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Re: I hate to say this but most will not save enough.
Old 12-24-2006, 01:42 PM   #41
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Re: I hate to say this but most will not save enough.

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.
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Re: I hate to say this but most will not save enough.
Old 12-24-2006, 01:45 PM   #42
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Re: I hate to say this but most will not save enough.

Quote:
Originally Posted by newguy888
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.

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Re: I hate to say this but most will not save enough.
Old 12-24-2006, 01:46 PM   #43
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Re: I hate to say this but most will not save enough.

Quote:
Originally Posted by d
... 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.
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Re: I hate to say this but most will not save enough.
Old 12-24-2006, 01:51 PM   #44
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Re: I hate to say this but most will not save enough.

Quote:
Originally Posted by newguy888
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.
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Re: I hate to say this but most will not save enough.
Old 12-24-2006, 02:06 PM   #45
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Re: I hate to say this but most will not save enough.

"There is no dignity quite so impressive, and no independence quite so important, as living within your means." Calvin Coolidge
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Re: I hate to say this but most will not save enough.
Old 12-24-2006, 02:43 PM   #46
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Re: I hate to say this but most will not save enough.

Quote:
Originally Posted by d
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.
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Re: I hate to say this but most will not save enough.
Old 12-24-2006, 06:28 PM   #47
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Re: I hate to say this but most will not save enough.

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.
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Re: I hate to say this but most will not save enough.
Old 12-24-2006, 07:06 PM   #48
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Re: I hate to say this but most will not save enough.

Quote:
Originally Posted by jeff2006
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.


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Re: I hate to say this but most will not save enough.
Old 12-24-2006, 07:49 PM   #49
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Re: I hate to say this but most will not save enough.

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.
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Re: I hate to say this but most will not save enough.
Old 12-25-2006, 05:47 AM   #50
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Re: I hate to say this but most will not save enough.

Quote:
Originally Posted by 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.
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.



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Re: I hate to say this but most will not save enough.
Old 12-25-2006, 12:15 PM   #51
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Re: I hate to say this but most will not save enough.

Quote:
Originally Posted by 2B

I never fail to be amazed at the people who won't put in enough
to at least get the company match.
At present I max out my 401K contribution
and put in all the over 50 catch up contribution
allowed each year.

I counsel the young people at my company
to raise their 401K a percent or two when
they get a raise... this way they won't miss
what they never had.




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Re: I hate to say this but most will not save enough.
Old 12-25-2006, 01:31 PM   #52
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Re: I hate to say this but most will not save enough.

Quote:
Originally Posted by Helena
I counsel the young people at my company
to raise their 401K a percent or two when
they get a raise... this way they won't miss
what they never had.
I do the same but it would be cutting into their daily latte allowance.
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Re: I hate to say this but most will not save enough.
Old 12-25-2006, 09:06 PM   #53
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Re: I hate to say this but most will not save enough.

As someone said earlier, although it is a better place to be (having more than you need) is also going the other way. My parents have a good pension from county government. But they also have quite a stash socked away. They are in their 80s yet they won't own a computer because of the monthly cost. They are constantly talking about what is a good price etc. I know at this point it is more a game or point of pride. But my feeling is that they ought to spend it and quit being concerned about every penney.
I'm concerned that I might end up this way as I too will have a pension but I'm also very frugal and have saved a few pennies. Even Bob Brinker says there comes a time when you need to stop saving and start spending.
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Re: I hate to say this but most will not save enough.
Old 12-25-2006, 10:27 PM   #54
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Re: I hate to say this but most will not save enough.

Mountainosea, your parents are about the same age as mine, and are from the "Greatest Generation." They belong to a generation that lived through the Great Depression and fought World War II. They are very strong people and also very frugal. In the 30's and early 40's many did not know where their next meal was going to come from. Some had parents who lost their entire life savings in the stock market crash on "Black Friday" in October 1929. There was no unemployment insurance or welfare at this time. The members of the Greatest Generation who were fortunate enough to survive World War II, have a different attitude toward money than subsequent generations. If your parents are like mine, they're very careful with their money and it's difficult for them to part with it.

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Re: I hate to say this but most will not save enough.
Old 12-26-2006, 05:40 AM   #55
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Re: I hate to say this but most will not save enough.

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Mountainosea, your parents are about the same age as mine, and are from the "Greatest Generation." In the 30's and early 40's many did not know where their next meal was going to come from.
I could chop your version of history up but I'll be brief. The "greatest generation" were also my parents. My father would be in his early 80's if still alive. He was born in 1925. My mother was born in 1928. The "end" of the severe aspects of the depression was before my father was 15. That was well into the pre-war boom. I think most of us from relatively poor backgrounds didn't realize what "poor" was until they were out on their own. His father and my mother's father worked throughout the depression as 75% of the people did. There were some very sad stories then as there are now.

Now my grandfather really did live through the depression and he blew money until the day he died. He was in debt but beat the collection agency in the end. I just don't agree with the generalizations about the depression era are all justified. It was a different time and generally more financially conservative. I would put that to more of the changes going on in society than the depression.

Some people are just "terminally frugal" or maybe they don't won't to have to deal with one of those "computer thingees." My daughter thinks I'm cheap because I made her drive an 8 year old Honda to college.
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Re: I hate to say this but most will not save enough.
Old 12-26-2006, 08:42 AM   #56
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Re: I hate to say this but most will not save enough.

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My daughter thinks I'm cheap because I made her drive an 8 year old Honda to college.
Cheap? Getting any car for college is a good deal. We have a 2000 Acura that has effectively become DDs car (when she is in town). When she graduates next year we will give her the Acura if she wants it (if she stays in NYC she will probably prefer some cash for cab fair). The Acura has 50K miles, looks great, runs great. Nothing cheap about a a free car.
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Re: I hate to say this but most will not save enough.
Old 12-26-2006, 09:38 AM   #57
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Re: I hate to say this but most will not save enough.

During the Great Depression there was no safety net for those who lost their jobs. They could not line up at the unemployment office for a weekly check as we can now. Nor, could they sign up for a welfare check. People who did not have enough food to eat, had to beg for help from family, friends, or churches.

Only a small percentage of the general population actually owned stocks. But those that were hurt by the stock market crash suffered tremendously. Don't forget that there was a run on bank deposits shortly after the crash. We did not have the protection of FDIC at the time. Many people no longer trusted banks and would put money under their mattresses. High unemployment was everywhere.

Sure, not everyone who lived through the depression is now frugal. But, it sure did change the way people looked at money. Both of my parents were born in Kansas. My father was born in 1923 and my mom was born in 1926. Things were not exactly perfect in the 30's in that part of the county with the "dust bowl" and the grasshopper infestation. Crops would no longer grow, because the powerful winds removed all of the topsoil. My mother remembers closing all of the windows in their farmhouse during a dust storm, only still having to remove buckets of dirt from inside the house, because of the fierce dust blowing Kansas winds. Many people of this era sought refuge in California, only to find out the poverty there was as bad as what they left in Kansas and Oklahoma. The flyers that told of agricultural jobs in the orange orchards, etc. of California were simply not there. They were only distributed by dishonest wealthy California farmers who were attempting to drive down the price of labor by causing the supply of labor to be greater than the demand. John Steinbeck did a great portrayal of this era, in "The Grapes of Wrath."

My father recalls watching his mother crying at times because she did not know where their next meal was going to come from. He also recalls going to the dentist and having an abscessed tooth removed without benefit of an anesthetic, because his dad did not have enough money to afford one.

Sure, World War II production of aircraft, tanks, other weapons, and ammunition provided work for people who did not join the armed forces. But, even so Rosy the Riveter suffered while being subjected to the rationing of food and gasoline.

People who went through this are a lot tougher than we are today. Many of them truly went through some very hard times. Don't forget that many people who fought World War II were old enough to remember having hunger pains during the depression. My dad who was 21 years old and in the infantry when the Battle of the Bulge started in December 1944 has numerous stories of the hardships as a child in the depression. He was 6 years old when it all began. When you go hungry when you're only 6 years old, you never forget it. Because whole families suffered during this time from not being able to afford enough food and other bare necessities, they have an entirely different attitude toward finances than subsequent generations.




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Re: I hate to say this but most will not save enough.
Old 12-26-2006, 09:48 AM   #58
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Re: I hate to say this but most will not save enough.

Someone earlier stated that spending is what Americans "have been told to do." I can understand that statement...just look at the number of TV and newspaper ads which proclaim "The more you spend, the more you save!!" That's backward logic if I ever heard it!
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Re: I hate to say this but most will not save enough.
Old 12-26-2006, 11:28 AM   #59
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Re: I hate to say this but most will not save enough.

We love this topic, that is, the topic of how most people just spend and don't save, and it comes up over and over on this forum.

Someone might say it's because it makes us feel superior, but I don't think that's it. It's because we're so frustrated that these other people can't see what's happening. We want to say "Hey, look, dummy, if you'd stop buying so much useless crap, you wouldn't have to work all your life." But we can't do that, so we discuss it here instead.
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Re: I hate to say this but most will not save enough.
Old 12-26-2006, 12:07 PM   #60
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Re: I hate to say this but most will not save enough.

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We want to say "Hey, look, dummy, if you'd stop buying so much useless crap, you wouldn't have to work all your life."
Yea, but what would happen to our ER stock portfolios if everyone listened to us and stopped buying crap?
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