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Old 09-10-2013, 06:10 PM   #21
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Ha, I don't know if that is absolutely true. My wife pulls in far more at a private job as a software engineer than she probably would in the public sector.
Very good point.The aristocrats of the working world are perhaps better off in the private sector. You certainly are not going to become a CEO of a major organization in the public sector. I believe that the real advantage comes at lower levels- though I remember some astounding pensions of prison psychiatrists and such in CA and similar, much better than the usual non-rockstar surgeon or doctor might command. And of course the permanent furlough comes a lot earlier.

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Old 09-10-2013, 06:14 PM   #22
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True. We have a friend who is a state psychiatrist who is working on a pension of about $140,000 a year. That is one fat pension. Couple that with a Roth and a little taxable account and it makes the public sector seem pretty dang attractive.
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Old 09-10-2013, 06:26 PM   #23
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True. We have a friend who is a state psychiatrist who is working on a pension of about $140,000 a year. That is one fat pension. Couple that with a Roth and a little taxable account and it makes the public sector seem pretty dang attractive.
I had no idea everyone in the public sector gets a $140K pension.
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Old 09-10-2013, 06:32 PM   #24
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I had no idea everyone in the public sector gets a $140K pension.
Ha and I were talking about a specific occupation, state psychiatrist.

Ok I do see how my statement made it seem that other public sector jobs might pay that well.

I was wrong about that. In Seattle, the managers at a fire dept earn up to $184,000 a year in a public pension.

http://seattletimes.com/html/localne...nspikexml.html
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Old 09-10-2013, 07:13 PM   #25
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The fact that folks don't do these things ISN"T (IMO) because they are complicated or even difficult to understand OR that folks don't know or can't find out about them just about any place. No. It is because they take more discipline than most folks have.
This is the #1 reason, as far as I'm concerned...
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Old 09-10-2013, 07:27 PM   #26
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Ha and I were talking about a specific occupation, state psychiatrist.

Ok I do see how my statement made it seem that other public sector jobs might pay that well.

I was wrong about that. In Seattle, the managers at a fire dept earn up to $184,000 a year in a public pension.

State feels bite of workers' 'pension spiking' | Local News | The Seattle Times
And that's how some cities in CA went banktupt - IMHO
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Old 09-10-2013, 07:39 PM   #27
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It's only as complicated as you want to make it. Basic rules are simple:

1) LBYM
2) Save as much as you can in a low cost index funds -- if you can't figure out how to create a balanced portfolio, you can always just buy target retirement funds and set it and forget it.

If you do those two things for your entire working career, you should be just fine. Everything else is gravy.
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Still, saving/investing isn't about having a lot of knowledge or expertise. It's about DOING it consistently (hence the concept of discipline).
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I think you have a point, but if this were literally true, this board would have collapsed long ago.

We have busy perpetual threads on social security, Medicare, Obamacare, Obamacare subsidies, SWR, etc.
I think it can be as simple as LBYM, save the rest, set it and forget it. But not for too many posters on this board, because what fun would that be to talk about?

What sets the posters (and lurkers) on this board apart from the rest of the population isn't so much their incredible mental prowess/financial acumen as their ability to see that they have a personal future out there that needs to be planned for. We have people on the board who can't bring themselves to invest in those incredibly risky things called equities, and we have people who have difficulty investing in anything less risky than microcaps, and most of us are somewhere in between. The similarity between these people isn't in their ability to read and react to the financial winds, but to see that they are going to need to provide for themselves when they can't (or decide not to) work any more. Saving 20% of your salary and stuffing it in a shoebox, while unsophisticated, is much better preparation for retirement than saving 5% of your salary, investing in a sophisticated portfolio of hedge funds, and running up credit card debts. The shoebox guy is probably lurking on this board, while the sophisticated guy is on the BMW board.

We come together on this forum to share ideas about where to live, how to live, how to live efficiently, how to support ourselves, how to enrich our lives in retirement. I don't think we do that because we're smarter on average than other groups, but because we're paying attention and trying to plan for that phase of our lives. We're all gratification postponers. Okay, maybe smarter-than-the-average-bear gratification postponers.
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Old 09-10-2013, 07:41 PM   #28
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The thing is, messing up those things probably won't cause real problems to someone who has spent 30 years living below their means and investing in something okay.

There are many, many opportunities to make small mistakes, but if you get the two big things approximately right you're probably going to be okay.

Really, what is the downside of taking SS too early/too late?


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I think you have a point, but if this were literally true, this board would have collapsed long ago.

We have busy perpetual threads on social security, Medicare, Obamacare, Obamacare subsidies, SWR, etc.

Just filing a 1040 for most of us takes a lot of care, plus usually some spending, even without professional help.
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Old 09-10-2013, 07:55 PM   #29
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Saving 20% of your salary and stuffing it in a shoebox, while unsophisticated, is much better preparation for retirement than saving 5% of your salary, investing in a sophisticated portfolio of hedge funds, and running up credit card debts. The shoebox guy is probably lurking on this board, while the sophisticated guy is on the BMW board.

.

I am the shoebox guy. Just saving 40 percent
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Old 09-10-2013, 08:00 PM   #30
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Ha and I were talking about a specific occupation, state psychiatrist.

Ok I do see how my statement made it seem that other public sector jobs might pay that well.

I was wrong about that. In Seattle, the managers at a fire dept earn up to $184,000 a year in a public pension.

State feels bite of workers' 'pension spiking' | Local News | The Seattle Times
Oh, for Pete's sake! This article is about a small number of retirees (in Lakewood and other cities of the Puget Sound region, not Seattle) who are taking advantage of a loophole in an obsolete pension plan, and about the fact that this loophole allows their former employers to provide a retirement incentive in the form of a last-minute salary hike, at small cost to the employing city, but creating a large expense for the State of Washington, which has to pay the artificially inflated pension. First of all, to the best of my knowledge, only a minority of public employees--law enforcement and fire fighters--were ever able to enroll in this plan. Second, the plan which allowed these very high pensions was replaced in 1977, and, according to the article, there are only about 200 people in it who haven't retired yet. The replacement plan does not allow "spiking", which is how the specific retirees mentioned in the article come to have such high pensions. Pension benefits under LEOFF2 are based on the 60 highest paid consecutive months' salary.

While supposedly withdrawing your original comment, you again imply that many public sector retirees draw outlandishly high pensions. Most of us didn't make as much as Bronske, McGovern or Hull when we were working, let alone after retirement. In fact, the article says these three are getting more in pension than Seattle's current fire chief is getting in salary. I'm a public sector retiree, and I'm fed up with hearing the fable of widespread six-figure public pensions repeated over and over as if it were an indisputable fact. Now you know better, and I hope next time you have occasion to mention the topic, you'll at least be more specific and not paint with such a broad brush.
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Old 09-10-2013, 08:16 PM   #31
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I think for high earners in the public sector, they get very high pensions. I think high earners in the private sector can save a decent amount in taxable accounts.

The public sector high earners are in a little better position because they can shelter a lot more money during their career in the pension, where the private sector individual has to pre pay tax on it thus not having the compounding of that money over the 30 years.

The regular earners in both private AND public sector are maybe about in the same boat and represent probably the vast majority of retirement.

That seem fair?
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Old 09-10-2013, 08:34 PM   #32
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In the "old" days people died before they could receive a pension or SS. There is a reason the retirement age for SS was set at 65. Back in the 1930s the life expectancy was around 62-63. Our increased life expectancy has radically changed things because we have to plan for 30+ years of retirement. That wasn't true in my parents generation. Though that means we have to save more for retirement I agree with many of the other posters who say that saving for retirement is as complicated as you want it to be. There are many fairly uncomplicated retirement tools out there if that is what you want.
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Old 09-10-2013, 09:18 PM   #33
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In the "old" days people died before they could receive a pension or SS. There is a reason the retirement age for SS was set at 65. Back in the 1930s the life expectancy was around 62-63. Our increased life expectancy has radically changed things because we have to plan for 30+ years of retirement. That wasn't true in my parents generation. Though that means we have to save more for retirement I agree with many of the other posters who say that saving for retirement is as complicated as you want it to be. There are many fairly uncomplicated retirement tools out there if that is what you want.
I don't know how old your parents are, but what you say is accurate in a minor way, but it gives the wrong impression. Life expectancy at birth has increased very greatly, but this is not the main thing affecting retirement economics. Life expectancy once middle age has been attained has increased some, but not nearly as much. Huge strides have been made in neonatal
care as well as pediatrics. Not many iron lungs left, or rheumatic fever which often set up young adults for an early death.

I had one great grandfather born in 1852 who died in 1946. This entire period was before "modern medicine" existed. Antibiotics first became available during WW2, but as far as I know they only became available to the civilian population in the late '40s-first sulfonamide, then penicillin. I remember when one great uncle who was a TB doctor at a sanatorium near our home had to enter private practice because the san was being shut down due to antibiotics curing the patients- I think it was streptomycin. A grandfather born in 1864 (his Dad figured the war could carry on just as well without his attendance)-died in 1949. Both my grandmothers born with at least 20 years still to go in the 19thy century lived into their late 80s, and my great grandmother married to the guy who died in '46 lived until 1952, in her late 90s and still getting around and enjoying the occasional beer. My Mom used to pick her up and take her (and me) to a nice beergarden. Both my parents' sibs lived at least into their mid to late 80s. And it isn't just my family. As a boy I went to so many parties with lots of old men and women spinning tales about how great it was in the old days. And our neighborhoods were age integrated. Old people were everywhere, and this was not just a young boy thinking any adult was old. I knew a lot about most of these people, they were old. A couple of old bachelor brothers lived up the street. Each had had a wife who ran off in their early 20s. Didn't seem to bother their life expectancy, as one lived to 84 and the other to 86. This was in the 50s. No nursing homes either, they were walking around the neighborhood, then all of a sudden they were dead.

What has really turned SS on its head is the falling birth rate. There was a short period in mid 20th century when youngish men were dying of heart disease, but as you know that is long gone now.

Ha
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Old 09-10-2013, 10:30 PM   #34
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First let me say, that I feel your pain. When I first entered this zone, I was overwhelmed with reading all the posts and trying to figure out what was going on and to educate myself. Seems like this should be a mandatory class in high school.

Perhaps some of the others could suggest a book that is an "easy read" for the OP. (Not 4 Pillars - though it is good. It is not one to start out with for a novice I don't think) Something, presented in more layman's language.

Then after that and reading this and Bogleheads Forum for a while, he/she might move up to another recommended book.
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Old 09-10-2013, 10:49 PM   #35
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I think kyounge1956 is right.

Puff up if you want, the sun will rise.
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Old 09-10-2013, 11:02 PM   #36
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I think for high earners in the public sector, they get very high pensions. I think high earners in the private sector can save a decent amount in taxable accounts.

The public sector high earners are in a little better position because they can shelter a lot more money during their career in the pension, where the private sector individual has to pre pay tax on it thus not having the compounding of that money over the 30 years.

The regular earners in both private AND public sector are maybe about in the same boat and represent probably the vast majority of retirement.

That seem fair?
Fairer, certainly...perhaps even a little off in the other direction. I don't want to minimize the value of a defined benefit pension, which many public employees receive and I think most private sector workers don't. The fact that I have a pension is what makes it possible for me to retire at all, as I didn't start saving seriously for retirement until about five years before I pulled the plug. I doubt that many private sector workers would have been able to retire at 57 in spite of having procrastinated for so long.

It's just a sore point with me that so many people seem to think many if not most public employees receive outrageously high pension benefits, which just isn't the case. I think generally the pension is proportional to pay--high earners get big pensions, modest earners get small ones. I do agree (with the author of the article, and I think the majority here on ER) that "spiking" is an abuse that should be eliminated from pension systems.
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Old 09-11-2013, 12:32 AM   #37
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I am the shoebox guy. Just saving 40 percent
Shoebox gal here, saving between 40-50%.
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Old 09-11-2013, 06:10 AM   #38
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I am thinking that some kind of sensible finance education mandatory in high schools might be of benefit. Do they do that now?? Like they have Home Economics??
+1
I was a teacher (high school and college) for most of my life and recognized the need for a course in personal finance for close to 40 years. Sadly you will be hard pressed to find this anywhere in the US public school system and most likely not in private schools as well. It is difficult enough for teachers to teach basic math, science, and grammer with the limited time left after all the other non-academic activities and requirements that eat up the day. Too bad. Even a short course with real world examples and individual/group projects for one grading period (6-9 weeks) would greatly benefit the students. But let's not go there.

On occasion I would take time out of regular class activities to go through some simple examples like a budget while trying to live on minimum (even 2X) wage, the value of compounding savings over time, or the expense of time payments, etc. I got through to a few who wanted to talk more after class but most were content to let it pass since parents were taking care of them and they had an allowance to blow each week.

I believe you have the right idea to allow for the opportunity to develop a basic understanding of personal finance "survival". It would go a long way to provide the tools to create a more comfortable life in their older years.

Cheers!
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Old 09-11-2013, 06:18 AM   #39
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It's just a sore point with me that so many people seem to think many if not most public employees receive outrageously high pension benefits, which just isn't the case. I think generally the pension is proportional to pay--high earners get big pensions, modest earners get small ones.
I think part of it is that a few news stories about exceptional out-of-the-ordinary pensions create a mental "anchor point" and that creates the perception, ignoring the reality, that all public service pensions are lavish six-figure ones.

While I also receive a public service pension, like most it is nowhere near six figures. I sure wish it was!
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Old 09-11-2013, 07:10 AM   #40
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There is a wide diversity in public pensions. Some plans have allowed high payments by gaming the system but most public pensions are pretty modest. Unfortunately, many plans are seriously (criminally?) underfunded. Again unfortunately, these plans will ultimately undergo some form of readjustment and even the modest pensions could be at risk. Eventually, the payments can only be maintained if the tax revenue can be matched to the spending. Think Detroit for the here and now but more will probably be coming.

I have been saying for years that we must consider some sort of systemic risk in our planning. That "ironclad" public or private pension might roll over someday. Social Security could be "saved" once more at your expense. We can not protect ourselves from everything but we can make sure we don't totally blow our lifestyle with one aspect collapsing.

As to the OP, I think the investment world now is simple with less illusions of security. My father worked many jobs and never got that pension because vesting was never achieved until he managed to work for 20-some years at the post office. That pension was modest but COLA'd. He should have been saving money but he didn't. If he had, he would have been ripped off by high brokerage fees and poor insurance products with high commissions. That's what I saw when I started investing. Now we have low cost index funds and no fee accounts available. As said before, we now need the discipline to do what needs to be done. It really is very, very simple but it is not easy. Most people don't bother to learn the basics and then many more won't follow through.
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