Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 03-17-2015, 04:19 PM   #81
Recycles dryer sheets
 
Join Date: Sep 2014
Posts: 481
Quote:
Originally Posted by pb4uski View Post
Actually if a low wage person retires at FRA the math isn't near as bad as you think because SS replaces a much higher percentage of income for low wage workers. This study indicates replacement rates of 72% for singles and 63% for couples for those whose income is in the lowest 20%.

Note that this replacement rate compares SS benefits with gross income, so a 72% replacement rate is actually much higher if one compares SS benefits to pre-retirement take-home pay (which presumably is all spent). After SS and federal withholding someone who is single earning $2,000 a month would take home 83% of their gross, so SS would really replace ~87% (72/83) of their pre-retirement takehome pay... and that assumes they reside in a state with no state income tax... in states with an income tax the replacement rate would be higher.

Is this a great outcome.... no, but it isn't as dire as you seem to think.
So will these broke people live in a van down by the river. or section 8. or in their kids basement.
__________________

purplesky is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 03-17-2015, 04:34 PM   #82
Thinks s/he gets paid by the post
 
Join Date: Sep 2012
Location: Seattle
Posts: 2,934
They certainly don't make it easy to save if your earnings have peak years. We have been working for 20+ years and maxing out 401K for 15 of those years yet have only $650,000 in our 401k. This would not buy an equivalent COLA'd annuity of a public/private pensioner with 20 years on the job. I haven't checked, but I doubt you get much at all with $650k in the annuity market at age 50 to 55.

Partly to blame as we had horrible choices in our 401K in the early years (1% to 2% ER funds)...should have done something different. Also we were not in the position to run to taxpayers if our 401K returns were not super, so we had to go with a more conservative allocation.

But whatever. Maybe there will be some SS left in 20 years.
__________________

Fermion is offline   Reply With Quote
Old 03-17-2015, 04:40 PM   #83
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 18,092
Quote:
Originally Posted by purplesky View Post
So will these broke people live in a van down by the river. or section 8. or in their kids basement.
[Mod edit] If SS replaces a significant portion of their income they'll probably live wherever they are currently living, be it an apartment, a van, section 8 or their kids basement.

Or with any luck, they can move in with you.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...60/35/5 AA
pb4uski is online now   Reply With Quote
Old 03-17-2015, 04:49 PM   #84
Thinks s/he gets paid by the post
 
Join Date: Sep 2012
Location: Seattle
Posts: 2,934
Actually there is an entire forum dedicated to people essentially living in a van down by the river. Most of them are on some form of SS. I post there a bit with financial and engineering information to aid them. Pretty decent bunch of people.
Fermion is offline   Reply With Quote
Old 03-17-2015, 05:07 PM   #85
Thinks s/he gets paid by the post
Lakewood90712's Avatar
 
Join Date: Jul 2005
Posts: 1,377
Quote:
Originally Posted by Fermion View Post
Actually there is an entire forum dedicated to people essentially living in a van down by the river. Most of them are on some form of SS. I post there a bit with financial and engineering information to aid them. Pretty decent bunch of people.
I used to follow the van dwellers ? site. It went dormant so I don't know it the guy found another host for the website.
__________________
I'm not an Attorney , But I have watched " My Cousin Vinny " Several times.
Lakewood90712 is offline   Reply With Quote
Old 03-17-2015, 05:08 PM   #86
Recycles dryer sheets
 
Join Date: Sep 2014
Posts: 481
Quote:
Originally Posted by pb4uski View Post
[Mod edit] If SS replaces a significant portion of their income they'll probably live wherever they are currently living, be it an apartment, a van, section 8 or their kids basement.

Or with any luck, they can move in with you.
No I don't know it all. I agree with you about the safety net of social security to keep people off the streets and to put some food on their table.

I am really more interested in people being able to work and save sufficiently for retirement during their working years and using SS to supplement those retirement savings.
purplesky is offline   Reply With Quote
Old 03-17-2015, 05:12 PM   #87
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 7,712
Quote:
Originally Posted by purplesky View Post
Remember back 20 years ago when teachers and government workers were heroes in our economy because they made such small salaries compared to the private sector.



Then the economic downward spiral started and it appears that now those once underpaid teachers are just evil government union workers with a pension and the blame for all our fiscal problems.

I remember reading an article in Fortune Magazine around the turn of the century that basically said you were a fool if you were in a pension system instead of a 401k. Of course they were assuming the stock market explosion was going to last forever. All I remember thinking is, "well it's too late to turn back now".
There are more types of pension systems and funding ratios with all getting lumped under the same troubled umbrella. I can only speak for mine, but if it ever got in trouble, there are so many levers that can be pulled to fix the system ; provided everyone didn't stick their head in the sand and not address it...Each of these can have profound positive effects on the system. 1)Lower retirement multiplier 2) Raise retirement age 3) eliminate COLA 4) Raise total amount of years needed to retire. 5) Raise contribution rates.
If needed, little bit of pain, could eliminate a catastrophe down the road.


Sent from my iPad using Tapatalk
Mulligan is offline   Reply With Quote
Old 03-17-2015, 05:22 PM   #88
Recycles dryer sheets
 
Join Date: Sep 2014
Posts: 481
Quote:
Originally Posted by Fermion View Post
They certainly don't make it easy to save if your earnings have peak years. We have been working for 20+ years and maxing out 401K for 15 of those years yet have only $650,000 in our 401k. This would not buy an equivalent COLA'd annuity of a public/private pensioner with 20 years on the job. I haven't checked, but I doubt you get much at all with $650k in the annuity market at age 50 to 55.

Partly to blame as we had horrible choices in our 401K in the early years (1% to 2% ER funds)...should have done something different. Also we were not in the position to run to taxpayers if our 401K returns were not super, so we had to go with a more conservative allocation.

But whatever. Maybe there will be some SS left in 20 years.
I can relate. I max out my 401k and Roth every year and I still am probably behind where I really need to be to have solid retirement income.
purplesky is offline   Reply With Quote
Old 03-17-2015, 05:26 PM   #89
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 20,882
Quote:
Originally Posted by Fermion View Post
Actually there is an entire forum dedicated to people essentially living in a van down by the river. Most of them are on some form of SS. I post there a bit with financial and engineering information to aid them. Pretty decent bunch of people.
Quote:
Originally Posted by Lakewood90712 View Post
I used to follow the van dwellers ? site. It went dormant so I don't know it the guy found another host for the website.
Are we talking about cheaprvliving-dot-com? I visit it from time to time. I really like what these people are doing, as they are resourceful and try to live on what they have. Living in a van down by the river is a lot healthier than getting cramped up in inner-city housing. You are out in the open, breathing clean air, getting to walk and hike about, having more physical activities. All the good stuff.

Quote:
Originally Posted by Mulligan View Post
... I can only speak for mine, but if it ever got in trouble, there are so many levers that can be pulled to fix the system ; provided everyone didn't stick their head in the sand and not address it...Each of these can have profound positive effects on the system. 1)Lower retirement multiplier 2) Raise retirement age 3) eliminate COLA 4) Raise total amount of years needed to retire. 5) Raise contribution rates.
If needed, little bit of pain, could eliminate a catastrophe down the road.
Most just like to pull this lever: Raise taxes.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 03-17-2015, 05:28 PM   #90
Recycles dryer sheets
 
Join Date: Sep 2014
Posts: 481
Quote:
Originally Posted by Mulligan View Post
I remember reading an article in Fortune Magazine around the turn of the century that basically said you were a fool if you were in a pension system instead of a 401k. Of course they were assuming the stock market explosion was going to last forever. All I remember thinking is, "well it's too late to turn back now".
There are more types of pension systems and funding ratios with all getting lumped under the same troubled umbrella. I can only speak for mine, but if it ever got in trouble, there are so many levers that can be pulled to fix the system ; provided everyone didn't stick their head in the sand and not address it...Each of these can have profound positive effects on the system. 1)Lower retirement multiplier 2) Raise retirement age 3) eliminate COLA 4) Raise total amount of years needed to retire. 5) Raise contribution rates.
If needed, little bit of pain, could eliminate a catastrophe down the road.


Sent from my iPad using Tapatalk
Yes my megacorp offers a pension and changes have been made like you mentioned to improve the health of the fund.
purplesky is offline   Reply With Quote
Most Americans Can't Retire...
Old 03-17-2015, 05:35 PM   #91
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 7,712
Most Americans Can't Retire...

Quote:
Originally Posted by purplesky View Post
Yes my megacorp offers a pension and changes have been made like you mentioned to improve the health of the fund.

And that is the prudent way to do it....NW's comment should be a scary one for any pensioner. The bailouts probably won't come if the system becomes a mess. And let's be honest.... Increased taxation on a work force who does not have a pension themselves won't bring out enthusiasm for "pulling that lever".


Sent from my iPad using Tapatalk
Mulligan is offline   Reply With Quote
Old 03-17-2015, 07:16 PM   #92
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2013
Posts: 5,610
Quote:
Originally Posted by purplesky View Post
So will these broke people live in a van down by the river. or section 8. or in their kids basement.
Tiny houses with solar power, solar showers and composting toilets? It takes a lot of money in global terms to live a standard middle class American lifestyle, but maybe not so much to simply have the basics like food, shelter and clothing.

Tiny Houses For Homeless People Put Roofs Over Heads In Time For The Holidays

"Occupy Madison, which resulted from the nationwide movement against Wall Street wealth in 2011, has focused its efforts on combating homelessness in the Wisconsin capital since its inception. Last December, OM Build completed its first tiny house: a 98-square-foot home with a roof, insulated walls, bathroom and kitchen for Betty Ybarra. "
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
daylatedollarshort is offline   Reply With Quote
Old 03-17-2015, 08:58 PM   #93
Recycles dryer sheets
 
Join Date: Sep 2014
Posts: 481
Quote:
Originally Posted by daylatedollarshort View Post
Tiny houses with solar power, solar showers and composting toilets? It takes a lot of money in global terms to live a standard middle class American lifestyle, but maybe not so much to simply have the basics like food, shelter and clothing.

Tiny Houses For Homeless People Put Roofs Over Heads In Time For The Holidays

"Occupy Madison, which resulted from the nationwide movement against Wall Street wealth in 2011, has focused its efforts on combating homelessness in the Wisconsin capital since its inception. Last December, OM Build completed its first tiny house: a 98-square-foot home with a roof, insulated walls, bathroom and kitchen for Betty Ybarra. "
I watched a film recently about this tiny house movement. Its actually pretty cool.
purplesky is offline   Reply With Quote
Old 03-17-2015, 09:55 PM   #94
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 20,882
I already have a tiny house as dwelling of last resort. It's comfortable, of 200 sq.ft (8'x25'), and is even self-propelled (at a cost of 9mpg, towing a car).

Here, it is parked facing Bodega Bay, where Hitchcock's thriller The Birds was filmed.

__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 03-17-2015, 10:16 PM   #95
Recycles dryer sheets
 
Join Date: Sep 2014
Posts: 481
Quote:
Originally Posted by NW-Bound View Post
I already have a tiny house as dwelling of last resort. It's comfortable, of 200 sq.ft (8'x25'), and is even self-propelled (at a cost of 9mpg, towing a car).

Here, it is parked facing Bodega Bay, where Hitchcock's thriller The Birds was filmed.

Thats awesome! I am planning on getting an RV not too far down the road.

I really like Newmar RVs but they are pricey. Seems like more and more options are becoming available in the RV market.
purplesky is offline   Reply With Quote
Old 03-17-2015, 10:31 PM   #96
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,567
Quote:
Originally Posted by NW-Bound View Post
Living in a van down by the river is a lot healthier than getting cramped up in inner-city housing. You are out in the open, breathing clean air, getting to walk and hike about, having more physical activities. All the good stuff.

This is pretty funny. I tipped an older woman I know that there was a vacancy in a subsidized age 60+ building near my home. She got it and invited me over.She pays $400/month for a studio of about 400 sq ft, with a beautiful Bay view from the 18th floor. A market rate studio with this view in this neighborhood would cost who knows what-without the view maybe $1550, with it I can't guess. Walk score 98, many bus lines very close by, and even a parking lot for those with cars. Now 400 sq ft is not very big, but neither are vans, or motorhomes for that matter. And as far as exercise goes, it is hard to get more daily exercise than people living in safe well serviced urban neighborhoods with safe sidewalks, crosswalks, police, supermarkets, etc. Just look at the typical city dweller's body.


Of course, if one really does not enjoy people, this would not be a happy existence. This board has made me aware of a type of living that is kind of anthro-phobic.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is online now   Reply With Quote
Old 03-17-2015, 10:39 PM   #97
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2013
Posts: 5,610
Quote:
Originally Posted by NW-Bound View Post
I already have a tiny house as dwelling of last resort. It's comfortable, of 200 sq.ft (8'x25'), and is even self-propelled (at a cost of 9mpg, towing a car).

Here, it is parked facing Bodega Bay, where Hitchcock's thriller The Birds was filmed.
Cool picture NW-bound. I think that is a cool way to travel. We are thinking of getting a travel trailer.

Here is a more stationary way to live pretty cheap with a solar cabin with no mortgage and no utility bills:



I love watching these kind of videos. We'd probably never really live like this, but we are implementing some of the ideas from similar books and videos on the house we have. We just tackle a few projects at a time. This year we want to install a solar fountain, some off grid solar panels, replace the lawn with a native plant garden (cut water usage and no more mowing) and a few other projects.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
daylatedollarshort is offline   Reply With Quote
Old 03-17-2015, 11:15 PM   #98
Thinks s/he gets paid by the post
 
Join Date: Nov 2009
Posts: 4,158
Quote:
Originally Posted by Andre1969 View Post
Same here...I didn't even start investing in my 401k at work until the last two weeks of 1997, at the age of 27. At that point, I had only been a full time employee, and eligible to invest in the 401k, since February 1994. At the time, our company match was only 1%. So, in the grand scheme of things, maybe I didn't miss out on much.

And, like you, my pay wasn't all that high back then either, so I wouldn't have been able to max it out. I don't think I started hitting the federal limit with my 401k until 2005
I started slowly with retirement savings, too. My old company matched the first 6% of salary for its 401k but I put in only 3% for the first 3 1/2 years I worked there. But in those 3 1/2 years with the extra take-home pay, I paid off my fairly small student loans, bought my first car and without needing a car loan, and saved up to make the down payment on my co-op apartment purchase. Once I bought the apartment, I boosted my 401k contribution to 6% to take full advantage of the company match.

A few years later, I made some after-tax contributions to my 401k for just over a year to try to catch up a little bit. That was interfering with my new goal to pay off the mortgage so I stopped that.
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

"I want my money working for me instead of me working for my money!"
scrabbler1 is offline   Reply With Quote
Old 03-17-2015, 11:27 PM   #99
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 20,882
All the talks about van down by the river, subsidized housing, or tiny homes show that people manage to retire with whatever they have. The few people that we see under bridges are not that many, and most if not all have mental problems anyway.

So, what is this talk about people not retiring?
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 03-17-2015, 11:30 PM   #100
Thinks s/he gets paid by the post
 
Join Date: Nov 2009
Posts: 4,158
Quote:
Originally Posted by Mulligan View Post
I remember reading an article in Fortune Magazine around the turn of the century that basically said you were a fool if you were in a pension system instead of a 401k. Of course they were assuming the stock market explosion was going to last forever. All I remember thinking is, "well it's too late to turn back now".
There are more types of pension systems and funding ratios with all getting lumped under the same troubled umbrella. I can only speak for mine, but if it ever got in trouble, there are so many levers that can be pulled to fix the system ; provided everyone didn't stick their head in the sand and not address it...Each of these can have profound positive effects on the system. 1)Lower retirement multiplier 2) Raise retirement age 3) eliminate COLA 4) Raise total amount of years needed to retire. 5) Raise contribution rates.
If needed, little bit of pain, could eliminate a catastrophe down the road.


Sent from my iPad using Tapatalk
My old company back in 2002 froze its pension for anyone who wasn't grandfathered into remaining in that system. At the time, I lacked the right combination of age and number of years of service so my pension got frozen. There was no pension for any new hires, too. In its place was a "Cash Balance" program which is a hybrid of a DB and DC plan. Because I had begun working part-time in 2001, my Cash Balance "balance" is pretty low but grows a little bit every year due to the interest credit.

These pension reductions better put the pension fund on more stable ground given that my pension benefit has not changed, not just since I left the company but in the 7 years after it got frozen while I still worked there. At least the ESOP exploded in those 7 years and that enabled me to ER by the end of that time.
__________________

__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

"I want my money working for me instead of me working for my money!"
scrabbler1 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
10 things most Americans don't know about America BigNick Other topics 71 07-29-2013 10:55 PM
Most Americans unprepared for retirement omni550 FIRE and Money 62 05-02-2012 09:43 AM
Most Americans In the Dark About Their Pensions mickeyd FIRE and Money 55 08-02-2011 06:52 PM
Most Americans are unprepared for retirement JustCurious FIRE and Money 10 04-12-2008 04:51 PM
Chinese Factory Worker Can't Believe the **** He Makes For Americans NYC Guy Other topics 10 06-19-2005 12:11 PM

 

 
All times are GMT -6. The time now is 09:30 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2018, vBulletin Solutions, Inc.