I must have lived in a different world

[AnonEMouse]

I'm a champion for DB plans

As in you suggest your kids take jobs with pensions?

 

[Big_Hitter]

As in you suggest your kids take jobs with pensions?

I don't have any kids - can't afford them

 

[Greencheese]

I'm a champion for DB plans

As someone from Illinois, I prefer the DC benefit to prevent "fuzzy math" that our local politicians are oh so fond of. Much like cashback credit cards, when its easier to compare the benefits you're able to make more informed decisions which can lead to better competition for the best employees/customers.

But hey, if you have a job that has a fully funded pension, private or public, more power to you, they're certainly tempting

 

[ChiliPepr]

I don't have any kids - can't afford them

+1

 

[EastWest Gal]

I've been hearing that Social Security will be insolvent in 30 years for the past 30 years. It hasn't happened yet. This problem can easily be fixed by Congress. If only they would read the preamble if the Constitution every day. Especially the part about promoting the general welfare and securing the blessings of liberty to ourselves and our posterity. There is a lot that can be done to correct the problem.


Sent from my iPhone using Early Retirement Forum

 

[Droo]

It is definitely harder for young people financially now than it was in 1975. Adjusted for inflation:

* The price of a public 4 year college education has increased by 138% since 1975
* The price of a private 4 year college education has increased by 157% since 1975
* Payroll taxes have increased from 9.9% to 12.4% since 1975
* The maximum taxable income for social security has increased from $64,516 (CPI adjusted 2015 dollars) in 1975 to $118,500
* The median single family home has increased from about $150,000 to over $200,000 since 1975
* From 1975 to 2005, healthcare spending per capital has increased by over 255%

At the same time, median household income adjusted for inflation has been somewhere between flat and +25% over the last 50 years.

Obviously everyone has anecdotes of ridiculous people, but it would certainly make it a lot easier to save in general if young people had all the extra money from those fixed costs if they were still at 1975 levels.

 

[Souschef]

I've already been told to my face that I should have my SS taken away because I'm "Rich and don't deserve it".

I replied that I don't know who that fellow "Rich" is, but I'm Marko and I DO deserve it.

+1, Marko. I have been paying in to SS for over 50 years. I found that if I had taken that money and invested it, I would be way ahead.
Someone else here had a great Quote-"I am not rich, I am poor with a lot of money"

 

[unno2002]

[FONT=&quot]A 401k with employer “matching” can be a great deal, but absent such an account a lot can be done with an IRA.[/FONT]
[FONT=&quot]
[/FONT]
[FONT=&quot]When I set up my first IRA (alas, too many decades ago), it was self-directed with Charles Schwab. Something like 20 years ago we migrated to a custodian that allowed greater choices than Schwab, including using the IRA to purchase rental real estate. That option worked out well for us.[/FONT]
[FONT=&quot]
[/FONT]
[FONT=&quot]Re a 401k, my “gripe” would be that the typical custodian selected by the employer has minimal investment options. While I’m not that excited about just securities, if I went back into business I would consider a 401k account thru a place like Charles Schwab, where the employees could have a very broad selection, vs a typical one company, or something so limited as the five options in the federal Thrift Savings Plan. To me, ideally the 401k custodian would be willing to work with any investment that is not prohibited under IRA rules…[/FONT]

 

[samclem]

It is definitely harder for young people financially now than it was in 1975. Adjusted for inflation:
. . ..
* The price of a public 4 year college education has increased by 138% since 1975
* The price of a private 4 year college education has increased by 157% since 1975
. . . .
* The median single family home has increased from about $150,000 to over $200,000 since 1975
. . . . .
but it would certainly make it a lot easier to save in general if young people had all the extra money from those fixed costs if they were still at 1975 levels.

Is our modern put-upon young person going to pay the same interest rates as young people paid in 1975? Mortgages then were 9%, and the payment (30 yr fixed) on that $150K house was $1,207. At 4% today, our young person's $200K house comes with a mortgage payment of $954. Put that $250 difference per month against the principal and today's young person will own his home many years before his 1975 counterpart.

Student loan rates are also a lot lower. And student loan money is a lot easier to get than in 1975 (surely a double-edged sword).

 

[samclem]

[FONT=&quot]Re a 401k, my “gripe” would be that the typical custodian selected by the employer has minimal investment options. While I’m not that excited about just securities, if I went back into business I would consider a 401k account thru a place like Charles Schwab, where the employees could have a very broad selection, vs a typical one company, or something so limited as the five options in the federal Thrift Savings Plan.[/FONT]

I can understand your reasoning, but my major gripe about 401K plans is high costs. While some employees might appreciate a huge spectrum of investment options, in the aggregate most would do a lot better with just a few prudent, low-cost choices (like the federal TSP--and they have more than 5 options). I don't know that employers >should< be paternalistic and just offer a few reasonable low-cost funds and some CDs, but I feel confident that most employees would end up ahead if employers did so.

 

[Amethyst]

In 1985 I felt lucky to be granted a 12.75% mortgage.

And I grumbled at the generation ahead of me, for driving up house prices. They had it so easy, I thought at the time.

Is our modern put-upon young person going to pay the same interest rates as young people paid in 1975? Mortgages then were 9%, and the payment (30 yr fixed) on that $150K house was $1,207. At 4% today, our young person's $200K house comes with a mortgage payment of $954. Put that $250 difference per month against the principal and today's young person will own his home many years before his 1975 counterpart.

Student loan rates are also a lot lower. And student loan money is a lot easier to get than in 1975 (surely a double-edged sword).

 

[Big_Hitter]

In 1985 I felt lucky to be granted a 12.75% mortgage.

And I grumbled at the generation ahead of me, for driving up house prices. They had it so easy, I thought at the time.

DW was ecstatic when she bought her first house in 86 and got 8.5%

We just refied a jumbo 10/1 ARM at 3%

 

[Big_Hitter]

[FONT=&quot]A 401k with employer “matching” can be a great deal, but absent such an account a lot can be done with an IRA.[/FONT]

not really, I think IRAs are pretty crappy, pre-retirement - the deduction limits are way too low

same for 401ks - I'd be a lot happier if the 402g and 415c limits were repealed

 

[JustCurious]

They don't even need to get rid of 401k's. One option would be to increase IRA contribution limits to the same level as 401k/403b/etc and keep the same rules (if you're not covered by a workplace plan, tIRA contributions are 100% deductible, otherwise subject to income limits).

I agree, that would be a simple fix that would *mostly* eliminate the unfairness of allowing some people to save more in tax deferred retirement plans simply because it is offered to them by their employer. I think all workers should have the option to save for retirement in a tax deductible plan up to the same limits offered by employer sponsored retirement plans.

 

[Pilot2013]

What do engineering interns make these days? Google suggests anywhere from $20-$30/hour -- don't know if this is accurate.

Our company starts (1st rotation) at $22/hour, increasing from there each term.

 

[Pilot2013]

Today the jobs don't pay much more than what they paid over 30yrs ago.

Hopefully that's sarcasm?

I started my first engineering Job in 1986 - $27k, thought I was rich. I just hired a basically new grad engineer (1 yr experience) for $72k...

 

[Big_Hitter]

Hopefully that's sarcasm?

I started my first engineering Job in 1986 - $27k, thought I was rich. I just hired a basically new grad engineer (1 yr experience) for $72k...

agreed - entry level pay has definitely kept up with CPI. I just looked this up actually.

I actually started out lower than $27K in 86/87. I had the lowest starting salary in my graduating class but that fixed itself, eventually.

 

[pjigar]

agreed - entry level pay has definitely kept up with CPI. I just looked this up actually.

I actually started out lower than $27K in 86/87. I had the lowest starting salary in my graduating class but that fixed itself, eventually.

I always say that the absolute numbers are so misleading. Salary of $27K going up to $72K is just about 3.5% annual rate which is roughly same as inflation so nothing has changed in terms of wages for engineering in last 30 years. But sadly low wage earners have taken a biggest haircut by far after adjusting for inflation.

PS: For the record, I am an engineer working in technical sales so I am not complaining.