I hate to say this but most will not save enough.

[Helena]

I never fail to be amazed at the people who won't put in enough
to at least get the company match.

At present I max out my 401K contribution
and put in all the over 50 catch up contribution
allowed each year.

I counsel the young people at my company
to raise their 401K a percent or two when
they get a raise... this way they won't miss
what they never had.

 

[2B]

I counsel the young people at my company
to raise their 401K a percent or two when
they get a raise... this way they won't miss
what they never had.

I do the same but it would be cutting into their daily latte allowance.

 

[mountaintosea]

As someone said earlier, although it is a better place to be (having more than you need) is also going the other way. My parents have a good pension from county government. But they also have quite a stash socked away. They are in their 80s yet they won't own a computer because of the monthly cost. They are constantly talking about what is a good price etc. I know at this point it is more a game or point of pride. But my feeling is that they ought to spend it and quit being concerned about every penney.
I'm concerned that I might end up this way as I too will have a pension but I'm also very frugal and have saved a few pennies. Even Bob Brinker says there comes a time when you need to stop saving and start spending.

 

[Retire Soon]

Mountainosea, your parents are about the same age as mine, and are from the "Greatest Generation." They belong to a generation that lived through the Great Depression and fought World War II. They are very strong people and also very frugal. In the 30's and early 40's many did not know where their next meal was going to come from. Some had parents who lost their entire life savings in the stock market crash on "Black Friday" in October 1929. There was no unemployment insurance or welfare at this time. The members of the Greatest Generation who were fortunate enough to survive World War II, have a different attitude toward money than subsequent generations. If your parents are like mine, they're very careful with their money and it's difficult for them to part with it.

 

[2B]

Mountainosea, your parents are about the same age as mine, and are from the "Greatest Generation." In the 30's and early 40's many did not know where their next meal was going to come from.

I could chop your version of history up but I'll be brief. The "greatest generation" were also my parents. My father would be in his early 80's if still alive. He was born in 1925. My mother was born in 1928. The "end" of the severe aspects of the depression was before my father was 15. That was well into the pre-war boom. I think most of us from relatively poor backgrounds didn't realize what "poor" was until they were out on their own. His father and my mother's father worked throughout the depression as 75% of the people did. There were some very sad stories then as there are now.

Now my grandfather really did live through the depression and he blew money until the day he died. He was in debt but beat the collection agency in the end. I just don't agree with the generalizations about the depression era are all justified. It was a different time and generally more financially conservative. I would put that to more of the changes going on in society than the depression.

Some people are just "terminally frugal" or maybe they don't won't to have to deal with one of those "computer thingees." My daughter thinks I'm cheap because I made her drive an 8 year old Honda to college.

 

[donheff]

My daughter thinks I'm cheap because I made her drive an 8 year old Honda to college.

Cheap? Getting any car for college is a good deal. We have a 2000 Acura that has effectively become DDs car (when she is in town). When she graduates next year we will give her the Acura if she wants it (if she stays in NYC she will probably prefer some cash for cab fair). The Acura has 50K miles, looks great, runs great. Nothing cheap about a a free car.

 

[Retire Soon]

During the Great Depression there was no safety net for those who lost their jobs. They could not line up at the unemployment office for a weekly check as we can now. Nor, could they sign up for a welfare check. People who did not have enough food to eat, had to beg for help from family, friends, or churches.

Only a small percentage of the general population actually owned stocks. But those that were hurt by the stock market crash suffered tremendously. Don't forget that there was a run on bank deposits shortly after the crash. We did not have the protection of FDIC at the time. Many people no longer trusted banks and would put money under their mattresses. High unemployment was everywhere.

Sure, not everyone who lived through the depression is now frugal. But, it sure did change the way people looked at money. Both of my parents were born in Kansas. My father was born in 1923 and my mom was born in 1926. Things were not exactly perfect in the 30's in that part of the county with the "dust bowl" and the grasshopper infestation. Crops would no longer grow, because the powerful winds removed all of the topsoil. My mother remembers closing all of the windows in their farmhouse during a dust storm, only still having to remove buckets of dirt from inside the house, because of the fierce dust blowing Kansas winds. Many people of this era sought refuge in California, only to find out the poverty there was as bad as what they left in Kansas and Oklahoma. The flyers that told of agricultural jobs in the orange orchards, etc. of California were simply not there. They were only distributed by dishonest wealthy California farmers who were attempting to drive down the price of labor by causing the supply of labor to be greater than the demand. John Steinbeck did a great portrayal of this era, in "The Grapes of Wrath."

My father recalls watching his mother crying at times because she did not know where their next meal was going to come from. He also recalls going to the dentist and having an abscessed tooth removed without benefit of an anesthetic, because his dad did not have enough money to afford one.

Sure, World War II production of aircraft, tanks, other weapons, and ammunition provided work for people who did not join the armed forces. But, even so Rosy the Riveter suffered while being subjected to the rationing of food and gasoline.

People who went through this are a lot tougher than we are today. Many of them truly went through some very hard times. Don't forget that many people who fought World War II were old enough to remember having hunger pains during the depression. My dad who was 21 years old and in the infantry when the Battle of the Bulge started in December 1944 has numerous stories of the hardships as a child in the depression. He was 6 years old when it all began. When you go hungry when you're only 6 years old, you never forget it. Because whole families suffered during this time from not being able to afford enough food and other bare necessities, they have an entirely different attitude toward finances than subsequent generations.

 

[linkerbink]

Someone earlier stated that spending is what Americans "have been told to do." I can understand that statement...just look at the number of TV and newspaper ads which proclaim "The more you spend, the more you save!!" That's backward logic if I ever heard it!

 

[TromboneAl]

We love this topic, that is, the topic of how most people just spend and don't save, and it comes up over and over on this forum.

Someone might say it's because it makes us feel superior, but I don't think that's it. It's because we're so frustrated that these other people can't see what's happening. We want to say "Hey, look, dummy, if you'd stop buying so much useless crap, you wouldn't have to work all your life." But we can't do that, so we discuss it here instead.

 

[Bailing-Bob]

We want to say "Hey, look, dummy, if you'd stop buying so much useless crap, you wouldn't have to work all your life."

Yea, but what would happen to our ER stock portfolios if everyone listened to us and stopped buying crap?

 

[haha]

We love this topic, that is, the topic of how most people just spend and don't save, and it comes up over and over on this forum.

Someone might say it's because it makes us feel superior, but I don't think that's it. It's because we're so frustrated that these other people can't see what's happening. We want to say "Hey, look, dummy, if you'd stop buying so much useless crap, you wouldn't have to work all your life." But we can't do that, so we discuss it here instead.

I think it's because it makes us feel superior. The other expanation is fallacious- in fact, it's an example of the fallacy of composition.

"A fallacy of composition arises when one infers that something is true of the whole from the fact that it is true of some (or even every) part of the whole."

http://en.wikipedia.org/wiki/Fallacy_of_composition

Since out economy is consumer and finance driven, and our ultimate customers are ourselves, we would likely die an entropy death if many people took the LBYM creed to heart.

Ha

 

[gwix98]

My daughter thinks I'm cheap because I made her drive an 8 year old Honda to college.

Wow, my daughter probably would be pretty happy with an 8 year old Honda.
I make her drive a 15 year old Honda to/at college.
Let me know when you are ready to get rid of it!

gwix

 

[kcowan]

Yea, but what would happen to our ER stock portfolios if everyone listened to us and stopped buying crap?

Not only our equity in the stock markets but also the equity in our homes.

 

[REWahoo]

I think it's because it makes us feel superior.

Ha,

Isn't your statement, by the definition you quoted, fallacious?

"A fallacy of composition arises when one infers that something is true of the whole from the fact that it is true of some (or even every) part of the whole."

http://en.wikipedia.org/wiki/Fallacy_of_composition

Not that I'm attempting to give even the slightest appearance of superiority by pointing it out...

 

[jazz4cash]

Ha,

Isn't your statement, by the definition you quoted, fallacious?

Not that I'm attempting to give even the slightest appearance of superiority by pointing it out...

Nice catch, REW.....maybe Ha was being sarcastic?

 

[73ss454]

I think that would be out of character for REW.

 

[haha]

Ha,

Isn't your statement, by the definition you quoted, fallacious?

Hmm, I see your point. Strictly speaking, my statement is definitely an unwarranted generalization from inadequate data.

I do know that speaking for myself ( nowhere as much fun as broadly generalizing) I only try to influence my wife, my kids and my sibs.

As my Dad used to say, if you don't share food or a bed with them, and they don't owe you money, their business is none of your business!

Ha

 

[bbuzzard]

As my Dad used to say, if you don't share food or a bed with them, and they don't owe you money, their business is none of your business!

Unfortuntely, given today's welfare society (and I include SS in welfare, as it is welfare for most recipients), this makes everyone's retirement planning my business, as I am going to have to foot the bill.

 

[jeff2006]

Seems like every thread ultimately sinks into politics . . .

 

[dumpster56]

Unfortuntely, given today's welfare society (and I include SS in welfare, as it is welfare for most recipients), this makes everyone's retirement planning my business, as I am going to have to foot the bill.

But we all foot a bill while working.

Then when it is time to call it quits and get to that age you get a small stipend. SS.

By the way there is not much welfare anymore Clinton really did sign that bill and the 5 year term is working. people are being thrown off welfare in droves.

Now if we could throw out the illegals from mexico and central america and fine the owners AMERICAN who hire them illegally, THEN put the american to work tax revenues would increase, and surprise a middle class might RE EMERGE!!

But alas the Democrats want illegals for votes and republicans want illegals for cheap labor!

 

[bbuzzard]

Seems like every thread ultimately sinks into politics . . .

I really did not mean this as a comment on politics, just a comment that we all have have something to loose regarding how others plan (or don't plan) their retirements. I certainly don't think that either party has distinguished themselves in this area.

 

[2B]

Wow, my daughter probably would be pretty happy with an 8 year old Honda.
I make her drive a 15 year old Honda to/at college.
Let me know when you are ready to get rid of it!

gwix

Too late. She graduated December 16 and sold it the next week. Now that she's a highly paid elementary school teacher she is driving a 2006 Grand Am. I'm just an old fuddy duddy that said she should drive that old piece of junk until she could pay cash for whatever she wanted.

I've discussed this with DW and I believe she needs to have a car repod and not have money for the rent. Maybe then she'll understand. I think she needs to be left to fail because I can't tell her anything anymore.

 

[gwix98]

I've discussed this with DW and I believe she needs to have a car repod and not have money for the rent. Maybe then she'll understand. I think she needs to be left to fail because I can't tell her anything anymore.

Oh well, thats to bad I missed it!

It took me a few years to understand that you did not have to have a brand new car just
"like everyone else". Its all a matter of priorities, and making big payments for new cars
is something I soon did not want to do anymore.

I just hope her old Honda holds up another year or so, then she can "upgrade" to one
like you just sold. Now, if I could just convince her that you don't have to have a new
outfit every couple of weeks. Oh yeah, I forgot, its different today than when I went
to college. Image is everything.

I guess I'm just an old fart who does'nt know anything!

 

[Nords]

But they also have quite a stash socked away. They are in their 80s yet they won't own a computer because of the monthly cost. They are constantly talking about what is a good price etc. I know at this point it is more a game or point of pride. But my feeling is that they ought to spend it and quit being concerned about every penney.

Welcome to the club, MTS.

If they're like my parents-in-law, maybe your parents are saving their entire ER portfolio for you. Or for your kids (because they can't believe that you'll actually be able to provide for your family without their help). Or for the Humane Society or some other deserving charity.

There's an ancient joke whose PC version is told like this:
"How many frugal grandmothers does it take to change a lightbulb?"
"That's OK, honey, I'll just sit here in the dark."

You won't get them to change. A 1935 dollar bill may only be worth seven cents now, but to them it'll always be a huge resource that can't be wasted on the fool crap that those durn kids buy today.

I'm concerned that I might end up this way as I too will have a pension but I'm also very frugal and have saved a few pennies.

I doubt it-- they've set a pretty strong example for you, haven't they? You're probably keenly aware of the line between frugality and deprivation.

However it's possible to change the way you feel about it. I've learned to politely decline to join in my FIL's schemes involving hours and hours of head-banging effort ("I don't see what there is to this appendectomy surgery. How hard could it be!??") to save a couple bucks.* Once you've changed your attitude, you guys can enjoy rollicking jolly conversations about rolling over Treasuries and where to get the best CD rates.

Come to think of it, a computer with an Internet connection would let them check their holdings on TreasuryDirect...

I think she needs to be left to fail because I can't tell her anything anymore.

Just as long as she's willing to let you tell her why she can't move back in with you guys!

* One of the island's best mechanics diagnosed the problem with his flat-four Subaru engine, fixed the mistakes made by him and his other shadetree-mechanic buddies, and then changed the spark plugs & wires. Total cost was $250, including parts. But because those spark plugs weren't the $1.50 variety he used to buy in the last millenium, the mechanic was obviously ripping him off. Since all mechanics are now con artists, he's "taking care of" the car's leaking head gasket by papering the garage floor and "topping off" the car with a quart of oil every other week. This will continue until he's too old to drive because I'm sure not going to strip down that engine with him to replace the %^&*ing head gasket!!

 

[FinanceDude]

Great points from all. Coming from someone who dispenses "checks drawn from the bank of REALITY"...........I have any number of war stories about people who make HUGE incomes and have little REAL ASSETS to show for it.

Best example of 2006: Met with a neurosurgeon who makes BIG MONEY. Looked at the "retirement plan". Yikes!! He can't retire until he's 80 years old at least!!

Yearly expenses are $200,000 MORE than he makes...........

Well, maybe they could drop TWO of the THREE country club memberships he maintains, or sell ONE of the THREE homes he owns...........and of course there's that cigarette boat that is drydocked 7 months out of the year........... 8) :