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Realistic = no hope!
Old 11-29-2009, 08:19 AM   #1
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Realistic = no hope!

Hi All.
New to this forum but not to the world of investments.

My one burning question that seems to be getting answered daily, as I write is.....does anyone else see the scam/con in the whole " Save for retirement".. it's a mirage of hope being sold by the financial industry.
I mean, the % likelyhood of Joe Public actually HAVING, say, a million at aged 65 is pretty slim. Then the crunch comes when Joe figures out that his financial planner forgot to mention that in 35 yrs time, a million would only feel like $200k, if he's lucky. Really lucky.
So how does Joe....who has scrimped & saved for 35 yrs, live on his 200k without burning through it, while being taxed out the barn?
4% annual withdrawals yeah, that'll buy a lot.
Don't forget that SS will be rationed on a means-tested basis.
Has to be. Poor folks have a greater need than us morons who actually saved throughout our lives. Lots of them with votes...gotta keep them happy to stay in Washington.
Also, this concept of 80% of "work income" as retirement needs
Another scam....people will "need" more than 100%....I mean if Joe spends all he earns WHEN he's working....what's he supposed to cut out when he has all day to fill Obviously anyone at retirement must have no mortgage & no kids at home.
How can it all end in amything but tears? Oceans of them.
When has anyone on TV ever explained this...showing the reducing buying power of money?
But what is the answer?
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Old 11-29-2009, 08:24 AM   #2
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Good morning. Save 10% of whatever you make throughout your working life, invest it per the Coffeehouse Investor (or equivalent), rebalance annually and don't touch this money --- and you'll have a good shot at retiring comfortably at 65, despite all the "scams" out there.
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Old 11-29-2009, 08:34 AM   #3
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Live less large
Save
Allow compounding to work
Payed off housing
Listen to experience not talking heads
Set realistic expectations based on your situation
Just like every child does not get a pony for Christmas every retiree does not get a 6 month cruise every year and 5 rounds of golf every week
Many here are retired early and many on less than a million dollars

If you have a 4% withdrawal on a modest nestegg and SS and paid off housing, life can be fairly nice. The early part of retirement is only an option for those who want to pursue it.

Politicians and tax rates can and do change.

The answer is simple: Set YOUR GOALS and work to realize them. Folks who sit down on the pity pot will never achieve success in life.
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Old 11-29-2009, 08:35 AM   #4
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And the alternative to saving and investing is what?

I'd rather rely on my own savings than whatever the future taxpayers can offer by way of hand outs. (Actually, where I live there is no SS)
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Old 11-29-2009, 08:39 AM   #5
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But have you ever used a spreadshhet to project this out, including inflation ( the real figures on stuff YOU spend money on....not the scam figures the Govt issues) over 25 years?
It's a VERY depressing exercise. 8% is not going to cut it.
Average Joe earns less than 100k. Assume 100k.
Save 10k a year to be financially secure Are you kidding? C'mon?
Living off spam, with 4 folks sharing a 2 bed apt, no car & no vacations.
Sure thing. Easy.
But where does the money come from to pay for health care, taxes, TAXES and have something approaching a middle class lifestyle?
It's not there. No way. Run a spreadsheet & see for yourself.
8% is not there either, going fwd, btw.
Ask CALPERS, NJ local govt or any of the rest of the bankrupt local pension funds.
They are so far underwater without any hope of fixing it with normal "prudent risk" investment plans...they are moving to the higher risk end of the curve.
We all know how that's going to end up.
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Old 11-29-2009, 08:45 AM   #6
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brogan007, I see you are quite the optimist.

The "Joe Public" folks who post on this forum appear to all have a common thread as to how they managed to retire: LBYM. They didn't get in debt up to their eyebrows, learned the value of saving/investing, and understood less is often more.

Those lifestyles and fiscal habits were an exception yesterday and will also be an exception tomorrow. But for the Joe Public's who adopt them early enough there will be no "ocean of tears".
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Old 11-29-2009, 08:47 AM   #7
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Quote:
Originally Posted by brogan007 View Post
We all know how that's going to end up.
Nostradamus? Is that you?
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Your biggest expense?
Old 11-29-2009, 08:47 AM   #8
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Your biggest expense?

What's your biggest expense?
I'm talking on-shore USA here.
Tax of course. It's not going down, it's going to explode.
Healthcare IS a tax.
Property tax
Fed tax, state tax
Sales tax
Tax on everything that you have, incld SS.
Energy costs...another black hole.
Add up these and project it fwd....the figures have most folks in the poorhouse.
This is the inflation nobody talks about.
In last 10 yrs, living costs have exploded. Yet official inflation is almost zero. It's all a Matrix of lies & deception.
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Old 11-29-2009, 08:49 AM   #9
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optimistic vs realistic.
Quite a difference.
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Old 11-29-2009, 08:59 AM   #10
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The hope sold by the financial industry, the need to save for retirement, is a necessity. Even though some people say they will work forever most can't. That is being realistic. You will likely end up retiring on SS and barely surviving. Anything you can save is a plus. Paying for your home is saving. Putting some away in a retirement plan is saving. Even if you end up with only $100,000 or $200,000 saved by the time you need to retire you are better off than many. One thing I have noticed with people who live on SS alone is that they have trouble maintaining and buying transportation. That extra hundred or so thousand dollars can make a huge difference.
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Old 11-29-2009, 09:04 AM   #11
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The answer is you have to start somewhere. The old saying that goes like "to walk 100 miles starts with the first step."

The alternative to say, no way and not even try as many folks who see saving for retirement as a scam never try and say, "screw it, I have bills to pay, why save for retirement?"

Some things that seem impossible really are. Look at all the invetions in the world: airlplanes, cars, microwave ovens, uh..talking on a device that you call around the world and carry along in your pocket or purse..to name a few.
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Old 11-29-2009, 09:24 AM   #12
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Quote:
Originally Posted by brogan007 View Post

" mirage of hope being sold by the financial Industry
.................................................. .................
"Don't forget that SS will be rationed on a means-tested "
.................................................. .................................................. ......
"When has anyone on TV ever explained this".......................
................................................
But what is the answer?
Hello Brogan:

I can give my opinion on a few things in your post.

In reverse order
1. DO NOT watch anything on TV , especially CNBC or "Infomertials" for any use , other than entertainment , this includes network news.

2. S.S. will not be on a means test. However , FICA and Medicare Tax rates are going to go up a lot for employer and employee.

3 " Mirage " from the financial services industry , pretty much true.
It is from looking at the markets from 1979-2005. You can't drive a car by looking at the rear-view-miror.

4. You must do your own research on investments,( don't buy stocks in companies that don't have good cash-flow), live below your means, and be alble to change course if needed, to be F.I. IMHO.

The "cookie cutter " plans for retirement used during the last 20 years are not going to work in a changing world.

To repeat myself, Job 1. turn off the T.V. !
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Old 11-29-2009, 09:26 AM   #13
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Quote:
Originally Posted by brogan007 View Post
We all know how that's going to end up.
See my signature lines
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Old 11-29-2009, 09:36 AM   #14
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Quote:
Originally Posted by brogan007 View Post
But have you ever used a spreadshhet to project this out, including inflation ( the real figures on stuff YOU spend money on....not the scam figures the Govt issues) over 25 years?
You'll find that most of us here use spreadsheets and other tools to project out expenses, inflation, returns, taxes, %SS and many other factors. We plan carefully and often and we don't blindly rely on others to plan for us. Because we'll face a lot of uncertainty in retirement (just like the rest of our lives), most of us tend to pad our calculations to add a 'safety factor' ie, higher than expected inflation, lower than historical returns, longer than expected longevity, higher taxes, reduced SS and so on - and retirement is viable at some point.

We all agree that CNBC and most of the financial media are suspect, and unfortunately many people are fleeced by listening to them. But that doesn't mean there aren't good resources out there (see below) if you think for yourself, save and invest wisely and stay flexible. And it isn't rocket science either.

· The Four Pillars of Investing - by William ("Bill") Bernstein. My favorite.
· Wise Investing Made Simple or The Only Guide to a Winning Investment Strategy You'll Ever Need - by Larry Swedroe
· The Bogleheads' Guide to Investing - by Taylor Larimore, Mel Lindauer, and Michael LeBoeuf
· All About Asset Allocation - by Rick Ferri
· The Informed Investor - by Frank Armstrong
· The Little Book of Common Sense Investing - by John "Jack" Bogle
· The Coffeehouse Investor - by Bill Schultheis.

BTW, what is your solution?

Note: For those of you who recognize this reading list, there is a good reason I am not providing a link...
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Old 11-29-2009, 09:45 AM   #15
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If average Joe can get a 4% real return, and if he saves for 40 years, and if he puts the same amount into investments every month (adjusted for inflation) then at the end of that time he'll be able to safely withdraw each month 4 times as much as he was putting in each month over that time (in real spending power). So, if he puts in $200 per month, he can withdraw $800 per month. If he saves $400 per month, he can withdraw $1600 per month. There are a lot of folks spending $400 each month on one car payment.

4% real return is not unreasonable for a prudent portfolio. If Joe doesn't get 4%, he can work a few more years and let it grow a little longer.

There are plenty of ways to save a large amount tax deferred.

While the returns aren't guaranteed, one thing is for sure: Regardless of his luck/skill, whatever fate hands him, the amount Joe can withdraw is directly related to the amount he saved. He's in complete control of that part of the equation. If he decides the game is rigged and sits at home whining about how tough things are, his future will not get any brighter.
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Old 11-29-2009, 10:06 AM   #16
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YES!
The people who save always do better than the people who don't. Even if the first have to "share" some with the latter group.
I have quite a few friends in the same profession who lament that they can never save enough, so there is no point in even trying. They and their wives spend all of their income. I have politely pointed out to them if they have looked at their SS and projected pension to see if it will add up to their current income. Their answer is that they expect to work till they die. Hah! If only their employers let them come in to work in their 80s with their walkers. I gave up!
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Old 11-29-2009, 10:12 AM   #17
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What Sam said +1!

If Joe Average invests $10000/yr with a 3% interest rate compounded quarterly for 45 years (20-65) the end result will be about $950,000.
Odds are high that Joe won't be able to invest that much age 20-25, but odds are also great he can invest more ages 40+.

Odds are also VERY high Joe can get better than 3%.
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Old 11-29-2009, 10:12 AM   #18
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I have quite a few friends in the same profession who lament that they can never save enough, so there is no point in even trying. They and their wives spend all of their income. I have politely pointed out to them if they have looked at their SS and projected pension to see if it will add up to their current income. Their answer is that they expect to work till they die. Hah! If only their employers let them come in to work in their 80s with their walkers. I gave up!
Unfortunately I know a lot of people in the same predicament. Families in their 40's and even 50's who have always spent every dime of income they've had and then some - and then complain about their future. Like you, I avoid the subject with them. I often wonder how big this coming train wreck is going to be, and how it will sort out. Conspicuous consumption could actually become dangerous, but that doesn't bother me at all...
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Old 11-29-2009, 10:13 AM   #19
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As with everyone else, most important: live below your means.

2. Persist - plugging along month after month and year after year beats darting from great idea to new plan to next great idea.

3. While most here seem to be stocks n' bonds people it's not the only way. Some are inventors, some entrepreneurs, some real estate moguls, some are rental property owners/managers. Find your own path.

Persist.

LBYM.
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Old 11-29-2009, 10:20 AM   #20
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Same message

Sifting through these general opinions...is the same underlying thread. The perceived retirement lifestyle of the masses will not be there for them.
Financial institutions are not to be believed.
Saving something is better than saving nothing.
Ok. No news there.

Nobody has explained WHO is going to pay for Joe's retirement & healthcare. There are millions of them. MILLIONS, without savings, underwater in their home value, a pathetic 201k pension fund and no plan.
Taxes. Your's & mine. Taxes on SS, which is already means tested if you think about it. Higher taxes, way higher taxes, on everything. No other answer.

Also nobody has ponied up to the real possibility that all the expected pensions & withdrawals that are promised .........will in all likelyhood NOT be there as we imagine.
Anyone here had an experience where initial 'projected returns" were scaled back drastically as payday approached, 25 yrs later?
My answer?
Disconnect & remove yourself from the tax system. Leave the Matrix.
Only way to survive the impending, devastating cost of supporting the 50% of the USA who are bankrupt.
btw....the 40 yr savings plan suggested at the top is typical financial hype....after 40 yrs the amount withdrawn is worthless at that time....or else the inflation figures he used are the Govt hype lies.
I'm not fighting with anyone, just frustrated that mainline USA sweeps this whole issue under the mat....
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