[Deputy Barnes]

www.nytimes.com/2014/10/25/your-money/4 ... ?referrer=

Looks like social security's got another thing coming, cuz you just know this money isn't being spent with the future in mind.

[Byron Walter]

I'm not getting how withdrawing money out of 401k's is connected to Social Security other than most SS payouts will not support living indoors in first world countries. And not to worry about SS as it's in a lockbox, other than the tiny concern that the lockbox only has five sides.

[MD]

Haven't you noticed the flood of reverse mortgage ads?

Here's a clue: If seniors weren't stressed to the point that they are willing in droves to sell their hard-earned domiciles for five or ten years of cash-flow, the ads wouldn't run.

401ks aren't shit in comparison to that.

After they piss away that money, they will discover that they are wait-listed for health care.

Anyone got any good news to share? ...

cricket...

cricket...
cricket...

...

I thought not.

[Byron Walter]

Haven't you noticed the flood of reverse mortgage ads?

Here's a clue: If seniors weren't stressed to the point that they are willing in droves to sell their hard-earned domiciles for five or ten years of cash-flow, the ads wouldn't run.

401ks aren't shit in comparison to that.

After they piss away that money, they will discover that they are wait-listed for health care.

Anyone got any good news to share? ...

cricket...

cricket...
cricket...

...

I thought not.

That's a good example of the fact that many people are poor financial planners. I've seen plenty of that within my small circle. One guy I know who is in the upper 0.5% of earners really screwed himself with a number of dicey investments that will have him working years longer than he originally planned.

Early in life everyone should be forced to learn the compound interest equation and know how amortization tables work.

The media pushes us to consume and live beyond our means (hey, we earned it). The Great Recession is the most recent example of such excess. If Joe Blow had pulled the stunts that the Banksters did, he would have ended up sharing a cell with Wesley (I-don't-have-to-pay-taxes) Snipes.

Those folks going for reversed mortgages have committed a basic error of living beyond their means.

Basically there are two types of people; those that pay interest and those that collect it.

But that aside, the US economy looks likely to keep moving forward at a modest pace into next year with third and fourth quarter GDP probably coming in around 3% or so.

[shallow sand]

There should be mandatory instruction in all high schools and colleges concerning personal finance, especially retirement issues. As 401(k) is now the primary retirement vehicle, it would seem there should be no debating this.
It seems to me, however, heredity is a big predictor, and family instruction is the only instruction being received by most. My unscientific polling indicates that if your parents were not savers, chances are you will not be either. The average 401(k)/(IRA) balance statistic is a canary in the coal mine. Stagnant wages and numerous job changes contribute to this problem, in addition to lack of education/training in the personal finance area.

[beamofthewave]

so do dental bills, car repair bills, student loans, car insurance, health insurance, I don't remember my dad ever having all of these different taxes taken out of his pay check every other week. I have come to the conclusion insurance is a scam and I am paying for nothing. I am paying 500 a month to health, dental and car insurance corporations and what a rip off. You people are talking about saving money as if it is even a possibility in the US. I think maybe in Ireland it would be possible where you wouldn't have to pay insurance rip off corpoations.

[Ibon]

Haven't you noticed the flood of reverse mortgage ads?

Here's a clue: If seniors weren't stressed to the point that they are willing in droves to sell their hard-earned domiciles for five or ten years of cash-flow, the ads wouldn't run.

401ks aren't shit in comparison to that.

After they piss away that money, they will discover that they are wait-listed for health care.

Anyone got any good news to share? ...

I thought not.

The increase in the death rate as a result of being wait listed for health care is good news in two ways. It brings our population back to balance more quickly and teaches us collectively to be just a little less self entitled in deserving a long life.

[AgentR11]

The increase in death rate as a result of being "wait listed" will be insignificant in respect to population dynamics. With reasonable sanitation and adequate food; people live to 70-something regardless of how good or bad the oh-so-important medical care is. By 70-something, most folks are done with their breeding and child rearing activities, and have moved on to odd hobbies, grandkid doting, and rocking chair grumbling. (I'm destined for the rocking chair grumblies... or at least the internet version of same...)

The population hasn't exploded because of great care in extending the last couple years of life. Its exploded because of food, tolerably good waste management, vaccines, and low-end, high use, cheap-as-dirt, antibiotics & steroids.

401k drawdown however is simple to understand. Millions of people thought they were upper middle class. And were not. They bought houses, and cars, and boats that went with an upper middle class, and upper class lifestyle... when they should have gone with a 1000-1500 sf house, one or two old cars, and a bicycle. Some like Pops, got really, really lucky with the real estate turn over; but for everyone who did well, someone else got stuck owing 300k on a house that was honestly worth 50k. Lots of people survived '09 btw, and kept those big houses, and kept those big notes, and kept those big property tax and insurance bills. Problem is, they don't make retirement plans that normal people can handle that can also handle the medical, property tax, and mortgages typical of post-70 upper class lives.

Most folks, as in 80-90% of the country need to be honest with themselves. Accept SS and whatever medicare will pay for; if medicare won't pay for it, use that as the clue that it wasn't worth the cost in the first place. We are all mortal; we will all die; and that death experience at 82 is pretty much exactly the same as the death experience at 78. As much as the industry would like to suggest otherwise, retirement planning is a fantasy; no plan funded by Generic American can survive contact with the high-end medical that we've convinced everyone to use when they're 85. None. Anything you think you can save, they can spend twice that amount in the blink of an eye. Not to say you shouldn't go that route if you *WANT* to. But I take strong exception to anyone that says people are irresponsible for choosing to be content with SS & medicare; and willing to tell the doc he is not authorized to perform any procedure which medicare does not feel adds sufficient value to be worth paying for.

As to deserving a "long life". Well; I'm a 50 year old mammal. The number of mammals that live 5 decades is very small; and the ease that I now acquire injury, and the baseline (non-narc) prescription pain meds required to keep me running along; makes it pretty clear to me. 50 years is a very, very long life. 70 is certinaly longer of course; but 70 being longer doesn't make 50 any less lonnnnnnggggg. Being a software guy, I get *why* humans have ended up genetically coded for this lifespan; the software of my teenager is hardly out of alpha testing. The world would be a very unsafe place filled with teens who've been released unsupervised. (might be kinda exciting I suppose, in a suffering, angst, and mayhem kind of way...) So a bunch of us do need to live 60-70 years to maintain some semblance of sanity in the world; but 70+... As long as a few live past that to pass on the "stories"; its all good.

[SeaGypsy]

Stone age aboriginals were living into their late 60's & 70's not very long ago in Australia, despite soap & meds, because of junk diets alcohol & smokes they now get to about 50.

Sent from my HUAWEI Y320-U151 using Tapatalk

[AgentR11]

Booze and cigarettes... and mostly booze, can account for that poor result all by its lonesome. On average, we really do more or less fine until 70'ish. I won't be in a hurry to go when the time comes, but I won't be disappointed or filled with regret with an expiration date of 72 years or whatever. That's a long, long time for a biological critter to keep on critter-ing.

[SeaGypsy]

There's a hell of a lot of tea totalling renal disease from overabundance of refined sugar. So called soft drink sales are massive.

Sent from my HUAWEI Y320-U151 using Tapatalk

[Timo]

I'm not quite sure how this fits into this discussion, but in the US, the longest average lifespans are among Mormons.

They don't drink. They don't smoke. What do they do?!

[Pops]

Isn't the point that people 100 years ago had neither 401s or SS because they worked until they croaked — then mid-century labor had the upper hand for a bit (helped out by energy slaves) and got the idea of a 30 year retirement in Boca at 95% salary.

The ownership put the kibosh on that PDQ and the mid-century pension funds all got trickled-up. I'm thinking we're moving back to the idea that we're going to work 'til we croak.

[Outcast_Searcher]

There should be mandatory instruction in all high schools and colleges concerning personal finance, especially retirement issues. As 401(k) is now the primary retirement vehicle, it would seem there should be no debating this.

Absolutely right, and yet you rarely see this pointed out. To me, the principle that personal finance should be a mandatory part of (at a minimum) public high school education goes well beyond the 401-K though. Getting people to have a clue about financial planning, realistic expectations of investment and debt, and avoiding "too good to be true" financial scams would be good for us both individually and as a society. Of course DOING something about it would take some effort and money, so fat chance on it happening, IMO.

It seems to me, however, heredity is a big predictor, and family instruction is the only instruction being received by most. My unscientific polling indicates that if your parents were not savers, chances are you will not be either.

True, and this has been pointed out in books like "The Millionaire Next Door", complete with oodles of supporting data (charts), and the cultural logic behind it. Naturally though, few people pay attention. They're generally too busy borrowing and spending all they can.

Another less obvious aspect of this is the "keeping up with the Joneses" aspect of competitive spending. Families can teach children to avoid this trap, which can prevent a LOT of needless spending (in favor of saving and investing) -- even for people with moderate incomes. "Money and Class in America" was an excellent discussion of this.

A huge amount of the financial "suffering" that goes on in first world countries is self-inflicted (too much spending and borrowing, far too little planning and saving and investing). But we can't admit THAT of course.

[Outcast_Searcher]

so do dental bills, car repair bills, student loans, car insurance, health insurance, I don't remember my dad ever having all of these different taxes taken out of his pay check every other week. I have come to the conclusion insurance is a scam and I am paying for nothing. I am paying 500 a month to health, dental and car insurance corporations and what a rip off. You people are talking about saving money as if it is even a possibility in the US. I think maybe in Ireland it would be possible where you wouldn't have to pay insurance rip off corpoations.

So let me guess. When your house burns down and you have no insurance, it's up to the taxpayer to build you a new one? When you or one of your children gets a serious illness, someone else should pay? (If the system is socialized medicine, fine -- they you need to pay higher taxes to support that -- medical care still isn't magic or free). And of course, car accidents never happen, or at least to you -- and you have complete control over that?

Not liking the size of insurance premiums doesn't mean the risks don't exist. If they're such a rip-off, why don't YOU start an insurance company and make a kazillion dollars off the obscenely high premiums? (In a competitive system, such excessive premiums won't exist very long).

All sorts of new taxes continue to be levied - I don't dispute that. And yet, we are careening toward a $20 trillion debt due to the increased demand of government programs by the electorate, and of course politicians only to happy to oblige in exchange for winning the next election.

[Outcast_Searcher]

. I'm thinking we're moving back to the idea that we're going to work 'til we croak.

Various polls show increasing numbers of working-age people stating that "plan". Unfortunately, in the real world, being too sick (or old) to do effective work will get in the way of that for the vast majority of old people.

Somehow I don't see people (at least those of middle age and the elderly) signing up to get rid of Medicare, hospitals, nursing homes, etc. and just accepting they'll die when they can't work -- not voluntarily.

[AgentR11]

. I'm thinking we're moving back to the idea that we're going to work 'til we croak.

Somehow I don't see people (at least those of middle age and the elderly) signing up to get rid of Medicare, hospitals, nursing homes, etc. and just accepting they'll die when they can't work -- not voluntarily.

No one is getting rid of SS/medicare. The country goes bankrupt and a burger sells for $100,000 before that'll happen.

I think the idea is that we work till we croak to supplement ss / medicare. Might be different for some, but if I become unable to work via aging, my other expenditures other than end-of-life medical (where I will not authorize anything not explicitly covered by medicare anyway) tend to fall off quite drastically. No car, no travel, a very small apartment (with a good A/C), somewhere flat I can lay on the floor or put a bed that better be as hard as the floor. Internet would be good. I don't watch TV anymore though.

Other than to transfer a ton of money to a bunch of doctors to have stuff done to me, that I don't want done to me, exactly where are these huge expenses supposed to be?

[Pops]

My point was not that they'll just up and die but that they will have to work for rent money instead of touring Europe.

200 years ago we had kids and a farm to take care of us, then came urbanization and fewer kids and no real assets (like the farm) to keep them around. After a period, unions and various other socialists caused enough trouble that defined benefit pensions became common. But the ownership got tired of "giving" all that money away and "Trumped" up reasons to get out from under. Now the great retirement boom forced on employers by unions has long since passed. The old days of defined benefits are over (except in government I guess) and for lots of people the new "sharing economy" is indistinguishable from hanging at the Lowes waiting to get a day labor gig.

Here is a pretty good article at Time on retirement
A good bankruptcy rant by Robert Reich
"Sharing" at counter punch

[onlooker]

I think another mind frame that is compelling older people to continue to work is lack of confidence that anything like social security or such will be available to them. I find it quite apparent that people all around the world have a sense of foreboding about future economic prospects. This is certainly a kind of awakening by people relative to the trends happening on the planet. Usually Americans were the last to have this pessimism but I think now that this different.

[Outcast_Searcher]

I think the idea is that we work till we croak to supplement ss / medicare. Might be different for some, but if I become unable to work via aging, my other expenditures other than end-of-life medical (where I will not authorize anything not explicitly covered by medicare anyway) tend to fall off quite drastically. No car, no travel, a very small apartment (with a good A/C), somewhere flat I can lay on the floor or put a bed that better be as hard as the floor. Internet would be good. I don't watch TV anymore though.

Other than to transfer a ton of money to a bunch of doctors to have stuff done to me, that I don't want done to me, exactly where are these huge expenses supposed to be?

And there you go. Reasonable, modest goals. People willing to live like you describe might do OK on SS / Medicare with little savings. Sadly, most people by far (in my experience) aren't nearly as realistic.

OR, many people could live on 80% of their salary, live a more modest middle class lifestyle and save and invest as a constant routine during their career, and then have some money for some prioritized extras (if they don't go too far in their spending). (I just had a crown prepped today. For me, being able to afford QUALITY basic dentistry and medicine to continue to eat/live in reasonable comfort as long as I am reasonably healthy FAR exceeds things like big houses or travel, in importance).

I think a lot of the perception of economic "catastrophe" in retirement is when everyone can't keep up with whatever flavor of the Joneses they envy. (As though this shouldn't have become apparent during a 40-ish year career).