Scott Burns doesn't want us to retire!

[Telly]

Scott Burns is the personal financial columnist for the Dallas Morning News. Probably syndicated to most of the western world too. He is one of two or three that are mentioned by Bernstein in "The Four Pillars of Investing" as being intelligent and trustworthy in analysis and advice. I read his columns whenever I can. But....

In columns earlier this year, Scott says he doesn't understand why people are betting that they won't live long - by taking Social Security at 62 rather than at 65/66. In fact, he promotes a later retirement, like 70, to maximize the SS benefit.

In a recent column, a guy 56 years old with $850k in assets is eligible for early retirement. Scott says:

"... the best economic protection most people have is their ability to work for a living. It gives you staying power and some room to negotiate. It also gives you income. Try replacing just $1,000 a month of income from work with income form investments - it takes a whole lot of money.
You have an additional reason to remain employed: You're only 56. Given the cost of medical insurance, most people should remain employed (and insured) until they are at least eligible for Medicare".

That's right, he said MEDICARE. 65 years old! He would probably think that I'm a real looney! Maybe that most of us here that are actually ER'd are loonies!

The man worries me when he writes things like that. He's always so sincere and well thought-out. Makes me feel like I'm doing something wrong... stop it, Scott!

 

[John Galt]

Hello Telly! I like Scott Burns too, but he must have
been smokin' funny cigarettes when he wrote about
when to take your SS. While it is obvious that it is
easier to take your salary than to make the same
money on your investments (Duh!), as you correctly point out, most of the folks on this website have
already crunched those numbers. For example,
let's say by working one more year (full time) that I could
have grossed $100,000. At 5%, I would have needed
$2,000,000 invested to match that. Sure, I could have kept working and probably become a millionaire with
maximum effort. My message for Scott; It's the
time stupid! We don't now how much time is left to us
and we better make the most of what we have.
Forgoing the big money was easily one of the best
decisions of my life.

John Galt

 

[unclemick]

Publish or perish - Scott has the the same problem most in the media do - they have to write something even if it doesn't fit all of his reader's. ER's (yeah!) can blissfully ignore this column and enjoy his other stuff. For instance his couch potato portfolio is way to much work-buy a balanced fund and let it rebalance itself.

 

[dory36]

... his couch potato portfolio is way to much work...

Heh -- for those who haven't see the couch potato portfolio columns, he says to buy 50-50 500 index fund and a bond index fund. At year end, spend 1 minute looking at the new totals, another minute figuring out how much to move from one to another to get it back to 50-50, and 3 minutes logging onto Vanguard to make that switch.

That's what I do, but perhaps I should save that 5 minutes a year, and look at a balanced fund!

Dory36

 

[Bob_Smith]

Burns lists two reasons to stay employed:

1. Considerable assets are needed. As John said, we have all already crunched the numbers in a hundred different ways. Furthermore, Scott Burns may like his job, so why not stick around? I absolutely despise mine. The people I work for have stripped all humanity out of the job, and it is only getting worse. I'd rather be poor than put up with another 14 years of this, and I think there's a reasonable chance that another 14 years would literally kill me. Stress kills. Every time I get spooked and consider staying "just a couple more years", I watch the movie, "Life as a House". That snaps me out of it, and I'd recommend it for anyone who gets the jitters about the decision to retire early.

2. The second objection Burns poses to ER is health insurance. He has a point. I'm setting aside $50 a day for health care and if that isn't enough, then I guess I'll die in a gutter somewhere. I'm not willing to work an extra 14 years for the security of having the best health insurance plan. The personal costs are just far too high. There are things I want to do and a life I want to live - my way - while I'm still young. The best health care plan for me is to get the hell out of this job. Who knows, it may save my life. I'll figure out a way to get the health care I need during the 14 year gap.

If we wanted to be safe, we'd all work till we're dead. When I think about my ancestors who came here with nothing in the mid 1800's, when there was no health insurance, no social security, no medicare; I should be able to leave my job with a million in assets.

 

[Cut-Throat]

Bob_Smith,

Yeah, I'm with you on this health care panic! -- In the end we're all dead anyway. You can die worrying about it much faster.

One huge fact of the U.S. healthcare system is that 70% of the total health care Bill in the U.S. is administered in the last year of life. - In other words, it did not work anyway or actually accelerated death! We as a society have not figured out how to die gracefully yet.

And again in Florida last week the Legislature and Governor forced a Human vegatable to keep breathing for who knows how long - And who is paying the bill ?

 

[unclemick]

Eleven years(49-60) in ER without health insurance and counting. Maybe I need to renew my passport so I can fly somewhere for cheap medical or at least croak in peace should real illness strike - just kidding - BTY - the old 550 IRS publication( circa 1993) when looking at early IRA withdrawal - says I got till 84.3.

 

[Ted]

There is an economic principle called the "fallacy of composition." It is the frequently erroneous idea that whatever is true for one person is therefore true for society as a whole.

The thing that makes it false is the fact that many social/economic issues are essentially "zero sum games." In other words, the only way that one person (or a limited group of people) can "win" is at the expense of everyone else.

Saving for retirement and eventually retiring is largely like that. Some people can adopt certain policies that will beat the system and allow them to retire comfortably while the work of others supports them. But if everyone tried these same strategies, they would simply cancel one another out. That is the dilemma faced by anyone like Scott Burns who provides financial advice: Most of the gains to people who followed it would be at the expense of those who didn't follow it. and if everyone followed it, nobody would be any better off.

There is a limited amount of advice that truly benefits everyone. One is to develop a marketable skill and to keep selling it for as long as it has value. Another is to make long term investments having minimal expenses associated with them.

 

[Bob_Smith]

One huge fact of the U.S. healthcare system is that 70% of the total health care Bill in the U.S. is administered in the last year of life. - In other words, it did not work anyway or actually accelerated death!

I was chatting with Senator John Kerry last night. One of the very few perks of living in Iowa is that Presidential candidates actually come to our small towns. A few people show up at a tiny restaurant and visit with them. Anyway, he says that only four tenths of one percent of insurance claims are for individuals with annual expenses in excess of $50,000 (based on 2001 stats). I found that statistic to be very interesting. If he is correct, those are pretty good odds for those of us with a 10-20 year gap between work and Medicare. Some sort of catastrophic coverage should be good enough to carry us to Medicare.

 

[Cut-Throat]

THis is a 'perk'?  I guess if you lived in a torture chamber, the nitely red-hot poker in the eye would be a 'perk' too??

GDER,

Well, it would be a 'perk', if you are a true American. Sen. John Kerry is a selfless public servant. He comes from a lot of wealth and could be living a life of luxury, but instead he is looking after your health care.

A graduate of Yale University, John Kerry entered the Navy after graduation, becoming a Swift Boat officer, serving on a gunboat in the Mekong Delta in Vietnam. He received a Silver Star, Bronze Star with Combat V, and three awards of the Purple Heart for his service in combat.

He is far more of a hero than someone that dresses up in a flight suit and lands on an Aircraft carrier.

Yes I would love to meet and talk with John Kerry and Bob_Smith I envy you!

 

[Telly]

[quote if you are a true American[/quote]

Let's not go there, guys!  Obviously there is a range of political opinions on this board.  We don't need to reach for the missile.  

Let's get back on-topic, and stop polluting my poor post!  

Back to what Bob related -  "Anyway, he says that only four tenths of one percent of insurance claims are for individuals with annual expenses in excess of $50,000 (based on 2001 stats). I found that statistic to be very interesting. If he is correct, those are pretty good odds for those of us with a 10-20 year gap between work and Medicare."

Thinking about that, if that is TOTAL health insurance claims, I could easily see the small percentage.  Me and my family have never turned in a truly large bill, and that is over many decades.  What I am saying (I think  ) is that the statistic may be good for considering costs for the overall population, but may not be applicable to a early-retired age range of people.

 

[makeitwork]

GDER's right This is what some call "Trickle Down". It doesn't work. Rich people know this. That's why they keep telling the working class we need more "trickle down". To the extent there are still rich people that itself is proof that trickle-down economics is sub-optimal. Well, it's sub-optimal for the whole of society. It's just bitchin' for the people that have what needs to be trickled down, but of course have no intentions of trickling anything down. Why should they? Life's not fair and they aim to keep it that way. And any attempts by some to get what they see as a fair shake will be squashed as some sort of evil socialism.

Wealth never trickles down even tho it needs to flood downward for the economy to be considered optimal and as free as Adam Smith required. The direction of wealth is always upward. Hence the school of trick-down

 

[makeitwork]

Sorry you've been 'trickled' on makeitwork, but I'm quite satisfied with my piece of the American Pie and I'm not rich. [/i]

No need to be sorry. I am not trickled on at all except in the most general use of the term which is how I used it before. Even YOU, whether you feel that way or not, are in fact and indeed... wel, you know what I mean. But I am oen of those people everybody else envies. Like you everybody just cant beloive I am so rich so young and retired. But I am not in that class of rich people that I alluded to. A few million does not put one in the top few families in the nation. As long as people think the "millionare next door" is the same as "the rich" the rich are secure

] Why are the rich admired who work when they don't need to or continue to accumulate wealth beyond what they need? Are the Gates, Buffetts, Waltons, etc of the world to be envied or pitied? I have more admiration for those who have accumulated what they need and have ER'd than for 100 year old politicians, nearly dead CEOs, etc. But then I'm in the minority and still get alot of folks telling me; "you're too young to be retired"!! Wonder if I should start responding that they are too old not to be... I don't need to be trying to accumulate as much as I can as Burns suggests, but if he is as astute as some suggest why doesn't he RE.

I agree with all the above. Always mkes me f....ing sick when I see on TV some 55 or 60 yr old lottery winner say he intends to keep working and everybody thinks this old a**h*le's "Work ethic" is somehow admirable!

Let somebody else with mouths to feed and bills to pay maybe , ya know, fill out an application for your job Pop! Ya' know, somebody who didnt just win a 10 million dollar lottery.

Yes, I know when enough is enough.

 

[Bob_Smith]

Your thread was already polluted, Telly.  Discussions with presidential candidates &/or other wackos is not much of a 'perk' in my humble opinion and I'm NOT headed for IOWA!

We get together with a few friends over coffee and chat with future Presidents. That's all it is. Nothing more - nothing less. The people who attend are generally thoughtful, well-read, reasonable, articulate, and concerned about the future. Most are successful in their work and well known in the community. They hold differing views, but carry on a polite discourse, always respecting the right of others to disagree. They tend to be skeptical, but I'd be surprised if anyone would buy into the belief that all of the Presidential candidates are "wackos". That would be viewed as way off the deep end. Certainly our role is very small here. On the other hand, we are the first to grill these guys, and we get to do it face to face, which is something only a handful of people will ever experience. Everyone who participates seems to truly enjoy it, yet we also put them through the paces. These events are not the scripted pap most people see. We determine the ground rules as we go, and they play by our rules. We sometimes see them at the end of a long day when they are tired and frazzled, and we see how they hold up. It's too bad everyone can't experience it. You've attempted to portray this rather innocuous gathering as something it isn't, and you're way off the mark.

Cut-Throat, thanks for your comments.

Telly, you make a good point. I'd like to see the figures broken down by age. I really do not know what the odds are for someone 55-65. I thought the costs would be concentrated more within the Medicare age group, but maybe not. If 70% of costs occur in the last year of life, maybe that includes a fair number of folks age 55-65, I don't know. If the high costs are also concentrated within our age group, the statistic would be meaningless for ER. Certainly health care continues to be my biggest ER concern, and if I knew the odds were small, it would help.

 

[John Galt]

Sorry, but I believe that all of the current presidential
"candidiates" are indeed "wackos". I'm not kidding. To me,
these people are beneath contempt. But, that's just
me and I realize I am "off the chart", politics-wise.

John Galt

 

[unclemick]

ER or RE = FREEDOM. My time is mine so work/not work, travel/not travel, start a business, etc. are options(yeah!) - value INCALCuABLE.


Scot touched on the low interest/div. environment(salary $ worth more now a days) and worry (health).

What I can't figure is how that last 10 almost eleven years went so fast in ER. Burns needs to write an article on the fine art of doing nothing in particular and sarvouring it so time doesn't zip by so fast.

 

[Ted]

We get together with a few friends over coffee and chat with future Presidents. That's all it is. Nothing more - nothing less. The people who attend are generally thoughtful, well-read, reasonable, articulate, and concerned about the future.

What Bob describes here is in my view the ideal form of republican democracy. Unfortunately, it is physically impossible for candidates for major offices to have such intimate chats with more than a tiny handful of voters, and there are many forces at work that cause that ideal to be distorted.

Speaking as a moderate, I regard one of the biggest political problems as being that the activities of the two major political parties -- particularly their primary election process -- tend to be dominated by people whose political agenda is more extreme than the national norm.

When there is a small neighborhood meeting of the type that Bob describes, in a typical middle class neighborhood, the people who attend are generally polite and thoughtful. But by the time that you get to political caucuses run by the local political activists, the agenda is often noisily dominated by pre-organized factions that often consist of zealots on a single issue.
Thus, to win the Democratic nomination candidates must at least appear to be more liberal than the national norm, while to win the Republican nomination candidates must at least appear to be more conservative. The candidates then attempt to shift to the center to win the general election.

The upshot is that most candidates are (1) not totally frank, in the sense that they are calculating and shifting their messages to optimize their chances of winning, and (2) are inclined to hold some rather extreme views.

In terms of their policies, I regard Nixon and Clinton as two of the more "moderate" presidents in recent decades, and it is rather ironic that both of them had major flaws in their character. It is disturbing to think that the only way that a person can win the presidency is by being disingenuous.

 

[Jack]

I can't help but comment on yesterday's mention of lottery winners here. I too am always amazed when those huge jackpot winners claim they have no intention of quitting their (mostly rather mundane, let's face it) jobs.

But the sad reality is that every one of those people have already shown - merely by buying those dumb lottery tickets - that they have zero capabilty to manage money. Any number of studies have proven that most of those `winners' end up poorer and even more miserable than they were before they `won' after they pissed away their `winnings.'

Sure the market's a gamble too. But I'll take the bet on a 70 year pretty impressive track record over a one-in-several-million get rich quick scheme any day.

 

[makeitwork]

Jack, I would disagree with the blanket description (stereotyping..?) of lottery ticket buyers and inherent money manegemnt ability. I know lots of people who buy them. Myself included. yes, some are Ralph Kramdens (get rich quick crazy hairbrained scheme. Those people are family. Thankfully I missed that gene) and some are either high salary types or small businessmen. (Yes, they joke about slummin'" but they still buy 'em)

It's a fun little toss of a dollar into the wishing well as it were. A grown-up's version of having a little fun blowing out the candles on a cake (Cause we know THAT doesnt really work , but that ticket actually does have as pay-off. Just maybe not to YOU) And many people insist on only voluntary taxes. OK, so I Donated a free dollar to the schools or the old folks social support system or whatever that state does with the lottery money. Lets face it, as I ahve moved up in tehw orld I have folund tha the truly "makin' it" types never worry about a lousy dollar. Only the "Fakin' it" types always have to make themselvs think they're somehow saving a dollar (screwing the salesman) on a plastic genuine wood gearshift knob on that brand new slightly used car, or that having a dollar's worth of fun on a lottery draw is "money down the drain". Like that health nut telling you drinking ONE diet Coke will somehow KILL YOU, rot your teeth, cause cancer, Alzheimers in lab rats, blah blah blah.

And the big winners ending up just as broke or broker...Depends on how BIG we're talking. Yes, many of those Ralph Kramdens... easy come...easy go. I dont have all the data on all the winnners but I suspect that they only show the "big crappers" on TV and play the violin. The other 99% or 95% of winners live on quietly and wealthier or with at least a bigger safety net in the bank. Lives are hardly "ruined"

And as far as "gambling" in general... I regard the stock market as more like betting on horses. You have a tout sheet and a bio on the horse/jockey/ sire.. something to go on. Not like cards or dice where it starts and ends with some "thing" that "just happens".

I wonder if phrasing it this way to people would make more people more comfortable with the idea of investing and especially LEARNING what they need to know about their investments

 

[FI3]

Does someone have a link to the Scott Burns article? I'd like to take a look at it.

Thanks.

 

[Billy]

Uncle,
I agree.......

I wake up in the morning with nothing to do......at the end of the day, I only have half of it done....

Billy
Website http://www.geocities.com/ba264

 

[makeitwork]

Your chances of winning the big price is the same whether you buy a ticket or NOT to 5 or 6 decimal places(ie. ZERO=0.00000). Do keep buying those tickets, I'm sure your 10 millionth ticket might just be the winner!! Maybe we need a national lottery to bankroll SS in the future and recipients could opt to get their benefits in cash or lottery tickets. Could be a big time saver for some people..

You know nothing of me but your mind is sooo made up. Typical. Too bad you didn't read everything else I wrote or had someone else read it too you. Or tried to understand it. But this is exactly what I have come to expect from so many on boards like this.

I'm a retired, millionaire, at 38 but I'm mathematically ignorant?

You'll be so glad to know this is my last post.
Throw a party

 

[Telly]

Does someone have a link to the Scott Burns article?  I'd like to take a look at it.

You could try looking for it at dallasnews.com

Some content you can view, a lot of it requires a log-in, and the rest they want $ for. And, IIRC, some of the newest articles won't be there for a while. I suspect so there is no financial loss to newspaper sales.

I did not include a link, because I really hate clicking on links that users on bulletin boards provide, that take you to a page whereupon you have to "log-in" to view anything.

 

[John Galt]

Hi Telly! Re. "links/log in", me too. Can be a pain.
I still like Scott Burns though, probably because he
reinforces what I already believe more often than not.

John Galt

 

[unclemick]

I used to read a lot Scot Burns when his early webstite was free(no log in) but don't anymore(screw Dallas MN) so I get him 'second hand' now a days. One of these days I'll grow up - scrap webtv and get a real computer - log in and put up with spam like my friends with 'real machines'.