Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 04-23-2012, 09:37 AM   #21
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 8,649
Quote:
Originally Posted by Redbugdave

What planet are these other people on? How can you live day to day with no thought of the future?

Thinking some more about it, I believe it has to do our culture.

In good old America, there is a 3, (maybe 4), generation money cycle.
1st generation makes money.
2nd generation maintains the capital.
3rd generation spends the money.

This also helps explain the cycles of growth and depressions.

1st generation, (my grandparents), has the memory of poverty, (Great Depression, Immigration, a couple of World Wars), and works hard.

2nd generation, (my parents), has the spoken memory of poverty by living with their parents. This generation has progressed financially in the work place and they provide a better life for their children that they themselves had.

3rd generation, (Boomers, my generation...but not me personally), does not have a memory of poverty and thinks they will always have money, so they spend. (But in later years, with this economy some are feeling like what it is to lose everything, (poverty).

4th generation, (my kids), ??

Opinions?
Possibly, but I think it depends on how the parents communicate. I fall into the second generation category since my parents were born in 1905 and 1910. They were ok financially but solidly LBYM. My kids have heard the same mantra from DW and me and seem to have adopted the attitude. I suspect kids who go off the rails may have parents who foster a sense of entitlement.
__________________

__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
donheff is online now   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

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!

Old 04-23-2012, 11:37 AM   #22
Moderator
rodi's Avatar
 
Join Date: Apr 2012
Location: San Diego
Posts: 8,817
I think the boomers haven't saved for several reasons.

Median real wages have been shrinking. (They've been increasing for the rich - but for the other 90% not so much.) This has been offset by dual incomes. And when you have dual incomes, you spend more money on others stuff (more meals out, childcare, lawn services and home cleaning services... )

Plus lifestyles have been expanding. Just look at home sizes. I live in So. California. Homes built in the 50's and 60's in San Diego were 1200-2000 sf. Now the norm seems to be 3000-4000sf. Not only does it cost more to buy these homes, it costs more to run them (heating/cooling/maintenance.) So a bigger percentage of income is going to carrying costs on these homes. (Bigger mortgages, bigger utility bills.)

As far as educating kids on budgeting and the cost of things... I took a page from my MIL and my Dad... I give my kids (ages 9 and 11) the opportunity to earn $$. Then I make them use their own money to buy their personal electronics. It tends to eliminate a lot of the entitlement feeling. But it also makes me an unpopular person in my household at times. (Don't know how many times I've heard "but everyone in my class has an iPod but me!!!! - You're so mean!!!")

U.S. Standard of Living Has Fallen More Than 50%: Opinion - TheStreet
What’s Going Down with Real Wages? | Jared Bernstein | On the Economy
__________________

__________________
rodi is offline   Reply With Quote
Old 04-23-2012, 12:17 PM   #23
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,386
Quote:
Originally Posted by rothlev View Post
Schools unfortunately did not ( in my day, anyway) do a good job of educating students in this area.
It's not just in this area, the average high school student graduates learning how to have sex and drink and very little else. But we have nice modern buildings and great athletic facilities!

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 04-23-2012, 12:25 PM   #24
Recycles dryer sheets
 
Join Date: Sep 2006
Location: clearwater
Posts: 223
Rodi you are correct in the education of your children. They might not like it now, but later they will have learned how to manage their own money.

Most families do not teach their childen about finance, budgeting, spending, and savings, and taxes. What little teenagers learn in school isn't enough, and they can't apply it yet.

People think nothing of emptying out their 401k accounts when they switch jobs.
__________________
rothlev is offline   Reply With Quote
Old 04-23-2012, 12:30 PM   #25
Recycles dryer sheets
 
Join Date: Sep 2006
Location: clearwater
Posts: 223
Quote:
It's not just in this area, the average high school student graduates learning how to have sex and drink and very little else. But we have nice modern buildings and great athletic facilities!
I taught in a high school for the majority of my career. Part of the problem is teenagers aren't mature enough to apply what they are taught. And of course the curriculum is severely lacking in life skills with all the algebra, geometry, advanced sciences and history classes.
__________________
rothlev is offline   Reply With Quote
Old 04-23-2012, 12:33 PM   #26
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,386
Quote:
Originally Posted by donheff View Post
I suspect kids who go off the rails may have parents who foster a sense of entitlement.
My sons are the opposite of off the rails. They are very high achieving, high earning men. But they are so far from the money pinching attitudes that we on this board accept and espouse that I can sometimes hardly believe it. And they hardly grew up with a sense of entitlement, they earned their way all the way.

We sometimes overestimate our effect as parents, and underestimate what is just blowing on the wind. Case in point- both my parents were savers and hard workers. Me, and my brother born in the 40s are frugal, hard bargainers, and basically money clever. I also have a brother and sister 8 and 11 years younger. They grew up in the same home, same city, same parents and same schools as I and my 40s sib- but they couldn't be more different in the way that they think about and evaluate money.

Every study I have seen echos this- the biggest influence parents have is choosing a neighborhood and schools and other environment that heavily influences the other young people that our kids will meet and be influenced by. And the era, which is pretty much out of anyone's hands.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 04-23-2012, 01:11 PM   #27
Thinks s/he gets paid by the post
 
Join Date: Aug 2006
Posts: 1,361
It also didn't mention IRA's, and I'm unclear on whether they take into account the possibility of multiple 401k's per person.

I have two 401k accounts (too lazy to roll over my last employer), a Roth IRA, a Rollover IRA, and a taxable account. In addition, my wife has a 457, a Roth IRA, a state retirement account, and we have a joint taxable account.

Unless someone was very familiar with our finances, they would look at each account and deem it too small for our needs.


Quote:
Originally Posted by Animorph View Post
Typical scare article I think. Maybe true if all you have is a 401k and no SS or pension. They don't mention SS or pensions anywhere that I saw. They don't consider taxable account savings. If boomers really "collectively own most of the nation's assets", they must be hiding them someplace besides 401k accounts I guess.

And to use 30 year Treasurys as a retirement portfolio is just icing on the cake. If these are the guys responsible for advising boomers about retirement, I wish them as much luck as possible.
__________________
Hamlet is offline   Reply With Quote
Old 04-23-2012, 02:11 PM   #28
Full time employment: Posting here.
EvrClrx311's Avatar
 
Join Date: Feb 2012
Posts: 524
This is from 2010, and had some really good tables in it about age and working life statistics for 401K holders:

Obviously... lost in the figures is the fact that most people in the 60's started off with pensions in mind and not 401K, so while workers in their 20's/30's have matching and auto enrollment pushing them towards 401(k) funding... maybe in the 50's and 60's did not (at least for the first half of their working careers).

Quote:
Table 1: Average 401(k) Account Balance by Age Group and Job Tenure, Year-End 2008

Age Group (Years of Service With Current Employer)
  • 20s: $3,237 (0-2 years), $7,001 (>2-5 years), $11,491 (>5-10 years)
  • 30s: $7,642 (0-2 years), $14,952 (>2-5 years), $27,809 (>5-10 years), $39,414 (>10-20 years)
  • 40s: $11,224 (0-2 years), $20,385 (>2-5 years), $38,510 (>5-10 years), $65,512 (>10-20 years), $101,625 (>20-30 years)
  • 50s: $14,670 (0-2 years), $24,004 (>2-5 years), $43,746 (>5-10 years), $76,057 (>10-20 years), $140,407 (>20-30 years), $145,990 (>30 years)
  • 60s: $17,619 (0-2 years), $25,130 (>2-5 years), $42,938 (>5-10 years), $74,284 (>10-20 years), $135,018 (>20-30 years), $172,555 (>30 years)
Quote:
Table 2: Average 401(k) and 403(b) Account Balance by Age Bracket, Year-End 2009

  • Under age 25: $3,908
  • Age 25–34: $17,453
  • Age 35–44: $43,765
  • Age 45–54: $85,799
  • Age 55–64: $124,472
  • Age 65 and up: $148,959
Average 401(k) Account Balances by Age Group | Suite101.com
__________________
EvrClrx311 is offline   Reply With Quote
Old 04-23-2012, 03:58 PM   #29
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,451
Quote:
Originally Posted by Hamlet View Post
It also didn't mention IRA's, and I'm unclear on whether they take into account the possibility of multiple 401k's per person.

I have two 401k accounts (too lazy to roll over my last employer), a Roth IRA, a Rollover IRA, and a taxable account. In addition, my wife has a 457, a Roth IRA, a state retirement account, and we have a joint taxable account.

Unless someone was very familiar with our finances, they would look at each account and deem it too small for our needs.

One of the big problems with assessing the state of retirement in the US is that lack of good data. I tend to be pretty suspicious of "all of the senior have no money to retire claims". Simply looking at 401K balances (which begs the question how did the figure out how much money is in the 401K in the first) only tells a small part of the story for the reason you outlined above.

One of the un/underreported stories is the primitive way we collect most economic data in the country. The census bureau creates large panels typically around 10,000 and then interviews the people every 3 to 6 months for several years and then follows up with them several years later.
I know one board member was not all happy to be included in a panel, because the questionnaires run hundreds of pages a take an hour or so.

The interview process is little changed since when they started it during the New Deal. I think they use laptops to record the answers and interviews are allowed to be conduct via telephone (but no cellphones for security). But a typical question about 401K would phrased.
Do you have a 401K?
If yes
How would you describe the balance of the 401K
<$5,000
$5,000-15,000
15,000-50,000
50,000-100,000
100,000-200,000
more than $200,000

Now if you been on the phone for a 30 minutes there is no way the average person is going to check there latest statement to give an accurate estimate, much less bring up that they have previous 401K from other employers. So my guess is that there is systemic undercounting of assets.

Of course the irony is that all of this information exists accurately on computers somewhere. However in world where every Walmart manager can tell you how many yellow Sundresses are sold the first week after the temperature hits 90, the government relies on 80 year old methods.
__________________
clifp is offline   Reply With Quote
Old 04-23-2012, 04:05 PM   #30
Full time employment: Posting here.
 
Join Date: Jun 2006
Posts: 926
Quote:
Originally Posted by Hamlet View Post
It also didn't mention IRA's, and I'm unclear on whether they take into account the possibility of multiple 401k's per person.

I have two 401k accounts (too lazy to roll over my last employer), a Roth IRA, a Rollover IRA, and a taxable account. In addition, my wife has a 457, a Roth IRA, a state retirement account, and we have a joint taxable account.

Unless someone was very familiar with our finances, they would look at each account and deem it too small for our needs.
Similar situation for us. I think they have insufficient data about retirement age people's entire savings and investments and pension packages.
__________________
CW4, USA-(ret)
RN, BSN-(ret)
jclarksnakes is offline   Reply With Quote
Old 04-23-2012, 04:31 PM   #31
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,820
Quote:
Originally Posted by TN_Steve View Post
I have read the linked article three times and am still unsuccessfully striving to understand the stats cited in it. E.g., "In terms of personal savings, including retirement savings, the middle-class group saves about 17.5% while the high-net-worth group saves 21% [of their income, from context]. Finally, the wealthy pay an average tax rate of about 5.4% while their counterparts pay about 4%." {this is second para from end}

4 or 5.4% taxes and those taxes constituting only 1/4 of savings rate for boomers heading into retirement?? Where do I sign up? Also, references 11 or 12% for food, half of which is "consumed at home." {4th para from end} Wow. The average person spends as much eating out as at home--and even the "wealthy cohort" spends twice as much on food as on taxes?

Perhaps the article (or the EBRI stats relied upon) are using different definitions than are generally employed? Or am I missing something obvious?
I think this is the underlying source for the spending stats: Consumer Expenditures Survey (CEX)

The BLS uses terms like "food at home".

Unfortunately, their spending survey is focused on spending, not income or taxes. So, even though they show numbers, I don't know that I trust them.
__________________
Independent is offline   Reply With Quote
Old 04-23-2012, 04:46 PM   #32
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,820
I have no doubt that some 60 year-olds aren't prepared for retirement and will have to work longer than they had hoped. Others are in good shape with a combination of SS, pensions, and savings. The tough cases are the people who were in good shape until they got laid off and are now chewing through savings without much hope of getting back to work.

But, I don't see a crisis that will force Congress to offer a "bailout". Maybe they'll be a little more generous with SS disability rules for older people. But, mostly, they'll just let the chips fall. Doing otherwise would be very expensive and it would appear to (or actually) reward poor planning.
__________________
Independent is offline   Reply With Quote
Old 04-23-2012, 06:00 PM   #33
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Posts: 3,862
Kind of scarey that anyone would write such logically thin paper, not even mentioning all the obvious weaknesses. No wonder I wouldn't trust my money to an FA.
__________________
Animorph is offline   Reply With Quote
Old 04-23-2012, 09:58 PM   #34
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,386
Quote:
Originally Posted by rothlev View Post
I taught in a high school for the majority of my career. Part of the problem is teenagers aren't mature enough to apply what they are taught. And of course the curriculum is severely lacking in life skills with all the algebra, geometry, advanced sciences and history classes.
Why were they mature enough up through WW2 and are not any longer?
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 04-24-2012, 05:32 AM   #35
Thinks s/he gets paid by the post
obgyn65's Avatar
 
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
I agree.
Quote:
Originally Posted by rothlev View Post
Middle class america has to work very hard and be very educated and financially savy to save money. Raising children and surviving takes most of the income.
__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
obgyn65 is offline   Reply With Quote
Old 04-25-2012, 04:41 PM   #36
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Chuckanut's Avatar
 
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 6,337
Quote:
Originally Posted by haha
It's not just in this area, the average high school student graduates learning how to have sex and drink and very little else. But we have nice modern buildings and great athletic facilities!

Ha
If that is true, it is because the student and parents do not take advantage of what is offered.
__________________
The worst decisions are usually made in times of anger and impatience.
Chuckanut is offline   Reply With Quote
Old 04-25-2012, 10:41 PM   #37
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,386
Quote:
Originally Posted by Chuckanut View Post
If that is true, it is because the student and parents do not take advantage of what is offered.
Perhaps. But to me that is a facile explanation. American public education is easily as dysfunctional as American medicine. Unbelievably expensive, and compared to almost all other western nations, unbelievably poor population- wide results.


Why do so many state universities need to offer remedial courses to their incoming students? Certainly not because those students are so capable. And blaming it on the students is kind to thin, too. Their lives are dominated and controlled for many years by the ineffectual and money sucking school system, shouldn't the system be held accountable?


Could the army possibly do this badly?


Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 04-26-2012, 12:48 AM   #38
Recycles dryer sheets
 
Join Date: Dec 2011
Posts: 388
Quote:
Originally Posted by haha View Post
Perhaps. But to me that is a facile explanation. American public education is easily as dysfunctional as American medicine. Unbelievably expensive, and compared to almost all other western nations, unbelievably poor population- wide results.

Why do so many state universities need to offer remedial courses to their incoming students? Certainly not because those students are so capable.

Could the army possibly do this badly?
Ha
Indeed, no other industrialized nation has an extensive, remedial education system comparable to the US community colleges. The US public education system may be the worst in the industrialized world.

However, it is ridiculous to believe that the military is more capable. Same story there as health care and education: most expensive in the world by far. A lot more money is wasted on the military than on education in the US.
__________________

__________________
Khufu is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 09:37 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.