Retirement Planning - Lessons Learned

[Brianczaw]

true, but there sure is a huge peace of mind when your mortgage is paid for. There is a lot of value in that.

 

[KennyG]

I'm expecting inflation to pop 10% or more if the $15/hr minimum wage starts to take hold.
For those of us retired without a guaranteed cost of living increases it's devastating.
It's one thing to have a $15/hr minimum wage where the cost of living is high, quite another in poorer areas.
I live part time in Fairfax county Va and part time in Mississisippi. The average income in Fairfax is about $54K/yr, in my neck of the woods in Ms. its about $21K.

I doubt the minimum wage is a strong driver of inflation. The number of people making less than $15 is relatively small and located in specific geographic areas and business segments. Yes, it would put a bit of upward pressure on other wages, but the more significant impact would be streamlining, automation and elimination of low value jobs (with resultant increased unemployment).

I think the uncontrolled inflow of money into an economy that cannot quickly deliver more products and services is much more important. If we inject all this money into "infrastructure" where are we going to find construction workers, healthcare workers, etc? In my area, even the Post Office is advertising for applicants. When did that ever happen before?

 

[riptides]

.... In my area, even the Post Office is advertising for applicants. When did that ever happen before?

It is much more than Postal in my area, it is wide spread skills needed in most every industry. Minimum wage up to high tech types.

It is a good time to be looking for a job, on your terms. Not someone else's.

IMHO, it is a huge shift in the relationship of what it means to be employed. The savvy people will do well in the new economy. The issue will be where do they take the economy and the nation as a whole, next?

 

[Gale Hawkins]

I doubt the minimum wage is a strong driver of inflation. The number of people making less than $15 is relatively small and located in specific geographic areas and business segments. Yes, it would put a bit of upward pressure on other wages, but the more significant impact would be streamlining, automation and elimination of low value jobs (with resultant increased unemployment).

I think the uncontrolled inflow of money into an economy that cannot quickly deliver more products and services is much more important. If we inject all this money into "infrastructure" where are we going to find construction workers, healthcare workers, etc? In my area, even the Post Office is advertising for applicants. When did that ever happen before?

I get your point that inflation is caused by too many dollars chasing too few of goods.

This year my large cup of coffee regular coffee at McDonald's has increased in price by 24%.

I expect many retired people will experience at least a 25% across the board inflation this year.

 

[DieselBound]

I get your point that inflation is caused by too many dollars chasing too few of goods.

This year my large cup of coffee regular coffee at McDonald's has increased in price by 24%.

I expect many retired people will experience at least a 25% across the board inflation this year.

OR, same price but smaller cups!

To me, coffee should NOT be messed with! Mess with sodas (they really are bad for you), but mess for coffee and that's where I draw the line!

As scary as the words "fixed income" might be, "uncontrolled expenses" is worse. My EX once asked me how much money we needed to make (I was "between jobs" at the time) and I responded with: "How much do we expect to spend?"

Know what your expenses are and know what you can pare down, in advance.

 

[Gale Hawkins]

Someone was complaining about fixed income and I said I do not have a problem with fixed income as long as it's fixed high enough.

 

[Gale Hawkins]

I was told by an Old gentleman a long time ago that it doesn't pay to be poor.

Serious I spoke with Social Security as I was about to turn 62 and quickly realized that was a no go. Working another 8 years was a game changer but that's not an option for everyone.

When I signed up to start drawing this last February my brother said he would take a look at retiring early. I suggested him to give Social Security a call and get the numbers and then next time we spoke he says he will be signing up when he get 66 and 4 months he's just turning 65 next month.

Planning retirement is not a simple task in my view.

 

[DieselBound]

The majority of humans know nothing of "retirement." The concept was little known throughout all of human history and didn't really appear in any way until about, what, 100 years ago? There has been, however, means for taking care of people past their ability to contribute to work: tribal; family; community.

The wealthy have pretty much been able to idle themselves down. The poor have always had to keep keeping on. The "advent" of the middle class brought in the notion of "retirement" for other than the wealthy. As things appear to be going I don't see anything other than return to the norm.

Health is the only thing that we have anything but a fraction of a true say in. Sick is sick, no matter whether working, retired, wealthy or poor.

I long ago figured that I probably wouldn't be able to "retire." I set expectations low and it looks like I'll be able to exceed them.

 

[ultrarunner]

If you stop working at 62 but do not collect does the monthly social security continue to increase even with no new contributions coming in?

 

[Brianczaw]

If you stop working at 62 but do not collect does the monthly social security continue to increase even with no knee contributions coming in?

SS averages out your top 35 earning years...So if you start late, have under the table jobs, or stop early; you might have some 0 or lower years in there. This would push your averaged index earnings down.. Go on SSA.gov and set up an account and it will give you estimates..

 

[ultrarunner]

Looking back when 12 and 13 years old my yearly earnings were bleak to say the least but it is all there in print...

$300 first year and $450 next... based on $50 a week.

One year in the 80's I had zero income... it was the year I spent remodeling a fixer I had bought... worked like a dog but it was all mine

In retrospect, guess I was eligible for unemployment as I was part of the Space Shuttle hires let go when the work stopped...

I guess we are just dumb that way or too proud to take a handout...

 

[Larry Caldwell]

You are not understanding that the economy is connected. It is not just that worker or that burger. When the minimum goes up, people making more than the minimum will get more, too. Many union contracts are pegged to the minimum wage. They automatically get raises if the minimum goes up. They could already be make 2-3x the minimum, but the contracts move them up. Even in nonunion environments, if you want to keep your good employees happy, when the minimum goes up, so does everything else. You cannot claim moral high ground based on intentions. I am sure that you and many others truly believe that boosting minimum wages will benefit the poor. The data shows just the opposite. Sure, for a few weeks or months, those who keep their jobs will have a bit more.

It is super scary right now because we have money supply concerns on top of pressure for massive increases in the minimum.

The money supply is the cause of inflation, though no CPI measures it. Inflation in the last few decades has attacked the basic means of social advancement. When I went to college in the '60s, I think tuition was $325/term, and a dorm room with 3 meals a day in the cafeteria was $365. Work-study paid $7/hour for washing test tubes, plus extra credit for making 1 molar standard solutions. I got $50/month from the Army as long as I was enrolled full time. At 10 hours a week working, I could cover one term of college with two months income with enough left over to buy records, meals out, movies, and hobbies. Try that today.

Fifty years ago, the primary means of wealth generation was home ownership. Even weekend warriors could get a 5% assumable VA mortgage. You could spin just about any paycheck into home ownership if you didn't drink it away. At the root of it, that's what the MAGA folks are really talking about. Inflation took that away, and it's not the price of a can of pork and beans that took it away, it was the printing presses and the vast accumulation of wealth that pushed basic assets like home ownership out of the reach of someone starting out. If you can't buy a house in your 20s, how are you supposed to get married and start a family? I know several young people who have resigned themselves to never owning a home, even though they want to, because of asset inflation. Call it sticker shock.

Superficial metrics like the CPI-U or the CPI-W are relevant to retired people because we have already garnered our assets. We own our homes, cars, tractors, and furniture. Maybe we even bought stocks when they were 10% of current prices. We could pretty much snooze through life and still end up with a decent nest egg. The only big inflation indicator we have to deal with is medical insurance, and that is mostly covered by Medicare. That level of economic security was not destroyed by hotel maids and burger flippers, it was destroyed by a system that left them sucking hind teat while vast accumulations of capital pushed asset inflation to extreme levels.

Yes, an increase in base wages would trigger an increase in the CPI. It would have little effect on inflation as a whole. To correct that, we need to shut off the printing presses and go through a period of high asset deflation. The oligarchs would bring down civilization first.

 

[Larry Caldwell]

While a 5.9% SS check increase sounds good until I realized if everything I buy inflates the same I have lost ground in a major way. Inflation is a killer tax.

Anybody who has been retired for a few years won't see a nickel of the increase. The "hold harmless" provision in Medicare premium increases means that we will have to make up for all those years that premiums went up and our SS did not.

 

[ultrarunner]

College can be affordable either through tuition free two year like SF offers or scholarships covering a wide variety of things.

Of course the tried and true GI benefits better than ever and several of our nurses and techs gained careers through military service and home ownership too...

 

[Larry Caldwell]

GI benefits are only available for a select few, and most states no longer offer any GI benefits at all, except perhaps hiring preference. By compensation, military service is highly paid now.

 

[ultrarunner]

Being a young homeowner is 100% true in my case but it was the least expensive single family home in the entire SF multiple listings at the time in the worst neighborhood... heck, someone broke in and stole my new 30 gallon water heater when I was at work... had bars on all windows and doors except the small garden window I put in over the kitchen sink...

1910 cottage of 575 square feet with fire damage on 25x100 lot...

Yes.. at age 22 I was thinking about retirement and paid off income property...

 

[Gale Hawkins]

If you stop working at 62 but do not collect does the monthly social security continue to increase even with no knee contributions coming in?

Yes as I understand. Penalties and bonuses are computed off of the date that you signed up I was told. So I just did not sign up till I was 70 to get the extra 32% per month until I die.

Now I drive more carefully and make sure I stay out of dark alleyways.

 

[MossRoad]

College can be affordable either through tuition free two year like SF offers or scholarships covering a wide variety of things.

Of course the tried and true GI benefits better than ever and several of our nurses and techs gained careers through military service and home ownership too...

Tell that to a kid trying to get into veterinarian college.

 

[ultrarunner]

Yes as I understand. Penalties and bonuses are computed off of the date that you signed up I was told. So I just did not sign up till I was 70 to get the extra 32% per month until I die.

Now I drive more carefully and make sure I stay out of dark alleyways.

Yep... Dad waited to last possible moment and kept working through Chemo and Dialysis until the last three weeks of his life because it gave him comfort it would be of benefit to mom...

 

[goeduck]

Businesses are ALWAYS looking to automate. They're encouraged to do so: it's called CAPITAL EQUIPMENT.

Yes, but they typically do not do it until they get near the tipping point. Wages going up gets them to that point faster.