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Old 04-26-2013, 08:22 AM   #101
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At the time of my ER I noticed that there were three major reasons why others my age couldn't ER too. One is that they just weren't mentally ready for it but that doesn't pertain to this thread. The other was that they had bought a house recently and had a huge mortgage to pay for a long time to come. The third was that they had a young child still in the house. Either these people were not economically literate enough to think about their housing and family planning choices late in life or they decided that these choices/purchases were worth the extra years of w*rk. The trend to get married and have a family later in life is not only a factor in young people's lives. I've seen quite a bit of it in my own generation happening to people who divorced and remarried and were starting over again. The same economic principals apply but in a scenario we didn't contemplate when I was younger.
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Old 04-26-2013, 08:39 AM   #102
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The third was that they had a young child still in the house.
I think it was mentioned in the recent Frontline episode (being discussed elsewhere) that significant contributors to the "problem" is the cost of raising and educating children, and the cost of divorce. Is it cluelessness to have children? (I think the early/late issue is a red herring. Why would it would cost less to raise children if you do it earlier in life?) Is it cluelessness to divorce? (I'm not answering either of these questions.)
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Old 04-26-2013, 08:46 AM   #103
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I think it might be as simple as the fact that saving for retirement looks like really hard work to most people. Those who do it well have found a way to think of it not as hard work, but as enjoyable.

My friends who love to exercise are pretty fit. I don't enjoy exercise, and I'm not very fit. I am smart enough to understand the benefits of exercise, but I am still not motivated to take sufficient action.

I enjoy saving towards a goal and finding ways to shorten the distance between myself and FI. My friends who derive no enjoyment from saving tend not to save.

Even though we don't talk about money much socially, there are moments of surprise at the differences. Good friends of ours have confided that they've stopped saving money for retirement since they had kids, and yet they post photos of themselves eating at very expensive restaurants and sitting in the front row at concerts. They clearly derive more enjoyment from this than from saving for retirement.

I think we tend to do what gives us pleasure, and avoid what causes us pain.

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Old 04-26-2013, 08:55 AM   #104
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My friends who love to exercise are pretty fit. I don't enjoy exercise, and I'm not very fit. I am smart enough to understand the benefits of exercise, but I am still not motivated to take sufficient action.
I know the feeling. Not to go off on a tangent, but some would say that exercise is a financial investment, since it could conceivably keep your costs of health care down, especially if they start surcharging us "not very fit" folks. (By the same token, it could be considered a bad investment, as it increases the chances of running out of money before you die.)
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Old 04-26-2013, 09:03 AM   #105
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I commented in another thread about my wonderment for folks who were unwilling to participate in managing their own money. Too each their own, but I could never just pass it off to someone. That's my effing life savings...

This is a different phenom from folks who won't save and invest, though the ignorance of basic finance and investing certainly has parallels.
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Old 04-26-2013, 09:06 AM   #106
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I know the feeling. Not to go off on a tangent, but some would say that exercise is a financial investment, since it could conceivably keep your costs of health care down, especially if they start surcharging us "not very fit" folks. (By the same token, it could be considered a bad investment, as it increases the chances of running out of money before you die.)
If you could find someone who doesn't want their energy-generating exercise bike anymore, you could earn a penny an hour on the thing!
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Old 04-26-2013, 09:20 AM   #107
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I know the feeling. Not to go off on a tangent, but some would say that exercise is a financial investment, since it could conceivably keep your costs of health care down, especially if they start surcharging us "not very fit" folks. (By the same token, it could be considered a bad investment, as it increases the chances of running out of money before you die.)
Conversely, fitness could give you a number of extra years in ER causing you to outlive your portfolio.
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Old 04-26-2013, 09:23 AM   #108
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It's funny that people can share on on the E-R.org boards and bare their financial details in anonymity but wouldn't consider doing the same to the people we are closest to.
Please see discussions about jealousy and destroyed relationships on other threads. Declaring to some people that "I have a $1M" saved leads them down all sorts of paths that are illogical. They don't see that you scrimped and saved it (even if you say so). They are likely to be jealous to just hear your number and shut down.

It is better to have discussions like "we feel it is important to save 25% of our wage per year... this means keeping our cars for 12 years, for example." It can start there and maybe grow into absolutes later when they open their ears and hearts.

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If you aren't the type of person to go and research everything to death (and most people aren't - to my shock at times), and talking about money and savings and how to prepare for retirement, etc. is kind of taboo - then it is hard to actually acquire the knowledge you need.
Not sure about that. My Megacorps (and my MiniCorp!) had nice glossy, short, simple, colorful brochures that came with enrolling in the 401k. These brochures always stressed the time value of money, and how saving early can grow into huge numbers later. And they emphasized that you HAVE to start. My current Megacorp has an "increase 1% per time period" plan too. I.E. you sign up and it will increase your 401k saved percentage by 1% each year, for example. All automatic. I encourage this for the youngsters.
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Old 04-26-2013, 09:34 AM   #109
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I think it was mentioned in the recent Frontline episode (being discussed elsewhere) that significant contributors to the "problem" is the cost of raising and educating children, and the cost of divorce. Is it cluelessness to have children? (I think the early/late issue is a red herring. Why would it would cost less to raise children if you do it earlier in life?) Is it cluelessness to divorce? (I'm not answering either of these questions.)
It is not clueless to have children later in life but it would be clueless not to consider the financial consequences of this choice. Divorce (unfortunately) happens. Whatever your life circumstance you need to adjust your financial strategy to accommodate both your immediate needs and planning for the future. A basic literacy with personal finance will give you better tools to live your life. What we have been discussing here is that people either haven't acquired these tools or appear to be uninterested in the issue despite their seeming intelligence and success in other walks of life.
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Old 04-26-2013, 09:49 AM   #110
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It is not clueless to have children later in life but it would be clueless not to consider the financial consequences of this choice.
Could you please elaborate on that? What is meant by "consider the financial consequences"? What are the available options you believe should be considered, and what criteria would you suggest be applied to the choice?

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Divorce (unfortunately) happens. Whatever your life circumstance you need to adjust your financial strategy to accommodate both your immediate needs and planning for the future. A basic literacy with personal finance will give you better tools to live your life.
Of course, but what people seem to be considering clueless includes making reasonably decent choices but still failing, because of circumstances.

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What we have been discussing here is that people either haven't acquired these tools or appear to be uninterested in the issue despite their seeming intelligence and success in other walks of life.
I don't know of many people who are having trouble making ends meet but still buying expensive cars. That makes a nice story, I suppose, but I don't see it happening, among those I know who are struggling the most. So I don't think that's really what we're talking about. The metric Midpack provided in her original message was this: "Some of them contribute 10% to a 401k and invest in target funds, and then assume all will take care of itself." Why is that not considered "clued-in"? Where do we draw the line between sufficient financial knowledge and specialization?
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Old 04-26-2013, 10:01 AM   #111
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People do seem to have the same disconnect with both money and health, although not necessarily simultaneously.

A surgeon friend has the same issues with money as expressed so well throughout this thread, but he will be fine financially.
As a cardiac surgeon, he sees in a very graphic way what happens if you neglect your health. Yet, he is very overweight, has a terrible diet, and does not exercise at all. Being exposed to his probable fate on a daily basis has no effect on his behavior. Humans are inscrutible animals.
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Old 04-26-2013, 10:08 AM   #112
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As a cardiac surgeon, he sees in a very graphic way what happens if you neglect your health. Yet, he is very overweight, has a terrible diet, and does not exercise at all. Being exposed to his probable fate on a daily basis has no effect on his behavior. Humans are inscrutible animals.
I'm always surprised by how many obese doctors and nurses I see. Though I also know doctors and nurses who are distance runners or otherwise extremely fit.
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Old 04-26-2013, 10:18 AM   #113
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"I have never understood how otherwise very smart people can be so uninterested in their own financial security" - from Midpack's original post.

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Could you please elaborate on that? What is meant by "consider the financial consequences"? What are the available options you believe should be considered, and what criteria would you suggest be applied to the choice?
I guess I'm saying that family planning is a set of choices as much as profligate spending. I'm not saying the two are equivalent qualitatively. I would say having a family is a good choice. Just don't be surprised if your retirement is put off to a later date.

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Of course, but what people seem to be considering clueless includes making reasonably decent choices but still failing, because of circumstances.
I think some of the examples being offered are that people are not making decent choices and then are surprised that some of us can ER. When people say that they can't save for retirement but they then post themselves on FB eating expensive dinners and pricy theatre tickets I would say that they are practicing short term thinking. When a Dr. makes a poor investment in some company without learning how to do investment research then that makes some people wonder how they an be smart enough to become a Dr. but not smart enough to learn how to invest prudently. This is different from people (even apparently smart people) from failing due to circumstances that are reasonably beyond their control.

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I don't know of many people who are having trouble making ends meet but still buying expensive cars. That makes a nice story, I suppose, but I don't see it happening, among those I know who are struggling the most. So I don't think that's really what we're talking about. The metric Midpack provided in her original message was this: "Some of them contribute 10% to a 401k and invest in target funds, and then assume all will take care of itself." Why is that not considered "clued-in"? Where do we draw the line between sufficient financial knowledge and specialization?
While that might not be the case for you there are others in this thread who apparently do know "smart" people making poor choices.

I had an employee who remarried and had a child when he was in his late 40's or early 50's. He also bought a new house with a big mortgage to accommodate his new family. He is a smart guy who is perfectly happy with his situation. And he is aware that he won't be retiring any time soon. I like and admire him.

I have a good friend from college who could not see himself working for others. He has a small business that has never made him a lot of money. He has little in the way of savings and has (luckily) just gotten some health care insurance. He also has a young adopted daughter. He will probably struggle as he gets older. On the other hand I would be reluctant to say that he should have chosen a stable corporate career where he would have been miserable for 30+ years.

However, we know a couple that went into a forced retirement from the same university I retired from. They bought a big house with a big mortgage late in life. It seemed like an extravagant choice at the time (obviously just our opinion). After their force retirement they started filling their time by doing some extensive remodeling of their house. Then we would hear them say they were short on money. I like them but I sort of shake my head at some of their choices.
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Old 04-26-2013, 10:25 AM   #114
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I'm always surprised by how many obese doctors and nurses I see. Though I also know doctors and nurses who are distance runners or otherwise extremely fit.
. . . and medical professionals who smoke.

This is just an extension of your original question. People who are experts in a particular field don't necessarily follow the advice they give to others nor are they using the skills they practice in their profession to help themselves in their own financial security issues.
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Old 04-26-2013, 10:42 AM   #115
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On the other side of the coin, there are also some good savers/investors that are not smart about spending. For a variety of reasons they fail to enjoy their wealth. That's another thread I suppose.
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Old 04-26-2013, 10:45 AM   #116
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I guess I'm saying that family planning is a set of choices as much as profligate spending.
I suspect you'll get push-back from some parents about that. Again: Life isn't just about money.

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Just don't be surprised if your retirement is put off to a later date.
The total cost of raising a child and sending it to college is about a quarter million dollars, in today's dollars. Median income in the US is about $35k now? Hmm... I don't even want to do the math; it'll depress me too much. And if you have two children...

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I think some of the examples being offered are that people are not making decent choices and then are surprised that some of us can ER.
I think we can restrict the discussion to just plan 'R', rather than going as far as 'ER'.

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When people say that they can't save for retirement but they then post themselves on FB eating expensive dinners and pricy theatre tickets I would say that they are practicing short term thinking.
I don't know anyone who does that.

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When a Dr. makes a poor investment in some company without learning how to do investment research then that makes some people wonder how they an be smart enough to become a Dr. but not smart enough to learn how to invest prudently.
What if the doctor is a conservative investor (perhaps even on ethical grounds)? Shouldn't conservative investing be a valid option? Shouldn't aggressive investing make the difference between levels of success, not between success and failure? Just curious about the boundaries of "cluelessness".

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While that might not be the case for you there are others in this thread who apparently do know "smart" people making poor choices.
Yes, of course. Though, it doesn't make much difference, if people making reasonable choices end up in basically the same place.
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Old 04-26-2013, 11:39 AM   #117
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Is it cluelessness to divorce?
IIRC, the Millionaire Next Door noted that avoiding divorce was a factor in success.

My wife and I are helping a neighbor learn the ropes of a divorce (she, a legal resident, was not prepared). I can say that the antics that go on trigger some primal responses and I don't even know the guy. I think there is a lot of waste in the process as the two parties spar, and the waste is not just the legal fees, but also clinging to real estate that is no longer suitable to the income levels and co-parents being unwilling to come to a sensible arrangement (e.g. live at the midpoint of the two jobs if care-giving is going to be 50/50).

But you know the old joke - why is divorce so expensive? "Because its worth it".

Hope to never be there myself.
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Old 04-26-2013, 11:58 AM   #118
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I'm always surprised by how many obese doctors and nurses I see. Though I also know doctors and nurses who are distance runners or otherwise extremely fit.
The one fat doctor that I have seen in the last 20 years was a woman dermatologist. The rest of them look very ascetic if men, very well kept if women.

And I don't remember ever seeing a doctor smoke, of course in Seattle they could not smoke indoors or close to the door of the building, so they might all smoke and I would never know it.

Ha
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Old 04-26-2013, 12:28 PM   #119
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I don't think there is a credible enough consensus yet to really teach retirement investing in high schools yet. This is something that is relatively new, as pensions have disappeared and people are living longer. We're just slowly adjusting to changes. This forum is still slowly working through many of the issues. And we have no retirement savings, investment, withdrawal consensus here. Could schools teach any one of our approaches to retirement without the rest of us thinking they were handing out some bad advice? Could schools teach our entire range of approaches without confusing everyone and turning them off to the problem altogether? Is there a consensus approach to estimating how your savings will grow during your career and how much you will need to save in order to retire? How many different retirement calculators are there that have really different answers?

I think we can be happy that at least the problems are being worked on a little bit now. We are approaching some useful generalizations. But there is a long way to go.
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Old 04-26-2013, 12:30 PM   #120
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IIRC, the Millionaire Next Door noted that avoiding divorce was a factor in success.

My wife and I are helping a neighbor learn the ropes of a divorce (she, a legal resident, was not prepared). I can say that the antics that go on trigger some primal responses and I don't even know the guy. I think there is a lot of waste in the process as the two parties spar, and the waste is not just the legal fees, but also clinging to real estate that is no longer suitable to the income levels and co-parents being unwilling to come to a sensible arrangement (e.g. live at the midpoint of the two jobs if care-giving is going to be 50/50).

But you know the old joke - why is divorce so expensive? "Because its worth it".

Hope to never be there myself.
Well my finances improved significantly after my divorce. I did my divorce myself so I had no legal fees. My ex and I split everything 50/50 except the retirement funds which she didn't want to deal with so I kept all those, even though both me and her lawyer advised her that she should take her half. There was no alimony.

Post divorce I was able to control spending and moved to a far better paid job. I know this is far from the norm.
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