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Old 04-28-2012, 02:20 PM   #21
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Originally Posted by Independent View Post
Yes to all.

It seems obvious that the EBRI or some similar group could interview people turning 62 and get a better picture of finances.

What is your:
SS benefit at at 66?
Total of stocks, bonds, CDs, etc?
Pension (COLA and non-COLA separately)?
House, equity, mortgage balance, payment?

(Note that if you've got the SS benefit at 66, then you also know the average of the top 35 years of income.)

I'd like to see the detail for 100 or so US families. I'm sure that some are in bad shape, but I'd like to see the distribution.

Maybe somebody here has a source.
The Census Bureau Current Population Survey has good data. Their income statistics page here Income Statistics - U.S Census Bureau
Here's a table with income distribution and home ownership breakdown by age PINC-01--Part 1
The BLS Consumer Expenditure Survey is also rich in data for this type of analysis. See it here Consumer Expenditure Survey I can't link to specific data points but Table 4500. Selected age of reference person: Average annual expenditures and characteristics gives a very detailed breakdown of income and expenditure by age group.
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Old 04-28-2012, 03:34 PM   #22
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Originally Posted by MichaelB View Post
The Census Bureau Current Population Survey has good data. Their income statistics page here Income Statistics - U.S Census Bureau
Here's a table with income distribution and home ownership breakdown by age PINC-01--Part 1
The BLS Consumer Expenditure Survey is also rich in data for this type of analysis. See it here Consumer Expenditure Survey I can't link to specific data points but Table 4500. Selected age of reference person: Average annual expenditures and characteristics gives a very detailed breakdown of income and expenditure by age group.
That's good stuff. (I think lots of people could use the CEX for personal budgeting.)

I can see that the median income for married couple families, ages 70-74, was $48,443. (From other sources, maybe $28k of that is SS.) FINC-02--Part 10

Then I can see that about 75% of two person households ages 75+ owned houses without mortgages, (60% for ages 65-74).
And the market value of those houses was over $200k.
ftp://ftp.bls.gov/pub/special.reques...byage/atwo.TXT

I'd estimate from other sources that the median couple had an income of about $70k when they were working.

So that gives a 70% replacement ratio, with no more mortgage payments for the median.

When I compare detailed spending in the CEX between the 75+ couples and all couples, I see reasonably comparable spending.
The older people spend less on housing (no mortages), taxes, and transportation. But, more on health care.

That totals up to no "crisis" in retirement for the average retired couple.

But of course that doesn't say that people who are currently 60 can expect the same result. And, it doesn't say anything about the extremes.
The NYT article is about a well-above-average worker who might retire on just SS plus home equity. I'd like to see a 2x2 table for 60 year olds that addresses that.
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Old 04-28-2012, 07:19 PM   #23
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I'm trying to understand why 401K's get blamed as the culprit in this type of situation. I ER'd at 52 in January 2003 largely because I (as well as my wife) contributed the maximum we were allowed, along with employer matches to diversified portfolios. Sure, taking the 401k money OUT for whatever reason will diminish the pot latter on. Investing it foolishly will accomplish the same. Take enough out and it will be GONE. Hello! is this a mystery?

So is it the cars fault if it runs off the road when taking a 45 MPH turn at 75 in the rain and sleet? We are turning into an interesting society to say the least.
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Old 04-28-2012, 08:59 PM   #24
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What is interesting about the article is the belief that pensions are inherently better. I do not think this is true. Considering how many pensions get clobbered when the firm in question goes belly up. I dont have a pension at all, and Im very glad that I dont. I do not trust corporations to be there when I need them.

Steel
It has happened that pensions have been clobbered, for airline pilots, for example. However, I don't think the problem is as pervasive as you believe. Recently read that in 2009, 84% of the pensions paid by the PBGC received 100% of the money due. The presence of the PBGC has reduced counter-party risk on corporate pensions substantially. I don't personally know anyone who has lost a corporate pension, but I do know several people who have outlived their money. So, I believe that the longevity risk is the greater of the two.
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Old 04-28-2012, 09:15 PM   #25
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I'm trying to understand why 401K's get blamed as the culprit in this type of situation.
Because you/me, and most folks on this board used our respective 401(k)/IRA's in the "proper manner" to prepare for retirement.

For most folks, the idea of making your own decisions for your financial future scares them, and rather than make a bad decision make none at all.

At least with a defined benefit plan (e.g. pension), all that decision making is done by another, with a proposed guaranteed benefit - all without not having to take a penny out of your paycheck.

DW/me had pensions in the early days, later replaced with 401(k)s (along with respective IRA investments). We're doing much better than what was anticipated at retirement with those early pension benefit projections. We have no regrets, but we also realize that we're unusual (just call us "unique" )...
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Old 04-28-2012, 09:57 PM   #26
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I don't personally know anyone who has lost a corporate pension,
Maybe this depends on what you mean by lost. At one time I worked for a megacorp who decided to convert the pension plan to some kind of cash plan. With the right kind of assumptions, the generous future pension we thought we were getting turned into a very small cash balance that had no chance at all of growing into the formerly promised benefit. Our pension wasn't "lost", it was just "different"

And very much less valuable to me and all my coworkers.
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Old 04-28-2012, 10:35 PM   #27
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Because you/me, and most folks on this board used our respective 401(k)/IRA's in the "proper manner" to prepare for retirement.

For most folks, the idea of making your own decisions for your financial future scares them, and rather than make a bad decision make none at all.

At least with a defined benefit plan (e.g. pension), all that decision making is done by another, with a proposed guaranteed benefit - all without not having to take a penny out of your paycheck.
Well, if so then I guess a "nanny" retirement system is the only answer for most people (Mods feel free to delete as appropriate) and then we as a society ought to quit pretending we can take care of ourselves in our old age and vote for a "nanny" caretaker one.

But I don't think so. I just cannot buy into the notion that most of the people in the "baby boomer" generation in this country will be totally unable to cope with retirement. Some will work longer and at lower wages, some will have a lower standard of living, some (maybe a lot) of bucket list items will not get crossed off the list but somehow the world will not come to an end.
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Old 04-28-2012, 11:00 PM   #28
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Is retiring on mostly SS so bad? I'm not sure what the average payout would be for a couple but if it is $2 - $3k per month that's seems like quite a bit. I'm sure many on this board have lower expenses than that.
I HOPE it is not bad.

For several reasons, we are not in as good financial shape as we could be at this age.

In order to avoid disaster, I do have to eliminate all debt before we get there, though.
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Old 04-29-2012, 07:32 AM   #29
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I see it all over the map with family and some others. We will be fine with a DB COLA'd pension, health/prescription coverage, etc. but that's because I started with a govt. employer at age 22 and stayed for 29 years. The retirement plan I'm in is no longer offered and hasn't been for 20+ years now. But there's a bit of luck in that too, in that I didn't get sick or injured and my divorce was early enough that I had time to financially recover. And admittedly I didn't think much about retirement until I was in my mid 30's.

A couple of other family members will be fine for the same reason - govt. employment for a long time and starting early enough to get in the old DB plan. But all of us have also saved well over $100k.

Others will not fare so well. The BIL with the spendarina wife who can't save a dime will be working until he's physically unable to. She talks of living in Sarasota, FL, going out in their convertible and dining out frequently. DW and I think they'll be walking to the grocery and eating rice 'n beans flavored with Alpo. We'll know in about 10-15 years.

Another nephew of mine has been a fraternity boy since 1975 and he'll also be dining on rice 'n beans.

I see the reality of retirement changing. Boomer kids want and expect what their parents had but I think for most that's going to be the exception and not the rule.
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Old 04-29-2012, 07:42 AM   #30
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I see the reality of retirement changing. Boomer kids want and expect what their parents had but I think for most that's going to be the exception and not the rule.
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Old 04-29-2012, 07:48 AM   #31
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Originally Posted by growing_older

Maybe this depends on what you mean by lost. At one time I worked for a megacorp who decided to convert the pension plan to some kind of cash plan. With the right kind of assumptions, the generous future pension we thought we were getting turned into a very small cash balance that had no chance at all of growing into the formerly promised benefit. Our pension wasn't "lost", it was just "different"

And very much less valuable to me and all my coworkers.
Ditto, but since I was laid off it work out. If it wasn't for the fact I was prepared for ER I would be in trouble.
TJ
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Old 04-29-2012, 07:57 AM   #32
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DW and I think they'll be walking to the grocery and eating rice 'n beans flavored with Alpo. We'll know in about 10-15 years.

Another nephew of mine has been a fraternity boy since 1975 and he'll also be dining on rice 'n beans.
Hey! I like rice and beans! (Of course, yummy sausage makes the dish!)

Actually, I suspect they will be taking the "2 big macs for $3" coupons to the clown house because so many don't have a clue how to cook economically - never mind nutritionally.
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Old 04-29-2012, 08:16 AM   #33
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Hey! I like rice and beans! (Of course, yummy sausage makes the dish!)
Could be it's not the main dish but the preparation that counts.

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DW and I think they'll be walking to the grocery and eating rice 'n beans flavored with Alpo. We'll know in about 10-15 years.
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Old 04-29-2012, 09:08 AM   #34
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THIS is part of the problem

This is the 800 lb whatever in the room, that nobody wants to admit.
These government COLA pensions.....who agreed to it? Not the tax payer...but the crooked, union bullied, politician...to get re-elected. These pensions are bankrupting the local systems.. What would it cost to purchase this benefit in the open market? Do private firms offer this? Why not? Major issue in the next 10-20 yrs....how to fund these rich pension obligations made by corrked politicians.


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Originally Posted by Walt34 View Post
I see it all over the map with family and some others. We will be fine with a DB COLA'd pension, health/prescription coverage, etc. but that's because I started with a govt. employer at age 22 and stayed for 29 years. The retirement plan I'm in is no longer offered and hasn't been for 20+ years now. But there's a bit of luck in that too, in that I didn't get sick or injured and my divorce was early enough that I had time to financially recover. And admittedly I didn't think much about retirement until I was in my mid 30's.

A couple of other family members will be fine for the same reason - govt. employment for a long time and starting early enough to get in the old DB plan. But all of us have also saved well over $100k.

Others will not fare so well. The BIL with the spendarina wife who can't save a dime will be working until he's physically unable to. She talks of living in Sarasota, FL, going out in their convertible and dining out frequently. DW and I think they'll be walking to the grocery and eating rice 'n beans flavored with Alpo. We'll know in about 10-15 years.

Another nephew of mine has been a fraternity boy since 1975 and he'll also be dining on rice 'n beans.

I see the reality of retirement changing. Boomer kids want and expect what their parents had but I think for most that's going to be the exception and not the rule.
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Old 04-29-2012, 09:21 AM   #35
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This is the 800 lb whatever in the room, that nobody wants to admit.
These government COLA pensions.....who agreed to it? Not the tax payer...but the crooked, union bullied, politician...to get re-elected. These pensions are bankrupting the local systems.. What would it cost to purchase this benefit in the open market? Do private firms offer this? Why not? Major issue in the next 10-20 yrs....how to fund these rich pension obligations made by corrked politicians.
And you think these pensions are frequent enough and widespread enough that they'll bankrupt the country? Or is it more likely they may get trimmed back?
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Where's the money?
Old 04-29-2012, 09:21 AM   #36
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Where's the money?

Where's the money coming from to pay for these Govt COLA defined benefit plans?
Assumptions of 8% return?......ah ha ha.
Where are the politicians with the balls to tell everyone..."your pension was promised by a crook, we cant's afford them now... they're going to be renegotiated...down. By a lot."
WE...the public...are the employers...how are we going to pay the taxes required to fund these rediculous govt pension obligations?
Where is the outrage?
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Old 04-29-2012, 09:23 AM   #37
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And you think these pensions are frequent enough and widespread enough that they'll bankrupt the country? Or is it more likely they may get trimmed back?
Not bankrupt the country...just the city you live in. Which will then get bailed out by the state...which will then get....
I think it's clear who pays for it all in the end.
Why should we?
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Old 04-29-2012, 09:26 AM   #38
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Not bankrupt the country...just the city you live in. Which will then get bailed out by the state...which will then get....
I think it's clear who pays for it all in the end.
Why should we?
So the city, then bailed out by the state, then bailed out by the country. So back to my question: do you think they are enough to bankrupt the country?
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Old 04-29-2012, 09:42 AM   #39
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Where's the money coming from to pay for these Govt COLA defined benefit plans?
Assumptions of 8% return?......ah ha ha.
Where are the politicians with the balls to tell everyone..."your pension was promised by a crook, we cant's afford them now... they're going to be renegotiated...down. By a lot."
WE...the public...are the employers...how are we going to pay the taxes required to fund these rediculous govt pension obligations?
Where is the outrage?
Outrage doesn't help. Calm, rational discussion does, which is why we prefer it here.
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Old 04-29-2012, 10:39 AM   #40
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Quote:
Originally Posted by brogan007
Where's the money coming from to pay for these Govt COLA defined benefit plans?
Assumptions of 8% return?......ah ha ha.
Where are the politicians with the balls to tell everyone..."your pension was promised by a crook, we cant's afford them now... they're going to be renegotiated...down. By a lot."
WE...the public...are the employers...how are we going to pay the taxes required to fund these rediculous govt pension obligations?
Where is the outrage?
There are as many types of pension plans, with various funding obligations owed as a dog has fleas, so it is very hard to lump them all together and generalize. However, the 8% assumed rate of return does concern me as a pensioner. Most funds have to keep a certain percentage in bonds and also cash for distributions. We all know what rate of return those have now. So does that mean that stocks have to return annual double digit returns to make up for that? That is why I continue to save in retirement, to prepare for a cut that may happen down the road. Some systems have started dropping assumed returns under 8% which I feel is a prudent thing to do.
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