When it comes to saving for retirement. 401k's and IRA's worked just fine for me and enabled ER at 52. I honestly don't understand all the negativity in this article Why retirement is a myth - MarketWatch
I must have lived in a different world
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Another Reader
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It's a political piece, designed to further the agendas of the likes of Teresa Ghilarducci and Elizabeth Warren. The "government needs to protect you from yourself and the evil corporate world" crowd.
marko
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folivier
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The below quotation is very revealing. If I had tried to blame my inability to save for retirement on everything else not in my control then I probably would still be working.
"The inability to save isn’t because we’re wasting money on kitchen remodeling or fancy coffee, but rather because the cost of living has gone up — thanks to rising health-care costs and housing costs — while our salaries have stagnated or declined. And millennials have the extra burden of staggering student debt."
"The inability to save isn’t because we’re wasting money on kitchen remodeling or fancy coffee, but rather because the cost of living has gone up — thanks to rising health-care costs and housing costs — while our salaries have stagnated or declined. And millennials have the extra burden of staggering student debt."
DEC-1982
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I am glad you were able to retire early at 52.
Not everybody is as fortunate.
Many people don't have 401-k options.
Many people are working 2-3 jobs just to get by. If you have read the book by Barbara "Nickel and Dimed - Not Getting by in America" you will know what I am talking about.
Many people have no financial education, informal or otherwise.
People think they will work till 65, but their body fails them and they are forced out of a job. Or the company gets rid of their "deadwood" and nobody wants to hire a 55-year old or a 60-year old. And before Obamacare, a medical problem occurs and they went bankrupt (that might possibly be true even today).
I do get what they say in the article. For the vast majority of Americans, the old pension system was better than the "new" 401-k system. The new system is better for the financial savvy folks, which is probably a small percentage of Americans, less than 50% for sure.
Not everybody is as fortunate.
Many people don't have 401-k options.
Many people are working 2-3 jobs just to get by. If you have read the book by Barbara "Nickel and Dimed - Not Getting by in America" you will know what I am talking about.
Many people have no financial education, informal or otherwise.
People think they will work till 65, but their body fails them and they are forced out of a job. Or the company gets rid of their "deadwood" and nobody wants to hire a 55-year old or a 60-year old. And before Obamacare, a medical problem occurs and they went bankrupt (that might possibly be true even today).
I do get what they say in the article. For the vast majority of Americans, the old pension system was better than the "new" 401-k system. The new system is better for the financial savvy folks, which is probably a small percentage of Americans, less than 50% for sure.
Take responsibility for yourself, your actions and the outcome of those decisions? Why are you talking this craziness? "Give me government (to take care of me) or give me death" Did I get Patrick Henry's quote wrong?
Car-Guy
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I think 401k's and IRA's are enablers. BUT, they have major limitations that hold some folks back from their full saving potential in tax deferred accounts. e.g. annual contribution limits and RMD's at 70.5. The government seems to want you to save, but not too much or for too long.
Andre1969
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I think 401ks and IRAs can be useful, BUT, you have to be able to make full use of them. And as others have mentioned, not everybody has access to one, or can afford to max out their contributions to one, etc.
At the same time though, the "good old days" where "everybody got a pension" weren't so great as the rose-tinted glasses might have us believe. Often you had to work for many years, if not decades, at the same job to be covered by one. They can go bust, or get frozen. They're not always indexed to inflation, so what starts off seeming pretty sweet when you're 65 might have you living off of Old Roy and Milwaukee's Best by the time you're 80. And, just like 401ks today, not everybody had access to a pension back in the day.
I have a Roth IRA, as well as a 401k and some rollover IRAs from previous employers. They've all done okay. However, I have an after-tax account with Scottrade that's done much, much better, at least when factoring in account growth. A lot of that might simply be that I've gotten lucky with the individual stocks I've picked, whereas the IRAs and 401k are all in mutual funds.
Also, in saying that the Scottrade account is doing better than the IRAs and 401k, I'm not taking taxes into account. My current employer gives a 4% company match, and in my tax bracket, I get about 33 cents back on the dollar in tax savings (25% federal + ~8% state/local). If I sat down and actually figured the tax ramifications, the Scottrade account might not look quite as good.
At the same time though, the "good old days" where "everybody got a pension" weren't so great as the rose-tinted glasses might have us believe. Often you had to work for many years, if not decades, at the same job to be covered by one. They can go bust, or get frozen. They're not always indexed to inflation, so what starts off seeming pretty sweet when you're 65 might have you living off of Old Roy and Milwaukee's Best by the time you're 80. And, just like 401ks today, not everybody had access to a pension back in the day.
I have a Roth IRA, as well as a 401k and some rollover IRAs from previous employers. They've all done okay. However, I have an after-tax account with Scottrade that's done much, much better, at least when factoring in account growth. A lot of that might simply be that I've gotten lucky with the individual stocks I've picked, whereas the IRAs and 401k are all in mutual funds.
Also, in saying that the Scottrade account is doing better than the IRAs and 401k, I'm not taking taxes into account. My current employer gives a 4% company match, and in my tax bracket, I get about 33 cents back on the dollar in tax savings (25% federal + ~8% state/local). If I sat down and actually figured the tax ramifications, the Scottrade account might not look quite as good.
What "old pension system" are you referring to that was better for the "vast majority" of Americans? There has >never< been a time in the US where the majority (much less a "vast majority") of workers had jobs that led to a pension. So, what was better about that setup for the "vast majority of Americans?" Were people better off before (the majority) had access to a 401K? Or the ability to save in a tax-deferred IRA? All this pining for the good old days ignores some important facts about then vs now. Again--there has never been a time when most American workers were in jobs that were covered by a pension.
Moreover, the post WW-II economy in the US was a blip in time, a freak confluence of events that led to a spike in US wages (and benefits) that won't be replicated (nor should we hope for it, if it comes at the same cost to the rest of humanity that accompanied that time). We live in a global economy, and our businesses and workers must remain competitive with the rest of the world. De-coupling retirement income security from a particular single employer (as we have done with 401Ks and IRAs) is an important step in encouraging worker mobility, freeing employees to seek the best position they can get at the best compensation they can get.
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marko
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That's exactly what happened to an uncle. After 42 years he retired. A few years later, megacorp (a huge international company...who'd 'a thunk it!) went belly up. Pension for his widow? Nada.
401k? Never put into it because he had his pension.
My company had a pension. When I left I had the option of keeping it with the acquiring thieves or taking it. Took me about a nano-second to say "show me the money". Glad I did. Now the pension for those who remain is in jeopardy.
jeffmete
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I agree that the old days look better through rose colored glasses. I worked for 9 years at a pensioned company but you had to have 10 to be vested. Consequently I get nothing from them. If I was 401k'd back then I would have 9 More years worth of savings in my retirement.
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Sent from my iPhone using Early Retirement Forum
The quote is true though. Why is that hard for all the old folks on this board to understand? When I went to college in 1990-95, the cost of a state school was manageable for a young person to pay for with summer jobs and a little help. That is no longer even remotely close to true. Without parental help, graduating from the college I went to is going to involve about 40k of debt for most students.
The low-end wages in this country have not kept up with inflation since then.
The road to financial independence is actually more difficult for this generation than past generations.
Anyone who doesn't realize that is too busy patting themselves on the back to look at the reality of the situation.
They even have a meme for you folks--
https://www.google.com/search?q=old...ved=0ahUKEwjzx5Lw9erKAhWGuoMKHbX6BDAQ_AUIBigB
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Andre1969
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A lot of my family members like to lament over the "good old days" of pensions. But, I come from a long line of railroad workers and government employees, so they don't know any different. And, many of them have been retired for so long, they don't realize that things have changed.
For instance, my grandmother's cousin retired from the federal government back in 1980 or 81, as a GS-13. I think she gets about $38-40K per year now, under the old CSRS plan. She keeps telling me that I should quit my job as a government contractor, and try to get in with the government. It took awhile for me to finally get through to her that the pension isn't as lucrative as it used to be.
Well, now she's on another kick, saying I should try to get a state government job, as I think they do still offer pretty good pensions. But, I told her I'd have to be in for about 30 years or more before it amounted to anything. Her response is, "so what's wrong with that?" I told her that would put me around the age of 75-76. And her response was simply a repeat of "and, what's wrong with that?" Obviously, not an early retiree mindset...
For instance, my grandmother's cousin retired from the federal government back in 1980 or 81, as a GS-13. I think she gets about $38-40K per year now, under the old CSRS plan. She keeps telling me that I should quit my job as a government contractor, and try to get in with the government. It took awhile for me to finally get through to her that the pension isn't as lucrative as it used to be.
Well, now she's on another kick, saying I should try to get a state government job, as I think they do still offer pretty good pensions. But, I told her I'd have to be in for about 30 years or more before it amounted to anything. Her response is, "so what's wrong with that?" I told her that would put me around the age of 75-76. And her response was simply a repeat of "and, what's wrong with that?" Obviously, not an early retiree mindset...
REWahoo
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Breaking News: Generational skirmish breaks out on early retirement board!
REWahoo
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target2019
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Old World Steve here.
Looking to trade my modern possessions for a yoyo, pinball machine, and a stack of Marvel comics...
Looking to trade my modern possessions for a yoyo, pinball machine, and a stack of Marvel comics...
FANOFJESUS
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A lot of my family members like to lament over the "good old days" of pensions. But, I come from a long line of railroad workers and government employees, so they don't know any different. And, many of them have been retired for so long, they don't realize that things have changed.
For instance, my grandmother's cousin retired from the federal government back in 1980 or 81, as a GS-13. I think she gets about $38-40K per year now, under the old CSRS plan. She keeps telling me that I should quit my job as a government contractor, and try to get in with the government. It took awhile for me to finally get through to her that the pension isn't as lucrative as it used to be.
Well, now she's on another kick, saying I should try to get a state government job, as I think they do still offer pretty good pensions. But, I told her I'd have to be in for about 30 years or more before it amounted to anything. Her response is, "so what's wrong with that?" I told her that would put me around the age of 75-76. And her response was simply a repeat of "and, what's wrong with that?" Obviously, not an early retiree mindset...
In my family 75-76 is at the end of life.(Some are gone before that) LOL
Senator
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Anyone in America can be a millionaire if they have enough drive, determination and ambition.
Andre1969
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And oddly, my grandmother's cousin, was an early retiree. She just turned 91 this past October (born October 1924), so depending on when she went out in 80-81, she was around 55-57. She's mentioned about how, if she had it all to do over again, she would have stayed in the workforce longer so she wouldn't be so cash-strapped right now. However, she's had a lot of leeching family members over the years take advantage of her kindness. If it wasn't for that, she'd be fine.
But yeah, my sentiment is that I could be dead before I hit 75-76, so the last thing I want to do is work until then, unless I really have to. I still have some relatives alive in their 90's, and my Granddad on my Dad's side is 101. But, as they say in the stock market "past results are not a guarantee of future performance!"
I actually collect comics.
Collecting in the internet age has made collecting old Marvel comics from the 60s pretty reasonable if you aren't picky about condition, outside of the very early issues and the big key books.
Danmar
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I believe my daughter has had a tougher time getting established than I did, 40 years ago. The cost of education and housing is so much more (in Toronto) while salaries paid to young people are less on an inflation adjusted basis. My daughter is very lucky that her parents are willing and able to help but most kids her age are saddled with student debt and have little prospect of acquiring a house on their salaries. At least in Toronto.
That's cool. Can you make money with the lower quality issues, or do you do it just for fun?I actually collect comics.
Collecting in the internet age has made collecting old Marvel comics from the 60s pretty reasonable if you aren't picky about condition, outside of the very early issues and the big key books.
dixonge
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Well, now she's on another kick, saying I should try to get a state government job, as I think they do still offer pretty good pensions. But, I told her I'd have to be in for about 30 years or more before it amounted to anything. Her response is, "so what's wrong with that?" I told her that would put me around the age of 75-76. And her response was simply a repeat of "and, what's wrong with that?" Obviously, not an early retiree mindset...
It depends on the state, of course, but the wife and I are in the TCDRS system for Texas counties and districts. Our previous employer (county) had an 8-year vesting period. My current employer (district) is 10. I can mix and match, so can still vest at 8 using the previous employer's requirement.
Matching from either employer is around 220%!
Several of my co-workers are already vested in one district while finishing up a second, separate vesting here. Two pensions in 20 years. During and after vesting the money you have contributed earns 7%/yr until you retire.
That's cool. Can you make money with the lower quality issues, or do you do it just for fun?
There is money to be made for people who follow the market and make savvy purchases, but I mostly do it for fun. Lately most of the money has been made by people anticipating higher interest in certain key books (mostly first appearances) due to the movies. The speculation on them has gotten pretty silly, IMO. I think there is going to be an ugly correction at some point soon that will remind people that these are comic books, not investments.
Most of the cheap stuff stays pretty cheap though. People who make money with the more common stuff do it by buying collections and selling the books individually, either online or at conventions. It's more like buying a job than an investment, IMO. It is something I would like to do a little of when I am FIRE. I just don't have the time right now.
Amethyst
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$10K of debt in 1979 (which is what my then-SO was shouldering for a state school, while living on campus instead of at home as I did), $40K of debt today. Is that consistent with the CPI, or is it a faster increase? Are today's students getting more or less for their $$?
Bottom line, I'd like to see something more authoritative than a snarky meme before I make any conclusions on where the greenest grass prevails. Like rumors, those memes always have a little grain of truth somewhere, are extremely easy to make up and pass around, and the axes are always grinding so furiously in the background that you can't hear yourself think.
Amethyst
Bottom line, I'd like to see something more authoritative than a snarky meme before I make any conclusions on where the greenest grass prevails. Like rumors, those memes always have a little grain of truth somewhere, are extremely easy to make up and pass around, and the axes are always grinding so furiously in the background that you can't hear yourself think.
Amethyst
