Economist blog post on retirement

[seabourne]

Pensions: Party until you die? | The Economist

Worth reading, in the vein of our discussions here.

[haha]

Excellent and IMO realistic article. Doesn't seem to have any axes to grind or products or services or even ideas to sell. Though I suspect that we will hear from those who tend to think any article about working longer is a conspiracy by the state to trick us into working or by the financial services industry into buying more of their stuff.

Ha

[REWahoo]

Quote:

Originally Posted by haha Though I suspect that we will hear from those who tend to think any article about working longer is a conspiracy by the state to trick us into working or by the financial services industry into buying more of their stuff.

Conspiracy? Nah, that's nuts. More along the lines of a coordinated effort.

[W2R]

I have a (tiny) pension along with other income sources, and plan to party until I die.

Now, one can never tell how lavish the party will be. But frankly, I don't care. My party will always be the best party imaginable, whether frugal or extravagant.

[Gumby]

A decent article. However, the whiny comments annoyed me.

[DeborahB]

The whiny comments were VERY annoying!

[Onward]

Quote:

Originally Posted by seabourne Pensions: Party until you die? | The Economist Worth reading, in the vein of our discussions here.

Thanks for the link to that blog. Interesting stuff.

[ziggy29]

IMO, it's just another reminder that the concept of a long, healthy retirement as a middle class expectation was an anomaly. The whiny comments (such as they are) seem to be from folks who expected that retirement deal to be the "new normal" rather than the unsustainable anomaly it appears to have been.

Middle class retirement certainly isn't dead, but to achieve it people are increasingly going to have to save and invest until it hurts in their 20s and 30s. The "new paradigm" for retirement is that if you wait until your 40s and 50s to think about saving for it, it's likely to be too late -- especially if you hoped to retire before 70.

[W2R]

Quote:

Originally Posted by ziggy29 IMO, it's just another reminder that the concept of a long, healthy retirement as a middle class expectation was an anomaly. The whiny comments (such as they are) seem to be from folks who expected that retirement deal to be the "new normal" rather than the unsustainable anomaly it appears to have been. Middle class retirement certainly isn't dead, but to achieve it people are increasingly going to have to save and invest until it hurts in their 20s and 30s. The "new paradigm" for retirement is that if you wait until your 40s and 50s to think about saving for it, it's likely to be too late -- especially if you hoped to retire before 70.

I don't agree. This is still a great country and I think anybody without dependents can find a way to retire in ten years if they put all that "whining energy" into LBYM and very hard work. Jacob (from the early retirement extreme blog) did it in what, five years? I went from broke to retired in ten years though some might say I "cheated" by purposely opting to take a federal job, with superior benefits. Aaron is making phenomenal progress on his goals to retire early, despite a lower salary than many of us.

[REWahoo]

Quote:

Originally Posted by W2R ...I think anybody without dependents can find a way to retire in ten years if they put all that "whining energy" into LBYM and very hard work.

While that may be true, it is much easier to continue to expend energy whining than to do what you describe. If that wasn't the case then this forum would be frequented by the mainstream instead of a few thousand of us oddballs.

[IndependentlyPoor]

Quote:

Originally Posted by ziggy29 IMO, it's just another reminder that the concept of a long, healthy retirement as a middle class expectation was an anomaly. The whiny comments (such as they are) seem to be from folks who expected that retirement deal to be the "new normal" rather than the unsustainable anomaly it appears to have been. Middle class retirement certainly isn't dead, but to achieve it people are increasingly going to have to save and invest until it hurts in their 20s and 30s. The "new paradigm" for retirement is that if you wait until your 40s and 50s to think about saving for it, it's likely to be too late -- especially if you hoped to retire before 70.

Agreed.
It was an anomaly, but who knew. I grew up in a lower middle-class family. Dad worked 42 years at a refinery and retired with cushy COLAed pension and full medical. I grew up thinking that was just the way things were. Gosh, if blue-collar Dad's retirement was that good, everybody's must be.

Wrong!

Judging from the reactions I got, I was probably the first new grad engineer who had ever asked about pensions in a job interview. I picked which mega-corp I was going to work for based partially on the existence of a pension plan. That "stock option" stuff that Intel was touting sounded just to iffy.

[ziggy29]

Quote:

Originally Posted by W2R I don't agree. This is still a great country and I think anybody without dependents can find a way to retire in ten years if they put all that "whining energy" into LBYM and very hard work. Jacob (from the early retirement extreme blog) did it in what, five years? I went from broke to retired in ten years though some might say I "cheated" by purposely opting to take a federal job, with superior benefits. Aaron is making phenomenal progress on his goals to retire early, despite a lower salary than many of us.

Sure, it will still be possible. But it would also be critical to be completely or nearly debt-free.

But many of these people enter their 50s with large mortgages, car payments and so much other stuff. Folks who can save half of their after-tax cash flow (or even more) can still "make it" to a reasonable retirement age. But those who are heavily burdened by monthly payments that suck up what could otherwise be retirement savings are swimming against the tide.

[W2R]

Quote:

Originally Posted by ziggy29 Sure, it will still be possible. But it would also be critical to be completely or nearly debt-free. But many of these people enter their 50s with large mortgages, car payments and so much other stuff. Folks who can save half of their after-tax cash flow (or even more) can still "make it" to a reasonable retirement age. But those who are heavily burdened by monthly payments that suck up what could otherwise be retirement savings are swimming against the tide.

Paying off credit card debt, the car, and a mortgage is part of what the LBYM part is all about. Do you think that the "house fairy" just came along and gave me a house during those ten years? I sure didn't have any or even one dollar in equity at age 50. Or perhaps the "car fairy" gave me my Solara. Jacob and Aaron have done far better than me in their progress towards becoming debt free and retired, within a very short time. Watch Dave Ramsey or Suze Orman. If a person doesn't LBYM and work very hard then he/she can continue to whine loudly while stacking up bigger and bigger monthly payments.

It's not just SAVING over half (try much more than that, please!) of one's income. It's applying that much to one's future, which means getting out from under.

[ziggy29]

Quote:

Originally Posted by W2R Paying off credit card debt, the car, and a mortgage is part of what the LBYM part is all about. Do you think that the "house fairy" just came along and gave me a house during those ten years? I sure didn't have any or even one dollar in equity at age 50. Or perhaps the "car fairy" gave me my Solara. Jacob and Aaron have done far better than me in their progress towards becoming debt free and retired, within a very short time. Watch Dave Ramsey or Suze Orman. If a person doesn't LBYM and work very hard then he/she can continue to whine loudly while stacking up bigger and bigger monthly payments.

Like I said, it can be done but it is far from the norm and I don't know that the masses have it in them. I have no interest in arguing this point.

[W2R]

Quote:

Originally Posted by ziggy29 Like I said, it can be done but it is far from the norm and I don't know that the masses have it in them. I have no interest in arguing this point.

I agree - - they'd rather whine loudly and assume that they are entitled and just "can't" retire. I think know that if one doesn't believe it is possible, it won't be.

[W2R]

Quote:

Originally Posted by IndependentlyPoor Judging from the reactions I got, I was probably the first new grad engineer who had ever asked about pensions in a job interview. I picked which mega-corp I was going to work for based partially on the existence of a pension plan.

Me, too. I chose a job with a lower salary partially due to the pension plan and health benefits. It is not rocket science to discover that the whole compensation package needs to be considered when comparing job offers. Besides, my mother would never have died in peace (back in 2007) if she had thought her "little girl" didn't have a pension coming to her.

[FIREd]

I think that this article is a very realistic depiction of the challenges faced by future retirees. Guaranteed retirements for the masses was never the norm historically and the last 70 years were probably a fluke in that regard. It's a tough pill to swallow for those who have come to see that fluke as the norm.

But even for those of us who have managed to save a good deal of money, funding a comforatble retirement could become more challenging in the future. Low returns on investments, lower SS benefits, higher taxes and perhaps a bout of inflation could make it far more challenging than we have come to expect. A few years ago, a 4% SWR seemed adequate and universally acceptable. Now it looks too high. As Professor Zvi Bodie points out, perhaps earned income should still be the bulk of one's retirement income (paradoxically). That's why ESR has become more appealing to me over this past year. My simulations show that earning even a few thousand dollars a year could greatly increase our portfolio's survivability.

[DeborahB]

Virtually everyone I work with (all younger) finds it impossible to max out the 403b plan. I keep telling them that's what you absolutely need to do. They mostly have brand new houses with lots of gadgets, and large cars to fit the kids in... I'd rather retire early.

[W2R]

Quote:

Originally Posted by FIREdreamer I think that this article is a very realistic depiction of the challenges faced by future retirees. Guaranteed retirements for the masses was never the norm historically and the last 70 years were probably a fluke in that regard. It's a tough pill to swallow for those who have come to see that fluke as the norm. But even for those of us who have managed to save a good deal of money, funding a comforatble retirement could become more challenging in the future. Low returns on investments, lower SS benefits, higher taxes and perhaps a bout of inflation could make it far more challenging than we have come to expect. A few years ago, a 4% SWR seemed adequate and universally acceptable. Now it looks too high. As Professor Zvi Bodie points out, perhaps earned income should still be the bulk of one's retirement income (paradoxically). That's why ESR has become more appealing to me over this past year. My simulations show that earning even a few thousand dollars a year could greatly increase our portfolio's survivability.

A job (or reducing my expenditures, since I refuse to work any longer) makes a huge difference in my computations, too.

Luckily, I have discovered that during my six months of retirement so far, my desire to spend has decreased dramatically. There is no more longing for "good for me" presents to myself, and honestly there is nothing that I could buy that would make me feel happier than I already am (if there was, I probably would have bought whatever-it-is since I can afford to spend more). So far, so good.

[ziggy29]

Quote:

Originally Posted by thinker25 Virtually everyone I work with (all younger) finds it impossible to max out the 403b plan. I keep telling them that's what you absolutely need to do. They mostly have brand new houses with lots of gadgets, and large cars to fit the kids in... I'd rather retire early.

I don't know if it's a denial or just the assumption that retirement will somehow work itself out. A lot of folks (myself included) saw their parents retire comfortably even without much personal savings for retirement. So many of us weren't raised believing that aggressively saving part of our own paychecks was a critical part of being able to retire at all these days, let alone early. (As a result it is a near-miracle that I was fortunate enough to be putting 12% of my pay into a 401K even when I was 22. I was even "wired" for retirement -- or at least FI -- back then!)

But I suspect over time, as more kids grow up in households with a 401K-based retirement instead of a pension-based retirement, they as young adults might be more likely to see the writing on the wall.