WSJ Retirement Section 12/11/06

[astromeria]

100% of working income may well be spent in retirement by the WSJ intended audience--the multiple home, luxury car, 4* travel class, likely with golden retirement benefits from executive jobs. I get more steamed when publications with a middle-upper middle class readership frighten 40-60somethings with unqualified nonsense that doesn't explain the difference between income and expenses--perhaps because so many people spend all of their income, no matter what it is.

[LEX]

The previous post was directly on point. All the finacial press is doing is marketing, presented as advice. Its all one big "infomercial" whether its print or electronic media. If one keeps a realistic and accurate budget, much of what we spend when working is making money to work, not working to make money. We locate in expensive areas to avoid costly commutes, but still pay too much on houses, have to buy new cars, usually ego driven choices, nice clothes, high cost two week 'vacations" that are three times more expensive than traveling on your own schedlue and budget when you retire, and in general, paying too much because your employer controls where you live, how much time you 'own' on your end to do what actually matters to you and your family. Most of us have money but little else in the way of personal control in this phase of life. So we use money, much more than we should, to buy the personal leverage that is required to offset the insane hours required by the job.

Once one retires, they still have needs, but if one knows what they truly needs, 30 - 40 K/year in a low cost part of the US, where housing is not based on commute distances, as you no longer need to live in the high cost commercial center, as well as a simpler approach that allows you to shop sales, avoid traveling in the high cost periods, and use time, rather than money, to leverage your life. The most important aspect of ER to me is the ability to pull time out of the daily barter with your former employer and now own this to dispose of anyway you want!

Ignore the media pundits that want your inventment account so they can rip you off with high fees, and use scare tactics and self serving misinformation that is really marketing to drive this point, make your own budget, and get your life back early from hock. Its not how long you live, its how you live that will ultimately matter.

[kcowan]

Quote:

Originally Posted by grumpy We are living large on the same level of EXPENSES as before retirement. As others have said, this is only about 50% of our peak pre-retirement INCOME (we were big savers). Grumpy

In our case, we live on 18% and even that includes paying rent. I guess the moron that wrote the WSJ article did not speak to Grumpy and me...

[Mudd]

I completely agree that most magazines and papers are doing their part "marketing" rather than informing BUT,

I hardly think the writer, or any writer who writes like this is a moron. Check that, I believe these writers are writing for morons. I believe telling regular, normal everyday Americans that they need 70-80% of their salary for retirement is off. But I beleive it's too low for most people. Most people have no idea how to live below their means, have little or no debt, or delay gratification. Are you telling me they are going to cut back on their lifestyle once they retire? Highly doubtful. Thinking expenses will go down for these people is a dream. They'll want the same if not more to "enjoy" their retirement.

The guy in the office next to mine is currently cashing out his retirement funds, fees be darned to put a down payment on a house he clearly can't afford. Moronic to the nth degree. He will then be near 40 with no retirement savings, no college funds for 2 kids, 2 leased cars, etc. He couldn't ever live on 70% of his salary. No way, no how.

So even though I currently live on 60% of our salary, as do most of you(if not a lot less), the regular person is never going to be able to live on below 70%. To much "I want it now" in them. But they'll keep working while we have options.

I did quote somebody from this forum when after trying to enlighten my friend to no avail (after he asked me for advice)about taking money out of his retirement accounts by saying "Well at least you'll have to keep working, which will help my SS benefit down the road. He had that deer in lights look, but didn't disagree.

Mudd

[rs0460a]

Quote:

Originally Posted by astromeria 100% of working income may well be spent in retirement by the WSJ intended audience--the multiple home, luxury car, 4* travel class, likely with golden retirement benefits from executive jobs.

Oh - so they targeted me . What's the problem

- Ron

[REWahoo]

Quote:

Originally Posted by Mudd I completely agree that most magazines and papers are doing their part "marketing" rather than informing BUT, I hardly think the writer, or any writer who writes like this is a moron. Check that, I believe these writers are writing for morons.

That may be a little harsh, but I'm with you so far...

Quote:

Originally Posted by Mudd Most people have no idea how to live below their means, have little or no debt, or delay gratification.

I'm still with you...

Quote:

Originally Posted by Mudd Are you telling me they are going to cut back on their lifestyle once they retire? Highly doubtful. Thinking expenses will go down for these people is a dream. They'll want the same if not more to "enjoy" their retirement.

They won't have a choice. They won't do it voluntarily or happily, but they will live on less because they will be forced to do so.

Quote:

Originally Posted by Mudd ... the regular person is never going to be able to live on below 70%. To much "I want it now" in them.

It depends on what your definition of "live" is...

[tryan]

You guys are brutal ... so I'll add that any moron can see that your taxes will decline at least 15% (33% becomes 15% for us) and a retiree no longer needs to save (25% for us). Drop your mortgage and it's another drop in expences.

[MasterBlaster]

Quote:

Originally Posted by Mudd The guy in the office next to mine is currently cashing out his retirement funds, fees be darned to put a down payment on a house he clearly can't afford. Moronic to the nth degree. He will then be near 40 with no retirement savings, no college funds for 2 kids, 2 leased cars, etc. He couldn't ever live on 70% of his salary. No way, no how. So even though I currently live on 60% of our salary, as do most of you(if not a lot less), the regular person is never going to be able to live on below 70%. To much "I want it now" in them. But they'll keep working while we have options. I did quote somebody from this forum when after trying to enlighten my friend to no avail (after he asked me for advice)about taking money out of his retirement accounts by saying "Well at least you'll have to keep working, which will help my SS benefit down the road. He had that deer in lights look, but didn't disagree.

I know the type and have given up trying to help wayward souls find their way. Their values are so different than mine. They can work till they drop. I always get the - "Who wants money when you are old" blah blah blah

The only problem that I can see is that they can vote. And they can vote in legislators who will help themselves to part of your stash. After all you have so much and need to give up your "Fair Share"

[Mudd]

so I'll add that any moron can see that your taxes will decline at least 15% (33% becomes 15% for us) and a retiree no longer needs to save (25% for us). Drop your mortgage and it's another drop in expences. Tryan

I have nearly 20 years to go- I hope the lowest tax rate for me will be 15%, but the way this country's spending is going, that's no guarantee rates won't rise. I'm in the 25% now, when I retire, i bet I'll be around 20%

Most people aren't saving much so they really won't notice a drop from what they are "saving"

My buddy, like a lot of people will be lucky to have their mortgage paid for when they hit 70 years old. So not much savings there.

Maybe morons was a bit harsh, more like sheep. They need to follow and have the Mcmansion and luxury car, and fancy vacations. Fees aside, if there is anything that can get people saving more, than I'm all for it.

Mudd

[Nords]

Quote:

Originally Posted by Mudd My buddy, like a lot of people will be lucky to have their mortgage paid for when they hit 70 years old. So not much savings there.

Age 74 in my case, unless we get another once-in-a-lifetime opportunity to refinance for a lower rate...

[Bikerdude]

Quote:

Originally Posted by MasterBlaster The only problem that I can see is that they can vote. And they can vote in legislators who will help themselves to part of your stash. After all you have so much and need to give up your "Fair Share"

You are so correct!

This how it will go down:

Congress is increasingly concerned about the growing number of elderly living at the poverty level. Most of these people are former middle class working people who have simply grown too old to work and cannot live on Social Security alone. President HR Clinton is urging Congress to pass her asset tax bill to help save these unfortunate people.

President Clinton was quoted as saying "I believe Congress must realize there are people in America whose incomes do not reflect their true wealth. The only fair way to raise the needed revenue is to tax the assets of these Americans. The great untapped revenue source in the form of asset taxing cannot be overlooked”.

[ZMAN]

I started the thread as my intro and the responses have been very helpful. I think Mudds recent post really nailed it for me. If, as the statistics say, the American savings rate is close to or less than zero then people are living at or above their current incomes. Thus they need 100% (or more) of current income at retirement.

This group (including DW and me), as savers, are essentially a different species. If you use credit carefully and rarely, and save the raises you are lucky enough to get, the "rule of thumb" clearly does not apply.

I spent the last few nights streamlining my catergories in Quicken to sharpen my understanding of my monthly expenses, which remain well below current income.

[macdaddy]

I read Hillary is planning to be called "President Rodham" when she is elected... we better all start practicing it now.

[LEX]

Confiscatory Socialists by any name are a true threat to those who responsibly saved and through personal effort have more than the 'less fortunate'. They gain power by reallocating the wealth of others to those who become their supporting political force. There is a real longer term asset preservation issue here IMHO. Besides inflation which is insidiously built into the system and functions as a surrogate asset seizure over time, the feds can and have found ways to take retirement assets, from double taxation to stealing it from your kids through the estate tax.

You are not paranoid if it turns out to be true that they really are out to get you! Perhaps this is a good reason to hedge your in-country assets and keep assets in more than one political system. Maybe buy a flat in Lucern or Zug and get to know your local banker.

[donheff]

Quote:

Originally Posted by macdaddy I read Hillary is planning to be called "President Rodham" when she is elected... we better all start practicing it now.

I doubt it. She doesn't even call herself Hillary Rodham Clinton anymore, just Hillary Clinton.

[HFWR]

Rod 'em...

Gotta nice ring to it, don't you think? :P

[brewer12345]

Quote:

Originally Posted by LEX Confiscatory Socialists by any name are a true threat to those who responsibly saved and through personal effort have more than the 'less fortunate'. They gain power by reallocating the wealth of others to those who become their supporting political force. There is a real longer term asset preservation issue here IMHO. Besides inflation which is insidiously built into the system and functions as a surrogate asset seizure over time, the feds can and have found ways to take retirement assets, from double taxation to stealing it from your kids through the estate tax. You are not paranoid if it turns out to be true that they really are out to get you! Perhaps this is a good reason to hedge your in-country assets and keep assets in more than one political system. Maybe buy a flat in Lucern or Zug and get to know your local banker.

Woop, woop! Tinfoil hat alert!

[CCdaCE]

Quote:

Originally Posted by Bikerdude You are so correct! This how it will go down: Congress is increasingly concerned about the growing number of elderly living at the poverty level. Most of these people are former middle class working people who have simply grown too old to work and cannot live on Social Security alone. President HR Clinton is urging Congress to pass her asset tax bill to help save these unfortunate people. President Clinton was quoted as saying "I believe Congress must realize there are people in America whose incomes do not reflect their true wealth. The only fair way to raise the needed revenue is to tax the assets of these Americans. The great untapped revenue source in the form of asset taxing cannot be overlooked”.

Quote:

Originally Posted by LEX Confiscatory Socialists by any name are a true threat to those who responsibly saved and through personal effort have more than the 'less fortunate'. They gain power by reallocating the wealth of others to those who become their supporting political force. There is a real longer term asset preservation issue here IMHO. Besides inflation which is insidiously built into the system and functions as a surrogate asset seizure over time, the feds can and have found ways to take retirement assets, from double taxation to stealing it from your kids through the estate tax. You are not paranoid if it turns out to be true that they really are out to get you! Perhaps this is a good reason to hedge your in-country assets and keep assets in more than one political system. Maybe buy a flat in Lucern or Zug and get to know your local banker.

... So, my question is... how are "they" gonna go about bleeding off any available funds from within Roth IRAs. I dutifully stick money in that honey pot, thinkin' it's virtually guaranteed that tax rates will be higher in 30+ years, though, all they've seem to do is go down in the past 30. Right?

-CC

[FIRE'd@51]

Quote:

Originally Posted by CCdaCE ... So, my question is... how are "they" gonna go about bleeding off any available funds from within Roth IRAs. I dutifully stick money in that honey pot, thinkin' it's virtually guaranteed that tax rates will be higher in 30+ years, though, all they've seem to do is go down in the past 30. Right?

If "they" do it, my guess is it will be through some type of means testing. At one time SS benefits weren't taxed at all, and SS taxes are "after-tax" dollars just like a Roth. IIRC, at first only a max of 50% of SS benefits were taxed, then in 1993 it was raised to 85%. I suspect we will see it raised to 100% in the fairly near future as part of a SS "fix". I don't mean to discourage you from a Roth. If I could, I would contribute to a Roth after I maxed out my tax-deductible contributions. But I am hesitant to rollover my existing IRA's to Roth's and pay the tax up front (I think we can do that in 2010).

[MasterBlaster]

If I recall correctly until 1997 there was a 15% IRA "excess distribution" penalty in the tax code for large withdrawals. I don't remember the details - perhaps Martha would know.

So there is indeed precident for IRA means testing.