Money Mag: Can this Retirement Be Saved?

[FinanceDude]

Switch the w with a b and put selfish in front. The only other explanation is STUPID!

The ridiculous part is that it is the house is an inanimate object. It can only fall into about 2 categories investment or toy...possibly a combination of both. Memories are in her mind... they do not have an opportunity cost. She should just take some pictures. If you think about it... this is emotion run a muck.

I really don't buy the memories part... I would buy the status symbol part or defining oneself with an object. Heck, they could probably sell it and rent the same place when they take a vacation and come out better off financially.

They will sell that place. No choice! Look at the realestate holdings all very illiquid. The taxes and insurance alone will probably suck up Carol's pension.

Their standard of living is going to plummet.

They're toast, he needs to get a job..............

HALF their retirement gone in a couple years??

 

[Texas Proud]

Was scanning the latest Money Magazine and saw the article "Can this retirement be saved?" I went to the bottom line and it showed:

Income:

[b]Withdrawal from savings $123, 489[/b]
Rental Income $36,000
Total - $159,489

Assets
NC vacation home $900K
FL residence $770K
FL investment prop $454K
401K/IRAs $120K
Cars (two-Ford and Mercedes) $36K
Life Insurance (cash value) $36K
Brokerage account $34.3K
Carol's Gov't pension $25K
Bank, checking/savings $9K
Total - $2.3843 M

Show me where they have savings to withdrawl $123K per year!!! Where is the $3 mill??

 

[Moemg]

I just read the whole article .These people are clueless about how to live on a smaller income .Have they never heard the word downsizing ?

 

[2B]

Yes, I noticed that. I wrote them off at that point. She said the vacation home had "memories". Apparently she preferred the past memories of a vacation home that they spent little time at to making new memories with a retired husband. Ouch!

I've had a prior post where I noted that "retired" wives seem oblivious to keeping "dear hubby" working until he dropped. My DW started make similiar comments and I basically pointed out the inconsistincies in what she seemed to think I should do, what I'd like like to do, what she's currently doing and what she's willing to do if I don't keep working. She had an "enlightening moment" but I don't know if it took.

 

[Celany]

the thing I don't get about the whole memories schtick is that they moved to florida to be with the grandkids...presumably, to make more *memories* with the grandkids. as the article said, due to their current situation, they only see the grandkids once a month.

so she'd rather hold on to old memories than make *more* memories with the very people that they moved to florida to see?

very strange, indeed...sounds like she hasn't put much thought into it...

 

[Fireup2020]

From what I see, she seems to be incapable of such advanced thought! Me me me...now now now...

That is the extent of the "thought"

 

[deserat]

The responses to this have been interesting - frankly - I just skimmed part of the article and focused on the numbers....I saw that they could have a retirement if they changed their expectations....sort of like the members on this board. My other thought was that "where the he!! did all of their money go over the years?" They weren't as far as they could be.....

Thanks for the responses - Deserat

 

[chinaco]

The responses to this have been interesting - frankly - I just skimmed part of the article and focused on the numbers....I saw that they could have a retirement if they changed their expectations....sort of like the members on this board. My other thought was that "where the he!! did all of their money go over the years?" They weren't as far as they could be.....

Thanks for the responses - Deserat

Exactly. And it is too late! I know people that have speculated on land and property and gotten rich ($10s of MM). But they are few. Most have gotten a more normal return. Some were highly leveraged and wound up broke in a cash crunch.

These people have most of their money tied up in illiquid real estate and the largest one is a toy. Imagine... a $900k house in NC. I can imagine it is in a tourist trap. But still, it is likely to be a fairly large house. Think of the furniture that was purchased. Plus, If I am going to have a $900k house, it damn sure is going to have a nice pool and probably a pool table (which I have). My point just think of furnishing that house. It is likely to be a good 3000+ sq ft. They likely did not have a bunch of empty rooms.

When we moved to our present house, most of our furniture was, shall we say fully depreciated... We bought a lot of new fruniture (personal decision). Heck we are probably set for life in the furniture dept. Any way dropping that money all at once was very expensive. We bought direct in NC and saved quite a bit... but still it was expensive.

Now think about yearly taxes, insurance, up keep, etc... Yuk!

I hope his wife's memories are fantastic... they sure paid for them. probably to the tune of $10k per thought.

 

[mathjak107]

one of the reasons money mag had been interested in doing us was they said most of the people they do are either committing financial suicide , in debt up to their eyeballs or just failing miseably in putting together on their own a financial plan. so they figured they wanted to do a baby boomer couple who was debt free, kind of financialy savy and thought they were covering all the bases . whether we actually did or not was the crux of the article. . then they wanted to pit their financial team against our plans and see how we faired. we did better than i ever expected us to do and we came to disagreement really only on the issue of long term care.

 

[oliverdickens]

Might be in the string, but did anyone wonder how they purchased car, life and health insurance for only $4775 a year. That seems impossible given high cost for car insurance alone in Florida, and I did not notice their former jobs that might have offered some reduced health insurance.

Their home insurance must have been rolled into the $67000 of mortgage payments. Wow

Any way, if there is someway to spend less than $400 per month for all that, I would like to know. Thoughts?

 

[W2R]

Might be in the string, but did anyone wonder how they purchased car, life and health insurance for only $4775 a year. That seems impossible given high cost for car insurance alone in Florida, and I did not notice their former jobs that might have offered some reduced health insurance.

Their home insurance must have been rolled into the $67000 of mortgage payments. Wow

Any way, if there is someway to spend less than $400 per month for all that, I would like to know. Thoughts?

High deductible on the house. Minimum liability on the car. These may not be the most attractive choices (which is why they are cheaper), but you asked.

 

[Sheryl]

Train wreck is right!!!

As others said, where in the heck are they going to withdraw $123k from per year? The cars (which they claim as assets)? Besides the insurance number being way low (maybe their health is paid for by employer?) There are no line items in the budget for all of the "other" that people like this are sure to buy. With this budget they will never buy anything but food, clothing and yard maintenance? She never gets her hair done, he never buys new golf balls? Sheesh – we think we’re pretty frugal, and we still can’t go through a month without a couple hundred bucks in “other.” I bet they can’t even live on the budget as shown!

 

[gindie]

The other mis-prioritization is that she is choosing her vacation home over paying for her cholesteral medication!

 

[Nords]

The other mis-prioritization is that she is choosing her vacation home over paying for her cholesteral medication!

Sounds like this problem will end with a Darwin-Award solution.

 

[mathjak107]

this is more for suzie orman and her flock of financial loosers.

 

[clifp]

I got interviewed by SmartMoney in 2000 on a segment about Early Retirement. The full archive of the article has mercifully disappeared. I was a bit unhappy because it had both my full name and my net worth in the same article.

The funny (although not total surprising) thing was the article focused on the downside of early retirement. Basically I said that investment for me had turned into more of a job than fun hobby, since I took ER. Although, if that is the worse thing about ERing , I don't think it would turn off a lot of people.

Thank God my budget was not discussed, although no way I would ever look as foolish as this couple.

 

[mathjak107]

we did both money mag and fidelity mag last year. it was interesting to do, and as i said before we had no reservations about the financial info.... no one really cared other than for the reading.....

no question the photo shoots are the best part, makeup and hair people and all the attention. its like being a star for a day

 

[2B]

I could not imagine having all of my financial and personal information plastered into a highly circulated mag and then having it available on the internet for a year or more. That in itself would probably drive me to retire to Panama.

I do find it interesting to read these. Nothing like being a financial "peeper." Although, if they open the blinds and undress in front of you is it really peeping?

It's interesting to compare different approaches and methods. It's been awhile since I read the Money mag article on mathjak. I thought mathjak was a little overboard on real estate but I'm a high liquidity kinda guy. I was also surprised by the % of net worth that came from inheritance. I'd be much better off if I'd done a better job picking my parents or, at least, educating them on how to invest and LBYM.

 

[unclemick]

we did both money mag and fidelity mag last year.
no question the photo shoots are the best part, makeup and hair people and all the attention. its like being a star for a day

The temptation would be too severe - as a lefthanded INTJ ER - a new tin foil hat, show them my new sheet metal vacation spot under the overpass and maybe a few creative tears in my bib overalls for effect - park the pickup out front with rusty/primer fender toward the camera.

Hmmm - possibly I have a different mag in mind.



You know an ordinary small tract house in the suburbs/vehicle(Oh my God - it's Kansas!) - paid for via boring as paint dollar cost averaging your 401k into index funds - won't make the news of any kind anywhere - because it's just well you know soooo boring.

 

[mathjak107]

I could not imagine having all of my financial and personal information plastered into a highly circulated mag and then having it available on the internet for a year or more. That in itself would probably drive me to retire to Panama.

I do find it interesting to read these. Nothing like being a financial "peeper." Although, if they open the blinds and undress in front of you is it really peeping?

It's interesting to compare different approaches and methods. It's been awhile since I read the Money mag article on mathjak. I thought mathjak was a little overboard on real estate but I'm a high liquidity kinda guy. I was also surprised by the % of net worth that came from inheritance. I'd be much better off if I'd done a better job picking my parents or, at least, educating them on how to invest and LBYM.

well the real estate was actually an inheireted business which my wife got an unexpected partnership in from her deceased husbands family. . the business consisted of 9 co-op apartments in a very prestigious building overlooking central park in nyc. .her father inlaw had been a builder and partner with bernie spitzer and at one point he owned 35 apartments but those were sold off before we had anything to do with them. . actually you can see the building by typing a google search on 200 central park south. it really is nice. we managed to buy out the leases from 5 of the rent stabilized tenents and sell those off. man talk about hitting the lottery.

we still have 4 left but these tenents arent moving so quick. it could be never before we see any more sales.

 

[Celany]

Sounds like this problem will end with a Darwin-Award solution.

you can only get a darwin award if you lose your life *before* you procreate, I believe...

 

[Milkman]

I read the article last week when my magazine came in the mail. The woman's comment about the "emotional attachment" to the NC home and not wanting to make any more fast decisions, struck me as being extremely selfish. However, the most revealing comment was "We're in this beautiful area and see our neighbors doing fun things like cruises, golfing, and going to the country club, and we can't enjoy any of it." She is blinded by status symbols and materialism, andconsiders them to be her entitlement. If they both share those feelings, I don't think they have an ice cube's chance in Hades of surviving this trainwreck.

I think their only hope is if the article's author emails them the link to this thread. If they see the opinions of people who have accomplished what they are trying to acheive, maybe they can get beyond their anger and selfishness, they might begin to see the light.

Or not...

Milkman