Perception Distorted by Prosperity

[RockMiner]

Most Americans have got little or nothing...

relative to the actual costs of living in the U.S.A.  It's true that most of us have a fair standard of living, but it's often hand to mouth, with debt being the facilitating factor. When you look at the actual savings of a typical household it's a pretty grim picture, assuming the statistics are to be trusted.

Some on this board debate SWR's which will yield ER incomes that exceed what most normal (age 65) retirees can hope for.  People accustomed to a career with a good salary usually develop high expectations and
sloppy spending habits.  This has made me realize how prosperity distorts our perception of a quality life.

 

[BUM]

Rock,

Interesting post. Maybe some of your concerns are pre ER jitters. Everybody goes thru it I'm told. I'm in the midst.

Re: Yellow Tail

When the goin' gets tough, the tough cut back on the wife's beer.

BUM

 

[Cut-Throat]

Most Americans have got little or nothing...

relative to the actual costs of living in the U.S.A. It's true that most of us have a fair standard of living, but it's often hand to mouth, with debt being the facilitating factor. When you look at the actual savings of a typical household it's a pretty grim picture, assuming the statistics are to be trusted. Retirement is the acid test.

Most middle class Americans live paycheck to paycheck. And this is even more evident now, as there are usually 2 paychecks now that wives work. There is a book out now called "The two income trap" which defines the tenous position most American Houselholds are in. They have little knowledge of the Great Depression, as the depression generation never got to speak to them directly. If either spouse loses their job, it puts them in bankruptcy status. If and when the spouse returns to work, it is usally at 50% of the former wages.

This piggybacks on why I believe that SS is not a crisis at all. Most americans cannot retire. The 3 legged stool is only 1 leg now - Social Security. There are few pensions and almost no savings.

 

[cute fuzzy bunny]

When the goin' gets tough, the tough cut back on the wife's beer.

My wife will only drink Budweiser. No matter how many times I try to sway her with various fancy pilsners and lagers, she crinkles her nose and says "Get me some Bud the next time you're at the store".

Cant cut back too far from that.

 

[Marshac]

Cant cut back too far from that.

schlitz

 

[brewer12345]

Most middle class Americans live paycheck to paycheck. And this is even more evident now, as there are usually 2 paychecks now that wives work.  There is a book out now called "The two income trap" which defines the tenous position most American Houselholds are in. They have little knowledge of the Great Depression, as the depression generation never got to speak to them directly. If either spouse loses their job, it puts them in bankruptcy status. If and when the spouse returns to work, it is usally at 50% of the former wages.

Yep, either that or you go from being DINKs to being SITCOMs - Single Income Two Kids Oppressive Mortgage.

Life's a bitch sometimes.

 

[cute fuzzy bunny]

SIOKERNM

 

[JOhn Galt]

Good one!

 

[REWahoo]

SIOKERNM

Single Income One Kid Early Retirement No Money?

REW

 

[Helen]

People accustomed to a career with a good salary usually develop high expectations and
sloppy spending habits. I know this is true in our case. Despite having been pretty good savers, ER doesn't look like a walk in the park

I've been thinking the same thing myself. I didn't start saving for retirement until I was 38. It is going to take 18 of my high earning years to create enough wealth to retire on. The only way I can even do this is because I bought a $100k house and have a DINK lifestyle. But, we are saving about as much as we are living on. After our house is payed off this year, our savings rate will be about 41% of gross for retirement. The end result is that we will have a comfortable retirement and live on more than what we are living on now, but it won't be a high spending lifestyle.

-helen

 

[sgeeeee]

. . . I think that managing our expectations may be a bigger challenge than most budgetary issues turn out to be. . .

It has always seemed to me that, by far, the most important advice given on these boards is to learn to live below your means. If you get that right, then you will have money to invest and most investments will do okay over time. If you don't get that right, no investment advice can help you.

 

[cute fuzzy bunny]

Single Income One Kid Early Retirement No Money?

REW

Close!

 

[soupcxan]

It has always seemed to me that, by far, the most important advice given on these boards is to learn to live below your means.  If you get that right, then you will have money to invest and most investments will do okay over time.  

Maybe I just like playing the bear, but are we taking for granted the fact that "most investments will do ok over time"? Certainly, the last 75 years in US stocks and bonds have been "ok" (and in some 20-year periods, much better than "ok"). But will history repeat itself in the coming decads?

 

[Cut-Throat]

Close!

What he said Except No Mortgage!

 

[cute fuzzy bunny]

We have a winnah!

Made you all use your brains for a while

Hope it didnt hurt!

 

[arrete]

This idea about expectations is very interesting, and right on the money. At some point, people have money to throw aound on things they never did before (big vacations, eating out a lot, etc) and after a while, they feel they're "owed". It takes a strong person to back away from that feeling.

I have a sneaking suspicion that in a few years there will be a bunch of disappointed retiress while I'll be happy as a clam. The best thing we ever did for our kids was to not raise their expectations. Modest house, modest vacations, state colleges, no personal cars, etc.

About the beer - how about The Beast (Milwaukee's Best). I know it's cheap because I use it on slugs

arrete

 

[brewer12345]

Maybe I just like playing the bear, but are we taking for granted the fact that "most investments will do ok over time"? Certainly, the last 75 years in US stocks and bonds have been "ok" (and in some 20-year periods, much better than "ok"). But will history repeat itself in the coming decads?

You pays your money and you takes your chances.

Seriously, I suspect that there will be 20 year periods in the future where returns suck, and 20 year future periods where returns are very good. If I knew which was going to be which, I would be posting this from my own private Carribean island (called Puerto Rico). Since we can't know what returns will be in advance, a thoughtful indexer can reasonably choose DCA, so that some of you investments go into high return periods and some into low periods.

 

[cute fuzzy bunny]

Seems to me we've used up 20 years of "good returns" in the last 10. Even with the couple of bear years we had, prices are still hanging in there (except for the internet stocks) with the late '99 bubble.

This thread reminds me a little of the "life in america 100 years ago thread" we kicked around last year. Amazing to see how far we've come, yet how little we've gained.

 

[sgeeeee]

. . . About the beer - how about  The Beast (Milwaukee's Best).  I know it's cheap because I use it on slugs  

arrete

Will it work on trolls?

I've heard that it's always a good idea to carry a six-pack around in your kayak.

 

[cute fuzzy bunny]

I can throw a full can of beer pretty dang hard.

That might work.

Six of them, certainly.

Make it a four pack of those big guiness cans, and if I get an edge strike we're golden.

 

[hocus]

I've heard that it's always a good idea to carry a six-pack around in your kayak.

No, No. The purpose of going kayaking is to forget about the trolls. You don't need to worry about trolls when you are kayaking. You just float right by them.

 

[arrete]

Make it a four pack of those big guiness cans, and if I get an edge strike we're golden.

You're talking about the ones with the plastic ball inside (cats love those). They whoosh pretty darn good.

arrete

 

[cute fuzzy bunny]

Yep thems the ones, and dogs like to carry them around as well, I think to keep them away from the cats.

My dogs like kayaking too.

I wish this forum had an "ignore" function. My built-in one fails every now and then.

 

[hocus]

There was a guy named Nas90skog who used to post over on the Motley Fool board who often said something that I thought was pretty smart, and from time to time I try to call Nas90skog's advice to mind. He used to say: "It's only a discussion board."

 

[unclemick]

Years ago the Old Milwaukee/Miller beer ratio as in number of cans of each sold at a fisherman's bar down the road was an indicator of how well shrimp season was going.