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Re: Mommas, don't let your babies grow up to be...
Old 03-31-2005, 09:40 AM   #41
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Re: Mommas, don't let your babies grow up to be...

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Doesn't exactly take a genius to look at the pay charts for Os & Es and choose one... *However, the extra pay isn't free and I knew alot of Es, that wanted NO part of all the stuff that goes with being an O... *
Noticed some of those big bonuses for spec ops, etc... look tempting <NOT>... Wonder, if he'll actually end up with a short term paycut as a butter bar w/o those bonuses and tax bennies... *

I took a cut enterring service and probably didn't reach the break even point until I went over 20... It's all gravy now. 8)
GDER: One point that seems to always be overlooked when discussions about lower salary with a COLA"d pension, verses larger salary without same is TAXES.

I have tried to put this point across to my older daughter. She works for the state of Calif. At a certain point she will qualify for a COLA'D pension.
My youngest daughter is a Reg. Mgr for a large retail company. She has no pension, and no matching deferred comp. scheme.
My youngest daughter, because she makes far more money than my older daughter, pays a helluva lot more in taxes. That fact makes the differences in "after tax spendible", a little less attractive.
Added to that, is my youngest daughter spends her days in a highly competitive, cut-throat invironment, while my older daughter puts in her time with the state,
has regular hours, lots of paid holidays, and a comparatively "stress free environment".
All my older daughter sees is that her sister makes more money than her.
While I personally, while working, was in my younger daughters situation, I think by far, my daughter that works for the state has the best deal.
She'll figure that out later in life.
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Re: Any middle class ER wannabe's?
Old 03-31-2005, 12:10 PM   #42
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Re: Any middle class ER wannabe's?

GD-ER, you are right, no peanut gallery about it. I guess there is a (possibly false) mental comfort of garanteed income streams. Even if I totally flop as an investor, I'll at least have a survivable income at 65. But I'm starting to see that it's not as big an incentive as it looks...
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Re: Any middle class ER wannabe's?
Old 03-31-2005, 02:17 PM   #43
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Re: Any middle class ER wannabe's?

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"My wife grew up a PK" Huh?
Preacher's kid.
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Re: Any middle class ER wannabe's?
Old 03-31-2005, 03:21 PM   #44
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Re: Any middle class ER wannabe's?

Ahh yes - as an officer, you get to do 'extra duties'.

The thread on taxes is very important - while many of my active duty military friends moan about what they make in comparison to the civilian sector, I've explained to them that all of my salary is taxed with my only sheltering being the 403B and the various flexible spending accounts. The military has these wonderful allowances which aren't taxed - bottom line, it is what you get to keep not what you make---better cash flow in the military allowed me to save quite a bit in a short amount of time. Now that I'm back in civilian land, the cash flow is quite a bit less.

Bridget
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Re: Mommas, don't let your babies grow up to be...
Old 03-31-2005, 03:39 PM   #45
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Re: Mommas, don't let your babies grow up to be...

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I started to mention taxes, but there are so many variables and what will the tax code be 30 years from now?

The additional $10-20k currently gets taxed at highest applicable rate for individual/couple.
Investing the after tax portion and then paying tax as applicable on cap gains, dividends, etc. (currently at reduced rates) and then doing SWR withdrawals is a fairly complex problem with lots of variables.

{IF the additional salary<or part> could be invested deferred in a 401 or trad IRA, it is more analogous to a pension, in that it is taxed when it is received. A Roth<&401> is probably a better alternative depending on eligibility.}

I suppose 60 years from now you could add all the applicable taxes paid on the extra income, investment returns and compare it to cola'd pension taxes... To further complicate matters, when/if SS is received the pension could be taxed at a higher rate and/or result in more of the SS being taxed. The whole problem hurts my head thinking about it.

Sooo, you could get out your crystal ball on future tax codes and work through all the numbers... Personally NOT at all sure of the result.

Of course, if/when the additional salary is just used for more goodies -- the pension wins by default...
GDER: I guess I didn't make myself clear when I was talking about taxes.

I was talking about "current" income taxes based on current income.
Daughter #1 makes less than Daughter#2.
Daughter #1 has cola'd pension. Daughter #2 has no pension.
Daughter #1 has phantom income that is not taxed, due to eventual cola'd retirement.



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Re: Any middle class ER wannabe's?
Old 04-02-2005, 08:30 PM   #46
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Re: Any middle class ER wannabe's?

I grew up in an upper middle calss family, but received the bare minimum to live (clothes and such, had enough to eat), while watching the halfsiblings living it up. The wife had two familes one was dirt poor the other similar to mine.

Of course me and the wife made many mistakes while learning about money and investing, however now we are on the right track and save almost, 20% of our gross income. That number will go up substantially within the next 2-3 years.

I think the adage of government jobs/retirements stating "It'll let you live comfortably, but will not make you rich," is apropriate. Personally if I had to do it over I'd prolly go with the savings and screw the pension. The reason, my wife makes about 2x my salary. The comparasions of our experience is, she has a total of 7 years in her industry, no college, numerous promotion possibilities, and a strong work ethic. My experience is, 4 year degree, 14 years in my industry, no promotion potential, and a strong work ethic.

My opinion could be colored by my current station in life. I have everything I want/need and if I recieved a 100% increase in pay my wife and I would be sitting very nice and could retire five years earlier.
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Re: Any middle class ER wannabe's?
Old 04-03-2005, 03:09 AM   #47
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Re: Any middle class ER wannabe's?

I had a strong "work ethic" from Day One. Before I got
out of high school I had the following jobs:

Pin setter in a bowling alley (dated myself there)
Caught and sold catfish (probably illegal now)
Cleaned barber shops
Worked in a state park
Mowed/raked lawns
Worked on farms (baled hay, etc)
Worked in a grocery store/butcher shop

After high school (1962) I held multiple jobs/sources
of income almost continuously until about 1976, all the while almost 100% oblivious to ER possibilities. Never saved a dime.
Interesting to speculate about what could have been
accomplished had I been aware earlier.

JG

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Re: Any middle class ER wannabe's?
Old 04-03-2005, 01:06 PM   #48
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Re: Any middle class ER wannabe's?

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Before I got
out of high school I had the following jobs:

Pin setter in a bowling alley (dated myself there)
I did this too. Only place in the town that was cool in summer. I don't remember what the pay was, but I got some tips so overall it was pretty good. I was 12-13 years old. Main thing I remember was getting the hell out of the way of flying pins, and being cool. Place was called "Dixie Bowl", and well run by a friendly blond named Vi.

Mikey

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Re: Any middle class ER wannabe's?
Old 04-03-2005, 03:23 PM   #49
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Re: Any middle class ER wannabe's?

You sound like me mikey.......and I bet you kept your weight in an acceptable range all your life!
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Re: Any middle class ER wannabe's?
Old 04-05-2005, 08:49 AM   #50
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Re: Any middle class ER wannabe's?

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$70,000 last year before tax. Spent about 32,000 after tax. I'm 52 this year and will probably work another year unless our reorg ticks me off too much. Spent everything I earned till about five years ago but had various positions with a company that has a good cola pension. Got to the point last year where pension will cover all expenses with some left over for fun. Will have income from a rental and a mortgage as well . Not awake yet have a week off.

Bruce
We are in very similar situation. Clearly I've learned from this board that ER is destined for the very few, even though the opportunity is there for many. I'm turning 50 this year which is the minimum age to get access to that COLA'd pension. I received my SS yearly estimate a couple weeks ago. It is always interesting to see one's working life represented by yearly income.

I doubt if many take medium income Government jobs because of the possible great pension benefit in the far future, they should, but in my examination of my coworkers, most never considered it. If anything the benefit that attracted them was the paid health plans. I got in 6 months before my Son was born, way-cool to have that potential devistating expense suddenly completely covered.

I would point out that one of the cool things about these types of pensions is that they especially reward those that are effective in promoting during their careers, as the calculation is based on your final salary, yet the withholding is based on your current salary. If you can end on a high note, and not get trapped into spending habits that chew up your salary as it slowly increases, you are In Like Flint. I'm going to work one more year, mostly because at that point I will be maxed out career/salary wise. The only advantage to staying after that for me would be the actuaries betting I'll die sooner, which is worth about 3k more per year worked. Not worth it to me, but overall Extremely worth it to 95% of my coworkers. ER is not for everybody. Yet I can barely contain my enthusiasm for it, while my peers scratch their heads and wonder why I'd "throw away" all that potential money.
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Re: Any middle class ER wannabe's?
Old 04-06-2005, 03:37 AM   #51
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Re: Any middle class ER wannabe's?

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* ER is not for everybody. * *Yet I can barely contain my enthusiasm for it, while my peers scratch their heads and wonder why I'd "throw away" all that potential money.
Look wise and mysterious and say time my friend time. That will confuse the heck out them. There is one fellow that works with me that gets it though.
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Re: Any middle class ER wannabe's?
Old 04-06-2005, 08:32 AM   #52
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Re: Any middle class ER wannabe's?

I know of only one co-worker who "gets it". It's a little lonely in that regard. But I don't think it's a matter of not grasping ER for most people as much as the fact that hardly anyone has planned and saved for it..it is so far out of reach that they prefer not to think about it. :-/
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Re: Any middle class ER wannabe's?
Old 04-06-2005, 10:30 AM   #53
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Re: Any middle class ER wannabe's?

Some people get it early as does the people on this board, and some get it late..too late when there is nothing they can do about it but all eventually get it.
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Re: Any middle class ER wannabe's?
Old 04-13-2005, 10:02 AM   #54
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Re: Any middle class ER wannabe's?

Hi there! My DBF and I are 37 yrs old and middle class. We have many discussions about ER and although he'd really like to do it, he really doesn't believe that ER is possible for people like us.....He reads the boards here and realizes that we don't have a large income like some of the folks here, and we aren't going to make a killing on a relestate sale or see a time when investing reaped huge rewards as it has in the past. We won't have a pension to cover our healthcare, and all the money we've paid into social security may not be there when we are older.....I still believe anything is possible but need some help encouraging him.... Last night one of our accountant friends told us that ER just isn't possible for regular folks anymore. My DBF would like to go see a financial planner (fee only, of course) to find out if there's any hope....anyone have a similar situation or any encouraging thoughts??

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Re: Any middle class ER wannabe's?
Old 04-13-2005, 10:17 AM   #55
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Re: Any middle class ER wannabe's?

Adventuregirl, maybe one approach is not thinking about ER but thinking about the FI part of the equation. I didn't think about retiring until about a year ago. But we have lived below our means for some time.

There are many advantages in the LBYM lifestyle beyond the possibility of ER. I am sure many could point to more, but some are:

1. You free yourself from worry about having to service too much debt if you incur as minimal debt possible. That worry is stressful and it inhibits the ability to be flexible in changing jobs or careers.

2. You won't get accustomed to a lifestyle that may be hard to give up in the future.

3. You will find satisfaction in life from things other than money and stuff.

And you may be able to retire early too.
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Re: Any middle class ER wannabe's?
Old 04-13-2005, 10:42 AM   #56
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Re: Any middle class ER wannabe's?

Hi Martha! We have been practicing a LBYM lifestye and have paid off our credit cards, bought used vehicles with cash, and carry a low-interest, low$$ mortgage. We enjoy many hobbies that are free (hiking) and some that are more costly, (horse and motorcycle) but even the costs for these pastimes are kept to the minimum. It does feel great to have no worries about bills etc....our extra cash goes into our 401Ks, but I wish we could do more than just hope that some day it will be enough....

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Re: Any middle class ER wannabe's?
Old 04-13-2005, 11:52 AM   #57
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Re: Any middle class ER wannabe's?

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Hi Martha! We have been practicing a LBYM lifestye and have paid off our credit cards, bought used vehicles with cash, and carry a low-interest, low$$ mortgage. We enjoy many hobbies that are free (hiking) and some that are more costly, (horse and motorcycle) but even the costs for these pastimes are kept to the minimum. It does feel great to have no worries about bills etc....our extra cash goes into our 401Ks, but I wish we could do more than just hope that some day it will be enough....

Adventuregirl

It's tough. In some ways I am glad I didn't even think about the possibility when I was 37. But, remember the power of compounding. Also, opportunities come along. If you save, in and out of the 401(k), you might be able to jump on those opportunities. As Cut Throat says, he views market drops as buying opportunities. And don't forget UncleMick, his Norwegian widow and deGaulle.
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Re: Any middle class ER wannabe's?
Old 04-13-2005, 12:24 PM   #58
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Re: Any middle class ER wannabe's?

adventuregirl-- My plan was to retire in 2016, but I didn't really think it was a real possibility. The way I figured it was even if we didn't have enough to retire on at least we'd have a nice nest egg.

The DW went to one of the financial planners, who advised that 2016 probably wasn't feasible, but 2018 was, considering our financial situation at the time. At that time, he did ask how we hadn't filed bankruptcy with our high debt ratio.
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Re: Any middle class ER wannabe's?
Old 04-13-2005, 01:13 PM   #59
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Re: Any middle class ER wannabe's?

O.K., so I've seen several references, but what is the Norwegian widow? DeGaulle (other than former head of France)?
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Re: Any middle class ER wannabe's?
Old 04-13-2005, 01:45 PM   #60
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Re: Any middle class ER wannabe's?

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O.K., so I've seen several references, but what is the Norwegian widow? DeGaulle (other than former head of France)?

This is really UncleMicks to answer but deGaulle said: "God Looks after Drunkards, Fools and The United States of America." I think of that when I am down on the future.

The "Norwegian Widow" is his story about the old lady who lived in her little frugal home in the country and each day she would trot out to the mail box to pick up her dividend checks from stocks so wisely picked by her long dead spouse. Or something like that.

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