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That ship has sailed, what will happen to these folks?
Old 10-10-2014, 12:01 PM   #1
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That ship has sailed, what will happen to these folks?

I've been planning for ER, or at least FI, since I first started working and it has guided many of the decisions I've made during my adult life.

I have a small, but close group of confidants who share my goals and strategies and we trade tips and philosophies often...but these aren't the folks who intrigue me.

The folks who intrigue me are the wider circle of acquaintences/friends or even family members at middle age.
Sometimes when we're sharing beer around the bonfire, or a glass of wine around the table...I will pick up comments they make - like one who has no savings but still paying off $60K of student debt for her kids educations...or another one, who is just now starting to save for his older years - these are people in their late 40s & 50s.

Do you ever hear comments like these? Whenever I do, I mostly keep my thoughts to myself, thinking "that ship has sailed" - without time on their side, how will these folks ever hope to retire? I don't see any of them working nowin jobs with fat pensions. I suppose they plan to live entirely on SS when they are older - maybe they think there will always be jobs available to people in their 60s,70s and beyond, or their mental and physical capacities will last forever.

Lately, I've started thinking maybe the real issue is me. Maybe I've been too anal/analytical all these years, squirrelling away nuts for the winter of my life...

In your wider circle, is ER planning common or do you stand alone?
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Old 10-10-2014, 12:13 PM   #2
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I have been amazed at the number of people near my age (plus or minus 10 years) who have little or nothing put away for retirement. Usually, the story is some combination of the same reasons: They avoided higher paying stressful jobs, they used their house as a cash machine, they never bothered to further their education, they bought a new car every 3-5 years, they bought the biggest house they could incurring high living expenses, they invested in stuff like gold coins and land in the desert, they got taken in by get rich quick schemes, etc. etc. etc.

The truly sad ones are those who did the right things but got caught by unexpected medical bills or some exogenous event that nobody could have predicted or prepared for.
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Old 10-10-2014, 12:15 PM   #3
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The truly sad ones are those who did the right things but got caught by unexpected medical bills or some exogenous event that nobody could have predicted or prepared for.

yes, these situations are more understandable..

The excuse most often given by my acquaintences is that they could not imagine compromising on their lifestyle choices or they did not want to move to seek better employment.

Another interesting trend I see is among those who did leave my hometown (town in the rust belt)... they do end up retiring and returning and having the cash to buy homes there outright, since prices are pitifully low.
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Old 10-10-2014, 12:19 PM   #4
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I've had similar thoughts... but I've also seen a few examples of "come from behind" winners. A former boss/mentor/good friend was a single mom who put her kids through college with no help from the ex. She woke up one day and realized she had nothing saved for retirement. She was in her late 40's.

She focused intently on retirement savings... buying and paying off aggresively an inexpensive townhouse in a very nice neighborhood, maxing out 401k, participating in every profit sharing opportunity available... and just generally saving saving saving. She retired 4 years ago at age 63... Not as early as folks on this board - but she has a comfortable retirement lifestyle and gets to spend lots of time visiting her grandkids.

I remember her having talks with me about the importance of saving for retirement - and not to wait till later like she had. It had an impact on me. But it all worked out for her.
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Old 10-10-2014, 12:19 PM   #5
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They will work till 65 and then live on SS ( which will not cover decent living ).

Unless they are Civil Servants who get nice pensions.
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Old 10-10-2014, 12:23 PM   #6
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Seems like a severe cutback in lifestyle at that time on only SS?
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Old 10-10-2014, 12:32 PM   #7
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I honestly don't know how most of my friends are doing financially. I mean I know some things like when a sole income earner loses his job, the family has less money and can't afford to do hardly anything (but they didn't lose their house or stop going to $1 roller skating night with us).

Otherwise, I can't recall discussing other people's specific 401k or IRA balances in anything more than an abstract level or generic level ("yeah, I'm in low cost index funds too").

A few very close friends will talk finance with me, and they tend to be well on their way to FIRE or a very comfortable retirement (ie six figure investments in their 30's).

I guess I tend to avoid hanging out with the folks that are permanently broke or strapped for cash. If they earn a lot and spend a lot, they would probably look down on my low spending lifestyle, or we wouldn't be able to spend enough to keep up with them (lift tickets in Vale aren't cheap, you know). Or the conversation would turn to how awesome all the stuff that they are acquiring is (yeah, wow, another luxury car, wow it is shiny, oh it has 4 wheels just like my beater!).

I figure the high spending types will work till they drop of death or disability and make do with what they have, often suffering a severe reduction in lifestyle when they deplete their resources. I've seen more than one grandparent get by on SS and tiny savings (mostly from not making much while working). It's not an altogether bad life if you have family and friends that care about you.
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Old 10-10-2014, 12:38 PM   #8
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Well, in my circle, not many are thinking that far ahead, but we're mostly 30s and early 40s. My parents didn't start planning and saving for retirement until I was in college. That put my dad at 60+ and mom at 50+. They had good incomes, a small pension, full SS, and a paid-off house, so they were able to catch up. That said, Dad worked until he was 77 and was diagnosed with Pancreatic cancer at 78 and been battling that ever since. Mom still hasn't retired, but it's coming in six to ten months, at age 73.

I suspect there will be a lot of people in this same boat. That's not going to be me!!

My former boss just retired from the Navy after 30 years. He's told me he's doing "very well." Granted he's got a pretty hefty pension, but I was surprised to see that his definition of "very well" was having as much saved as I do 15 despite being years his junior and with a lot less time as a so-called "high-earner." It's all relative: he spends more, so he needs more, and his perception of "doing well" probably doesn't include analysis of his spending needs vs. what he's got. He's a pretty smart guy, so it just leads me to believe there are many, many folks who don't get serious about this stuff until it's much later (too late?).
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Old 10-10-2014, 12:42 PM   #9
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If we all lived the same kind of lives it would be really boring. I'm happy for their choices, if they had choices to make.
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Old 10-10-2014, 12:55 PM   #10
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the point of my post was not to generate a us vs. them type of discussion, but more along the lines of how people can catch up financially, when time is no longer on their side.

and as a side theme, are people who save and RE, not common?
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Old 10-10-2014, 12:56 PM   #11
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The paradox here is that as LBOMers and investors in order to raise our standard of living, we need people to not save and invest, rather continue to consume. It's not as much about how much you save and accrue, it's about how much you save and accrue relative to others. Not to say I actively root against or compete with other people, I just recognize that if everyone did as most of us do, we would not be able to "retire early." We need consumers and day traders to make our methods effective in allowing us to "get ahead."
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Old 10-10-2014, 12:58 PM   #12
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Quote:
Originally Posted by TresBelle65 View Post
and as a side theme, are people who save and RE, not common?
Certainly not the majority, but it also depends on where you live. For example, I think the FI/RE crowd in the military is potentially a larger percentage than of the general population because of the pension, not necessarily because of savings. In fact, I know many military veterans who think their pension will go farther than it does, and quite a few don't focus on savings early enough. They end up working a lot longer than they'd initially planned in spite of their pensions.

I assume in the civilian sector the same is true, except magnified in the sense that most folks are on their own when it comes to funding retirement.
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Old 10-10-2014, 01:05 PM   #13
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My Dad is 63, and due to a combination of poor planning and bad luck with medical expenses has almost nothing saved for retirement. He has nothing in retirement accounts, and a couple of small pensions that will come online at 65 (I'm guessing less than $500 per month in pensions).

At this point, he's planning to work until 70 to maximize his SS benefits. After that, he'll retire to an expat community in Mexico with a low cost of living. He'll have around $2800 in income per month, which should be enough. Fortunately, he's a simple guy who doesn't have extravagant tastes.

I think he'll be fine, and we'll help him to the extent that we're able, but it's not the retirement I'd want.
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Old 10-10-2014, 01:06 PM   #14
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Two income families who have got their kids through college can save a bunch of money if they can live off if one income for 20 years or so. And, then roll into an annuity at about age 67 to 70 also receiving full SS.

Some do, some don't. We try to get young folks to start their 401k ASAP. But, it's hard to get someone to imagine being 65 when they are 25. I'm not sure people realize the opportunity they have to save on their own, especiall with the government's and employer's money through a 401k. I wish they did.
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Old 10-10-2014, 01:06 PM   #15
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That's the thing. I've seen plenty of people living quite happily on very little, especially as they get old enough that travel and other spending seems more like work than fun.

The adjustment may be hard for some of these people, but they aren't going to starve. Is downsizing into a little apartment when you're too old to work really a disaster?

Quote:
Originally Posted by FUEGO View Post
I've seen more than one grandparent get by on SS and tiny savings (mostly from not making much while working). It's not an altogether bad life if you have family and friends that care about you.
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Old 10-10-2014, 01:12 PM   #16
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The people who don't save might not be able to retire. "Retirement" is a new phenomenon, it was rare and short just a few generations ago here in the US, and remains so in most of the world. So those who choose not to save will have the same options people in their older years have always had.
Actually, they'll have it quite a bit better. By transferring wealth from young/higher-income to old/lesser income people, SS will help them and assure they will have at least some resources to keep the wolf from the door. They also continue to live in one of the most robust and productive economies in the world, affording them opportunities to continue work that older people wouldn't have in most of the world. And they have all the benefits of living in an affluent society: clean water, functioning courts, good roads, a safety net, etc. And, if the light bulb comes on in time, they can save and invest as much as possible at lower costs than ever before.
In short, it is all relative. If you compare their situation to a prodigious long-term saver in an first-world economy, it doesn't look very rosy. But by all other measures it is not bad. I hope they take the second option as their frame of reference.
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Old 10-10-2014, 01:15 PM   #17
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I know several people who say they are planning to work "forever"--I don't know why as some seem to be very well off (high level executive) or do not seem to overindulge in conspicuous consumption. They won't retire early and they will have fewer years to finance, perhaps at a decreased standard of living, when they do. Maybe they will need to move to a low cost of living area. It will work out one way or another.
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Old 10-10-2014, 01:24 PM   #18
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Quote:
Originally Posted by TresBelle65 View Post

Do you ever hear comments like these?
I'm only in my late 30s, but have heard some comments over the years from various people who are older than me. Most of the time I just keep to myself, but every now and then I'll try to interject some facts, like "if you start early, the magic of compounding is a powerful force".

In fact, I think the main reason why they don't save earlier is because of the complete ignorance towards the concept of compounding earnings.

People don't realize that you could save just $x in your 20s and 30s, and stop saving, with your investments simply growing, and you'll end up with more money than if you save up $2x (or $3x!) in your 40s/50s/60s. They foolishly think that you can simply start saving when you're in your 50s, after the house is paid off, kids schooling expenses are done, etc., and be in no worse shape than if they started in their 20s/30s.
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Old 10-10-2014, 01:25 PM   #19
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I am surrounded by people where I work who are clearly very well off and well over 65. They can't see themselves "doing nothing." I do work at a place that I would characterize as low stress. We're treated and paid very well. There's nothing I don't really like except the drive I have because of DW wanting to be closer to grandkids. If I was a 5 minute walk to work, I might sign up for OMY (aaaarrrrrgggggh -I can't believe I wrote that).
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Old 10-10-2014, 01:30 PM   #20
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I only knew a few people at the job I retired from who had much if anything saved, but we were in line for pensions that while not as good as the old federal CSRS was nearly so. (That has long since been changed. They're not nearly that good now.)

At my last job, aside from the two or three millionaires, there was only one guy I knew of who had saved as much as I did. Actually he'd saved more, but didn't have to start over from scratch at age 35 because of a divorce. Almost all the others were still living paycheck-to-paycheck.

But like the OP I do wonder what these people are thinking. One SIL belongs to the "you only live once" crowd and that justifies her spending, saving nothing, and being deep in debt. She talks of retiring to Sarasota, FL and what she's going to be doing then. I think if she makes it to FL at all she'll be living in a trailer and it won't be in Sarasota.
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