A Harvard Economist Screwed Up

[Al in Ohio]

By delaying retirement until 70 from 62, individuals can increase Social Security checks by 76 percent, she said. Working longer also delays spending retirement nest eggs while providing more time to save. Munnell and her co-authors propose raising the earliest age for collecting Social Security to 64 from 62.

Link https://www.bostonglobe.com/busines...-retirement/BmRipXkLpTWMdfjlXy4ELJ/story.html

Above is a quote from her book. Ugh.

She might know how to crunch numbers, but she has no understanding of sociology or why Americans are so overworked already even though worker efficiency in the U.S. has increased fourfold. She should put her efforts towards getting our wealth back in the hands of those who earn it instead of asking them to work til they die like she's planning to do.


Sent from my iPad using Early Retirement Forum

 

[LOL!]

I thought this thread was going to be about this Harvard economist:
http://www.nytimes.com/2015/07/12/u...rk-the-biggest-cost-of-fear-is-paralysis.html

After years of procrastinating, I logged on to my retirement account. Just working my way through the rigmarole of retrieving lost passwords and locating my investments was bad enough. But once I started to examine my portfolio, I began to feel anxious. Some of my money was in mutual funds, but I had no sense of how I chose them. And the rest of my money was in cash, earning virtually nothing; how had I let it sit there for so long?

 

[Texas Proud]

If it weren't for her son prodding, this woman would not have invested in stocks, and just kept her money under the mattress. She lived large in a big expensive home, and appeared to not understand budgeting. When changing jobs, she cashed out her retirement funds to spend. It goes to show they need to teach more about lowly home economics than whatever fancy theories they have in these Ivy League schools.

And she is still working now in her 70s, because she says that "a lot needs to be done on the policy front". I wonder what damages she had done in her previous jobs at the Federal Reserve, as assistant secretary of the Treasury for economic policy, and member of the president's Council of Economic Advisers.

Yes... that is what I was wondering.... what kind of policies did she advocate to screw things up for the rest of us...

You would think with a PhD in Economics she would know a bit more.... seems kinda stupid in some of the things she says.....


Soooo.... wow....

 

[Texas Proud]

I thought this thread was going to be about this Harvard economist:
http://www.nytimes.com/2015/07/12/u...rk-the-biggest-cost-of-fear-is-paralysis.html

Seems like economists are not getting a good education....

But you would think they should be smart enough to deal with their investments a bit better....

I mean, come on.... if you want someone to 'drive you to your hotel' then just invest in a retirement dated fund.... they WILL do the driving for you.. but that does not make a good article, does it

 

[Dog]

I guess there will be no consideration for those laid off before age of 64 or those not able to continue working. Do they also plan to change the age of 591/2 to access IRA and 401k accounts?
Just once, I would like them to think through what they propose beyond what "they believe to be true" - not to mention possible unintended consequences.


Sent from my iPhone using Early Retirement Forum

 

[Independent]

Munnell is correct in saying that working longer can significantly increase your annual retirement income.

However, that comment is only useful to people nearing 62 who are in good health with good job prospects.

It's a dangerous idea for people who are 40 or 50 and decide that they don't need to save now because they'll just work till 70.

And it's an empty statement for people nearing 62 whose health or job prospects make it impossible to continue working.

 

[Independent]

Interesting side note:
It's pretty safe to assume that Munnell and her husband both had 35 years at maximum SS earnings. If they started SS at 70, their combined benefits should be around $80,000.

Even if they had never saved a dime, they could have a "comfortable" US retirement.

 

[Mulligan]

Seems like economists are not getting a good education....

But you would think they should be smart enough to deal with their investments a bit better....

I mean, come on.... if you want someone to 'drive you to your hotel' then just invest in a retirement dated fund.... they WILL do the driving for you.. but that does not make a good article, does it

I deliberately avoided reading the article and this thread, because I did not want to reinforce my anecdotal impression of too many "airheads" in academia (I am sure I am wrong, but that is the danger of anecdotal evidence). But I finally succumbed and was left again with an unfounded opinion reinforced.
The older I get the more I am unimpressed with the idea of "more education is needed", whether it is about smoking, saving/investing, or eating to obesity. You either have the discipline to do it or you don't, provided you have a career that makes a sufficient salary.
She didn't know that spending her retirement money from a previous employment to fund two houses was harmful to her retirement? She didn't ever link the idea of "retirement funds" with using it when you are too old to work? Nothing wrong with trying to help other people to learn from your mistakes, but don't blame it on the process being complicated. Blame it on lack of self control and not "paying yourself first".
I have done all sorts of dumb things with my money over the years, but it had nothing to do with the idea its complicated. Mostly doing with "living for the moment". Of course reaching maximum results through investing may be complicated such as retirement accounts, proper withdrawal methods, etc. But that is only a problem after you have saved and acquired a meaningful base of money.
The two main segments of population will never be able to prepare for retirement are the very poor and the very undisciplined. One can be corrected only by beatings. The other is just in a tough spot and deserves some sympathy/assistance. Fortunately at least SS is there for them.


Sent from my iPad using Tapatalk

 

[rayinpenn]

Getting good grades in college has nothing to do with common sense. My simple self imposed rules

1. Live below your means
2. Save at least 15% of what ever you earn (I've been as high as 30% or more)
3. Save at least 90% of windfalls (tax returns, bonuses, inheritances..)
4. Marry someone who has the same money value set
5. Never touch retirement money...
6. Avoid the $4 moca Java. (And all its ilk)
7. Invest in low cost dividend paying mutual funds and ETFs

I didn't go to Harvard but my simple plan worked out pretty well.


Sent from my iPad using Early Retirement Forum.

 

[daylatedollarshort]

One of her hot topics seems to be people need to work longer. That is a rather let them eat cake solution. It is easy to say if you have a desk job. I don't see a lot of 70 year old roofers.

In the Boston Globe she was quoted as saying, "The idea that people can retire at 62 and walk around holding hands on the beach, it’s not realistic.” Instead of making statements like that, she could benefit from studying the outliers. It obviously is possible for many except the working poor or the disabled. What are those people doing different? Solar cabin guy seems to have more common sense when it comes to LBYMs and retirement savings:

 

[Gumby]

Well, they know that people like us who manage to retire just fine by ourselves are not interested.

That's why this new program is mandated. Duh!

But those of us who manage to do it just fine by ourselves are the ones who should be most interested in such a program. When all those other people are eating cat food because they saved nothing on their own and Social Security is insufficient, where do you think the government will look for money?

 

[dunkelblau]

But those of us who manage to do it just fine by ourselves are the ones who should be most interested in such a program. When all those other people are eating cat food because they saved nothing on their own and Social Security is insufficient, where do you think the government will look for money?

I doubt that a new government mandated tier of retirement savings would derail the plans of anyone here, and it could help a significant fraction of the vast majority who aren't as well situated as those here. I would guess that the variance of retirement savings across individuals makes income inequality look pale by comparison. Ultimately the burden of supporting the unprepared will fall on themselves (highly unlikely IMO), on future generations (good luck with that), or on the minority who are well-prepared (hello common pot). IOW I'm reluctant to criticize this kind of policy thinking, mainly because I believe it would help the typical individual, but also because I hope it would allow me to keep more of what I've set aside.

 

[Al in Ohio]

I usually try to maintain a positive outlook and rarely bash our government, but I would not be so sure what Gumby has stated is the course we might head. It's not fair, but those of us stuck in the middle and try to plan wisely are often $crewd by new legislation such as this. Keep it on your radar and write your congress rep if you even get a whiff this is on the horizon.


Sent from my iPad using Early Retirement Forum

 

[unclemick]

I deliberately avoided reading the article and this thread, because I did not want to reinforce my anecdotal impression of too many "airheads" in academia (I am sure I am wrong, but that is the danger of anecdotal evidence). But I finally succumbed and was left again with an unfounded opinion reinforced.
The older I get the more I am unimpressed with the idea of "more education is needed", whether it is about smoking, saving/investing, or eating to obesity. You either have the discipline to do it or you don't, provided you have a career that makes a sufficient salary.
She didn't know that spending her retirement money from a previous employment to fund two houses was harmful to her retirement? She didn't ever link the idea of "retirement funds" with using it when you are too old to work? Nothing wrong with trying to help other people to learn from your mistakes, but don't blame it on the process being complicated. Blame it on lack of self control and not "paying yourself first".
I have done all sorts of dumb things with my money over the years, but it had nothing to do with the idea its complicated. Mostly doing with "living for the moment". Of course reaching maximum results through investing may be complicated such as retirement accounts, proper withdrawal methods, etc. But that is only a problem after you have saved and acquired a meaningful base of money.
The two main segments of population will never be able to prepare for retirement are the very poor and the very undisciplined. One can be corrected only by beatings. The other is just in a tough spot and deserves some sympathy/assistance. Fortunately at least SS is there for them.


Sent from my iPad using Tapatalk

Sooo where IS that Drill Instructor with the Smoky Bear Hat now that we need him!



Heh heh heh - Hindsight says balanced index funds and doing nothing EXCEPT cutting expenses when necessary since 1977 has been my best policy.

All praise to St. Jack

 

[Independent]

Just a comment on cat food.
The median earnings for full-time, year-round male workers in 2013 were $51,100. For women, $40,600.

Let's look at people who can average that amount for the best 35 years of their careers.

They would get SS PIAs of $22,100 and $18,700. Those numbers aren't going to buy a lot of steak, but I think they're enough to stay in the people food aisles.

Even 75% is $16,500 and $14,050.

The people who struggle to buy food on SS alone are those who had low earnings during their working careers. Another tax (aka "mandated contribution") is going to be an issue for them while they are working.