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Old 02-26-2009, 07:38 AM   #21
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It is difficult to even imagine being in the 55-64 year old category, with wealth of only $140K.
I once thought as you. Mr. Market has "improved" my imagination substantially.
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Old 02-26-2009, 07:56 AM   #22
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Sometimes I forget that those of us posting on the ER Forum are atypical. It is difficult to even imagine being in the 55-64 year old category, with wealth of only $140K.
You could have 140K in wealth but also have a 60K pension with cola and health care included. Or be 65 and have 140K, 30K in SS, and medicare. Not great but doable IMO.
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Old 02-26-2009, 09:10 AM   #23
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My investments are down double the value of my house after my house declined by one third . . . oh never mind.


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Old 02-26-2009, 09:27 AM   #24
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This is in the summary"

Quote:
Finally, these projections should make clear that homeownership is not always an effective way to
accumulate wealth. Homeownership during a housing bubble was a route toward losing wealth, not
accumulating it. While typical homeowners cannot be blamed for not recognizing the bubble, the
economists and policy professionals who designed policies that pushed homeownership certainly
can and should be blamed.
It was possible to recognize a bubble at least as far back as 2002 based on the sharp divergence in
house prices from their historic trend. The fact that so many economists and policy professionals
failed to recognize and warn of this bubble had enormous consequences. Unfortunately, the people
who listened to these experts are likely to suffer the consequences of the experts’ failure, rather than
the experts themselves.
I don't agree with the extreme view of "it's all the experts' fault", real people still made decisions. Yet, lots of normally rational people found it easy to believe that the stock market was going to return 10% forever, or that house prices would go up much faster than inflation. To the extent that this made them comfortable about their financial planning when they should have been worried, the bubbles did reduce wealth accumulation.

(Note that at least one of the people who wrote this study -- Dean Baker -- really did argue that house prices looked like a bubble back in 2002.)
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Old 02-26-2009, 09:45 AM   #25
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You could have 140K in wealth but also have a 60K pension with cola and health care included. Or be 65 and have 140K, 30K in SS, and medicare. Not great but doable IMO.
I believe the $140K in wealth includes any home equity. I still find it hard to imagine (even with SS, medicare, AND pension) having accumulated only $140K, including home equity, at age 55-64. None of these fixed income sources are written in stone these days.
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Old 02-26-2009, 12:03 PM   #26
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I believe the $140K in wealth includes any home equity. I still find it hard to imagine (even with SS, medicare, AND pension) having accumulated only $140K, including home equity, at age 55-64. None of these fixed income sources are written in stone these days.

I actually agree with you. I was just pointing out it may not be quite as bad as it looks at first blush.
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Old 02-26-2009, 12:07 PM   #27
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I believe the $140K in wealth includes any home equity. I still find it hard to imagine (even with SS, medicare, AND pension) having accumulated only $140K, including home equity, at age 55-64. None of these fixed income sources are written in stone these days.

I do not find it hard to believe .Put a few children through college , have a messy divorce or two , be laid off or have a serious medical problem and you are lucky to have a positive cash balance. As I remember you had a very low cash balance in your early 50's so you should be able to see how this happens .
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Old 02-26-2009, 02:12 PM   #28
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I do not find it hard to believe .Put a few children through college , have a messy divorce or two , be laid off or have a serious medical problem and you are lucky to have a positive cash balance. As I remember you had a very low cash balance in your early 50's so you should be able to see how this happens .
Then throw a hit in the old portfolio into the mix from 2000-2002. Then throw the portfolio hit from 2007 to 20XX on top of that.

Remember the indexes are back to early 1997 levels. So those "indexers" are back there too.
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Old 02-26-2009, 02:15 PM   #29
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Bend over. Last hour. Here it comes again.
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Old 02-26-2009, 03:16 PM   #30
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Bend over. Last hour. Here it comes again.
Went out right at the low of the day.

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Old 02-26-2009, 04:21 PM   #31
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I do not find it hard to believe .Put a few children through college , have a messy divorce or two , be laid off or have a serious medical problem and you are lucky to have a positive cash balance. As I remember you had a very low cash balance in your early 50's so you should be able to see how this happens .
The article refers to a median net wealth of $140K among those ages 55-64, though you are right that the circumstances you cite can and do cause financial disasters for some individuals during the ages 55-64.
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Old 02-26-2009, 06:19 PM   #32
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The article refers to a median net wealth of $140K among those ages 55-64, though you are right that the circumstances you cite can and do cause financial disasters for some individuals during the ages 55-64.
This is not hard to imagine. One distant relative in her late 50's has had severe mental problems since high school, compounded by a serious car accident 20+ years ago. She did buy a small duplex home with the settlement from the car insurance company, but her sole income is disability and food stamps. She's married to a fellow who is, shall we say, "not very bright". He's honest and hard-working but cleans highway rest stops and delivers telephone books for income. Buying a six-pack of beer is a luxury to them, and they are at or very near poverty levels.
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Old 02-26-2009, 06:24 PM   #33
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But from the sounds of it, they (or at least he) are honest, hardworking and deserving of whatever social programs benefit them (him)?
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Old 02-26-2009, 06:35 PM   #34
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As a baby boomer, I guess I was naive in never considering home equity as part of my "wealth." I always thought wealth had to do with liquid assets used to put food on the table, take vacations, and eventually never having to go back to work. Not that I haven't lost home equity along with everyone else, but the idea of using my home as a bank never appealed to me.
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Old 02-26-2009, 06:57 PM   #35
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Ever notice those women in WalMart, working checkout, who must be in their 70's if not 80's in a few cases?

Bored heiresses?

People who are actually twenty, but partied too hard in high school?

Most of us in another decade?
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Old 02-26-2009, 07:47 PM   #36
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Ever notice those women in WalMart, working checkout, who must be in their 70's if not 80's in a few cases?

Bored heiresses?

People who are actually twenty, but partied too hard in high school?

Most of us in another decade?
Its all relative. Most women (70 & 80) in the "third world" would die for the WalMart job. Oh, wait,...their already dead.
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Old 02-26-2009, 10:10 PM   #37
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Then throw a hit in the old portfolio into the mix from 2000-2002. Then throw the portfolio hit from 2007 to 20XX on top of that.

Remember the indexes are back to early 1997 levels. So those "indexers" are back there too.
Not if they had been rebalancing all along.
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