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Non-savers/planners make (early) retirement possible for others...
Old 01-16-2013, 07:53 PM   #1
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Non-savers/planners make (early) retirement possible for others...

Always struck me as an irony, but I'd forgotten that Bernstein's Retirement Calculator from Hell IV illustrates why if everyone did what it supposedly takes to retire early, none of us could. I was reminded by a thread elsewhere.

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If you want to retire early, what matters is not how much you save, but how much more than everyone else you save. In a world where everyone saves as if theyíre going to retire at fifty-five, or even at sixty-five, none can.
Retirement Calculator from Hell, Part IV
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Old 01-16-2013, 07:59 PM   #2
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Old 01-16-2013, 08:39 PM   #3
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"Letís say 100% of workers woke up tomorrow morning, smelled the coffee, ate their Wheaties, and began salting away 25% of their salaries into retirement savings. In very short order, this would do to corporate earnings and stock prices what Genghis Khan did to the steppes."

I'm not so sure. I can see corporate earnings taking a hit, but when people save that much, the money has to go somewhere, and some would go into stocks. IMO stock prices would rise, along with P/Es.

"Let us further assume that the candidate-retiree has planned for his nonproductive years by accumulating a disproportionate number of the coconuts. In doing so, he has done nothing to increase the productivity of the island."

By saving more, the candidate-retiree has made more money available to the banking system, thereby driving down interest rates, which over time leads to more lending for new projects and thus productivity.
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Old 01-16-2013, 08:55 PM   #4
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I don't think we'll have to worry about too many people retiring early and shorting the workforce. For example, when I left at 61 most thought I was crazy as they all said that they planned on working until they dropped. Plus, when we see statistics of how little most people are saving it's no wonder they think that they'll never retire...they cannot afford to stop working.

And that is sad. I'm sure that there are lots of people who would just love to retire in their low 60's but just can't because of money constraints. Some are that way because of poor planning but I think the majority just have no choice. When you're living paycheck to paycheck and you have responsibilities of family there's next to nothing to "invest". I don't know what in the world those people are going to do when they continue to need an income and they either can't work or no one will hire them.

It's all too easy to sit back here in this forum and gloat about how "we got ours" and why can't everybody do the same. "Shame on them" and "Tough luck for them" attitudes are out of line.

I don't know how I got off on this tangent as this has nothing to do with this thread and certainly wasn't the point of the posts already written. My apologies. I'll shut up now.
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Old 01-17-2013, 07:00 AM   #5
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I don't think we'll have to worry about too many people retiring early and shorting the workforce. For example, when I left at 61 most thought I was crazy as they all said that they planned on working until they dropped. Plus, when we see statistics of how little most people are saving it's no wonder they think that they'll never retire...they cannot afford to stop working.
This is true. Most people who can afford ER still don't do it. I retired from the Federal Government, home of the golden pension. Most of my fully vested peers (with kids already out of the house) were shocked and continued working for many years beyond me. I understand and applaud those who love their work. But the sad thing is that many of those who continue to work when they don't really have to are unhappy in their work. I watched as a couple of old friends stayed on for 6-8 years getting more and more disgruntled until they finally left on negative terms. Sad.
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Old 01-17-2013, 08:06 AM   #6
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Those of us that are retired need these people. Who will provide goods and services for us otherwise?
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Old 01-17-2013, 08:21 AM   #7
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"Letís say 100% of workers woke up tomorrow morning, smelled the coffee, ate their Wheaties, and began salting away 25% of their salaries into retirement savings. In very short order, this would do to corporate earnings and stock prices what Genghis Khan did to the steppes."

I'm not so sure. I can see corporate earnings taking a hit, but when people save that much, the money has to go somewhere, and some would go into stocks. IMO stock prices would rise, along with P/Es.

"Let us further assume that the candidate-retiree has planned for his nonproductive years by accumulating a disproportionate number of the coconuts. In doing so, he has done nothing to increase the productivity of the island."

By saving more, the candidate-retiree has made more money available to the banking system, thereby driving down interest rates, which over time leads to more lending for new projects and thus productivity.
Increased savings suggests reduced consumer spending, a major part of the economy. Is there an example of an economy where reduced spending and increased investing provided a superior result?
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Old 01-17-2013, 08:53 AM   #8
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I suppose it would be possible in an export-driven economy. As for ours, decreased consumer spending is bad news.
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Old 01-17-2013, 09:12 AM   #9
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Those of us that are retired need these people. Who will provide goods and services for us otherwise?
Robots
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Old 01-17-2013, 09:18 AM   #10
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Always struck me as an irony, but I'd forgotten that Bernstein's Retirement Calculator from Hell IV illustrates why if everyone did what it supposedly takes to retire early, none of us could. I was reminded by a thread elsewhere.

Mum's the word...
Not to worry. There are so many out there, including most of the ones I work with now, and all but two of my family, who are still living paycheck to paycheck and up to their eyeballs in debt that they will never retire until they physically have to.

There are only a half-dozen out of almost 40 where I work who have either the savings/investments or a DB pension with COLA's that puts then in position to retire when they want.

And we all know what happened to DB COLA'd pensions. As the elderlaw attorney for FIL put it about me "You're a dinosaur".
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Old 01-17-2013, 10:02 AM   #11
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One fembot please.
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Old 01-17-2013, 10:04 AM   #12
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One fembot please.
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Old 01-17-2013, 10:10 AM   #13
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I suspect you'll enjoy this one too (if you know about Raj's inability to speak around women)...

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