Big mistakes in retirement

[Katsmeow]

Worst almost-retired mistake: Building a retirement home rather than buying used.

We made a number of mistakes but avoided this one after buying the land. When I really saw how much it was going to cost to build versus buying an existing house, it ended up making so much more sense to buy. We sold the land and bought a house that was bigger than what we planned to build, just as nice and was about $150k cheaper....

 

[pb4uski]

I've got a couple contributions.

Not sure this is a retirement mistake other than perhaps working to long and not living for today. My mom's uncle scrimped and saved to have a bundle to enjoy his retirement. Frugal to a fault and IMO sacrificed too much during his working years. He retired and dropped dead from a heart attack about 6 months later and never really got to enjoy the benefit of a lifetime of sacrifice.

The other one is a friend of mine's retirement plan was the bundle or dough he expected to inherit from his Mom & Dad. Well, after his last parent passes he finds out that the money he expected is held in a trust because his dad didn't want my friend's money grubbing ex-wife to get anything and friend's sister and uncle control the trust. Long story short, he only gets a fraction of what he was expecting. Then, to make matters worse, he builds a new house and changes contractors twice along the way so in the end he pays way more for the house than he should have. He's quite a bit older than me and still working but shoudl be able to retire soon despite these missteps.

 

[frayne]

IMHO the biggest and most common mistake is, living for today like there is no tomorrow and then at 55 years of age realizing there are plenty of tomorrows.

 

[panacea]

A couple my parents know sold their successful business in their 60's for about $25 million. They take a good portion of the money and buy a mansion and the rest of it is "reinvested" in a restaurant and a new dance club type place in a smaller town that would never have the population to support this kind of business. Long story short, the businesses fail, they can't keep up with the house, they lose everything. And actually this is so new, I haven't heard what they plan to do next except there was some talk about moving to California. No idea why. So many things wrong with this. Ugh.

 

[jerome len]

James Clavell wrote a book years ago, I believe its name is Tiapan. In it he advised a younger key manager that had scored her 1st big win to consider this cash as her "screw you money"......because if she didn't like something she was asked to do, she could tell her boss or mega corp to "screw you". I've always treated my retirement account as my "screw you" money........I don't rish it with a 25/75 conservative portfolio at Vanguard. Now, once I saved that.....and it's as safe as I can make it, I spend/risk the excess however I want.....and, do things like buy a nicer car, fly 1st class if it's not too expensive, give my kids nicer gifts at Christmas, whatever I want to do within reason. I owned my own business..l...some with similar businesses made much more....some went bankrupt.....we all get to make choices....some who make 50k a year make better choices than others who make 500k a year.......I've been lucky, careful and now more than anything I'm really thankful!!!!!!!!!!!!

 

[Which Roger]

During the dot-com boom, stock in my Mega Tech Corp reached $80 per share. Then the crash started. Some guy who was close to retirement, and who had $800K in his 401k, was certain that the price could never drop below $50. So when it got down to $50, he moved his entire 401k into company stock. A couple years later, the stock bottomed out at less than a dollar per share. It's recovered somewhat, but still down over 95% for its peak. I don't know if the guy is still working.

At that time, we also had stock options (400 shares at about 10 dollars per share). After the price peaked at $80 and then dropped to $70, a co-worker friend of mind cashed in and bought a car. I held on to my options, the thought being "why sell at 70? Wait until it goes back up to 80." Whoops.

 

[Culture]

We made a number of mistakes but avoided this one after buying the land. When I really saw how much it was going to cost to build versus buying an existing house, it ended up making so much more sense to buy. We sold the land and bought a house that was bigger than what we planned to build, just as nice and was about $150k cheaper....

This is what I want to do; walk away and buy used. However, my wife want the cabinets/counters/tile that SHE wants, not that someone else wanted. She also wants a newly built house, not someone else's "dirty house." She has always had a problem with used things. I have to agree that purchasing a used home and refinishing everything will cost as much as building new, so we might as well do that.


We also have the problem that we want a modest (small) house in a very nice neighborhood. The house have planned is half the size of the other houses in the area (one to two mile radius). No houses like we want have come up for sale in over a year of looking.

I do not want to make my wife sound like a ogre, she earned half the money that will be paying for it, and this is the first splurge she has ever made in her life.

My real complaint is that everyone has dishonest with me at every step. If they had been honest up front, I could have decided whether or not I wanted to build and moved forward. Instead it has been: we can building you a house for 200K, well, not really, it's 300K. Oh, after further evaluation it is 400K. Oh, you also wanted an AC and plumbing? OK, its 450K. Well, we missed something, it is now 500K. I cannot take it anymore.

 

[Amethyst]

You are exactly correct. You just put your finger on a problem that I was thinking about turning into a thread. "How can I become shrewder?" Intelligence does not equal shrewdness. All my life, I've observed people who seem to have been born knowing how to turn events to their own purposes, and wondered why they could do it so much better than I could. I'm still going to run the thread, because even though I am empathic, I can learn to be better at dealing with the world as it truly is.

Amethyst

I can't remember which billionaire investor made this observation, but he said that empathic people make poor investors. What is empathy? It means that you tend to feel others emotions. But an investor hopes to observe others' emotions, and take advantage of them.... What was taken for granted 10 years ago is cast out today, and much of what is taken for granted today will be cast out or even made illegal tomorrow.

Ha

 

[JoeWras]

You are exactly correct. You just put your finger on a problem that I was thinking about turning into a thread. "How can I become shrewder?" Intelligence does not equal shrewdness. All my life, I've observed people who seem to have been born knowing how to turn events to their own purposes, and wondered why they could do it so much better than I could. I'm still going to run the thread, because even though I am empathic, I can learn to be better at dealing with the world as it truly is.

Amethyst

The part that bothers me is that it borders on psychopathy to be the hard nosed investor the billionaire mentions. This isn't my observation, I think we've discussed it somewhere on this board recently.

I don't want to be that person. I need some empathy in me. I think you hit the nail on the head though, Amethyst. Use my intelligence to see that world as it is and deal with it.

 

[calmloki]

You are exactly correct. You just put your finger on a problem that I was thinking about turning into a thread. "How can I become shrewder?" Intelligence does not equal shrewdness. All my life, I've observed people who seem to have been born knowing how to turn events to their own purposes, and wondered why they could do it so much better than I could. I'm still going to run the thread, because even though I am empathic, I can learn to be better at dealing with the world as it truly is.

Amethyst

Interesting. SO is fascinated with the Netflix show "House of Cards". I fail to see the character's motivations. They all seem driven by the desire to influence; to have "power". All manner of machinations and cunning plans within plans to ... change the course of events?

I tend to just deal with things as they are, taking my lesson from a stream that flows around the rock that doesn't easily move. Not good officer material.

 

[Bestwifeever]

I don't see it as such, but some people think getting a puppy three years into retirement would be a mistake both for the cost and the restrictions on our ability to just take off.

 

[robnplunder]

James Clavell wrote a book years ago, I believe its name is Tiapan. In it he advised a younger key manager that had scored her 1st big win to consider this cash as her "screw you money"......because if she didn't like something she was asked to do, she could tell her boss or mega corp to "screw you". I've always treated my retirement account as my "screw you" money........I don't rish it with a 25/75 conservative portfolio at Vanguard. Now, once I saved that.....and it's as safe as I can make it, I spend/risk the excess however I want.....and, do things like buy a nicer car, fly 1st class if it's not too expensive, give my kids nicer gifts at Christmas, whatever I want to do within reason. I owned my own business..l...some with similar businesses made much more....some went bankrupt.....we all get to make choices....some who make 50k a year make better choices than others who make 500k a year.......I've been lucky, careful and now more than anything I'm really thankful!!!!!!!!!!!!

It is Tai-pan.

I have my screw you money now. The hard thing is not to screw myself with it in RE. Plenty of folks have done that, it seems.

Being successful in one business does not mean one will be successful in another. Most small business folks I've seen fail right away or go from one business to another and eventually end up with nothing much to show for.

 

[athena53]

The part that bothers me is that it borders on psychopathy to be the hard nosed investor the billionaire mentions. This isn't my observation, I think we've discussed it somewhere on this board recently.

I don't want to be that person. I need some empathy in me. I think you hit the nail on the head though, Amethyst. Use my intelligence to see that world as it is and deal with it.

Not necessarily. I consider myself to be an empathic person. When the market was tanking, not only did I feel the pain of others who were watching their assets plummet- I felt my OWN pain! I could still, however, use my brain and my memory of earlier crashes to keep myself from selling at the bottom. One of my favorite Warren Buffet quotes: "When others are greed, be cautious. When others are cautious, be greedy". It's not that simple, of course- sometimes there's a darn good reason a particular stock is unpopular- but when the next crash comes (and it will), my main concern will be that I won't have new money from wage income to plow in during the recovery.

 

[MichaelB]

I think the James Clavell book was "The Noble House", a modern day sequel to Tai-Pan.

 

[Mulligan]

This is what I want to do; walk away and buy used. However, my wife want the cabinets/counters/tile that SHE wants, not that someone else wanted. She also wants a newly built house, not someone else's "dirty house." She has always had a problem with used things. I have to agree that purchasing a used home and refinishing everything will cost as much as building new, so we might as well do that.


We also have the problem that we want a modest (small) house in a very nice neighborhood. The house have planned is half the size of the other houses in the area (one to two mile radius). No houses like we want have come up for sale in over a year of looking.

I do not want to make my wife sound like a ogre, she earned half the money that will be paying for it, and this is the first splurge she has ever made in her life.

My real complaint is that everyone has dishonest with me at every step. If they had been honest up front, I could have decided whether or not I wanted to build and moved forward. Instead it has been: we can building you a house for 200K, well, not really, it's 300K. Oh, after further evaluation it is 400K. Oh, you also wanted an AC and plumbing? OK, its 450K. Well, we missed something, it is now 500K. I cannot take it anymore.

I feel for you Culture. Everything you have had to deal with, I haven't. I had a home built for me in a nice neighborhood. But the similarities end there based on scale and location. My "nice neighborhood" is a small town and 1500 sq. feet ranch with basement is considered nice. Being single I didn't have to deal with "added necessities" from a wife. I just basically said I want a 3 bedroom home with a gas fireplace and vaulted ceilings and they did the rest, though I picked out the ceramic tile and carpet, and lights. What was odd was it was built for me, but I didn't ever sign anything and could have walked away and he would have had to sell it himself. Only thing I had to yell at him about was the cheap bastard evidently thought an automatic garage door wasn't part of a normally built home. Well he quickly changed his mind when I said I wouldn't buy it without one.


Sent from my iPad using Tapatalk

 

[Culture]

Wow, a $110,000 closet (500x220 sq ft).

If only it was just the closet .

 

[Culture]

What was odd was it was built for me, but I didn't ever sign anything and could have walked away and he would have had to sell it himself.

While I think your builder is crazy, it is encouraging that there are people who still work on a handshake. My commercial construction jobs come with 75 pages of contract and 2000 page of specifications that you have to have a law degree, engineering degree and construction science degree to understand.

 

[Culture]

You are exactly correct. You just put your finger on a problem that I was thinking about turning into a thread. "How can I become shrewder?" Intelligence does not equal shrewdness. All my life, I've observed people who seem to have been born knowing how to turn events to their own purposes, and wondered why they could do it so much better than I could. I'm still going to run the thread, because even though I am empathic, I can learn to be better at dealing with the world as it truly is.
Amethyst

Fortunately for me, and am very empathetic one-on-one, and practically a sociopath outside of that environment. Thus, I have friends and a wife, and client like me. However, I have no problem using cold-blooded pragmatism outside of this context.

I find I am very different from about everyone else I run across. Most people seem to be all empathy or all sociopath.

 

[Chuckanut]

No. It's better if you do not even think about it, then you would not know what you missed.

But if you talk about Wally, Dilbert's coworker, he's the BIG winnah! Wally retired while at work.

I remember Wally's career goal: To work himself into a position where he had no effect on anything.

 

[NW-Bound]

Not necessarily. I consider myself to be an empathic person. When the market was tanking, not only did I feel the pain of others who were watching their assets plummet- I felt my OWN pain! I could still, however, use my brain and my memory of earlier crashes to keep myself from selling at the bottom. One of my favorite Warren Buffet quotes: "When others are greed, be cautious. When others are cautious, be greedy". It's not that simple, of course- sometimes there's a darn good reason a particular stock is unpopular- but when the next crash comes (and it will), my main concern will be that I won't have new money from wage income to plow in during the recovery.

If and when you buy during a market crash, think of it as an altruistic act. Somebody has to buy, else the dearth of stock buyers would drive the price even lower.

The late Sir Templeton, a famed value investor, said that his mission was to help people. When they wanted to buy, he sold. And when they sold, he bought.

 

[robnplunder]

But if you talk about Wally, Dilbert's coworker, he's the BIG winnah! Wally retired while at work.

Perhaps this is where I should be headed. Do the least amount of work but just enough to fool my manager that I matter. Call me Wally jr.

 

[NW-Bound]

At my former megacorp, more than 1/2 managed to do what Wally did. Then, when I was doing contracting work at a mid-size firm, I was not there long but saw that there were a lot fewer Wallys.

Kilocorps - hey, you see this term here first - cannot afford so much deadwood, although some people pointed out that it is the deadwood (the core of a tree trunk) that holds up a tree.

As we all know, a higher percentage of a young tree is the actively growing part. For an old tree, a huge portion is just the deadwood at the center of the trunk. Companies are just like that.

PS. Megacorp: A corporation with more than 100,000 employees.
Kilocorp: A corporation with 1,000 to 10,000 employees.

 

[Mulligan]

While I think your builder is crazy, it is encouraging that there are people who still work on a handshake. My commercial construction jobs come with 75 pages of contract and 2000 page of specifications that you have to have a law degree, engineering degree and construction science degree to understand.

Wow! One page into reading that, I think I would have been looking at the "used homes" for sale.


Sent from my iPad using Tapatalk

 

[aja8888]

Wow! One page into reading that, I think I would have been looking at the "used homes" for sale.


Sent from my iPad using Tapatalk

Have a peek at a Variable Annuity contract and see how many pages of terms and conditions there are in one of those in comparison.

 

[MuirWannabe]

During the last 10 years, at separate times, two young nurses (mid to late 20's) rented the house next to us. Both got jobs in California with signing bonuses. I heard they were going to start at around $100K.

If good nurses (top tier?) make this kind of money, I should have pointed my daughters into nursing instead of general business.

I think nursing is a great career for a young person. But I'm not sure they really make this much money. Maybe in CA. I have two daughters that are 25 and they are both RN's. They make around $55-60K in Texas. Still pretty decent for a young person. Hard to believe CA can double it but maybe so.
Also, I'm not sure the salary growth potential over the years is there for nurses the way it is for business and other professionals. Lots of flexibility and security with nursing though.