you'll have to have soemthing in the market for growth to comp for inflation. What took YEARS to grow can be wiped out in seconds.

The bottom line is, even with the best planning, sometimes things just don't work out because it's outside of your control.

Farmers, they have it rough, for sure, and losing everything is a possibility quite frequently.

However, I disagree on the possibility losing EVERYTHING in the market in a matter of seconds.

Yes, the value of my holdings went down but it is not true that my 401k or any other account, ceased to exist (anyone, if your whole account went to 0 and never returned, please post details of your holdings).

this has not happened in my lifetime. In fact, none of the mutual funds available in my 401k vaporized, either. Sure, price per share plummetted, but not to 0, or less, and they came back, so where is the wipeout?

If you invest all of your money in a company that goes kaput, ok, there is total loss. For the rest of us, diversification hedges against this risk.

All the mutual funds and every company on all of the exchanges would have to go bankrupt, out of business, for there to be widespread cases of people Losing Everything.

I simply do not believe there is any chance that all equities can be reduced to nothing in a matter of seconds. A nuke could do it, but I wouldn't be alive to know it or need the money.

 

[x3 skier]

I worry not at all about a meteorite hitting me in the head just as I don't worry about anything else I cannot control like the stock market, hurricanes, plague, etc. Better for my health that way.

If something unexpected happens, I have made reasonable preparations. If they were insufficient, I move on. Wringing of hands and whining or worrying about it does zero to change my situation. S*** happens and you can accept it and let it beat you down or deal with it.

Cheers

 

[vacationhopeful]

This months AARP mailing has a story on adult women sharing houses as they age - refers to the many unmarried 50+, divoriced, or widowed women living together - sharing housing expenses and companionship.

Adapting --- to aging with less resources but pluses include companionship and better neighborhoods to live in.

 

[planzfortomorrow]

Your right--you don't lose all your money in seconds. But you don't gain it back immediately either. Say the market takes a 30% hit in one day. Even if it comes back to a 30% gain, you're still not even. And the stock market rarely makes rapid gains like that. If you take out any money (such as for living expenses), then that's even less there to help gain you back to zero. The last stock market plunge took me about 3 years, to maybe be back to where I was (and I'm not counting my additional contributions as part of getting me to "what it was"). My grandparents, who are very well invested, suffered with the last market hit. They still live very comfortably, but I'm willing to admit that they may be in the minority.

I find that in most personal interest stories, most readers try to find fault with the people involved, because otherwise they'd have to admit to themselves, that could be their sob story & not some stranger. And that scares them.

 

[PigsDad]

There's also environmental concerns. There was this older couple who had farmed/ranched their entire lifes. Money lean but land rich. Except there had been an oil & gas spill nearby, and all their cattle died, they got cancer, etc. Even if they had not been immediately affected, their home worth was next to zero (contaiminated ground water, oil/gas company wouldn't admit fault). Hurricane Katrina--same thing--you might be OK, but the economy around you isn't, and it'll drag you down.

I would chalk that up to a lack of diversification. To have all or a significant amount of your assets in one thing is a poor investing strategy.

Those Enron employees that lost everything had all of their 401k assets in Enron stock. How smart was that? If the company goes down, not only do you lose your job, but you also lose your retirement assets. Defined benefit retirement plans have the risk of falling into that trap as well (but usually a lower risk, since they are often insured). But what if that insurance company goes belly-up?

Diversify, diversify, diversify. It can't be said enough. If your whole retirement is in a single investment, be that land, a house, a limited number of stocks, a narrow set of bonds, etc., you are just looking for trouble.

Your right--you don't lose all your money in seconds. But you don't gain it back immediately either. Say the market takes a 30% hit in one day. Even if it comes back to a 30% gain, you're still not even. And the stock market rarely makes rapid gains like that.

The stock market has never lost 30% in one day. Take a look as some real data:

http://en.wikipedia.org/wiki/List_of_largest_daily_changes_in_the_Dow_Jones_Industrial_Average

The absolute worst was Black Monday in 1987. There were only two other days in the history of the DJIA that the market had a double-digit percent decline.

But getting back to your comment about an "average investor in a 401(k) or Roth IRA or whatever just cannot get out of the market in time" -- my response is that an "average investor" shouldn't be trying to time the market in the first place.

Over the long term, there are few, if any, investments that match the performance of the stock market with the same level of risk. Of course the market goes up and down, but for a dollar-cost investor, the volatility actually adds to your gains as you buy more shares when the market is down, and less when it is up. Trying to time the market just increases your risk and has proven time and time again to lead to disasters for the average investor, as the average investor tends to be emotional and will do exactly what they should not do: panic and sell after a big dip. The only thing that does is lock in your losses. Not very smart, IMO.

Kurt

 

[SunSand]

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.