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Old 04-18-2010, 07:23 AM   #41
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I just got through reading through this thread. Kudos to those that can separate the issues instead of being snotty. I sometimes wonder just how much people really think about "there but for the grace of God".

I'm one of those early boomers. My father, 8th grade education, had a good pension because he was able to get a job with a major oil company doing manual labor. He had a pension because he was just at the right age to take an early out offer when that oil company closed in his home town. My family had a policy of not talking finance with their children thinking that children didn't need to worry about adult matters. However there was never a question that his children (girls) would attend college and train in a career that insured against dependence on marriage as a career. I suppose the increase in divorce over their lifetime caused this thinking.

So to the boomer daughters. My sister married a very successful man, stayed married, and had her own career. My husband married a successful woman, stayed married and had his own career (chuckle). My sister is the richest but both families have two pensions and lots of savings. My BIL planned his rise to riches. My husband and I just muddled along without questioning or planning the future.

What could have happened? Well, I could have had a head-on collision that killed me or left me unable to continue to work.

What did happen? Well, I had a head-on collision that only crippled me. I took over a year to get repaired enough to go back to the office every day. I worked in a profession that did not need to be in the office every day and didn't require someone who could walk. I worked for an employer who understood my situation and let me work from home until I could return to my office.

Another thing happened. After the event, I took a serious look at what would have happened to my husband financially had I died. The answer was dismal. I spent the next ten years fixing this problem and will soon retire. Now if I were to die, my husband should have a secure future if he continues the lifestyle we have adopted.

So, what's my point?

This story is not complete but, with the snippets, people should be able to identify the difference between choice and luck. Take my father. He dropped out of school for no good reason - bad choice. He recognized the responsibility of providing for his family - his good choice, my good luck. He chose a job with a good employer - good choice. A good employer was available in a small town - good luck. His employer closed down before he retired - bad luck. His age was appropriate to early retire and get that pension - good luck. Keeping that good job no matter how hard it got - good choice.

This is the life of more real people than some want to see. Even if people try to prepare for bad luck, no one expects a perfect storm of bad luck. It is this "in between" perfect and irresponsible that I imagine most boomers prepared for, not the series of really bad storms that occurred. I could be wrong about that but I grew up with ordinary people and ordinary people try to meet the definition of responsible that they know. Back then, in the 40-60's, the parents of the boomers understood saving, as in bank accounts, for the water heater busting, and if that didn't happen ended up with the savings. Most retired and were not rich but were OK, even though a great percent were one worker households.

Myself, it took a major life event to wake me up but, luck again, I wasn't too old to fix the problem. It was the knowledge of living without that I gained from my childhood that made the transition from spender to saver totally painless since I grew up with a sense of "not wanting" instead of "not getting" or "giving up" things. So I consider it more good luck than good choice.

I am old now and my observation is that life isn't alway a choice. More than one wants to admit to oneself, each day of life places a bit of luck into the mix. Overall, I have been lucky but not so much so that I don't know that tomorrow can only be secured by my choices to the extent that bad luck can be overcome.
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Old 04-18-2010, 07:37 AM   #42
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I just got through reading through this thread. Kudos to those that can separate the issues instead of being snotty. I sometimes wonder just how much people really think about "there but for the grace of God".

...

I am old now and my observation is that life isn't alway a choice. More than one want to admit to oneself, each day of life places a bit of luck into the mix. Overall, I have been lucky but not so much so that I don't know that tomorrow can only be secured by my choices to the extent that bad luck can be overcome.
Outstanding post. I agree, "life" has more control than any individual... if it seems otherwise than it is only one of "life's" little teases or it is not quite time.
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Old 04-18-2010, 07:53 AM   #43
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What a quality thread this one turned into, Oldbabe, Tadpole, etc.! I wish it pointed to some new answers though.

We must all do all we can to prepare, that's a choice. It's very well understood on this forum, but seemingly not so for the mainstream.

For those who are unlucky (a significant number, but less than those who choose poorly IMO), I don't believe the answer can be for society to provide for them beyond the basics. I can elaborate, but probably not necessary for this audience.

What is the answer for the unlucky?
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Old 04-18-2010, 07:58 AM   #44
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Now that I am 61, I am beginning to understand that many do lose the physical capacity needed to perform many jobs as they age.
Heck - just wait till you reach 62 (like me )...
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Old 04-18-2010, 08:04 AM   #45
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I believe some will continue to work full-time after 65 (as they do today). But I think you will see more work part-time to supplement SS and whatever other resources they have saved.

The big determinant for working full-time after 65 might be debt load.
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Old 04-18-2010, 10:15 AM   #46
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What a quality thread this one turned into
Absolutely!

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What is the answer for the unlucky?
I suppose, in the broadest sense, it's insurance. To FIRE, one must self insur against running out of money over time. Most of us choose insurance products based on our perception of risk. Disability insurance, critical accident insurance, even longevity insurance make sense. Life insurance makes sense if you have dependents. For those people who cannot wither self insure or purchase insurance, there are social safety nets. For those who could insure, but choose not to, I have less sympathy.
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Old 04-18-2010, 12:52 PM   #47
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Heck - just wait till you reach 62 (like me )...
Oof! I am not looking forward to it. I just have 51 days before I get there. But hey, it's better than the alternative and I am enjoying ER immensely. When I was 40, I thought I would be young forever.
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Old 04-18-2010, 01:19 PM   #48
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Oof! I am not looking forward to it. I just have 51 days before I get there. But hey, it's better than the alternative and I am enjoying ER immensely. When I was 40, I thought I would be young forever.
Ugh...I just turned 40 on April 2, and wish I had that "young forever" feeling. I went to the Kings Dominion amusement park in VA on my b'day with some friends, and those damn roller coasters beat me up!

The main thing that bugs me though, is how fast the 30's went past. I remember my 30th like it was yesterday.
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Old 04-18-2010, 01:19 PM   #49
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I would like to see our society make part-time employment a real option for people.

Currently, our health care system rules part-time employment out for a large portion of the workforce. If you need health insurance you pretty much have to work 40 hours a week. Most jobs beyond cashier and fry cook require you to work 40+ hours a week because they provide health insurance and wouldn't be cost effective to the employer at fewer hours per week.

If we ever get our health care untethered from our employment, I expect that we will see an explosion of people working part time as they get older, rather than the current full-time to zero cutoff that we currently have.

I think that this would be a very good thing.
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Old 04-18-2010, 03:16 PM   #50
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I think that there certainly people who are genuinely worthy of sympathy and that most people would agree some financial support or help is appropriate.

I think the vast, vast majority of people who are unable to fund their retirement have (or had) a life style problem--they spend (or spent) more than they should have when they were working. Most people who are (or will be) working beyond "normal retirment age" are not in that position because they had things that happened to them that were beyond their control. They did it because they bought 50" flat screen plasma tv's, granite counter tops, hihg end, stainless steel appliances, I-Phones with $100+ per month data/communication charges, and leased new cars every 3 years.

I am sorry these people are in the situation they are in, but for the most part, this was a choice they made.

This was my way of thinking as well, but this line of thinking is not backed up by any data. It is just popular opinion and anecdotal evidence. If you looked what Elizabeth Warren found through her studies of the middle class as an aggregate, it is not the discretionary spending that is driving the increasing financial instability. It's the competition for housing in better school districts, college education, health care cost, and the lack of flexibility from having two incomes fully committed to these fixed costs that's putting middle class families in a more precarious position.

If you watch her lecture below, you'll see that she drove the government statistician nuts having him re-do the data analysis several times because when he first came back with the fact that spending on clothing, food, cars, and electronics actually consume a smaller percentage of family income now than it did 30 years ago, she questioned him thinking that he had made a mistake.

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Old 04-18-2010, 03:20 PM   #51
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Ugh...I just turned 40 on April 2, and wish I had that "young forever" feeling. I went to the Kings Dominion amusement park in VA on my b'day with some friends, and those damn roller coasters beat me up!

The main thing that bugs me though, is how fast the 30's went past. I remember my 30th like it was yesterday.
Yeah, I was watching the latest episode of the TV show V, and it referred to some events from "ten years ago". I thought to myself, "Really? Oh, yeah, that was 10 years ago." Scary as heck. I am looking forward to my ER in which my drunken stupor will slow down time.
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Old 04-18-2010, 03:25 PM   #52
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I would like to see our society make part-time employment a real option for people.

Currently, our health care system rules part-time employment out for a large portion of the workforce. If you need health insurance you pretty much have to work 40 hours a week. Most jobs beyond cashier and fry cook require you to work 40+ hours a week because they provide health insurance and wouldn't be cost effective to the employer at fewer hours per week.

If we ever get our health care untethered from our employment, I expect that we will see an explosion of people working part time as they get older, rather than the current full-time to zero cutoff that we currently have.

I think that this would be a very good thing.
That is essentially what the health care reform will do in 2014. It will be very expensive, but that is basically the largest effect it will likely have.
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Old 04-18-2010, 04:00 PM   #53
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If we ever get our health care untethered from our employment, I expect that we will see an explosion of people working part time as they get older, rather than the current full-time to zero cutoff that we currently have.

I think that this would be a very good thing.
Agreed. I could easily see a transition from full time work to part time work to full retirement become a much more common "retirement path" than it is today. There are probably already a lot of folks who are fairly close to retirement who would love to work part time if the loss of health insurance wasn't in the picture.
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Old 04-18-2010, 04:27 PM   #54
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Agreed. I could easily see a transition from full time work to part time work to full retirement become a much more common "retirement path" than it is today. There are probably already a lot of folks who are fairly close to retirement who would love to work part time if the loss of health insurance wasn't in the picture.
Working a full 9.5-hour day (including the half hour lunch) plus commute became a lot harder after I turned 60, for some reason. If I could have transitioned to part time work, I might still be working. However, in my job that was not an option. Guess I am pretty lucky that it wasn't.
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Old 04-18-2010, 04:44 PM   #55
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Oof! I am not looking forward to it.
I have been told that the alternative really sucks.
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Old 04-18-2010, 05:00 PM   #56
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This was my way of thinking as well, but this line of thinking is not backed up by any data. It is just popular opinion and anecdotal evidence. If you looked what Elizabeth Warren found through her studies of the middle class as an aggregate, it is not the discretionary spending that is driving the increasing financial instability. It's the competition for housing in better school districts, college education, health care cost, and the lack of flexibility from having two incomes fully committed to these fixed costs that's putting middle class families in a more precarious position.

Thanks for the link--I stopped watching after 30 minutes, but I think I got the gist of her research and position. Very interesting. A few things I noticed that I thought may be relevant: (1) Her assessment compares a 4 person family over time, and she shows increased "fixed" costs. The thing is, families are dynamic--kids grow up, they move out. Some of the costs she sights that are higher are not permanant, e.g. childcare. Also, not everyone lives in a four person family home--some folks are single all their lives, other get married and have no kids, etc. I would be interested to know how their costs changed over time---did they go up like her model family? go down? (2) She showed housing costs increasing--I suspect part of this increase is becasue over the past ten years, down payment amounts have fallen--used to be it was pretty normal to put down 10-20% on a house. In recent history, you could put nothing down--thereby increasing your interest costs--thus increasing your housing costs. I had a hard time understadning if she tried to control for quality (I don't think she did) but while more moeny goes toward housing today, it is arguably better hosuing, e.g. has central air conditioning, two car garages with garage door openers, bigger rooms (she mentioned something about controling for rooms I think), some muncipalities require hones to be built with fire suppresion systems today, larger lots, double paned windows, fancier appliances, countertops, etc. To the extent she did not capture these qualitative differences, her compariosn about costs increasing overtime is overstated. (3) I certainly can't argue with her point that heathcare costs have increased, but I would ask you the question---would you rather be treated for a medical condition today with today's technolgy, medicine, and Dr. training, or would you rather be treated using 1970's knowledge and technology/medicine/expertise. Again, threre is (in my opinion) a qualitative increase in the medical services we receive today--thus reducing some of the perceived cost increase. (4) Same with cars---cars are no doubt safer today than they were 30 years ago--seat belts, airbags, stability systems, improved design to resist crash impact--yes, costs have increased, but there has been a correpsonding increase in quality.

In short, I think Dr. Warren maybe overstating the differences she discussed as she may not be making an apples to apples comparison of 1970's goods/services to 2000's goods/services.
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Old 04-18-2010, 05:02 PM   #57
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I have been told that the alternative really sucks.
That would be really interesting if the people who told you about the alternative actually had experience with it....
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Old 04-18-2010, 05:13 PM   #58
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That would be really interesting if the people who told you about the alternative actually had experience with it....
Now THAT would be a great thread!
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Old 04-18-2010, 06:28 PM   #59
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In short, I think Dr. Warren maybe overstating the differences she discussed as she may not be making an apples to apples comparison of 1970's goods/services to 2000's goods/services.
Have you read her book "The Two Income Trap"? Because I think you're missing some of her points.

1. Mortgage lending of the 1960s/70s used to require 20% down payments, limit buyers' mortgage payments to 28% of after-tax income, and limit total debt payments to 36% of after-tax income. As you've mentioned, most of those limits have been blown off by "modern" financing.

2. We've done it to ourselves. Families have bid neighborhood housing up to insane price levels in our desire to send our kids to good schools. Unfortunately, unlike private-school tuition or childcare, mortgage payments last a lot longer even without cash-out refinancing. And when every single house in the neighborhood is being bid up by the fabled four-person family then it doesn't matter how many kids you may have or what your marital status may be. You have to bid at least as high as them or live in a "bad" neighborhood.

3. Well, maybe that marital status matters in one important way-- income. One of the ways we've outbid ourselves was by putting two incomes toward housing payments. If two incomes are required to support the mortgage payments then neither income is discretionary. Layoffs and part-time, let alone ER, are not options.

4. Your comments about quality & safety of home, cars, & healthcare sound suspiciously like the government justifications for hedonic adjustments to the CPI. Only problem is that you can't eat hedonic adjustments...

Her point is not that we're failing to appreciate the quality. Her point is that we're spending way higher percentages of our income on non-discretionary items like homes and healthcare. If two incomes are necessary to support that non-discretionary spending, and one of those incomes is laid off, then there is no discretionary spending to cut back. Whether the hedonics are accurate or not, the percentages are the issue.
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Old 04-18-2010, 07:46 PM   #60
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I think women especially who always depended on a man (for money and for decisions) are going to be in terrible shape. Sometimes it's financial, sometimes it's emotional bondage. But when the husband dies, they truly can't figure out how to go on. It's tragic, and I'm not being sarcastic. I have seen what they write about it.
Yes, it is. Widowed at age 46. My husband was the larger wage earner due to a longer time in the same type of j*b. I was earning about 2/3 of his salary level. Do the math on the household income drop.
I landed squarely on my feet (financially), not because of some big insurance policy payout or "fat" pension, but because I had a professional career, money saved, no debt, and a 401(K) and a fully self-funded portfolio already well under construction.
I have been told many times that I should give classes on how to survive one of life's biggest black swan events. I disagree.
It is up to every PERSON, regardless of gender, to do the right financial things for themselves and their loved ones. Period.
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