How is it "early" if you can't get your money?

[TooFrugal]

So the bottom line is that you have to have enough cash to sustain a $60,000 income on something that can't take your principle, such as CD's or Treasuries. Get out your calculator. Current CD rates are about 3% in a best case scenario for a lot of money. To get 60K you need 2 million in cash reserves at the present no loss principle rates.

HC, I do get what you are saying. My long term retirement plan is to save enough and spend little enough to live off my TIPS interest if I had to.

I think you are right, most people are never going to save enough to retire early if they have to save a huge amount of money. But I think a lot of the people who post here aren't in the majority. And as others have noted, many have fantastic pensions, some sold businesses, some are extremely frugal, some are in unusually high paying professions, some have two six figure incomes, some received inheritances, some live in low cost of living countries etc.

 

[Khan]

For many people who want to retire, trying to live on $21K is really really hard. It would be almost impossible where I'm moving for retirement.

If your view of ER finacially independent is living on 21K a year, then, heck, you can do that with about $500,000 if you are very careful about what your investments are and throw in a day at Walmart in something fairly mindless.

I'm shooting more for more than 3 times that. My daughter will want me to visit her in California, and my son in Germany at least once a year.

If the common view here of ER is living on 21K a year, heck, anyone can do it. I was under the perhaps mistaken impression that most people here wanted to retire with something approaching 60-70 grand a year, not 1/3 of that. If you want to do the 60-70K, then I just don't see how the numbers come up with most of what people say, unless they are willing to leave a lot of the stable money in the markets and are hoping to pick up a good stable 6-8% per year. But then this is what a lot of my baby boomer friends did, and now they have a 1/3 of what they had before.

HC

Crap hun, I could probably live on $10K if I wasn't so lazy.

If you are greedy/lazy to retire, fine. Don't burden us with your greed/needs/wants.

 

[Nords]

Absolutely. I've put anyone who doesn't agree with me on my Ignore List. Its the only way that works. Who wants to talk with people who disagree with us.
Not me, Babes!
On the City Data forum, I have 41 people who are on my Ignore list. All of them disagree with me.
ROTFLMAO!!!!

I think the [-]principle of the principal[/-] relevant data on this board is how many of its members have added you to their "Ignore Poster" lists. Luckily the moderators will help you keep track of any notable milestones.

You have a nice life now.

 

[kyounge1956]

(snip)The fact that some pension funds have been mismanaged doesn't make all DB pensions a swindle.

OK.... Look. I have one of these ponzi pension schemes. Its the PA Public School Teacher fund. Its pretty well managed even though it did manage to lose 20 billion in the market crash. Its untouchable by the state government, and the state constitution would have to be changed to have the state deny the payments. However, while it does draw on the funds, its not only the funds that manage it. While teachers put in money all along, the state is also supposed to put in money, and the school districts are supposed to do so. Since 2001, the state told itself and the school districts that they didn't have to add anything. So what its drawing on now is the funds in the markets, and the payments of people who are working. Its supposed to be 85% financed for everyone who is in the fund even those who are 33 years from retirement. It won't run out of money for me, but some time in the future, the paying teachers may be paying for the retirement of the retired teachers.

Thats like SS. No interest built up to draw on. Do the payments from the people who still putting in the money. Only works when you have a whole lot more people putting in money than taking out money.

In my opinion, anyway.

HC

I'm also a public employee and participant in a defined benefit pension plan. I work for a city, not a state, but otherwise the conditions sound similar: the pension system is badly underfunded (it's actually quite a lot worse off than PA), the City is on the hook to make up any shortfall, and it would require legislation to change or discontinue the payments. Instead of taking a contribution holiday in 2001, the City added an unfunded partial COLA to the pension benefit. We got shellacked in 2008, and to add insult to injury, also lost a little over 1% of its assets that year to a collapsing hedge fund. As a result, it is also paying out more in benefits than it is bringing in in earnings, and even with drastic increases in both employee contributions and the City match (probably starting next year), we may not see the 100% funding level again in my lifetime.

None of that makes either system, or any other DBP a swindle. You're making the mistake of attributing to malice what can be adequately explained by incompetence.

 

[jayc]

Going 100% or close to it in CDs for the future just because it would have been a great strategy for the last 10 years is a very questionable plan, especially if inflation kicks up.

CD's worked fine for me from 1988 - 2010. That works out to 22 years. Currently locked in to 2013 at 5.66%. Tell me about when inflation kicks in and your principal starts (or aleady has) to decline. I would/could not think of a worse situation.

 

[REWahoo]

I think the [-]principle of the principal[/-] relevant data on this board is how many of its members have added you to their "Ignore Poster" lists. Luckily the moderators will help you keep track of any notable milestones.

You have a nice life now.

Interesting that the principal of this discussion has suddenly seen his post count spike from the 50's to over 380. Even more interesting is the fact his older posts and a comment on his profile page...

Hi Zarathu

In response to your comment the other day,...

...refer to "Zarathu", not "HsaioChu".

Looks to me like someone has been caught in a bit of a deception. Does this call into question the principal's principles?

 

[caninelover]

Hello,

I've been reading lots of interesting things on this board, and some of the debates I've seen about different kinds of retirement accounts (IRA, TSP, 401k, etc.) have puzzled me.

If a normal retirement account doesn't actually let you access any of its contents (with exceptions for education, 1st home purchase, or withdrawing principal from a ROTH IRA) until you're more or less at the traditional retirement age of 60+/-, then how are they useful to someone who wants to retire earlier than that? I mean, yes, obviously being able to reinvest your profits tax-free (or tax deferred) will earn you more than doing the same thing in a taxable account, but how is a non-taxable account I can't touch until I'm 60 going to help me if I want to retire at 45?

I feel like I'm missing a vital part of this equation. Perhaps some of you helpful folks can point me in the right direction?

Josh

Josh, one of the nicest features of the Roth IRA is that you can withdraw your contributions (which are after-tax) at any time, at any age, for any reason. The earnings on the contributions are tax free, and those can only be withdrawn pre-59.5 yrs under the conditions you mention (1st time home buyer, education, etc). Just one reason why I think its the best vehicle available for most people to save for retirement...

 

[kyounge1956]

Interesting that the principal of this discussion has suddenly seen his post count spike from the 50's to over 380. Even more interesting is the fact his older posts and a comment on his profile page...
...refer to "Zarathru", not "HsaioChu".

Looks to me like someone has been caught in a bit of a deception. Does this call into question the principal's principles?

What does it mean? that Zarathu and HsaioChu are one and the same?

 

[REWahoo]

What does it mean? that Zarathu and HsaioChu are one and the same?

Perhaps one of them will be along in a while to answer that question...

 

[Rich_by_the_Bay]

Perhaps one of them will be along in a while to answer that question...

As always, nice pickup. Busted.

 

[ERD50]

As always, nice pickup. Busted.

Busted?

Others have changed their screen name. Were they 'busted'? It used to be a game for some. I never liked it as it did make it confusing when looking back at old posts - the screen name changes on the old ones too, creating a disconnect with comments. You can see this in (whatever his name is) first posts.

-ERD50

 

[REWahoo]

Busted?

Others have changed their screen name. Were they 'busted'? It used to be a game for some. I never liked it as it did make it confusing when looking back at old posts - the screen name changes on the old ones too, creating a disconnect with comments. You can see this in (whatever his name is) first posts.

The old forum software (pre 2008) allowed users to change names, vBulletin does not - at least not without moderator assistance. Also, due to some of the reasons you mentioned above plus others, when Community Rules were drawn up they included this:

Participants may only have one account unless moderator permission for multiple accounts is granted. Moderators may consolidate or delete multiple accounts if permission is not obtained.

Busted? Yep.

 

[ERD50]

The old forum software (pre 2008) allowed users to change names, vBulletin does not - at least not without moderator assistance. Also, due to some of the reasons you mentioned above plus others, when Community Rules were drawn up they included this:

Participants may only have one account unless moderator permission for multiple accounts is granted. Moderators may consolidate or delete multiple accounts if permission is not obtained

.

Busted? Yep.

OK, that's good AFAIC, but I'm still confused then.

If (what's his/her name) couldn't do it w/o mod assistance, where does the 'busted' come from? If it was an illegitimate second account, they would not have been linked (with references to the other name).

Unless the poster found a 'back door' or some other glitch in the vBulletin SW to allow a name change w/o mod approval - that would explain it.

edit - OK, so maybe a mod detected the second account, but rather than delete it merged it w/o any sort of public notice. I guess I see that as tacit approval rather than a 'busting', but that's just semantics I guess. No big deal, just got curious over this.

-ERD50

 

[RunningBum]

CD's worked fine for me from 1988 - 2010. That works out to 22 years. Currently locked in to 2013 at 5.66%. Tell me about when inflation kicks in and your principal starts (or aleady has) to decline. I would/could not think of a worse situation.

That's great. I wouldn't be surprised if you had been able to do even better over that period with a 50/50 mix rebalanced yearly, because there were some very good years with stocks for the first part of that stretch.

5.66 is a nice rate. I need to keep a closer watch on CD rates because I never seem to find them anywhere near that high whenever I look. With the rates I find, I seriously worry they won't keep up with inflation. I feel that stocks, while more risky, over time have a better chance to do better. Of course neither of us can be certain which will do better.

 

[REWahoo]

edit - OK, so maybe a mod detected the second account, but rather than delete it merged it w/o any sort of public notice.

That's the same conclusion I drew.

I guess I see that as tacit approval rather than a 'busting'...

I don't think we have enough information to reach that conclusion. We don't know what sanctions were placed on the bustee by the mods. I suspect he was told if he attempted a repeat performance he would be escorted to the entrance and thrown out into the street. But that's just [-]wishful thinking[/-] a guess.

 

[ERD50]

That's the same conclusion I drew.



I don't think we have enough information to reach that conclusion. We don't know what sanctions were placed on the bustee by the mods. I suspect he was told if he attempted a repeat performance he would be escorted to the entrance and thrown out into the street. But that's just [-]wishful thinking[/-] a guess.

Agreed. Although I get a bit of twisted amusement out of these little 'dramas'. I think it tells us far more about the poster than they imagine .


OT: I just noticed your sig line, I assume it was updated recently -

I suggest limiting all elected officials to just two terms - one in office and one in prison. - Kinky Friedman

We've been doing that with our IL Governors for quite some time! Doesn't seem to have much effect (evidenced by the fact that we've been doing it for quite some time!). Blago is number 6 (7?).

-ERD50

 

[Danmar]

Picky picky picky. Is there any intelligent human being on this forum who didn't know what I was talking about? I think not.

Yes but your credibility would be enhanced if you knew how to spell an important word in your argument.

 

[HsiaoChu]

I think the [-]principle of the principal[/-] relevant data on this board is how many of its members have added you to their "Ignore Poster" lists. Luckily the moderators will help you keep track of any notable milestones.

You have a nice life now.

Pardon me, but that makes no sense. I have no way of knowing, nor do I care, and you have no way of knowing, nor should you care, who has added anyone to their ignore list.

Its their to keep blood pressures from rising too high.

It the principal of the thing.

Hsiaochu

 

[HsiaoChu]

I'm also a public employee and participant in a defined benefit pension plan. I work for a city, not a state, but otherwise the conditions sound similar: the pension system is badly underfunded (it's actually quite a lot worse off than PA), the City is on the hook to make up any shortfall, and it would require legislation to change or discontinue the payments. Instead of taking a contribution holiday in 2001, the City added an unfunded partial COLA to the pension benefit. We got shellacked in 2008, and to add insult to injury, also lost a little over 1% of its assets that year to a collapsing hedge fund. As a result, it is also paying out more in benefits than it is bringing in in earnings, and even with drastic increases in both employee contributions and the City match (probably starting next year), we may not see the 100% funding level again in my lifetime.

None of that makes either system, or any other DBP a swindle. You're making the mistake of attributing to malice what can be adequately explained by incompetence.

You are looking at a very narrow description of a ponzi scheme. if you want to stick to the textbook definition, then no DB plan is a ponzi scheme. However, no DB plan also exists sole on the money that is invested. PA's plan is pretty well managed compared to many, is untouchable by the state government BY LAW, and must be paid because of the State Constitution, and both the state employees and the State Police are other aspects of the total process of public emplyees. altho the State police and public employees get free health care and educators do not.

So.... since the plan requires state money(money from state taxes) and School District money(money from local taxes), essentially they are using money from people who are working right now to pay the retirement benefits of people who are retired now.

In a ponzi scheme its similar. You use money that you get from investors right now, to pay for the benefits of people who have money in your fund, to prop it up. Whenever money is used to pay for benefits, and that money comes from people in the same real time, then in my opinion is kind of ponzi like. Its not a strict definition.

IN PA you could make a case for that not being true since the fund currently has nearly 50 billion dollars in it. But if you divide the number of current retired teachers by the bucks in the fund's investment returns per year, you can see that there is not enough money to handle the expenses. So this mean that my payments, the state's payment, and the district's payment and some of the investment income is going to pay for my mother's DB teacher pension at her elderly age 87, when she retired 30 years ago.

Hsiaochu

 

[avengerki]

Technically retiring at 59 and a half is still retiring early since most look at what the SS retirement age is and that keeps rising. So as long as you are retiring prior to the SS retirement age you are early in my book. If you can do it before 59 and a half then its not retirement it is Financial Independance and you can technically "retire" since you no longer need to depend on a paycheck.

 

[teejayevans]

I agree with 1 thing, RE does require some luck to stay away from the 3Ds:
divorce, disease, or death. Any one of these can ruin you plans for ER.
TJ

 

[HsiaoChu]

I agree with 1 thing, RE does require some luck to stay away from the 3Ds:
divorce, disease, or death. Any one of these can ruin you plans for ER.
TJ

Or personal ethics and good heredity. Death comes to all, Saint, sinner, and the most powerful and richest in the world.

But luck: Whenever my wife uses to date and exact time to buy lottery tickets, she always gets more numbers correct.

 

[REWahoo]

Agreed. Although I get a bit of twisted amusement out of these little 'dramas'. I think it tells us far more about the poster than they imagine .

Yes it does.

Makes you wonder if that virtual world character trait carries over into the real world.

 

[Letj]

Sure..... but if you think this is attainable by more than a very very small percentage of the population, then you are living in a dream world bubble and should try to do it with all the normal stuff of living: buying a house, living on a salary or wages, having any children, paying healthcare, etc.

Get out your calculator. Figure the numbers you need. I don't know anybody in MY WORLD who has this kind of money. I'm sure many do, and maybe many on this very narrow framework forum, but for 99% of the population this is really only the territory of the Lottery.

I have to say, I agree but to a certain extent. Just keep in mind that no matter what you make, you should always strive to save a sizable chunk. I am ahead of most of my peers because I've always been careful with money but having a high income career and side business were the keys to financial success for me.

 

[avengerki]

I agree with 1 thing, RE does require some luck to stay away from the 3Ds:
divorce, disease, or death. Any one of these can ruin you plans for ER.
TJ

Death would just kill it for me one way or the other.