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Will this forum become extinct
Old 10-24-2009, 09:49 AM   #1
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Will this forum become extinct

Many of us on here can FIRE because we save, LBYM and invest sensibly. But big factors are also the good benefits like pensions and health care we have from our emplyers that younger workers no longer get. So my question is simple. With the death of these benefits will anyone be able to FIRE in the future?
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Old 10-24-2009, 10:05 AM   #2
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Hard to say what will happen, but FIRE will not be extinct even if SS gets stingier and pensions continue to wither. On one hand, current trends toward the decline of pensions and retiree health insurance (at least in the private sector) would seem to indicate that middle class retirement -- which was really only a widespread reality for the last few decades -- may become somewhat more elusive. Yet it's still possible for someone who lives simply, earns reasonably well and invests in their 20s and 30s to make it, even with no pension.

And health care reform remains the wild card. Depending on the details of whatever health care reform passes -- and how it's paid for -- it could either help or hinder the Quest for FIRE. The Baucus plan, for example, would make it easier for people who are able to live well (but simply) on a fairly low income.

I would claim that many of the benefits people have been receiving in the last few decades are unsustainable given demographics and global economic changes. These benefits were made possible by what I thought was an unsustainable blip -- dare I call it a "bubble" -- in post-WW2 prosperity. We've spent the last 2-3 decades in denial that that era was coming to a close, and now we have entitlement crises and a huge amount of debt to show for it, as we continued to spend as if the post-WW2 and prosperity was sustainable and continued economic growth was a birthright.

Don't mean to be Debbie Downer here, but it does show that more than ever, workers (especially in the private sector) MUST get an early start if retirement at a reasonable age is going to be possible. It's more of a wake-up call than a statement of futility.
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Old 10-24-2009, 10:11 AM   #3
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It's more of a wake-up call than a statement of futility.
What he said.
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Old 10-24-2009, 10:31 AM   #4
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There are two questions here...

1. Will this forum become extinct?

I hope not. As far as this particular forum goes, more than money is discussed. It's about sharing and hope...regarding all types of subjects.

2. With the death of these benefits will anyone be able to FIRE in the future?

It depends on the person. What sacrifices are they willing/able to make? Even with benefits, some people just get by. It takes grit, hard work, and determination to reach the FIRE goal...and many other types of goals as well. I think anyone that wants to retire early badly enough will find a way.
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Old 10-24-2009, 10:48 AM   #5
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So my question is simple. With the death of these benefits will anyone be able to FIRE in the future?
(bold added by me)
This is one of the few questions that I can give an 'absolutely yes, someone will be able to FIRE in the future'.
Now, will as many people be able to FIRE? Probably not unless there is an equivalent number of people that understand they won't be able to FIRE unless they do more preperation when they are young.
There are people that are able to FIRE now without any of the benifits you mention, so I don't see why that won't continue in the future.
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Old 10-24-2009, 10:58 AM   #6
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I think ultimately the number of people able to retire at all or retire early will depend a lot more on productivity growth than on any specifics regarding pensions or benefits. When worker productivity grows, then compensation of all types (benefits and wages) go up, which makes discretionary spending or saving possible. If productivity goes down, there will be fewer retirees (and standards of living will decrease).

The money for retirement doesn't come from the government or from businesses. It ultimately comes from productivity. Government policies and business practices can have a lot to do with increasing or decreasing this productivity--right now I think we are headed in the wrong direction on this front, but the pendulum will swing back when things get bad enough.
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Old 10-24-2009, 10:58 AM   #7
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I'm more concerned about low "new normal" future portfolio returns that could make a historic SWRs too aggressive than I am worried about the demise of pension benefits that I don't get or Social Security which I don't expect.

On the health care side, the trend toward increasing deductibles and ending 1st dollar insurance could actually help eventually keep costs down as people finally begin to factor price into their health care decisions. And as I'm more concerned about the rate of health care inflation than I am about whether or not someone else will pick up my tab, I see that trend as a step in the right direction.
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Old 10-24-2009, 11:01 AM   #8
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There are quite a few young dreamers around here who plan on FIREing with no pension, no SS and no benefits of any kind... So it can still be done. But:

1) Benefits made it possible for people with a wide range of incomes to retire early. Now that the benefits are going away, I think that only those young dreamers making very good livings will be able to contemplate FIRE, especially if heathcare costs for early retirees continue to skyrocket. Those costs alone will require accumulating much larger nest eggs (forget retiring on $20K a year...).

2) I worry that higher taxes down the road will make it even more challenging to retire early.
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Old 10-24-2009, 11:08 AM   #9
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I would claim that many of the benefits people have been receiving in the last few decades are unsustainable given demographics and global economic changes. These benefits were made possible by what I thought was an unsustainable blip -- dare I call it a "bubble" -- in post-WW2 prosperity. We've spent the last 2-3 decades in denial that that era was coming to a close, and now we have entitlement crises and a huge amount of debt to show for it, as we continued to spend as if the post-WW2 and prosperity was sustainable and continued economic growth was a birthright.
I wonder if some of these benefits were ever actuarially solvent, particularly in the public sector. I'd like to see an analysis comparing the present value of the output of an old time GM worker against the PV of his salary and benefits package. I'd be surprised if an awful lot of those old pensions didn't have negative NPVs.
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Old 10-24-2009, 11:14 AM   #10
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Ziggy gave my answer better than I could, so I'll leave it at that. FIRE is becoming an endangered species --- without fear of outright extinction.
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Old 10-24-2009, 11:45 AM   #11
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With the death of these benefits will anyone be able to FIRE in the future?
  1. Corporate / government pensions will continue to go away - so won't be a foundation of future ER strategies.
  2. SS will get increasingly means tested - so that will not be a foundation of ER.
  3. Society will "universalize" health care (either through government or private means) so that probably won't stop ER.
So you're left with good old, "working, saving, and investing".

Did a quick spreadsheet - to get a portfolio of 20x current salary, and assuming 8% investment return and 3% salary increases -- someone would need to save 35% of their pay each year (taxes ignored) to get there inside of 30 years.

That's a lot to save - but dual income households that "live off one income" have a shot........
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Old 10-24-2009, 11:55 AM   #12
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I think the post ww-II US prosperity "bubble" mentioned by Ziggy applies not only to US worker wages, but also to corporate returns. I'm not sure 8% annual growth in equities going forward is realistic.

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So you're left with good old, "working, saving, and investing".

Did a quick spreadsheet - to get a portfolio of 20x current salary, and assuming 8% investment return and 3% salary increases -- someone would need to save 35% of their pay each year (taxes ignored) to get there inside of 30 years.

That's a lot to save - but dual income households that "live off one income" have a shot........
So, maybe 40% savings to get there with lower returns on investment.

And, ignoring taxes is probably gonna be a "gotcha" too.

Maybe 45% . . .
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Old 10-24-2009, 12:07 PM   #13
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Benefits made it possible for people with a wide range of incomes to retire early. Now that the benefits are going away, I think that only those young dreamers making very good livings will be able to contemplate FIRE. (forget retiring on $20K a year...).
I worry that higher taxes down the road will make it even more challenging to retire early.
I disagree that only people making a "very good living" will be able to contemplate FIRE. It all depnds on a persons ability to LBYM. I make less than the average individual income in the country(far less than those on this forum) and still expect to FIRE no less than 10 years before "normal retirement" age. "Forget retiring on $20K/yr"... Why? I could retire on <$12K/yr not counting health ins. If I get a high deductable, catastrophic injury plan, it'll cost less than $500/mo for a total of less than $18K/yr in today's dollars for me to retire. Anyone CAN do that it's just a matter of giving up the luxuries and living on less.
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Old 10-24-2009, 12:12 PM   #14
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I disagree that only people making a "very good living" will be able to contemplate FIRE. It all depnds on a persons ability to LBYM. I make less than the average individual income in the country(far less than those on this forum) and still expect to FIRE no less than 10 years before "normal retirement" age....
Good for you, Aaron! You might add that you started keeping an eye on that goal very young. I, too, had an unimpressive income and lived in an expensive area. It can be done.
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Old 10-24-2009, 12:18 PM   #15
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I think people will continue to FIRE even without pensions. Semi-ER may become more prevalent as people find ways to monetize their interests and passions or do it just for the added social contact or to fund the gap. I am an example - still ER'd, but will probably be more Semi-ER'd in the future.

There are others in this forum who have also ER'd without pensions.

I studied my 10 year return and it is only 6.30% (nominal as of 10/9/09). That is for a portfolio that had massive additions of funds as I went through the highest earning period of my career. The same should hold roughly true for anyone retiring in the late 2000s.

There are a few developments in favor of the ability to retire early. There is an added awareness of the dangers of debt as a result of the 2008/09 downturn and more double-income households now than when those ER'ing now were starting off. Starter homes are affordable again. On the other hand, I think the legions of people working low wage jobs in retail and other service sectors may never be able to save enough even if they are so inclined.

As to whether this board will continue? Maybe technology will make it obsolete and replace it with something even better.
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Old 10-24-2009, 12:27 PM   #16
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As to whether this board will continue? Maybe technology will make it obsolete and replace it with something even better.
We'll get digital TX/RX/GPS nanotechnology implanted in our forearms and noise cancelling microphones implanted in our upper lips. We will be interconnected wirelessly and able to use speech-to-text translators to do our posts in real time, and text-to-speech for the reading them. We will hear each other in full duplex on real time multichannel comm systems.
[end of geek-burst]
A lot of this technology already exists stand alone, it just has not been fully integrated for this purpose. Oops, I just did a public release of my next invention.
Stuff like this is not so far away, folks.
Maybe one of our Young Dreamers will see this post and do the math and design a system. Have fun!
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Old 10-24-2009, 12:33 PM   #17
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Did a quick spreadsheet - to get a portfolio of 20x current salary, and assuming 8% investment return and 3% salary increases -- someone would need to save 35% of their pay each year (taxes ignored) to get there inside of 30 years.

That's a lot to save - but dual income households that "live off one income" have a shot........
I think a key is that spending cannot increase at the same percentage as the salary. If you start at 10% savings, and increase your spending by 1.5% while your salary increases at 3%, and your investments earn 8%, you get to 25x your 'spend' in 30 years.

Reality is a lot more complex since expenses jump when you buy a house, drop when you get married (if both work), and jump again when you have children. Larry Kotlikoff and Scott Burns talk about this in their book, Spend Till the End.
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Old 10-24-2009, 12:33 PM   #18
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Many of us on here can FIRE because we save, LBYM and invest sensibly. But big factors are also the good benefits like pensions and health care we have from our emplyers that younger workers no longer get. So my question is simple. With the death of these benefits will anyone be able to FIRE in the future?
No, because it seems a good many folks on the forum aren't FIRE'd, but working towards/hoping to be. There will always be those working towards the FIRE goal which is what this forum is much about.
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Old 10-24-2009, 12:33 PM   #19
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I agree with Ziggy about many people retiring early in comfort were fortunate to be in the right place at the right time. Though we have no pensions nor benefits, my wife being able to quit and I to work part-time, we were also fortunate to be saving money and investing during the long bull market of 1980-2000. There will still be people who retire early, but they will need to be more frugal, willing to settle for a lesser standard of living in retirement, and being a lot more financially savvy than the lucky baby boomers. Life is not fair, I know.
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Old 10-24-2009, 02:01 PM   #20
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I disagree that only people making a "very good living" will be able to contemplate FIRE. It all depnds on a persons ability to LBYM. I make less than the average individual income in the country(far less than those on this forum) and still expect to FIRE no less than 10 years before "normal retirement" age. "Forget retiring on $20K/yr"... Why? I could retire on <$12K/yr not counting health ins. If I get a high deductable, catastrophic injury plan, it'll cost less than $500/mo for a total of less than $18K/yr in today's dollars for me to retire. Anyone CAN do that it's just a matter of giving up the luxuries and living on less.
Well, you want to buy a high deductible policy but apparently you plan on never being sick and never have to pay any part of the deductible. And when your premiums go up 7% or so a year, which part of your no-frill budget are you going to squeeze to keep up?
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