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Old 09-14-2008, 09:00 PM   #21
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We have a friend who has wiped out his 401k because he is too lazy to work. Threw in a good job that paid close on $200k with benefits because he didn't like management. Only had enough saved to survive for 3 mos. which has been and gone. However, rather than be a big boy and suck it up and go and get a job we think he has hit on mummy to give him money to tide him over as he has exhausted all other avenues open to him.

I hate to think what his retirement is going to be like living on $1k a month of SS.
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Old 09-14-2008, 09:06 PM   #22
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One hears this, but I have not yet seen anyone take a step down. I do know people about my age who are still working, but they seem to like to.
I was waiting for you to finish that sentence...they seem to like to eat. I think if I had to continue working, I would convince myself that it was my decision, and I liked it too.

I have been talking to my only cheapskate frugal friend for years about how people aren't saving and are living either right at or well above their means. I could't see how it could continue that way. He tended to agree. And now as things are getting more difficult, I'm starting to see a lot of people sweating. I agree, they aren't stepping down yet. But I think they will have to, if hard times stay around for a few years or a decade. When you are living on the edge it's too easy to slip.
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Old 09-14-2008, 09:22 PM   #23
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I was waiting for you to finish that sentence...they seem to like to eat. I think if I had to continue working, I would convince myself that it was my decision, and I liked it too.
LOL. You may be right. Even pretty good friends would not normally tell you that they had messed up totally. They would spin it as best they could.

I know a couple of women who while they would not begin to admit it must find some lover with some money who will help them out. Everytime either one is laid off she gets a worse job going back. It isn't easy after 50. They are both cute and can find lots of dates, but so far no bed and board in the deal.

The interesting thing is that I have seen it work. A dumb enough guy with the pension or assets happens by just when he is needed.

At least one of these gals kicked out a perfectly good husband because he couldn't deal with her New Age Attitudes.

Ha
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Old 09-14-2008, 11:10 PM   #24
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I was waiting for you to finish that sentence...they seem to like to eat. I think if I had to continue working, I would convince myself that it was my decision, and I liked it too.
Yes, the powers of rationalization and self deceit are very great, aren't they?

Quote:
I have been talking to my only cheapskate frugal friend for years about how people aren't saving and are living either right at or well above their means. I could't see how it could continue that way. He tended to agree.
Yep, for years I've been looking around and wondering how long this unsustainable trend could continue. And I've been a rather lone wolf during this time too, as I've not personally known any others who've really live much below their means, much less saved 40-50% of their income.

One thing I've enjoyed about this forum is finding like-minded folks to relate to. DW's family is going to be dumbfounded when I RE, although they should realize that we must be in good financial condition.
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Old 09-15-2008, 12:26 AM   #25
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I was waiting for you to finish that sentence...they seem to like to eat. I think if I had to continue working, I would convince myself that it was my decision, and I liked it too.
My parents were hard working people. They had long careers (40-42 years) and really enjoyed working. But, as they got older, working became harder and harder, not because they didn't like their jobs anymore, but because working started to take a toll on them physically. Clearly they could have continued to work if they had to, but I am pretty sure that the "love" of working would have disappeared with each passing year.

So when they were given the opportunity to retire (at 60), they took it.

My dad's small company was acquired by a multinational corporation when he turned 55. After working 37 years for a small company (and really loving it), he had a hard time keeping up with the demand of a modern multinational corporation. At age 55, he was required to learn a foreign language and he was frequently "asked" to travel all over the world to attend meetings and visit subsidiaries. While the change of pace was welcomed at first, it started to take a toll on him (he has limited vision and mobility). He still loved the job very much, but physically he knew that he couldn't keep up with the job's demands. So when he qualified for retirement he went for it and from what I can see, he is not regretting this decision one bit. I am a bit surprised actually because my dad always took great pride in his career achievements and I had a hard time picturing him out of a job (he has never been unemployed once in his life).

My mom always worked for small companies and while she loved working, her stressful work environment had started to have a negative impact on her health. In the 5 years prior to her retirement she came down with a number of more or less serious illnesses that the doctors attributed in part to high stress levels. It became really difficult for her to continue working so when she qualified for full retirement benefits she retired. Her health has improved (though she misses the social interactions she had at work). She goes back to work some time to time when her replacement is on vacation or sick leave and she finds it very very difficult to transition back to work. She is glad she doesn't have to work on a full time basis anymore.

Among family members who are in their sixties and seventies, the only one who is still working (and claiming to like it) is also the only one who can't afford to retire.
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Old 11-23-2008, 10:15 AM   #26
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Wondering if taking money out of 401k early is always a bad idea? Let's say an engineer with GM loses his job on Jan 1 when the company folds. Biggest problem is paying mortgage monthly with no job or Mcdonalds/Walmart job making $20grand a year. If the choice were foreclosure or withdraw $100,000 to payoff mortgage, I would likely choose the latter. Plus, even with the 10% penalty, taxes would still be manageable with the current low income level.
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Old 11-23-2008, 02:49 PM   #27
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Among family members who are in their sixties and seventies, the only one who is still working (and claiming to like it) is also the only one who can't afford to retire.
My mother finally retired for good last year at 83. By then she could no longer drive due to macular degeneration and although undiagnosed at that time she also was suffering from dementia. She definitely could afford to retire but just would not.

Of course, this is the depression generation and although she has virtually no short term memory, she can remember $ every time. She can't remember where she went to lunch after church, who else was there, who drove her home, what she ate.., but she can tell me she spent $4.19.
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Old 11-23-2008, 03:31 PM   #28
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I'm 29 and although i'm in better financial shape than the majority of 20-somethings I know, I am still probably just a pink slip away from dipping into my 401k/rollover IRA or most likely Roth IRA. As long as I have my job i'm fine but i'm a highschool graduate working in manufacturing in an area that has lost a large % of it's manufacturing jobs already. I have no experience in anything other than manufacturing. If I lost my job, I could be unemployeed or underemployed for a very long time and would have no choice but to raid my retirement accounts. At least I have retirement accounts. A lot of people older than me with higher paying jobs have far less saved than I do.
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Old 11-23-2008, 11:15 PM   #29
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I'm 29 and although i'm in better financial shape than the majority of 20-somethings I know, I am still probably just a pink slip away from dipping into my 401k/rollover IRA or most likely Roth IRA. As long as I have my job i'm fine but i'm a highschool graduate working in manufacturing in an area that has lost a large % of it's manufacturing jobs already. I have no experience in anything other than manufacturing. If I lost my job, I could be unemployeed or underemployed for a very long time and would have no choice but to raid my retirement accounts. At least I have retirement accounts. A lot of people older than me with higher paying jobs have far less saved than I do.
I might suggest before continued funding of your 401k - you fund an "emergency fund" in a money market or something else liquid - so if you get the pink slip you won't have to raid the 401k.

Figure out how much you might need - 3 months, 6 months, a year? - then save it up (don't forget to factor in how much unemployment monies you'll get & for how long if you get laid off) - in the meantime put no more in your 401k than you have to to get your employer's matching.

If getting laid off is a real possibility you may want to do what you can to also get rid of any debt you're carrying (if any)
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Old 11-23-2008, 11:18 PM   #30
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A Friend In Need

"We have a friend who has wiped out his 401k because he is too lazy to work"

I'm glad you're not my "friend".

b.
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Old 11-24-2008, 09:16 AM   #31
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Read a recent article about an increasing number of Americans depleting their 401k's just to pay bills due to layoffs and housing crisis. How many of you know of such instances? Is this common in your area? ....
I personally do not know anyone (young or old) who dipped into their 401(k). Perhaps they have, but they do not want to advertise this fact. However, I know of many people who are (and have never) contributed to their 401k plans (or any other long term savings). I also know lots of people who are not eligible for any type of pension and contribute less than 5% of their salary. They keep telling me, they will start/ramp-up their saving "later on"... they have been telling me this for years.
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Old 11-24-2008, 02:49 PM   #32
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"We have a friend who has wiped out his 401k because he is too lazy to work"

I'm glad you're not my "friend".

b.
You've got to be kidding, right? Why should anybody give him money when he's been irresponsible and lazy too? That only enables bad behavior on his part and would hurt the person giving money with no good outcome at all. Do you enjoy throwing money down a rat hole?
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Old 11-24-2008, 02:59 PM   #33
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Originally Posted by aaronc879 View Post
I'm 29 and although i'm in better financial shape than the majority of 20-somethings I know, I am still probably just a pink slip away from dipping into my 401k/rollover IRA or most likely Roth IRA. As long as I have my job i'm fine but i'm a highschool graduate working in manufacturing in an area that has lost a large % of it's manufacturing jobs already. I have no experience in anything other than manufacturing. If I lost my job, I could be unemployeed or underemployed for a very long time and would have no choice but to raid my retirement accounts. At least I have retirement accounts. A lot of people older than me with higher paying jobs have far less saved than I do.
Why not go to night school or something and get certified in computers or something? It would be cheap,would not interfere with your life, and you would have a contingency plan?
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Old 11-24-2008, 08:19 PM   #34
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Before I retired, I ran an organization with about 30 employees, most of whom were younger than I. I was amazed at how little these folks were putting away for retirement -- most didn't participate in the 401(k) plan offered to them -- and for those that did participate, several treated it like their personal Christmas club accounts, borrowing as much as possible as often as they could!
So as the CEO, you were able to see what everyone's percentage contribution was?
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Old 11-25-2008, 03:47 PM   #35
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I think the old plan of, working 9-5, save 10-15% of your income, "invest" (gamble in the market?).....then through the "magic" of compounding.....you're suppose to ride off into the sunset in 40 years.....is anyone starting to see the flaws in that system?

-The government can keep shuffling things around with taxes, schemes, bailouts to pay for.

-Corporations can keep shuffling things around.

It opens you up to endless pitfalls, headaches, disaster (stocks crash right before you retirement?).

I think you should save like mad early. In your late teens, early 20's. You get free rent at home, and have minimal expenses. Like saving, 80-90% of your income. Then figure out your payments and living within your means.

And you need to figure out renting vs owning early. I know one woman...in her early 70's, a former college professor, you'd think it'd be a good profession and you'd be set for life. But she rented, 10-15 different places? in the last 20 years, within about a 60 mile radius.

She ends up with nothing to show for it. Vs buying even a modest house and you end up with an asset.

Even if you have to drive more, or gas, or anything. That doesn't compare to a lifetime of rent payment, vs a home.
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Old 11-25-2008, 07:36 PM   #36
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My mother finally retired for good last year at 83. By then she could no longer drive due to macular degeneration and although undiagnosed at that time she also was suffering from dementia. She definitely could afford to retire but just would not.

Of course, this is the depression generation and although she has virtually no short term memory, she can remember $ every time. She can't remember where she went to lunch after church, who else was there, who drove her home, what she ate.., but she can tell me she spent $4.19.
Furball, your $ story made me chuckle.

Can you tell me what she did (work wise) until 83 years old?

tmm
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Old 11-25-2008, 08:09 PM   #37
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"We have a friend who has wiped out his 401k because he is too lazy to work"

I'm glad you're not my "friend".

b.
Don't worry mate - the feeling is mutual from what I have seen you post I probably wouldn't want you as a friend either.

You know sometimes part of being a friend is calling someone on their behaviour. You might think it is acceptable for someone who could earn $150k a year with benefits to quit his job when he has no savings and a mortgage to pay and leave it up to his wife to continue working and struggling to work out how to make ends meet on her $40k salary. I don't think it is ok to raid your 401k when you are mid 50s with no other savings and no inclination to work and use the money to take 4 overseas trips to run marathons. I think it is a bad decision and as a friend I believe I should tell him so. Unless he wins the lottery he is going to have a miserable retirement.
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Old 11-26-2008, 06:59 AM   #38
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So as the CEO, you were able to see what everyone's percentage contribution was?
Yes, the CEO can see everyone's contribution. It's all detailed in the compensation plan reports. For small businesses, the CEO is often the plan administrator as well (I was).
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Old 11-26-2008, 11:47 AM   #39
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One thing I've enjoyed about this forum is finding like-minded folks to relate to.
Yeah, it's great to have like-minded folks to gossip with about people living their lives differently than yourself!

There seem to be no threads as popular as threads where someone criticizes someone else's lifestyle and others jump in to pile on!
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Old 11-26-2008, 02:09 PM   #40
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Wondering if taking money out of 401k early is always a bad idea? Let's say an engineer with GM loses his job on Jan 1 when the company folds. Biggest problem is paying mortgage monthly with no job or Mcdonalds/Walmart job making $20grand a year. If the choice were foreclosure or withdraw $100,000 to payoff mortgage, I would likely choose the latter. Plus, even with the 10% penalty, taxes would still be manageable with the current low income level.
I'll agree with this. Money is fungible - it's all the same. If you "need" to spend, you get it from the cheapest source. Cashing out your 401k is cheaper than piling up credit card debt.

OTOH, the big problem is separating needs from wants. This board is full of LBYM types who would love to educate their friends and family on the difference (I'm one of them).

So I'll go ahead and get my pet peeve in. I see lots of media discussion on saving, and contributing to your 401k, and investing wisely. I don't see nearly as much discussion of the notion of getting out of debt. If I had the ear of the "average" American, I'd say you should focus on your GOOD Date (Get Out Of Debt Date). When do you plan to be completely out of debt? Age 50? Age 45? Age 65? It's foolish to think that you are "saving" until your debts are gone.
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