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Old 09-25-2013, 09:40 PM   #61
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Wow, pretty brutal comments. It is a fact that a large percentage of people are just lousy with their own finances. We are all built differently. That is why for many, a forced savings such as social security is a blessing. Problem is, it is not enough to live on. I can still shake my head, and say "what were you thinking" and still have compassion at the same time. And be thankful I am one of the lucky ones who knew better.
The problem with your logic is that "compassion" often turns into "we need to DO something to fix _____". 401ks and IRAs aren't broken as the quoted gentlemen suggest. People's personal responsibility to plan for their futures IS. But we'll probably figure out a way to "fix" what's not broken to cater to those who don't take care of themselves when they have the means.
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Old 09-25-2013, 09:48 PM   #62
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Why all the harsh comments and judgement? Look, the guy messed up. It could happen to anyone, especially if they aren't very good with money. And I admire his fortitude in the face of bad circumstances. He's working hard to make the best of his situation. How can you fault him for that?
I, for one, wasn't saying anything about the subject of the article. I simply commented on the thought that "the current retirement system isn't working". That statement isn't true. It works for plenty of people, including some who are fortunate enough to retire pretty early. Simply put, people need to educate themselves (or be educated) earlier regarding personal finance. Like, say, high school. That would be a skill far more useful in life than a lot of other things.
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Old 09-25-2013, 09:51 PM   #63
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My original intent for creating this thread was not to bash or 'judge' Palome, but rather point out how the article's author was extensively (yet very subtly) biased in twisting the facts around to try and put another message in the minds of the middle class that there is no hope without a government program mandating (more) savings.

And it wasn't just that it was a Yahoo! article - do a google search on Tom Palome. You'll see it was originally a Bloomberg article, but it has been republished on multiple sites (Yahoo, CBS Marketwatch, MSN, etc., etc.). And apparently on NPR radio, and surely among others as well. As more and more of the common masses hear stories about the upper middle class being 'forced' to work at 77, there will be more and more people demanding some magical fix to this situation.

However, a 'guaranteed rate of return' would have likely done nothing for Palome - or else I'm sure the author would have pointed out that Palome had contributed $x00,000 to his 401k over the years but lost it due to bad investments, and that Palome would have otherwise been happily retired, had he only had a reasonable, guaranteed return of x%.


Amid the various stories and quips, the main message of the article is

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The author said that there should be a savings program established for everyone with a guaranteed rate of return to prevent others from meeting Palome's fate.
And the painfully obvious answer (yet lost to many people) is that there already are guaranteed rates of return: they're called CDs. I wonder why the author and Ghilarducci aren't simply telling people to save money in CDs?
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Old 09-25-2013, 10:06 PM   #64
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The author said that there should be a savings program established for everyone with a guaranteed rate of return to prevent others from meeting Palome's fate.
I'm sure such a program would offer less return than I can get on my own, but would be "safe" and create a huge bureaucracy to run it. It's not something I would choose for myself, but if it were required, I would still plan to work around it, just like I now work around Social Security, and while it would probably be a drag on my retirement preparations, I would deal. If we really believe that people cannot be responsible for themselves and need such a program, then let's discuss why and what we want. But it's not because 401k doesn't work. It's because people don't use it. Which implies that the new solution has to be required. Maybe it's possible to include the idea that this new program is in addition to the (for many people) successful IRA, 401k, etc and not replacing them.
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Old 09-25-2013, 10:38 PM   #65
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I'm sure such a program would offer less return than I can get on my own, but would be "safe" and create a huge bureaucracy to run it. ... If we really believe that people cannot be responsible for themselves and need such a program, then let's discuss why and what we want. But it's not because 401k doesn't work. It's because people don't use it. ... Maybe it's possible to include the idea that this new program is in addition to the (for many people) successful IRA, 401k, etc and not replacing them.
One can only hope, but rarely does it work that way. I appreciate compassion, as others have pointed out, for the problem. However that compassion often leads to misguided solutions that don't fix the root of the problem.
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Old 09-26-2013, 12:05 AM   #66
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Maybe 1 - 2 people in a single family home in retirement will just be a luxury in the coming years that many retirees without substantial savings may not be able to afford. With four SS incomes to a household, retirees could have at least a median household income. Even if the government did step in and replace the 401K system, that still wouldn't change things for people close to retirement age now without any savings.

When I was looking over some census records on ancestry.com, one thing that struck me is how often my family members from a few generations back lived 5+ people to a house in city areas where I know the older homes just weren't that big by today's standards. Many of the household census records included extended family members and boarders. I never saw any one or even two person households pre-1940s. Unmarried sisters and brothers lived with married siblings, parents lived with their adult children, widows moved in with married siblings or back to their parents house, many households rented out rooms, etc. Living like that sure had to be relatively low cost, and before SS I guess that is what people had to do to get by.
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Old 09-26-2013, 12:39 AM   #67
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I think you hit the nail on the head daylate.

If you think about it, all a person really needs to live per month is $300 for food, $50 for their share of utilities, $200 for medical, and around $400 for housing (1 room in a 4bd house). That is a $950 a month budget.

Funny, when most of us are planning on $40K to $80K a year in retirement.
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Old 09-26-2013, 01:02 AM   #68
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Let's see, article on Yahoo Finance, interview on PBS...Main slant appears to be we can't be expected to do it for ourselves, so _government_ should do something...umm...

I give the guy credit for working and not expecting the government to do something to increase entitlements like raise his SS or 'Guarantee' him a return. Too many folks like the Yahoo /Bloomberg writer want both - let our kids pay for it. I think not.
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Old 09-26-2013, 05:16 AM   #69
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My original intent for creating this thread was not to bash or 'judge' Palome, but rather point out how the article's author was extensively (yet very subtly) biased in twisting the facts around to try and put another message in the minds of the middle class that there is no hope without a government program mandating (more) savings.


And the painfully obvious answer (yet lost to many people) is that there already are guaranteed rates of return: they're called CDs. I wonder why the author and Ghilarducci aren't simply telling people to save money in CDs?

It is head scratching why the media continues to write article like this. I guess they generate clicks But why?

What pisses me off is there no context around this article and the underlying message is that the unless old folks work at minimum wage jobs they are one step above eating catfood.

Even with not working the guy is receiving in 1800/month (mostly cola adjusted) income almost 2x the poverty level. With a paid off house and medicare he is much better off than huge percentage of 25 year old, with student loans, no health insurance, a beater car (maybe), struggling to find affordable housing.

For a young person to make the equivalent of $1800/month (after account for the SS benefits being tax free and payroll taxes) the young person would have to making $13-14/hour and have a full time job.

The latest news about ACA is that insurance rates are higher for young people and lower for older folks. For the last 50 years wealth has been transferred from the young to the old... The last thing we need is articles suggesting we need to more to help us old folks.
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Old 09-26-2013, 06:01 AM   #70
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Daylate, I think your point is well-made, and dovetails with imolderu's recent thread about in home help/companions for elderly. In my family, there were two unmarried sisters who lived with my grandparents and helped raise my mom and her siblings, and even helped care for a couple of grandchildren. Their cost of living must have been very low, though in this case they had a spacious add-on to the existing home with three bedrooms and a large kitchen for themselves.

I could see living in a space with other retirees at some point being a reasonable way to reduce costs and look out for each other. Probably friends instead of family, but I could imagine it being a good thing-and a lot better than working at 77 over a grill. My dad at 71 loves teaching, but he wouldn't enjoy a low-status job in the least.
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Old 09-26-2013, 08:56 AM   #71
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Now you all are scaring me. I know what you are saying about living together with regard to cost advantages. But...

As some have pointed out, this can go into dangerous areas. I.E., a government mandate. Now for roommates. Stick the oldsters in government housing with assigned roommates?

Just in case you missed the army, you get to experience it at age 80.
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Old 09-26-2013, 09:03 AM   #72
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Nah, man, too much paranoia in your Wheaties. I'm just saying I'd pick out another crazy cat lady to live with me when I got old.
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Old 09-26-2013, 09:05 AM   #73
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I just watched "Soylent Green". I think the paranoia rubbed off on me. (Imagine getting either Charleston Heston or E. G. Robinson as your assigned roommate!)
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Old 09-26-2013, 09:15 AM   #74
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I think one thing that no one has commented on is that our job market must be pretty bad if these jobs are the best that Tom can find. By all accounts he is a top-notch employee. He was a business executive, but now all our economy can use him for is burger flipping?

The fact that he is working isn't a big concern. He made marginal financial decisions all his life and ended up with a marginal, but not disasterous financial situation in retirement. He's working to improve his standard of living from acceptable to pretty good. That's not a bad thing.

What is concerning is that the vast majority of the jobs our economy is producing are near minimum wage jobs, and that those jobs are now being held by people like Tom, leaving our younger generation with massive unemployment.

Why would you hire an entry level worker when you've got people like Tom available to fill those jobs?
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Old 09-26-2013, 10:28 AM   #75
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I'll repeat something I've said before:

I think every paycheck should include an estimate of the income that SS should be expected to provide if you work to FRA, and how much you need to save to increase that to various levels.

Every quarter, there should be some mandatory presentation and quiz to make sure people are reading the info - maybe just a short on-line program that makes them enter the numbers and they have to match, with a few basic questions. Maybe some counseling program for anyone not investing some X% in an IRA?

As Mulligan implied earlier - the grasshopper/ant story isn't rocket science. Everyone can 'get' this. It isn't about complicated investment strategies, it's about saving for the future.

-ERD50
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Old 09-26-2013, 11:28 AM   #76
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I think you hit the nail on the head daylate.

If you think about it, all a person really needs to live per month is $300 for food, $50 for their share of utilities, $200 for medical, and around $400 for housing (1 room in a 4bd house). That is a $950 a month budget.

Funny, when most of us are planning on $40K to $80K a year in retirement.

Our kids' friends who didn't go to college, or are out but not making STEM career money, seem to live okay like that. They don't live in poverty, and that is even in a very high COL area.

One way they cut back is by having 3 - 4 roommates and maybe an economy or older car. One group lives with 5 roommates together in an upscale house with an indoor pool.

The low end wage ones aren't jetting off to Paris for the weekend, but they seem to have fun and enough money for free or low cost activities like pizza parties, camping trips, arranging car pools to visit friends in other cities, and days at the beach.

Maybe Yahoo finance would better serve the general public by publishing articles on how some people manage to live well on SS type incomes, instead of all the scare stories.
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Old 09-26-2013, 12:14 PM   #77
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All young people need for a nice life is plenty sex and no supervision. Lots of middle aged people around Seattle live this group way too, and even some families. (Groups, not necessarily the sex thing.) I haven't lived in a group home since I was in my 20s-very early 30s. It was mostly but not entirely fun then. As we get older, often other people do not look as good to us as they did when we were young. (And vice versa.)

I know many day to day things are more fun if you have company to do them, especially things like going shopping, house cleaning, yard cleanup, etc. Modern industrial life is inherently lonely, and though we might resist it if we had to step back we might be better off. But it is hard to tame the jealousy monster, and that is another issue for most of us. Meals and food security and kitchen and bathroom cleanliness is another frequent sticking point. Another one is dope. Since this can get your door broken down, you need some clear and enforced prohibitions on this.

I talk to the young people who clerk at Trader Joe. Manyof them live groupwise, and seem to do OK. I also knew quite a few younger people when I was regularly dancing. Many of them lived in group homes, sometimes organized around an interest in some genre of dancing (and thus tended to be in older homes with hardwood floors.) It mostly works and it sometimes doesn't. There is a lot of turnover, moving in and out, breakups, hissy fits and pouts. At least cell phones have mostly solved the arguments over who called Minneapolis last month and talked for 2 hours.

Ha
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Old 09-26-2013, 12:26 PM   #78
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I agree with Ha here. I just spent 50 days in 168 square feet with up to 13 other people, and you get to know each other really really well. Even when it dropped to just 9 of us, it was an exercise in manners and civility. I'd say I craved private space than the 20-somethings did. But at the end, I quite missed all of them, and wandering around by myself in my spacious home seemed kinda lonely.
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Old 09-26-2013, 02:00 PM   #79
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I could see living in a space with other retirees at some point being a reasonable way to reduce costs and look out for each other. Probably friends instead of family, but I could imagine it being a good thing-and a lot better than working at 77 over a grill. My dad at 71 loves teaching, but he wouldn't enjoy a low-status job in the least.
This came up in conversation just the other day with one of my friends. I was out biking on a trail, saw a house for sale I really liked, and looked it up. It was expensive, but seemed like a lot of house for the money, and in an area I like. I joked with my friend about going in together on it. I could muster a good down payment, but not the income. My friend has a good income, but no down payment.

It's a big enough house that we wouldn't be stumbling over each other. Only problem though, is that my friend is a neat freak, and I'm not, so it would sort of be like Oscar and Felix on the "Odd Couple"...well, maybe not *that* extreme...

Also, going in on a business deal like that could have bad consequences and potentially ruin a friendship. Still, I'd be willing to at least have roommates in my old age. Hell, I have roommates right now, at the age of 43! It works out pretty well, although the current house is pretty small so there can be skirmishes here and there...
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