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Old 03-18-2010, 11:51 PM   #81
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The more I think about this "survey" the more I conclude that it tells us a lot more about financial advisers and other folks involved in money management than it tells us about retirement needs.

The median household income in this country is 44,389. The survey is suppose to be about the average family's need, so for simplicity sake lets say average=median.
I think this figure ignores a lot of non-cash compensation and cash transfer payments. Corporate and government employer provided medical insurance and retiremment benefits, government transfers such as Medicaid, Medicare, food stamps, housing programs, welfare payments to families with children, earned income credit, free school lunches, government provided scholarships and educational aid to favored groups, etc, etc.

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Old 03-18-2010, 11:55 PM   #82
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Originally Posted by ERD50 View Post
I know what you mean, and generally agree, but let's apply a different perspective:

How about the 23 YO in India, or China, or [fill in the blank]? The 'flattening' of the world is a very good thing for those on the bottom, anxious to work their way up. Hopefully, we can raise everyone's standard of living, but I do think the US is bound to have hit some kind of ceiling.

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I have to agree about the "ceiling". Bummer. Still, a lot of folks have gone broke betting against the US. We shall see in our (limited) life times, I'm guessing. I'm honestly happy for the kid in India/China, but I am worried about my kids who are US citizens.
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Old 03-19-2010, 08:36 AM   #83
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I have to agree about the "ceiling". Bummer. Still, a lot of folks have gone broke betting against the US. We shall see in our (limited) life times, I'm guessing. I'm honestly happy for the kid in India/China, but I am worried about my kids who are US citizens.
In reality I think we'll be fine relative to historical global standards. I think we just became spoiled by an unsustainable post-WW2 prosperity bubble that is popping after trying to keep it inflated with personal and government debt for three decades.

It seems to me that we're slowly resetting some of our expectations back to the pre-bubble realities (and will be for quite some time). That includes eliminating expectations of suburbia, wages growing faster than inflation, the nuclear family and, yes, a long and healthy middle class retirement. These things will continue to be possible to those who plan and make the necessary sacrifices, but they won't fall into our laps as a birthright as they seemed to in decades past.

It feels like a diminishing of our standard of living, but really I think it's more of a "correction" of an unsustainable bubble.
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Old 03-19-2010, 09:02 AM   #84
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I have to agree about the "ceiling". Bummer. Still, a lot of folks have gone broke betting against the US. We shall see in our (limited) life times, I'm guessing. I'm honestly happy for the kid in India/China, but I am worried about my kids who are US citizens.
What ziggy said.

I'm not really betting against the US, but to some extent having the rest of the world improve their living standards (like you, I'm happy about that), just has to have some 'dragging' effect on the US. It might keep us flat, maybe just slow the growth curve, or it might cause a noticeable decline.

But there are all sorts of see-able and un-see-able things that could impact that +/-. If we were to spread what most people would see as 'excess' wage & benefits of some of the strong unions across the general public, we would probably overall see an increase in standard of living, w/o spending a dime (more work done for that same $ means cheaper products for the rest of us, and more exports).

Our kids will adapt. I wouldn't be totally surprised if increasing numbers adapt by moving out of the country. A lot of our ancestors did exactly that.

edit/add: and if my income (and that of my peers) had been 20% lower through most of my life, I'd probably still be a happy camper. Not as happy, but it wouldn't be the end of the world either. Better than a mud hut, no doubt. Life is good.

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Old 03-19-2010, 10:56 AM   #85
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Not as happy, but it wouldn't be the end of the world either. Better than a mud hut, no doubt. Life is good.

-ERD50
Ah, the elusive quality of perspective... always worth maintaining even in the heat of battle.

My own vote is for diminished US standards of living mainly due to the significant (actually staggering) increase in government debt of late. We, as a nation, have reached forward dramatically into the future to pull demand into the present through the use of debt spending. This policy (started by Greenspan and perfected by Bernanke) has been done in the hopes of solving our current self-induced problems, but at the expense of the future. Policy makers have taken from the future to soften a needed correction now. It is a policy of robbing Peter (the future) to pay Paul (the present). To my eye, this has been too costly an approach for the benefits received. Others, of course, will disagree...

Regardless, this rise in government debt will impact future generations, and their standard of living. More and more of the Federal budget will be consumed by interest, and not used for other services. Plus, there will be other ripple effects like increased taxes or “crowding out” in the debt markets: thus causing the private sector to pay more for funding, which will slow growth. Moreover, expect much more volatility in future financial crisis as future policy maker's find their hands tied.

Regardless, someone has to service this debt and it will by our children and grandchildren. There is no such thing as a free lunch despite what our current crop of politicians think…
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Old 03-19-2010, 11:10 AM   #86
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I think we just became spoiled by an unsustainable post-WW2 prosperity bubble that is popping after trying to keep it inflated with personal and government debt for three decades.

It feels like a diminishing of our standard of living, but really I think it's more of a "correction" of an unsustainable bubble.
I agree entirely.

I seem to remember from school days that one of the justifications for foreign aid was that increased prosperity of third world countries would provide additional markets for our products. That has probably proven true, but folks failed to see (or just didn't mention) the increased competition for workers.

An anecdote:

When the Soviet Union collapsed, many of their military-industrial complex researchers were suddenly out of work. The Mega-corp I worked for swooped into Moscow and hired the entire computer simulation staff of one of their national labs. Mega-corp now had the services of world-famous researchers for about a third of what they were paying (not world-famous) me.

Suddenly, it wasn't just blue-collar workers who were experiencing pressure from foreign workers, but high-tech folks like me. Yikes.

Advances in communications have made the pool of high-tech knowledge workers truly world wide - resulting in layoffs here.

I don't think there is anything that anybody can do about it. It is just economics.
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Old 03-19-2010, 11:39 AM   #87
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I don't think there is anything that anybody can do about it. It is just economics.
Water seeks its own level. Technology is removing the "retaining walls" between adjacent chambers of water, formerly at different levels, and with those walls out of the way the water is slowly and surely seeking its own level worldwide. The supply of labor in many occupations is worldwide now whether we in "developed" economies with higher wages and standards of living like it or not. The best we can do is grudgingly accept it and adapt to it as best we can.

In fact, I think "information workers" now face the worst of it even as these "white collar" folks felt insulated from the exodus of manufacturing jobs in the 1970s and 1980s. Manufacturing could theoretically return if energy costs become so high that it's cheaper to pay labor more to make it here than to pay the price of having it shipped here from China. On the other hand, transporting packets of information from Bangalore to Boston will almost certainly remain dirt cheap.
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Old 03-19-2010, 12:58 PM   #88
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* No need to save for retirement *in* retirement = less income need to fund 401K, IRAs and other retirement investments
So you folks who have FIRE'd are not adding to your IRAs?


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In reality, the only expenses that would likely rise are health care and (perhaps) hobbies and travel if someone is into that. But I once calculated that even if I assumed $10K a year went to health insurance, we could comfortably retire on what is now about 40% of our current income. Without blinking.
Health care is the great unknown. Even if reform passes, the laws don't kick in until mid-century and it will be a few years after that before we get an idea of the new health care landscape, especially for people who may want to retire early but are years away from Medicare.

Not sure if travel, especially overseas, will remain as affordable either.
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Old 03-19-2010, 01:22 PM   #89
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This article is dumb, and Yahoo! Finance is dumb for publicizing it. (That's why they're a portal, not an editorial department). The only surveys like this you should pay attention to are the ones NOT sponsored by brokerages and asset managers. I have worked in financial PR for many years, and will tell you that if this "survey" had come out finding that people need LESS than expected for retirement, the PR team would have left it on the shelf. Also, where were these advisers they called? Bet they were all clustered around major metro areas, northern California, New England, New York, etc., where incomes and costs of living are skewed. Moral of the story: only pay attention to surveys from government or sometimes academic sources.

As for me, considering ER or SER at a very young age (not quite 40), my partner and I are seriously considering moving to Mexico, Uruguay, or Argentina. Thankfully, we love Latin America and would love to settle there, but I have to admit another driver is the cost of healthcare in the US. All of these other countries have low-cost or free healthcare of fine quality. In Uruguay, you pay $20 a month to "join" a hospital and you can see any doctor or specialist in that hospital at no charge, if you get admitted for tests or surgery, it's no charge, etc. I don' t have any chronic conditions, so this sounds perfectly fine to me. If I stay not working here in the US, very soon I will become one of those uninsured Americans we hear about because I will simply refuse to pay more than ten thousand dollars a year to insure my healthy 40-year-old body. I seriously will leave the country to be able to retire and have access to medical services - what does that say about the future of America? I hate this new healthcare bill, but I hate the status quo even more.
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Old 03-19-2010, 01:39 PM   #90
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So you folks who have FIRE'd are not adding to your IRAs?
If they are truly and completely retired, they will have no earned income, and thus no ability to fund an IRA.
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Old 03-19-2010, 01:55 PM   #91
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[QUOTE=midlifeguy;915992]All of these other countries have low-cost or free healthcare of fine quality.


Okay, not to be a jerk or to "jump" the newbie, here. I promised myself (and the forum, heh, heh, in another thread) I wouldn't let the word "FREE" go next time. Medical care is not free. It costs money. It costs a lot of money. In some countries, including the US, the end user doesn't pay all of it directly. In fact some users pay virtually none of it. But it isn't free. It costs SOMEBODY.

One medium sized example: For those who think drugs are "free" or even cheaper in other countries, they are not. It costs the same for every pill. It's just that folks in the US pay a disproportionate amount for every pill you get for "free" in Uruguay or Mexico or where ever. Those countries tell the US (and the occasional other country that still is hanging on to a pharmaceutical industry) if you don't let us put price controls on your drugs, we'll make our own and not pay patent/license royalties. Since the US limits price controls (generally only for - you guessed it - the government) US citizens help to pay the profits to the big pharma companies instead of the folks in Uruguay or Mexico. So, it ain't FREE. It's ALL paid for. It's just that the end user may or may not pay a proportionate or disproportionate "share" of the cost.

One more time, I'll state the truism that came out when Hillary care was almost as popular as Obama care. If you think health care is expensive now, wait until it's FREE.

End of rant. Nothing personal - not even political. I'd be the first to agree that health care is broken in this country. I just disagree with some of the ways folks are trying to fix it. Making it "FREE" is not my idea of a way to hold costs down. Oooops! I said end of rant. This time I really mean it.
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Old 03-19-2010, 02:23 PM   #92
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Koolau - Here is my response: Duh.

Just kidding. But free is relative. If I live in Mexico and go to the clinic and don't have to pay, it's free for me. : )
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Old 03-19-2010, 02:24 PM   #93
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One medium sized example: For those who think drugs are "free" or even cheaper in other countries, they are not. It costs the same for every pill. It's just that folks in the US pay a disproportionate amount for every pill you get for "free" in Uruguay or Mexico or where ever. Those countries tell the US (and the occasional other country that still is hanging on to a pharmaceutical industry) if you don't let us put price controls on your drugs, we'll make our own and not pay patent/license royalties. Since the US limits price controls (generally only for - you guessed it - the government) US citizens help to pay the profits to the big pharma companies instead of the folks in Uruguay or Mexico. So, it ain't FREE. It's ALL paid for. It's just that the end user may or may not pay a proportionate or disproportionate "share" of the cost.

Excellent point that a lot of people tend to gloss over.

Heck, a similar concept is being played in our local retail pharmacies:

When I hear someone comment about a $4 generic medication, I have to *try* and explain that the company selling that $4 generic is making it up somewhere else. Like the generic drug that cost $12 (and is not on the "$4 list") they are selling for $76, helps make up (and more) for the $15 they are losing on the $4 generic.
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Old 03-19-2010, 02:38 PM   #94
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It's just that the end user may or may not pay a proportionate or disproportionate "share" of the cost.
Midlifeguy's point is valid: why would he want to be the one paying that disproportionate share? I can certainly understand why he would not.
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Old 03-19-2010, 02:52 PM   #95
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Midlifeguy's point is valid: why would he want to be the one paying that disproportionate share? I can certainly understand why he would not.
I wasn't suggesting Midlifeguy's point wasn't valid. I'm just quibbling - perhaps it's semantics - with the "concept" of FREE healthcare. There is no such thing. It's just a matter of who pays. The US is subsidizing the countries who have FREE HC. Drugs, medical advances, research, etc. Since no one is willing to WORK for free, someone has to pay for all of this. It turns out its those who live in countries (pretty much the US where price controls are strictly limited) pay full ride for everyone else. Simply saying, we'll go that route also and control the price means that services and new products will be curtailed. I could go on, but I won't.
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Old 03-19-2010, 03:24 PM   #96
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If they are truly and completely retired, they will have no earned income, and thus no ability to fund an IRA.
I mean if you're still under the age before you have to take IRA distributions but are drawing "income" from your retirement assets, does it make sense to continue to add to the IRA or ROTH IRA?
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Old 03-19-2010, 03:26 PM   #97
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Midlifeguy's point is valid: why would he want to be the one paying that disproportionate share? I can certainly understand why he would not.
We're not just subsidizing other countries who pay lower drug prices.

We're paying huge profits for big Pharma and their lobbyists make sure we keep paying big profits. Hence Congress blocking or making it difficult to import drugs from Canada and prohibiting volume-discount negotiations for Medicare D.
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Old 03-19-2010, 03:39 PM   #98
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I mean if you're still under the age before you have to take IRA distributions but are drawing "income" from your retirement assets, does it make sense to continue to add to the IRA or ROTH IRA?
Income from investments such as dividends,interest, real estate rental etc. doesn't count as compensation and can't be used to fund an IRA.

Myself and many others have tried and failed to get around this limitation. At the end of the day, you basically have to get a j*b and do w*rk if you want to fund an IRA.
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Old 03-19-2010, 05:01 PM   #99
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I mean if you're still under the age before you have to take IRA distributions but are drawing "income" from your retirement assets, does it make sense to continue to add to the IRA or ROTH IRA?
What clifp said.

When you stop wo*king, you stop having earned income and you no longer qualify to contribute to an IRA.

When you spend money from your retirement savings to meet living expenses, that is not earned income.
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Old 03-19-2010, 05:28 PM   #100
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I mean if you're still under the age before you have to take IRA distributions but are drawing "income" from your retirement assets, does it make sense to continue to add to the IRA or ROTH IRA?
Your age is irrelevant as to whether you can put money into an IRA. I am age 55 and do not earn any money from a job. (I have pensions, dividends etc) I am not eligible to put money in an IRA.

I have friends over age 60 who go to work. They are eligible to put money in an IRA.
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