I hate to say this but most will not save enough.

[Corporateburnout]

Make sure that you are not paying the brand-name schools with costs of about $50K per year. You can always send them to a local community college then to a local state university. This is a big saving for the same education (but not name recognition). Actually your kids may receive a better education since these schools are focused on teaching as opposed to research by brand-name schools in search for fundings (or profits). A significant number of classes are taught by teaching assistants. Relationship between professors and students does not exist.

Obviously, if a brand-name school offers financial aid in significant amount, it might worth considering.

Actually they both attended brand name private schools. They were offered some merit based scholarships which reduced the cost of attendance to about 25K to 30K per year.

I was very impressed with the education they both received. My youngest attended a liberal arts school with an average class size of 25 ( her senior year classes had 12 students). All classes were taught by professor with terminal degrees. Her professors were always accessible to her via e-mail when she studied abroad for a year. I felt their education prepared them for life rather than just a profession.

A couple of my kids friends attended state universities with class sizes of 200 or more taught by assistants and had no educational assistance from any professors outside the classroom.

But I can only talk about my kids' experience and I am sure others may have had a good education in the public sector.

 

[Martha]

Some time ago I talked with the board about helping a friend figure out a retirement savings plan and what she would need to maintain her standard of living presuming retirement at full retirement age. She was in her 40s, very little savings, and a job that doesn't pay much. Odds are she would end up having to take out a reverse mortgage for part of her retirement income. At the time the idea of either using an annuity or otherwise spending savings to delay SS until 70 did not come up. But this does make a lot of sense. The increase in the SS by waiting until 70 is huge. It seems to me that she is much better off by spending more of her assets early and delay the SS. I guess I just had Cut Throat's ah ha moment on delaying social security, but a few months later.

Now I will have to remember that 20 plus years from now! Wonder what the world will look like then.

 

[Donzo]

I think that how you live/save/plan has so much to do with the mate you choose. My 2 college friends I discussed yesterday in the "have you been near the bottom?" thread make huge dough. One is a loan broker that made great contacts over the years and often makes over $500,000 year - the other owns a successful business. They both married high matainence wives. I enjoy spending time w/ their wives at our get togethers but am shocked by their attitudes and needs. One spends over $1000. per month at Nortstroms, My buddy showed me her closet - loads of tags on clothes not even worn/enough shoes to build a bonfire! The wives guilt them into trips, expensive entertaining and vacations. A good example - I was best man at both of these guys weddings - It cost a bundle just to be best man - one was at the Hotel DelCoranado in SD the other at the Plaza in NY. Now the guys are not living small - new SUVs - one has a Sirus plane($400,000) and all the trappings of house/ highend furnishings etc.
I got lucky and married a woman that had dreams of being free early in life - w/o needs of keeping up w/ the Jones etc. She is the one that found YMOYL book amd brought it home in 1992 - that focused our plans.
I remember being around 18 when my father asked me what was the most important investment you will ever make? You know the answer.
Who you pick as your partner makes all the difference in the world.

 

[Arc]

I'll use your comment to hijack the thread a bit. The biggest problem I see on this forum is the tendency to save and defer gratification at the expense of the here and now. As the "spenders" will someday regret their lack of saving will we "savers" also regret our way. I wonder how many of us worked or are still working (like me) to amass a stash far more than we really need for a life of leisure.

I have heard from many people how they are living in full early retirement on far less than my future SS check that I intend to be a small part of my retirement budget.

Let me confess my sins.....

I felt obligated to pay my children's college cost. No one paid mine so why did I think they would need me to do it?

My house is too big for me and DW. Total housing costs are fully half of our expenses. We could cut it in half and still have more room than we really need.

I have lusted just yesterday for a 61" 1080p DLP. I watch too much TV now and this would only make it more tempting plus it needs a big room in my too big house to view it properly.

I could go on but what's the point.....

2B,
Balance is the key! I believe strongly that success hinges on starting early. If starting early, you can invest smaller amounts and do a better job of enjoying life along the way. I'm in a similar situation as you: larger house than needed, 3 cars, 1 motorcycle etc... and enjoying life - and making adjustements along the way as needed.

I think that it takes some vision at a young age - that not everyone has - and tough to teach. Don't mind adding that a little luck doesn't hurt - and I have been blessed in many ways.

It is a shame that most do not even think hard about the future until fear becomes the driving force - then typically it is too late. Oh well!

 

[Corporateburnout]

I think that how you live/save/plan has so much to do with the mate you choose. My 2 college friends I discussed yesterday in the "have you been near the bottom?" thread make huge dough. One is a loan broker that made great contacts over the years and often makes over $500,000 year - the other owns a successful business. They both married high matainence wives. I enjoy spending time w/ their wives at our get togethers but am shocked by their attitudes and needs. One spends over $1000. per month at Nortstroms, My buddy showed me her closet - loads of tags on clothes not even worn/enough shoes to build a bonfire! The wives guilt them into trips, expensive entertaining and vacations. A good example - I was best man at both of these guys weddings - It cost a bundle just to be best man - one was at the Hotel DelCoranado in SD the other at the Plaza in NY. Now the guys are not living small - new SUVs - one has a Sirus plane($400,000) and all the trappings of house/ highend furnishings etc.
I got lucky and married a woman that had dreams of being free early in life - w/o needs of keeping up w/ the Jones etc. She is the one that found YMOYL book amd brought it home in 1992 - that focused our plans.
I remember being around 18 when my father asked me what was the most important investment you will ever make? You know the answer.
Who you pick as your partner makes all the difference in the world.

I know this wealthy doctor whose wife drove him bankrupt for going on shopping sprees where she'd spent 15k to 20K per trip on clothes for her and the kids that they never wear. She claimed that he worked all the time and she felt lonely and needed to fill her time..............He is now rebuilding his life after the divorce.

I am fortunate to have my DW.

 

[Nords]

As one guy said over a beer last week I am doomed to work forever.

Two dozen responses later I'm still hung up on this statement.

The guy can either educate himself to find a way to retire, or let an insurance company educate him to take New Thinking's approach, or he can continue to work forever.

The first will bring him to this board where he can get a free tutorial on how to retire.

The second will be his tuition at the school of financial knowledge, but for all its expenses & drawbacks he'll still be able to retire.

The third will ensure that Social Security & Medicare will be funded for the rest of my life.

So I'm not sure that I see the problem!

 

[rs0460a]

Who you pick as your partner makes all the difference in the world.

Just remember, you "pick" each other

- Ron

 

[TromboneAl]

Unless you've been living under a rock, have minimal intelligence, or are just so stubborn its hard to imagine or believe some of the stories you read or hear about of individuals in their 50's and sometimes 60's who haven't saved.

I've thought about this, and I think I've figured it out: We're very different from other people. Most people don't watch the news, don't read things on the Internet. They are totally focused on their present lives and what they're going to do on the weekend. If they watch TV, it's sports or reality shows that are quite apart from reality. If something related to saving does happen to intrude on them (e.g. on the TV at the airport), they push it aside because they don't like to face their shortcomings, and they can't do math or understand the concepts of investing. It's very scary to them.

So for us, we can't understand how they can ignore all the warnings about not saving enough. But these people aren't exposed to most of these warnings, and do all they can to push them aside.

 

[d]

I think that it takes some vision at a young age

seeing beyond the end of one's nose would be a good start ... i know a guy who spends every penny on travel, and every year is absolutely surprised and amazed that he gets a realestate tax bill in the mail ... that he didn't save the money to pay. i'm pretty sure you can guess at the balance in his retirement funds.

 

[Arc]

I've thought about this, and I think I've figured it out: We're very different from other people. Most people don't watch the news, don't read things on the Internet. They are totally focused on their present lives and what they're going to do on the weekend. If they watch TV, it's sports or reality shows that are quite apart from reality. If something related to saving does happen to intrude on them (e.g. on the TV at the airport), they push it aside because they don't like to face their shortcomings, and they can't do math or understand the concepts of investing. It's very scary to them.

So for us, we can't understand how they can ignore all the warnings about not saving enough. But these people aren't exposed to most of these warnings, and do all they can to push them aside.

I think that about explains it - very well put Al.

 

[Rich_by_the_Bay]

The increase in the SS by waiting until 70 is huge. It seems to me that she is much better off by spending more of her assets early and delay the SS. I guess I just had Cut Throat's ah ha moment on delaying social security, but a few months later.

True but -- and I had the same reaction when CT was all atwitter -- what if SS reform reduces that delay-reward (it's ripe for the pickin' and far enough out that ERs could easily be caught by the phase-in)? You have eroded your nest egg, the SS deferral raise is lower than you were counting on and your assets are lower than they would have been.

I realize this is speculative, and the delay strategy is probably a darn good risk to take for those of us with a little cushion. But for someone "close to the line" to accelerate their SWR as a tradeoff against a higher SS payment may backfire in that scenario.

Just thought I'd throw a little paranoia into the mix .

 

[d]

Just thought I'd throw a little paranoia into the mix

even for our congress, it would be a bit much to have them penalize those who delay taking benefits.

 

[Nords]

even for our congress, it would be a bit much to have them penalize those who delay taking benefits.

It'd be a "bit" harder to get re-elected, too.

 

[d]

guess some have saved a bit too much

MONTREAL (AFP) - The world's oldest ice hockey stick, a hickory shaft carved in the 1850s, sold for 1.9 million dollars US (2.2 million Canadian) here and will be displayed at the Hockey Hall of Fame.

 

[Nords]

guess some have saved a bit too much

MONTREAL (AFP) - The world's oldest ice hockey stick, a hickory shaft carved in the 1850s, sold for 1.9 million dollars US (2.2 million Canadian) here and will be displayed at the Hockey Hall of Fame.

Sounds like they overpaid-- I doubt even Gretzky or Lemiuex could have kept up their scoring with that sucker...

 

[Dog]

Just read an article in the Sunday paper this morning (picked up from the LA Times) titled, "Paying For The Wrong Choices". A 56 year old man, twice divorced that has a pay-option mortgage. Originally purchased the home 11 years ago and it has more than tripled in value, but he tapped into the equity for $190K that he spent on traveling, new car, paying off credit cards and risky investments that tanked. Anyway, with his pay-option mortgage he can pay his full monthly payment at $2,513, or make an interest only payment of $2,279 or opt for the cheapest payment of$1,106 (promising to make up the shortfall later). Guess what option he chooses....the cheaper payment. He has basically increased the size of his mortgage in a little over a year from $320k to $332k. Once he hits 115% of the loan amount he will run out of credit with his mortgage company (in about two years) his payment jumps to over $2,800 a month. He can't sell the house to get out from under the mortgage without incurring an $11k prepayment penalty (money he doesn't have in savings). His statement is, "I am rather screwed". The article states that WaMU has the nation's largest portfolio of pay-option loans and of those, 47% of of their borrowers choose the minimum payment option. Let's see he is 56 years old with no money in the bank and a mortgage he really can't afford. And the article says he is just marginally employed....whatever that means.

 

[audreyh1]

I agree they decided to spend, but that is what americans are told to do, and I am not saying it is right but I do believe there is a complete disconnect to understanding how much money is need to save to retire.

There are a lot of people who live their life on autopilot, doing whatever "they" say to do. I find it rather hard to feel much sympathy at all for someone who can't have some personal responsibility and initiative about their financial future. In fact, it is in my best interest for most people to work well past retirement age as that would keep our economy going stronger than if we had a whole lot of retirees.

Audrey

 

[Leonidas]

... i know a guy who spends every penny on travel, and every year is absolutely surprised and amazed that he gets a realestate tax bill in the mail ... that he didn't save the money to pay.

Not trying to be mean, but that just cracks me up. I have a vision of the guy going through his mail and saying "WTF? Another one of these damn things? Bur I just paid this.... last year!"

There are a lot of these folks out there. Busily jamming all their dough into here and now living, and when they finally look at the calendar they realize that they want to retire but didn't prepare. We socialized with a group of people for several years - all big money makers and spenders - who were constantly hosing greenbacks around like they owned the printing press. Gigantic McMansions, private schools for the kids, wives shopped til they dropped every day, several expensive vacations every year - the whole deal.

One couple kept pestering DW to get involved in some weird investment deal. She finally listened to what they were talking about, realized it was some desperate scam they had bought into, and told them she wasn't interested. The hubby was more than a little upset and said "But, this is a great opportunity to set something aside for your retirement."

Our friendship/acquaintance with them was doomed after that day. DW looked at him and said "Actually, I think we're doing very well in preparing for retirement, but thanks for the offer." She told me later that he was speechless for a few seconds and that his attitude was as if she had insulted him. We talked about it and decided that what had upset him was not the rejection of his offer, but being confronted with the fact that he had neglected to take care of the future.

There are times here that I think many of us (including myself) here are guilty of copping an attitude about how we are the smart and industrious ants while taking some shots at our live-for-the-moment grasshopper bretheren. But while I sometimes have to check myself to curb the attitude, I don't have any pangs of guilt about the situation. I chose what I chose and they made other choices.

 

[lazygood4nothinbum]

I agree they decided to spend, but that is what americans are told to do

i've been told many good things that i never listened to and a few bad things that i heard. it matters less what someone tells me and more what i decide to hear.

granted, luck of the womb blessed my early retirement. but i was not that far off course on my own and i never made much money working. i even tripped up my own corporate climb so that i could stay put and take care of mom. i could afford that, not only because i knew my family would provide for my retirement (though had that not been the case, i simply would have dragged her up the corporate ladder with me), but particularly because i understood something which no one ever had to tell me.

the boglehead's book phrases it well: "reducing your spending is financially more efficient than earning more money...because you have to pay income taxes. however, every dollar you don't spend...can be invested."

not only can you accumulate more money while making less but you can live, materialistically, better than many without spending the money of most because enjoyment has less to do with what's available in life and more to do with how available we make ourselves.

it pays to be a bleeding-heart-on-my-sleeve socialist gay liberal. there are choices we make in life which have nothing to do with what society tells us. you can have children, or you can have convertibles. you can try to keep up with the joneses, or you can make a pot luck dish and bring it onto the joneses' yacht for a lovely day of boating. and if you think it is wonderful to own a big boat, just think how wonderful it is to be able to enjoy it, yet at the end of the day walk away without the fuel bill.

you can live in the biggest house in the best neighborhood in town or you can buy a reasonable house in the best neighborhood in town like my parents did or you can buy in crack town during white flight after doing your homework and realizing how close you are to the best areas of town. guess which house did best over the last 10 years. yup, little ol' lazy me just listening to what my inner lazy self tells me not to do.

 

[d]

"There is no dignity quite so impressive, and no independence quite so important, as living within your means." Calvin Coolidge

 

[Goonie]

seeing beyond the end of one's nose would be a good start ... i know a guy who spends every penny on travel, and every year is absolutely surprised and amazed that he gets a realestate tax bill in the mail ... that he didn't save the money to pay. i'm pretty sure you can guess at the balance in his retirement funds.

Wow! What a small world! You know my friend, Paul, too!!!

He owned a mobile home, on a rented pad. He'd get his property tax bill, and wonder if/why he had to pay it! DUH!!! The tax bill was something like $40 a year...and he NEVER had enough money to pay it!!! He'd say, "They'll never miss $40....what can they do to me?"

Haven't seen him since he lost his home a few years back, and moved into the projects.

 

[bubba]

Hi, been lurking for a couple of months, and this thread compelled me to add a comment. Early on, someone mentioned pooling 401Ks. That is one of my biggest fears regarding retirement. I fear that DH and I will sacrifice to accumulate a few dollars to live on in our old age, and the tax structure will be changed to force us to share these dollars with those who never considered saving while working. Perish the thought.

 

[gwix98]

They will have an income from these assets of at least 60K per year, depending on how they work things. So, they will not be poor. Far from it. Around here (NC), you can live pretty well at this level.

You can still live here pretty good as well on the west coast.
60K is 2.5 times what all the posters on this board with 24K
seem to think is adequate for a decent retirement lifestyle.

 

[jazz4cash]

I agree with New Thinking and Nords

I'll bet 100k at age 50 is way above average. It may sound pitiful to the ER types in here, but they still have a long time to prepare for a normal retirement, but no time to waste. They gotta get a better attitude, though............feeling "doomed" is just gonna be another excuse to procrastinate.

I always look at the ERISA statments and other stats for our company plan, and I know the average balance for 90,000 participants is about 130K, but the distribution is extremely skewed. The average account balance for 50 year olds is 73K. Only 30% have over balances over 100k, but you never know if they have rolled the money over or whatever. It is apparent that people dip into thier accounts when they hit the 100k mark.

 

[2B]

I agree with New Thinking and Nords

I'll bet 100k at age 50 is way above average. It may sound pitiful to the ER types in here, but they still have a long time to prepare for a normal retirement, but no time to waste. They gotta get a better attitude, though............feeling "doomed" is just gonna be another excuse to procrastinate.

I always look at the ERISA statments and other stats for our company plan, and I know the average balance for 90,000 participants is about 130K, but the distribution is extremely skewed. The average account balance for 50 year olds is 73K. Only 30% have over balances over 100k, but you never know if they have rolled the money over or whatever. It is apparent that people dip into thier accounts when they hit the 100k mark.

I'm one of the people with a low 401k balance but many job changes gives me a more impressive rollover IRA balance. I will agree with you on the skewed distribution. The people I've talked with about finances usually fall into either the "big contributor" group or "can't afford it now" group. The "can't afford it nows" are also the ones that if they had put some money in to get the company match are usually the ones with a 401k loan and are "paying themselves interest." I never fail to be amazed at the people who won't put in enough to at least get the company match.