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Old 04-26-2013, 10:07 AM   #141
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It isn't actually. Ask the people who are in that situation. There are several right here in this thread (myself, among them). How about asking us how we feel about having these matters labeled "difficult" instead of assuming how we would feel about it?

Again: This is hard stuff, no matter how much the people who find it easy try to convince other people otherwise.

Yes. It is. Annuities. Whole Life insurance. Backdoor Roth Conversions. 12b-1. Asset Allocation. Coupon. I-Bonds. TIPS. Tax-managed. Umbrella policy. Revocable Trust. Long term care (something for which even folks here cannot provide an answer straight enough to be operational for most Americans). And so on.

Now I learn that one of the states actually charges income tax on ostensibly pre-tax contributions to 401(k) plans. That throws yet-another wrench into the machine, for my friend living there (and makes some of the advice I've given her in the past somewhat suspect).

No: Not easy.

If it was so easy, given how motivated everyone is in this regard, why would they fail? Sorry, but this whole "those who fail financially are lazy" line of reasoning is offensive.

I think that you are doing what most people are doing...... looking at all your items listed and freezing because they are so 'difficult'....


Break them down and it is not as difficult as you think....

First, make a decision to SAVE for retirement.... easy....

Now, determine if you want to save in a tax advantaged account or a taxable account... easy... (especially if you get matching!!!)...

Now, start saving at least 10% of your money into this account... easy (but, this is where a lot of people fail as they do not do this)...

But, you have to decide on a fund or group of funds to invest.... (OH NO, what do I do.....AAAARRRRGGGGGHHHHH, I will do nothing..... ) this is also where a lot of people fail.... but that are some good basic funds or groups of funds you can invest and get a good return.... heck, if you have a problem just pick a retirement fund.... again EASY....


If everybody did the above, which IS easy..... they would be a lot better off for their retirement than where we stand today....


One of the problems is that people are greedy.... they want to beat everybody they know... they swing for the fences (like the person who put all their money in gold futures)..... this is stupid... because other people hear how bad they did with investing, they do not do it themselves..


But, bottom line, the basics of retirement investing is very very easy....
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Old 04-26-2013, 10:10 AM   #142
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Now, start saving at least 10% of your money into this account... easy


Okay; I give up.
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Old 04-26-2013, 10:51 AM   #143
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The thing is, you can get alot of the hard stuff "wrong" and be okay. The issue isn't that people are saving enough but managing it badly, for the most part.

The big issue is that people aren't saving to begin with.

Simply reading "The Wealthy Barber" gets you 90% of the way to where you need to be. Steadily save a good chunk of your money, put it in a few low-cost equity mutual funds, and in 20-30 years you will be in pretty good shape.

Don't buy an investment you don't understand (which throws out annuities, whole life, and the other stuff you listed for most people). Sometimes those things would have been a little better for some people, but it won't be the difference between financial security and poverty.

Yes, you might miss out on some tax advantages along the way. Almost no one gets it perfect.

But if you save the money consistently each year, you can make plenty of mistakes and still be in pretty decent shape.

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Originally Posted by bUU View Post
It isn't actually. Ask the people who are in that situation. There are several right here in this thread (myself, among them). How about asking us how we feel about having these matters labeled "difficult" instead of assuming how we would feel about it?

Again: This is hard stuff, no matter how much the people who find it easy try to convince other people otherwise.

Yes. It is. Annuities. Whole Life insurance. Backdoor Roth Conversions. 12b-1. Asset Allocation. Coupon. I-Bonds. TIPS. Tax-managed. Umbrella policy. Revocable Trust. Long term care (something for which even folks here cannot provide an answer straight enough to be operational for most Americans). And so on.

Now I learn that one of the states actually charges income tax on ostensibly pre-tax contributions to 401(k) plans. That throws yet-another wrench into the machine, for my friend living there (and makes some of the advice I've given her in the past somewhat suspect).

No: Not easy.

If it was so easy, given how motivated everyone is in this regard, why would they fail? Sorry, but this whole "those who fail financially are lazy" line of reasoning is offensive.
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Old 04-26-2013, 11:11 AM   #144
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The thing is, you can get alot of the hard stuff "wrong" and be okay. The issue isn't that people are saving enough but managing it badly, for the most part.

The big issue is that people aren't saving to begin with.

Simply reading "The Wealthy Barber" gets you 90% of the way to where you need to be. Steadily save a good chunk of your money, put it in a few low-cost equity mutual funds, and in 20-30 years you will be in pretty good shape.

Don't buy an investment you don't understand (which throws out annuities, whole life, and the other stuff you listed for most people). Sometimes those things would have been a little better for some people, but it won't be the difference between financial security and poverty.

Yes, you might miss out on some tax advantages along the way. Almost no one gets it perfect.

But if you save the money consistently each year, you can make plenty of mistakes and still be in pretty decent shape.
Conceptually the foundations of investing are very easy.

1) Save 10% or more of your gross income

That is probably the biggest hurdle for most people....they either don't earn enough or spend recklessly so that can't save that much.

2) Save 6 months income into your bank account.
3) Get into company retirement accounts and invest in a 33/33/33 mix of US equity, International Equity and Bond market low cost index funds. This might be impossible because of bad fund choices in the plan.
4) Open a Vanguard account and start to make automatic investments in the same 33/33/33 fund mix.
5) Rebalance and don't panic sell!
6) Fund your ROTH, again using the 33/33/33 fund mix.
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Old 04-26-2013, 11:13 AM   #145
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Now, start saving at least 10% of your money into this account... easy (but, this is where a lot of people fail as they do not do this)...
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Okay; I give up.
If we can't at least expect people to save 10% if they expect to retire reasonably comfortably, what can we assume?
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Old 04-26-2013, 12:45 PM   #146
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If we can't at least expect people to save 10% if they expect to retire reasonably comfortably, what can we assume?
The fact is that most people don't save even close to that amount and they will face a difficult time in retirement living off just SS. I think we can assume people will have to work longer and longer. The numbers show that most people won't save enough without greater incentives or legal mandates. Of course that gets us into the tension between personal responsibility and societal responsibility. The UK when faced with a similar lack of retirement saving passed legislation mandating that every employer and employee must contribute certain minimum amounts to a DC plan that meets minimum standards. Whether or not you agree with this approach, I'm sure we can all see the difficulty of imposing such forced saving in the US.
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Old 04-26-2013, 12:59 PM   #147
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The fact is that most people don't save even close to that amount and they will face a difficult time in retirement living off just SS. I think we can assume people will have to work longer and longer. The numbers show that most people won't save enough without greater incentives or legal mandates. Of course that gets us into the tension between personal responsibility and societal responsibility. The UK when faced with a similar lack of retirement saving passed legislation mandating that every employer and employee must contribute certain minimum amounts to a DC plan that meets minimum standards. Whether or not you agree with this approach, I'm sure we can all see the difficulty of imposing such forced saving in the US.
Our Social Security was supposed to be that forced savings.

I think the absolute center of the problem is no saving. It is worse than no saving, much of the US population lives in negative saving. They look at their credit card debt limit as some sort of savings account balance they can access. It is bizarre in my mind.

Sure, once we get beyond no saving into actual saving, then we can press on the problem of fees, asset allocations, etc. But most of the time we don't even get there.
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Old 04-26-2013, 01:15 PM   #148
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I always found thermodynamics difficult.

But the bigger point from your post is the 10% employer match in the 401k.....most people are lucky to get 3% or 4%, if they get any match or even have a 401k.
Yes - I do color myself lucky to work at a corporation that reasonably looks out for their employees (less so now, than pre-2009, but another story...). They match well now because it is a Global corp and their ex-US employess get pensions.

However, in the vain of this thread, I also started saving the maximum I could 20 years ago (pre-2009 we got just the 4% match), and started the 50+ catchup 401k contributions when I turned 50. I also took full advantage of the 15% discount ESOP that did very well over the years. Luckily I was taught early by my parents about finances, learned about good and bad debt, and most importantly saving using a simple method - 'Take it out before you see it', and then you learn to live without it. This method worked well for me, and I thank my Mom for this when I can.

I was just listening to an Albert King interview (famous old Blues guitarist) who was talking about the time when Bill Graham (Rock promotor) had him play at the Fillmore (famous rock venue) in the late 60s with the Rock Stars of the day (Jimi, Janis, etc). He was discussing the kids (Hippies) acting like they were poor and had no money and how times were tough - yet had cars, hung out at the beach, had food, had shelter... etc. and he was talking about how they had no idea what it was to be poor, and sleep in homes with no heat, no electricity/plumbing, and sleeping watching the stars thru the roof and when it rained moving the bed around... you get the point... (hopefully)

And it reminds me a lot of today's situation supposedly we are doing awful economically, but people are at Shopping Malls, have cars, have Smart Phones, tattoos/piercings, HDTV with game consuls, cool clothes/shoes, etc - BUT saving nothing for the future. I see this all the time - I think most of us do.

I realize that this doesn't hold for many people - but that is a good place to start with the concept of saving 10%.
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Old 04-26-2013, 01:30 PM   #149
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The more I read this thread, the more depressed I get about the state of our society.

Kind of like watching Frontline. Depressing.
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Old 04-26-2013, 01:44 PM   #150
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Our Social Security was supposed to be that forced savings.

I think the absolute center of the problem is no saving. It is worse than no saving, much of the US population lives in negative saving. They look at their credit card debt limit as some sort of savings account balance they can access. It is bizarre in my mind.

Sure, once we get beyond no saving into actual saving, then we can press on the problem of fees, asset allocations, etc. But most of the time we don't even get there.
Even as the scope and size of SS has grown it has never been intended to provide the whole of someone's retirement income. While the middle class had safe DB plans to add to their SS everything was fine......nobody worried about the poor who had to continue to work in retirement because they didn't have much of a voice in Washington. The poor have always had a retirement crisis ie. no retirement at all. But now that comfortable employer provided retirement plans have gone and been replaced by DC plans that require the middle class to actively save for retirement we see the crisis. Whether it's because of stupidity or lack of spare income to save the middle class is now facing the same retirement fate that the poor have always had ie no retirement.

IMHO the US will have to re calibrate expectations. People will have to keep working, some until they die, and the membership on this forum will dwindle to zero.
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Old 04-26-2013, 01:51 PM   #151
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The more I read this thread, the more depressed I get about the state of our society.

Kind of like watching Frontline. Depressing.

Heck, don't get depressed... I would say a majority of people will do just fine when it comes to retirement...

Even the examples on the show, most were well on their way to a decent retirement... the teacher was doing OK (sure, the annuity was crap and should never had been offered).... the gay couple had a lot (might have had more, but not poor)... even the guy who was interviewing was well on his way to a good retirement....

I think the gist of the show is that most people who are doing the right thing by savings have an uphill battle due to fees from big banks/brokers... not that we should have an alternative way to fund retirements....
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Old 04-26-2013, 01:59 PM   #152
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I think the gist of the show is that most people who are doing the right thing by savings have an uphill battle due to fees from big banks/brokers... not that we should have an alternative way to fund retirements....
I think we watched different shows. The emphasis was DC plans and their fees and the lack of engagement of the participants. The show didn't go into the even bigger issues of lack of access to retirement plans and the total mismatch between the saving required to retire and the actual level of retirement saving.
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Old 04-26-2013, 02:10 PM   #153
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.....IMHO the US will have to re calibrate expectations. People will have to keep working, some until they die, and the membership on this forum will dwindle to zero.
I agree with the first part that the US will have to re calibrate expectations.

On the second part I would suggest differently - people will have to keep working and begin LBYM and saving regularly and investing in no-load, low cost index funds until they retire and the membership on this forum will explode.
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Old 04-26-2013, 02:20 PM   #154
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On the second part I would suggest differently - people will have to keep working and begin LBYM and saving regularly and investing in no-load, low cost index funds until they retire and the membership on this forum will explode.


I wish I was as optimistic as you, I don't see people changing a lifetime of money habits and as they get older the incentive to save will go down; they'll just want to spend as much as they have before they die.

Even if people did save some money and eventually retire they'd have to join an LR (Late Retirement) forum.
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Old 04-26-2013, 04:18 PM   #155
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I wish I was as optimistic as you, I don't see people changing a lifetime of money habits and as they get older the incentive to save will go down; they'll just want to spend as much as they have before they die.

Even if people did save some money and eventually retire they'd have to join an LR (Late Retirement) forum.
Actually, you're not as capitalistic as I am.

And you're probably right that people won't change. However, I think our kids have seen the pickle many of their parents are in by not saving and are looking to do better (or have seen the benefits their parents have reaped by saving and want to do similarly).

The opportunity to live less large and save have been available to everyone (just as they have been to you, me and others), the need to save for retirement is well advertised for anyone who is paying a little attention so they have the same opportunity as we have. They chose to live larger and not save and are paying the piper. While I am sorry for their situation, in most cases they brought it upon themselves. I remember contributing to retirement savings plans in the early 1980s and increased my contributions by half of any raise I received. I sacrificed in the past and am now reaping the benefits.

The only problem that I see is a bunch of stupid people who refuse to save and adopt a woe is me attitude.
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Old 04-26-2013, 05:51 PM   #156
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In the first 5 minutes of the show when they showed the young economist, I think it was Hiltonsmith, saying basically he had no plan for retirement, I thought to myself, "What the heck type of economist is that?" FWIW you can always save after-tax if you don't like the fees/terms of 401(k)s.

-gauss
My thoughts exactly. This show was very poorly done and one-sided. If Hiltonsmith lost money in the last four years -- well that's pretty hard to believe. The show definitely had more than a hint of political agenda.
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Old 04-26-2013, 06:26 PM   #157
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My thoughts exactly. This show was very poorly done and one-sided. If Hiltonsmith lost money in the last four years -- well that's pretty hard to believe. The show definitely had more than a hint of political agenda.
The show definitely had an agenda, but it was about high fees in retirement funds and lack of engagement by savers. I don't see those as political at all. Left, center or right we want low fees and educated savers.
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Old 04-26-2013, 06:38 PM   #158
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The show definitely had an agenda, but it was about high fees in retirement funds and lack of engagement by savers. I don't see those as political at all. Left, center or right we want low fees and educated savers.
I guess I thought it was more about doing away with 401Ks and expanding Social Security.

Most of the interviewees had some hard-to-believe stories. The economist whos account went only down. The middle aged couple that lost half -- they must have sold at the bottom. Unfortunate, yes, but they didn't lose half to fees.
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Old 04-26-2013, 08:44 PM   #159
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I guess I thought it was more about doing away with 401Ks and expanding Social Security.

Most of the interviewees had some hard-to-believe stories. The economist whos account went only down. The middle aged couple that lost half -- they must have sold at the bottom. Unfortunate, yes, but they didn't lose half to fees.
Interesting
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Old 04-28-2013, 09:18 AM   #160
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It was an informative program. However, it was a little disappointing that it appeared to say that most people just cannot understand this by themselves, which I believe is wrong given motivation. The solution they seemed to espouse apparently was government regulation. I think there are several problems they failed to highlight that center on personal responsibility:

1. I don't have time to review my plan. Make time, it's important.
2. I want a sure thing for my retirement, someone owes that to me. No sure thing, like everything in life, you need to work at it. Nobody, in your generation or future, owes you a retirement.
3. I hope Social Security keeps me afloat. SS was never intended to be a sole source of retirement income, don't expect it to be in the future. Do not expect the government, or other people, to provide you an income if you chose not to save. I noticed most of the people profiled with problems lived in nice houses with big screen TV's, one was typing away on a $1300 MacBook - umm...

I realize it was PBS - hence push toward more government, but overall it was a good wake-up call. However, I think they could have been fairer to people as to the real solution. I posted a nice comment on the PBS/Frontline site with these suggestions, but it is still being 'moderated' after two days...
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