What the &%#$ are we doing? I don't see how the spend, spend, spend mentality that exists in this country won't have dire consequences for us as a nation. How are all of the unprepared boomers (and that's most of us) ever going to retire? When they can no longer work, who's going to house them, feed them, pay for their greens fees? Furthermore, it seems quite possible that when the spending DOES finally stop, we could face a recession of monumental proportions.
I see a small glimmer of what's down the road with the parents of my Goddaughter. (as reported by my goddaughter) Her Dad worked as an IT contractor (without pension benefits) for many years and made a pretty good living. But unfortunately, he didn't put a single penny away!! Now that he's drawing social security, he isn't bothering to try to find work because "he's retired". The Mom is younger - in her mid fifties - but is starting to have health problems. She is trying to continue to work but I don't know how much longer that'll be possible. Meanwhile, there is a daily barrage of calls coming in from bill collectors.
The really horrible part about all of this is the impact that it potentially could have on people like us. (This has often been discussed on this Board) Not only is it likely that our taxes will be raised to take care of these idiots but there is always the possibility that our own carefully thought out plans won't work because of that "recession of monumental proportions".
Maybe we should all just spend down all of our money so we can free-load along with everyone else.
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
What the &%#$ are we doing? I don't see how the spend, spend, spend mentality that exists in this country won't have dire consequences for us as a nation.
This is one issue that always confuses me. I thought that spenders are doing a big favor to the nation, economically speaking. They contribute significantly to the national budget, they keep the economy growing.
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,526
They are beneficial when they're still spending.
Its when they age, stop working, stop spending as much and then realize that they have no money and need to be supported that theres a little bit of a problem.
The good news is that this means that most of them will have to defer retirement, keep working, keep spending, and it'll all be fine.
Or they'll fall down, need excessive medical care, our taxes will go up and people will stop spending the money they no longer have and the economy will fly straight into the ground.
__________________
Many an optimist has become rich by buying out a pessimist
I think this falls in the category of "Don't worry about things over which you have no control".
There is no point in bemoaning the fact. These folks will have to work as long as they can - which is good for the economy. We can only hope we won't have to support them once they are no longer able, but if it turns out otherwise, there is not much we can do about it (other than vote).
I don't spend a lot of time agonizing over whether most US citizens are spending too much or not saving enough for retirement. I have my own life to live.
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,526
"I dont have to outrun the bear, I just have to outrun YOU!".
Perhaps it bears a small consideration with regards to investing decisions that might go one way should the baby boomers retire and another if they work an extra 10 years.
__________________
Many an optimist has become rich by buying out a pessimist
The negative savings rate is even more scary when you consider that there are a lot of folks figured in those averages (like the people on this board) that save a large percentage of their income. The people going in the hole more than off set everything being saved...
OK, maybe I tend to look too hard for a positive interpretation... but could the low savings rate be due to the big increase in 401K maximum contributions in 2006? I know that I was able to contribute $15K, plus $5K catchup and for me this was a huge increase.
So could this article be interpreted as reporting that taxable savings went down a teensy bit and 401K balances went way, way up?
__________________ "Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harborless immensities." - - H. Melville, 1851
wonder what the health ratios are for spenders versus LBYM'rs...
perhaps if they are reckless with money, they are reckless with eating habits, while they may incure some steep health costs for a few years, will not be leaching for much if they in fact reach a retiring age...
oooh, this must be the fun type of logic government budget folks and insurance analysts do all day long...
__________________ If i think of something clever to say, i'll put it here...
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,526
Blerg...its a bit of a math problem and as we've discovered with our conversations about what is and isnt part of net worth, the definitions are tough to nail down.
For example, capital gains on home appreciation and investments arent included as income, but if you sell some of those assets and spend them, they're weighed on the spending side. Home value changes and investment changes arent considered "savings" either. Some argue that those should be included on the income side as many people have their savings in their home or in an investment account thats appreciating.
I believe the ratio is determined as a function of net income minus net spending, and 401k contributions are counted but not any appreciation of those accounts...I could be wrong about that though, still reading...
And I wonder if when these things are worked out in a meeting room somewhere at the commerce department, someone doesnt say "it'd be nice if people were a little nervous about how much they're saving so they'd do more about it and be less dependent on government coffers..."
__________________
Many an optimist has become rich by buying out a pessimist
I had a negative savings rate, or at best flat, last year by how they measure it. But if you include my retirement accounts the story is a lot sunnier. We were great savers in after tax until we hit the magic number for our "I lose my job" cushion. Now any extra money goes into retirement accounts.
I think most people, however, are not in as good a shape, and will have to continue working. I know have a dozen guys over 70 who still work, all but one because he has to ( the other guy is crazy! ). I would expect that on average, the guys who can't afford to retire work until they physically can't due to bad health, and then they probably don't have many more moons to go...
... I would expect that on average, the guys who can't afford to retire work until they physically can't due to bad health, and then they probably don't have many more moons to go...
Just like before Social Security was created.
I can remember my grandmother working well into her mid 80's because there was nothing else she could do. She stopped working when she had a stroke and died soon after.
Many of us "kids" don't have a clue what life was like prior to defined pension plans, SS, defined benefit plans, IRAs, retirement medical benefits, etc. Not all that long ago retirement was what rich people did; not the common man (person). Today the landscape is vastly different and anyone who does not have a nest egg of some type is just plain stupid. The tools are there and there is no shortaqe of (blood suckers) financial planners available to assist anyone with getting a nest egg laid.
__________________
Work? I don't have time to work....I'm retired.
Perhaps we need to implement a Logan's Run type rule where everybody over the age of 70 who can't pay their own way has to go to the carousel!
I know that's reprehensible! Bad me! Bad me!
Synchronisticaly, I just watched it last night. The last person left would get half of the benefits of the people who were renewed, which is, of course, a great benefit in itself. And the hidden benefits would be the greatly reduced Medicare payments. And, like the lottery, it would be purely voluntary.
__________________
Angels danced on the day that you were born.
This is one issue that always confuses me. I thought that spenders are doing a big favor to the nation, economically speaking. They contribute significantly to the national budget, they keep the economy growing.
We, the LBYM types, are bad. No?
The spenders are doing a favor to the nation. However, the groups that end up with the money are 1) Corporations who are doing record stock buybacks with the money they earned (can we say $39 Billion earnings) and 2) Nations who sell the big spenders the cheap plastic stuff.
We LBYM types benefit since we probably own stock in both. I just got my 1099-DIV for my measly investment account and saw that I received over $3K last year.
__________________
Angels danced on the day that you were born.
Laurence and want2retire,
Personal contributions to 401Ks and IRAs are included in the savings rate calculation--and the savings rate was still negative. CFB has it right--the rate is simply the amount a person makes minus spending (including taxes). The number is suposed to indicate how much of their income people are puting into savings--and, on the whole, they are puting a negative amount in.
Now, their investments/savings balance might still be going up (due to capital gains, etc). Also, I'm not sure how the 401K employer match s figured in (as pay?). Regardless, people are not saving much of what they earn.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
In that case, then I am concerned! Everybody ( o.k., about 90% last check) at my job is contributing at least to the match. That means an average of 7 grand (excluding employer contribution) per year. I guess that's just anectdotal evidence from an employer that requires at least a 4 year degree, but still, that's adding a lot of moolah back into the equation to still be negative.
Quote:
Linear Mode
