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Retirement crisis: From bad to worse
Old 03-04-2008, 02:42 PM   #1
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Retirement crisis: From bad to worse

Retirement crisis: From bad to worse - MSN Money
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Old 03-04-2008, 03:11 PM   #2
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Jim "Mr Negative" Jubak strikes again..
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Old 03-04-2008, 03:26 PM   #3
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what a cheerful outlook.

um, who is this guy?
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Old 03-04-2008, 03:26 PM   #4
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I find parts of the article to be thought provoking, I'm interested in his follow-up ideas. I'd rather read something "outside the box" like this than a cheerleading piece by someone on Wall Street. He might be too gloomy, who knows, he might be right on, it's happened before. I remember about 10 years ago when the CNBC clowns used to ridicule Jim Rodgers on a weekly basis on his commodities predictions. Look who's laughing all the way to the bank now. There's nothing wrong with looking at all of the possibilities.
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Old 03-04-2008, 03:27 PM   #5
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Filled with rhetoric but few facts. Boom-bust-boom is what I relying on to retire in less than 20 years. Things can be bust now and for another 5 years while I accumulate. I will sell on the way up to retire.
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Old 03-04-2008, 03:45 PM   #6
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Boom-bust-boom is what I relying on to retire in less than 20 years. Things can be bust now and for another 5 years while I accumulate. I will sell on the way up to retire.
Your market timing could be excellent, going out 20 years is a little tough though. It could be boom-bust-boom-bust...........
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Old 03-04-2008, 03:57 PM   #7
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I couldn't help but think that he was talking about the kind of people that don't post on the ER forum. He talked about people using their houses as piggy banks, about percentage investing in 401K's and IRA's going down, about fewer people putting anything away in savings, and so on. Actually, the article made me feel pretty smug about my financial situation right now.

Yes, I agree that the non-LBYM'ers out there who haven't really thought about retirement are going to have problems.
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Old 03-04-2008, 04:06 PM   #8
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I couldn't help but think that he was talking about the kind of people that don't post on the ER forum. He talked about people using their houses as piggy banks, about percentage investing in 401K's and IRA's going down, about fewer people putting anything away in savings, and so on. Actually, the article made me feel pretty smug about my financial situation right now.

Yes, I agree that the non-LBYM'ers out there who haven't really thought about retirement are going to have problems.
I agree. I think his points do apply to the average person, not the ER forum type. What % of families fall in the average person category? I wonder. Surely there are many out there who are trying to make correct decisions about their future, defaulting into 401k plans as a minimum.
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Old 03-04-2008, 06:44 PM   #9
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Um, does anyone here personally know someone who cashed out the equity in their home, ran up their credit cards, and other wise went into a binge when told to "go shopping"? The funny thing is that I don't know anyone in any of these categories much less anyone in all of these categories. It makes me wonder if all these stories that make it appear that the entire country was in a debt binge are exaggerating. Most of the people I know were just getting up each morning and going to work and paying their bills.
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Old 03-04-2008, 06:52 PM   #10
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I live in a fairly new fast growing, semi-wealthy area. The keeping up with the Jones is out of control here. I suspect in a small midwestern town it is much different. I don't know where you live.
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Old 03-04-2008, 07:07 PM   #11
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I live in MD, north of Baltimore; DOD territory.
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Old 03-04-2008, 09:34 PM   #12
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I live in a fairly new fast growing, semi-wealthy area. The keeping up with the Jones is out of control here. I suspect in a small midwestern town it is much different. I don't know where you live.
The semi-wealthy are as willfully clueless as J6P.
The economy has a lesson for them.
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Old 03-04-2008, 09:43 PM   #13
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Um, does anyone here personally know someone who cashed out the equity in their home, ran up their credit cards, and other wise went into a binge when told to "go shopping"?
I know of 2 couples. One is retired, HELOC'ed out, bad money troubles, only SS and tiny pension left,
gambling away what little they have. The second is worse - spent 2 lump sums from pensions, borrowed
and spent equity in previously paid-off house, then sold house and moved to tiny apt, kept
spending, declared bankruptcy, now living on SS.
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Old 03-05-2008, 01:39 AM   #14
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The semi-wealthy are as willfully clueless as J6P.
Could you explain what or who is J6P?

Thanks.

Ha
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Old 03-05-2008, 05:28 AM   #15
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I don't know if his conclusions are completely correct. But he has a point.

The home is the largest asset many people own. I am sure some were considering using its equity during retirement. The values of houses (and liquidity through sales or loans/reverse mortgages, etc) may have changed for several years. The housing market will correct itself, but some are finding themselves to be worth less now and for the next several years.

Look at it this way. Many people have taken the approach... a nice large home means everything so they invested heavily in a home over the last 20 - 30 years. Now that they are older they are planning to free up the money. If you have a large home and have always considered that once the kids moved, you would downsize and pull $200 or 300k out of it to help finance your retirement... you just hit a bump in the road. Especially if your home was a large portion of your investment assets.

Our home is a small fraction of our assets (about 15% - 20% not considering taxes). This debacle does not affect DW and I too much. However, if our home was 60% of our assets and I was planning to free up half of it to spend during retirement, we would have a problem.

Couple home values/liquidity along with the effects of a recession (some lose jobs unexpectedly) and their 401ks and IRAs take hits because of the stock market... Those people just had a rude awakening, they will be working longer!
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Old 03-05-2008, 05:51 AM   #16
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I take J6P to be an abbreviation for "Joe Sixpack". I see pain ahead, and not just for retirees, but I really don't know what to do about it. I feel like I am watching a slo-mo car crash. The 4% rule may not bear out for us, being stuck between rising inflation and a falling market.
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Old 03-05-2008, 07:55 AM   #17
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We have no reliance on home equity as part of our retirement plans, as we've already cashed out and "traded down." And as we may be here for a long, long time, year-to-year housing prices don't affect us much at all.
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Old 03-05-2008, 08:37 AM   #18
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Yesterday, I heard something I thought was the stupidest idea ever. Something about a debit card attached to your 401k? I just happened to hear it on TV, and that's got to be the worst investment vehicle scam ever to provide to Americans who are not inclined to save. Retirement crisis? Can you see a future president/congress "rescuing" these unwary investors who were preyed upon by those "lying, scheming, bad" mutual fund companies? Cashing out the equity in your home, running up credit card bills, tapping your 401k are all aspects of a retirement crisis and they are mostly due to a lack of individual responsibility.
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Old 03-05-2008, 08:41 AM   #19
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Yesterday, I heard something I thought was the stupidest idea ever. Something about a debit card attached to your 401k? I just happened to hear it on TV, and that's got to be the worst investment vehicle scam ever to provide to Americans who are not inclined to save. Retirement crisis? Can you see a future president/congress "rescuing" these unwary investors who were preyed upon by those "lying, scheming, bad" mutual fund companies? Cashing out the equity in your home, running up credit card bills, tapping your 401k are all aspects of a retirement crisis and they are mostly due to a lack of individual responsibility.
On one hand, I'd laugh this off, saying that people are reaping what they sow and that people who overconsume and have to keep working will keep the economy and Social Security afloat.

But on the other hand, I see this being seen as a "crisis" calling for a government bailout, and I can see candidates in the 2016 or 2020 election climbing over each other to promise "relief" for those victimized overconsumers who have no retirement left because of all those evil corporations which forced them to spend their retirement savings. And those who prudently saved will foot the bill.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 03-05-2008, 08:42 AM   #20
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Um, does anyone here personally know someone who cashed out the equity in their home, ran up their credit cards, and other wise went into a binge when told to "go shopping"?
Yes, DW and I know of at least one. This pair of idiots is about 60 and "own" a $530K house and have about $30K equity in it. He's a carpenter, she just retired as (of all things!) a math teacher. They've had a great time the last 20 years running up their credit cards, sucking the equity out of their house to pay them off, and running up the credit cards again.

They probably won't actually starve since she does have a retirement income from the teaching job, but when the music stops some bank is going to be left holding the bag of debt. Perhaps that is their financial plan.

Perhaps I'm mistaken but it seems to me they'd be further ahead by not paying all those interest charges for the sake of immediate gratification.
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