Five ways to prevent retirement

[Nords]

From the Dollar Stretcher: Five Ways To Make Sure You'll Never Retire.

I have a hard time feeling sorry for the retiring worker profiled in the first paragraph...

 

[Dawg52]

Kind of reminds me of a guy I work with(age 68). He retired at 59 and had to unretire at age 65. He made good money through out his career but helped support his kids when their marriages failed. On the surface a noble thing to do, but his children are in their 40's and still gives them money to this day! He also lost a good chunk of money when stocks tanked a few years ago.  Not much he can do about that, but he sure can let his kids grow up by just saying no when they come by for their weekly allowance!

 

[TromboneAl]

Item #2 is the one I don't like to read. An amazing number of good things have come from hanging out on this forum, but one bad thing is regret that we didn't evaluate some more reasonably priced college alternatives. Ignorance is bliss.

 

[Mr._johngalt]

Item #2 is the one I don't like to read.  An amazing number of good things have come from hanging out on this forum, but one bad thing is regret that we didn't evaluate some more reasonably priced college alternatives.  Ignorance is bliss.

Well, I evaluted them. My daughter ignored me. The result was lots
of time spent in court (with my ex.), lots of attorney's fees and now my daughter is not speaking to me. I did the right thing but it made a hell
of a mess family-wise.

JG

 

[Nords]

Item #2 is the one I don't like to read.  An amazing number of good things have come from hanging out on this forum, but one bad thing is regret that we didn't evaluate some more reasonably priced college alternatives.  Ignorance is bliss.

Sounds like the lesser of two evils:
1) Unmotivated, surly kid attending local community college while living (and driving, and dating, and drinking) at home. But it's cheap!

2) Enthused, happy kid developing independence at a far-away state university while engaging in all of the above activities in the co-ed dorm. Not only is it expensive, but you don't have to watch it happen!

Later this year we're gonna get the standard UH tour for our eighth-grader and get on their mailing list for the summer activities & year-round seminars. Then we'll have a baseline to compare to other schools that we visit during family vacations.

If you think 8th grade is too young to be touring colleges, you're wrong. Some schools start picking out their future alumni when the kids are still in 7th grade...

 

[work4beer]

Strongly disagree with #2. If your child (or you) are going to a top school, it is probably worth it. Middle-of-the road private school probably not.

You can't tell me there's no difference. I know one guy who failed out of my alma mater (twice!), and made a 4.0, in the same major, at the public school down the street.

Not only will you get a better education, it will open doors for a better job out of college, and open doors just by being on your resume after that. And, you get to network and make connections with better connected people.

I graduated with a lot of debt, but it was worth it, and has payed itself back several times over. I'm not an elitist. I'm not saying you can't get a good education at a state school, or by doing the the CC for 2 years plus college for 2 years route. But those success stories are fewer, and the time to get where those who went to a top school are at, is longer.

 

[cute fuzzy bunny]

Unless i'm mistaken, the stats show that there are far more wealthy people who either never went to college or attended partially without graduating or attended a humble school than people who went to a very expensive top school.

While I wouldnt dispute that a top school is "better" and in many ways well worth the money, the overall outcome is that you are not as likely to be as prosperous.

Of course, that depends on what you consider prosperous.

If you consider prosperous to be learning skills, making money, spending wisely, and achieving financial independence, then a top school is probably not going to lead you in that direction.

If you consider prosperous to be rubbing elbows with the elite, joining the right legbone or cheekbone clubs, buying a new SL every other year, living in a million dollar home, and having negative net worth but being the envy of the neighborhood, then there you go.

 

[cube_rat]

I agree with () on #2. I bet if you surveyed the CEO's of the top fortune 500 companies, you'll find more business graduates from the regular ol' schools than those who attended Wharton, Kellogg or Harvard.

Personally, I finished my bachelor's degree at a private university later in life. Not having a degree did not deter my professional growth or income what so ever.

 

[REWahoo]

...you are not as likely to be as prosperous.

I did a double-take on this one. First thought you wrote "preposterous". 8)

 

[maddythebeagle]

Going into huge debt for a college degree doesnt make much sense in my book. : Then again, I am an engineer and the larger public universities actually had the best programs.

 

[brewer12345]

Unless i'm mistaken, the stats show that there are far more wealthy people who either never went to college or attended partially without graduating or attended a humble school than people who went to a very expensive top school.

While I wouldnt dispute that a top school is "better" and in many ways well worth the money, the overall outcome is that you are not as likely to be as prosperous.

Of course, that depends on what you consider prosperous.

If you consider prosperous to be learning skills, making money, spending wisely, and achieving financial independence, then a top school is probably not going to lead you in that direction.

If you consider prosperous to be rubbing elbows with the elite, joining the right legbone or cheekbone clubs, buying a new SL every other year, living in a million dollar home, and having negative net worth but being the envy of the neighborhood, then there you go.

Don't mistake an outlier for the median. For the average college student contemplating the future, the best choice is the school and degree that allows them to have the highest certainty of the highest income doing what they want to do for the lowest college tuition investment. Very, very few of us become mega-wealthy CEOs. Millions of us become accountants, lawyers, engineers, etc. I'd rather bank on the steady work than the moonshot, myself.

 

[justin]

Strongly disagree with #2. If your child (or you) are going to a top school, it is probably worth it. Middle-of-the road private school probably not.

You can't tell me there's no difference. I know one guy who failed out of my alma mater (twice!), and made a 4.0, in the same major, at the public school down the street.

Not only will you get a better education, it will open doors for a better job out of college, and open doors just by being on your resume after that. And, you get to network and make connections with better connected people.

I graduated with a lot of debt, but it was worth it, and has payed itself back several times over. I'm not an elitist. I'm not saying you can't get a good education at a state school, or by doing the the CC for 2 years plus college for 2 years route. But those success stories are fewer, and the time to get where those who went to a top school are at, is longer.

I think the distinction between top private schools and middle of the road private schools can be drawn just as well at public schools.

There are the U Va's, Berkeley's, U Texas, U of NC, U of Illi UC, etc. out there. Good schools for many programs. Then there's Middle Southwestern Podunk State University. You'll get an education and a degree when you graduate, but it won't look the same on a resume, the skills you picked up may not be as cutting edge, and your social network may not be as wide or deep as if you went to one of the prestigious public universities.

There's a continuous spectrum of quality (however you measure it) in both public and private schools. The difference between public and private is usually cost, in my opinion. Sure, the top five best private schools might be marginally better than the top five public schools, but only a small proportion of people will attend those ten schools. For the average person, you may not be able to get in to one of the top 5 or top ten schools.

 

[TromboneAl]

Here are some of the pros and cons I've found of sending my daughter to Wash U at St. Louis (recently ranked 11th in nation) as opposed to a Univ of Calif. school.

Pros

1. I know that she's getting a top education with small class sizes and a good program in biomedical engineering. At a UC school DD might have harbored a lingering resentment of her cheap dad the rest of her life.

Cons

1. Tuition cost

2. High travel costs

3. Rich-person environment may result in higher expenses ("What, no cell phone?!", "Let's go on a ski trip!").

4. Name recognition of Wash U not proportional to tuition cost.

There's one other pro, but you didn't hear it from me: will probably end up with rich husband. I did not say that. It must have been the stuffed beaver who wrote that.

 

[brewer12345]

There's one other pro, but you didn't hear it from me: will probably end up with rich husband.   I did not say that.  It must have been the stuffed beaver who wrote that. 

Heheh, busted!

T-Al, FWIW, I met DW at college. We were engeged by junior year and got married about a year after graduation. Apparently meeting a spouse was a long-standing tradition at our alma mater, with 50+% of graduates marrying another alums not being uncommon in years past. Dunno if that is still the case, especially since the school has a reputation as a gat student mecca.

Of course, she might meet a spoiled loafer or a scholarship kid, but you pays yo' money and you takes yo' chances, I suppose.

 

[azanon]

As i mentioned once before, I ended up dropping out of a service academy (think high end school) and just went to a local small private school;  one respected here locally, but certainly not nationally recognized.  Incidentally, i actually work with one west point graduate and another Air Force Academy graduate.  One's a GS-12 (older than me) and one's a GS-13 (much older than me).  I'm also a GS-12.   I went on to get a masters degree.

In no way, form or fashion do I think they have an edge on me.   In fact, I would think my masters from a mediocre private college trumps their service academy degree, and probably would in the eyes of most people. 

If you're comparing apples to apples, it might matter.   But you can go on to get a masters from BFE and instantly you trump that "harvard" undergrad degree.   Everyone knows a masters is higher than a bachelors.  And if you get a decent GRE score, you can usually go (to graduate school) free.   I know i did.  Heck, i made money since I did a teaching assistantship.

Azanon

(now granted service academies are bad examples if we're talking about cost to go. They pay you to be a cadet).

 

[sgeeeee]

Strongly disagree with #2.  If your child (or you) are going to a top school, it is probably worth it.  Middle-of-the road private school probably not.

. . .

You are right, WW4B.  A pedigree pays. It opens doors that a degree from a non-pedigree school won't. If you want to get into those doors, a pedigree degree will help.

You aren't guaranteed a better education at a pedigree school, but you are guaranteed more and better opportunities.  You can either take advantage of them or you can get by drinking and rubbing shoulders with the smart, influential kids (GWB comes to mind).  Similarly, you can get a really good education at underdog schools.  Nothing will stop a smart, motivated kid from getting smarter.  

As far as any kind of data that more CEOs come from Podunk U. or Dropout Tech . . . well there are about 10,000 times the number of people from these institutions than there are from pedigree schools.  Your odds of getting a high flying job are much better if you went to school with high flyers.  You can get to be a corporate exec without any degree by working hard, proving yourself or by sucking up to the right person.  But the pedigree graduate is likely to be handed the same position right out of school.  

 

[Jay_Gatsby]

Pedigrees do matter, especially in the legal and medical professions. An MBA from a top business school is also a must if you want to reach the highest levels of established companies.

OTOH, if you're an entreprenuer, where you received your degree from really doesn't matter. Starting your own business requires street smarts and a true head for business -- things you can't learn in a pedigree school.

 

[Cut-Throat]

I think the biggest thing that the article left out are the little things. With the exception of the biggest thing that the article left out, which is the Mcmansion. - The big house continues to eat you alive, yet is not mentioned.

The Little things:

IOW, the daily Lattes, The monthly cable bill etc. etc. - The first step a financial planner would do is examine someone's personal budget. Often times it's a huge part of the income that is disappearing and the spender does not know where it's going.

The article is probably correct that an Ivy league education, may not financially pay off in the long run, but this is an intangible that is difficult to measure. (i.e. - If you are smart enough to get in one, you are probably gonna do ok anyway)

 

[laurence]

Here are some of the pros and cons I've found of sending my daughter to Wash U at St. Louis (recently ranked 11th in nation) as opposed to a Univ of Calif. school.

Pros

1. I know that she's getting a top education with small class sizes and a good program in biomedical engineering. At a UC school DD might have harbored a lingering resentment of her cheap dad the rest of her life.

Hey, don't knock UC's! Some states may have poor public Universities, but here is a quote on UCSD, DW's alma mater:

"In 1995, the National Research Council ranked UCSD faculty the 10th best in the nation, and ranked numerous graduate programs among the top ten in the United States in terms of quality: neurosciences (1st), oceanography (1st), bioengineering (2nd), physiology (2nd), pharmacology (3rd), theatre and dance (3rd), genetics (6th), geosciences (6th), cell and developmental biology (7th), anthropology (9th), biochemistry and molecular biology (2nd), political science (2nd), aerospace engineering (10th), and mechanical engineering (10th). UCSD also counts among its research centers the Scripps Institution of Oceanography and the San Diego Supercomputer Center."

UCLA and Berkeley are right up their, too!

 

[work4beer]

There are the U Va's, Berkeley's, U Texas, U of NC, U of Illi UC, etc. out there. Good schools for many programs. Then there's Middle Southwestern Podunk State University. You'll get an education and a degree when you graduate, but it won't look the same on a resume, the skills you picked up may not be as cutting edge, and your social network may not be as wide or deep as if you went to one of the prestigious public universities.

Yeah, but you have to a) live in a state with a top public university and b) be able to get them into it; in-state competition at say, UC Berkeley, is pretty fierce. Paying out-of-state tuition to a public university is not much cheaper than a private school.

You also need to look at the overall opportunity cost. Some of the biggest expenses in a college education are more or less fixed: room&board, going to school vs. working. So if going away to private school costs:

($30K x 4) + ($25Kx4 for not working) + $(10K room/board x 4) = $260K

public school should cost about:
($7.5K X 4) + ($25Kx 4$ for not working) + ($10K room/board x 4) = $170K

I think you can pick up most of the delta in the first 5 years, if not sooner.

Another point is, that $30k is just the sticker price. You may be able to get state aid/merit/athletic scholarships to cover the rest. We had to do a few "show-downs" with the financial aid office, but we got a "discount" of about 50% of sticker price, and my parents and I split the rest. So it would have cost my parents the same if not more to send me to state U.

 

[justin]

Yeah, but you have to a) live in a state with a top public university and b) be able to get them into it; in-state competition at say, UC Berkeley, is pretty fierce. Paying out-of-state tuition to a public university is not much cheaper than a private school.

You also need to look at the overall opportunity cost. Some of the biggest expenses in a college education are more or less fixed: room&board, going to school vs. working. So if going away to private school costs:

($30K x 4) + ($25Kx4 for not working) + $(10K room/board x 4) = $260K

public school should cost about:
($7.5K X 4) + ($25Kx 4$ for not working) + ($10K room/board x 4) = $170K

I think you can pick up most of the delta in the first 5 years, if not sooner.

Another point is, that $30k is just the sticker price. You may be able to get state aid/merit/athletic scholarships to cover the rest. We had to do a few "show-downs" with the financial aid office, but we got a "discount" of about 50% of sticker price, and my parents and I split the rest. So it would have cost my parents the same if not more to send me to state U.

Sure, if you don't have a good state school in your state, you go out of state. Pay the price for a year, establish residency (hire a lawyer if you need to). The next three years will be at the lower in-state rate. I don't know how much more competitive prestigious state schools are than prestigious private schools. Prestigious schools are competitive, period. Sure UC Berkeley is competitive, but isn't Stanford too?

You make a good point re: opportunity cost. But what average college-bound high school grad has an opportunity cost of $25k for 9 months (since they can work in the summer, right?). I don't know what the average state school tuition is now, but my local state universities, it is a little over half the price you have indicated (it is more like $4k/yr). I'd guess the on-campus room and board at your average private school is more than the on-campus room and board at a public school (higher expectations, nicer facilities at private schools). Here's the comparison I have:

So if going away to private school costs:

($30K x 4) + ($10.5Kx4 for not working) + $(10K room/board x 4) = $202K

public school should cost about:
($5K X 4) + ($10.5Kx 4$ for not working) + ($9K room/board x 4) = $98K


Private school will "cost" about twice as much as public school. That $104,000 price differential is pretty substantial in my book, and it would require quite a bit more time than five years to make up the difference. 10 years? 20? Never? Why not go to a public U, then use that $104,000 as a down payment on your first house.

In my experience, I haven't seen a big difference in earning potential between public and private university educated workers, at least not to the degree WW4B has alluded. Unless you are comparing a Harvard grad to a Middle Southwestern Podunk University grad.

 

[Nords]

In no way, form or fashion do I think they have an edge on me.   In fact, I would think my masters from a mediocre private college trumps their service academy degree, and probably would in the eyes of most people. 

I think we'll have to suspend judgment until everyone has dropped & given 20 multiple times and then gone on an overnight hike with 50-pound packs while people are screaming in their faces. You know, the military version of workplace stress.

Oh, you mean academically!

 

[cute fuzzy bunny]

Don't mistake an outlier for the median. For the average college student contemplating the future, the best choice is the school and degree that allows them to have the highest certainty of the highest income doing what they want to do for the lowest college tuition investment. Very, very few of us become mega-wealthy CEOs. Millions of us become accountants, lawyers, engineers, etc. I'd rather bank on the steady work than the moonshot, myself.

Not looking at outliers, but your point is well taken. As TMND pointed out, the vast majority of wealthy people never experienced much higher education than high school but started a business early. The combination of not carrying a huge debt load, getting a 4-5 year head start on their peers, and earning their own money with their own business rather than slaving for someone else was simply too much of an advantage for the well heeled, well educated peers to overcome.

I guess if the student isnt paying for the degree, doesnt have the motivation to start a business or jump in making money, and/or has no idea what to do with themselves, there isnt much downside (for them) to enjoying the ivy league education.

If I were the dad paying for the education, unless I was loaded to the gills with money, some shopping for value is warranted. If I've doubled my portfolio by the time Gabe hits 18, he can pick any school he wants. If we're still treading water, he can go to any UC school he wants to.

 

[FlowGirl]

I think pedigree can matter, but as Cut-Throat said - a good student can do well almost anywhere.   There are also advantages to being a superstar at a less competitive school rather than just another student at an elite one.

I started out my undergrad career at an elite school (think-  top 5).  Absolutely hated the atmosphere and the education I was getting (money was not an issue because of financial aid).  So, I transferred to a top state school that was well respected  in my field and had a much better time - I challenged myself, took courses that were are on a par with what I was getting at the elite school, and was a standout student who had lots of research and internship opportunities.  

Had job offers up the wazoo when I graduated ( although it didn't hurt that it was the height of the tech boom) and after 3 years in the workforce my public u diploma was good enough to get me into a master's program at an elite private university with a full scholarship.  I'll admit the name brand on my grad degree has probably opened  some doors, but no one even asks about my undergrad degree anymore.

 

[Patrick]

I think in order to make a valid comparison you have to use percentages, not just total numbers, because the total number of people who did NOT graduate from an upper-level school is much higher than the number of those who did.  What PERCENTAGE of upper-level grads became wealthy/CEOs versus the PERCENTAGE of non-grads who became wealthy/CEOs?