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new genre: doomsday retirement stories
Old 07-22-2014, 09:55 AM   #1
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new genre: doomsday retirement stories

Over the last few years a new writing genre has surfaced: doomsday retirement stories. Maybe they will come up with a Pulitzer catagory for this new genre. But as the writers try to out 'doom and gloom' each other, we get articles like this
A Disturbing Look at the New Retirement
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Old 07-22-2014, 10:08 AM   #2
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Retirement plans are subject to the same disasters working people face. Fortunes were wiped out during and in the aftermath of WWI, WWII, and many others. The US, the UK and Switzerland are among a select few nations that have not had total financial collapses at some point in the last few hundred years.
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Old 07-22-2014, 10:56 AM   #3
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I love the solution: expand SS.

I agree with her that 401(k)s were a great deal for the employer and dumped all the investment and longevity risk on the employee, while saving the employer a ton of money from getting rid of the pension plan. I DID have a previous employer who added 6% to your 401(k) every year if you'd been hired after they got rid of the pension plan, regardless of what you put in and in addition to a 6% match on the first 6% you put in. That's rare, though, and you can still outlive your savings.

I also understand that there's a lot of just plain bad luck; one realtor I know, a serious businesswoman who had been in it for decades, spent down most of her retirement during the last recession when she just plain wasn't making enough money. You also can't do much about the fact that your house just lost a ton of value even though you've been making the payments, because other people did stupid things.

Still, there's a lot of bad decision-making going on over many years. Not saving when you could, buying a new SUV every 3 years, taking the kids to Disney World or going on a cruise every year but not saving for retirement, financing "home improvement" projects with little potential payback using a HELOC, doing cash-out refinancing, etc.

I wish more people were financially literate; some of these sad tales were preventable.
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Old 07-22-2014, 11:11 AM   #4
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I listened to an interview with the author of that article (it is in Harpers, behind a paywall, unfortunately). The idea of these geriatric work-camper folks, moving around the country and working at places like Amazon, is compelling and certainly sad.

She picks out a few folks that are upper-middle-class to profile, but I suspect many more are just folks who didn't have the luck and stability many of us have been so fortunate to experience.

Certainly someplace I hope to never be.
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Old 07-22-2014, 11:14 AM   #5
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Originally Posted by athena53 View Post
I love the solution: expand SS.

I also understand that there's a lot of just plain bad luck; one realtor I know, a serious businesswoman who had been in it for decades, spent down most of her retirement during the last recession when she just plain wasn't making enough money. You also can't do much about the fact that your house just lost a ton of value even though you've been making the payments, because other people did stupid things.
I wouldn't include a realtor with several decades of experience blowing through her retirement money as "plain bad luck." The business is cyclical and always has been. Several decades of "success" should have been enough time to be able to build up a cash cushion.
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Old 07-22-2014, 11:26 AM   #6
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The environment described in the article reminded me of 'Slab City' in the Southern California desert Slab City - Wikipedia, the free encyclopedia
Slab City Camping Guidelines for RVers, Campers #Slab City #Boondocking #RV
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Old 07-22-2014, 01:52 PM   #7
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I wish more people were financially literate; some of these sad tales were preventable.
And that's the sad part, the lack of financial literacy and education. As books like The Millionaire Teacher and others show, it can be done. I haven't seen him here recently but there was the pizza delivery driver who was within four or five years of having made "The Number" that worked for him. As usual, the only way (absent a pension or windfall) is to spend less than you earn.
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Old 07-22-2014, 05:51 PM   #8
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And that's the sad part, the lack of financial literacy and education.... .
and the lack of interest to learn or to take even the smallest step...
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Old 07-22-2014, 06:14 PM   #9
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One thought on pension plans: yeah, I miss them, but they sure didn't cover everybody. They were a major factor for anyone who managed to make it 25 or 30 years at one place, but who can manage that? The way the plans were structured, even if you worked 3 jobs long enough to qualify for a pension at each, you were far worse off than if you stayed at the same employer. Here's my history:

Job 1, 1975-1978. They may have had a pension plan but I wasn't there long enough to find out. I left for better opportunities in an area with more companies in my field.

Job 2, 1978-1985. They had a pension plan but it was 10-year cliff vesting (zero vested till 10 years, then 100%). I left because they were acquired and I would have had to relocate; husband's job was in the area so I couldn't.

Job 3, 1985-1995. Generous plan, I was vested, but it has some sort of co-ordination with SS (you're guaranteed $X but they subtract SS before they determine what they pay). Useless in my case. I was part of a wave of downsizing before an IPO.

Jobs 4 and 5, 2 small consulting firms, 1995-2002. No pension, 401(k) only.

Job 6: Sub of large company with gold-plated pension plan, 2002 till it was acquired in 2006. I'm vested in $987/month from that job, and am collecting it. I'll take it.

Company which acquired us did not cover us in pension plan, but did add 6% (on top of 6% match) to 401(k) if you weren't covered. I left in 2012 when opportunities dried up there.

Company 7, 2012-2014- no pension plan, decent 401(k) match.

So, back when pensions were more common I worked from 1975-1995 with no pension to show for it. A corporate acquisition meant I was dumped out of another with only a small accrual (and no COLA).

Maybe the 401(k) isn't as evil as it looks, if we could just teach people to use it, and not raid it to pay for DD's dream wedding.
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Old 07-22-2014, 09:38 PM   #10
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And that's the sad part, the lack of financial literacy and education..... As usual, the only way (absent a pension or windfall) is to spend less than you earn.
It's really not financial literacy/education that's sad, since "spend less than you earn/make" is quite a simple truth. The sad part is the lack of personal DISCIPLINE with money at ALL economic strata. Look at all the once-wealthy famous folk (athletes, actors, even some successful business people) who later ended up destitute or in bankruptcy. A few may have been swindled or suffered truly unforeseeable misfortune, but most simply spent far too much for far too long.
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