Retirement planning

[RedNeckGeek]

I worked with a lot of scientists, too. Some were so smart the Lab had to get a crossing guard at noon to keep people safe on their way to the cafeteria. That's a long winded way of saying that just because someone is smart doesn't mean they're equipped with the skills and knowledge needed to manage their money. After all, personal money management is still not taught in high school! Life has a way of not working out as planned. All a person can do is try to prepare for the worst and hope for the best. But a lot of people don't prepare, don't even give that kind if thing any thought at all. And even those who do will need a healthy dose of luck to come out OK in the end.

When I was a kid, gasoline was $0.25/gallon, and during gas wars could be had for a dime. Last year, 43 years later, I paid over $4.00/gallon, sixteen times as much. I'm planning to live at least another 30 years; how am I going to afford gasoline at $36.00/gallon living on a fixed income? Think my savings will compound as fast as gasoline? Think Social Security will make up the difference? I'm betting it won't even survive the next fifteen years, at least not as we know it now.

The way I understand it, Social Security has grown far beyond the original intention, and in my opinion left any kind of sound financial basis in the dust many years ago. I've never counted on it, and have resented every penny I've been forced to contribute. It's very likely I'll never collect enough even to match my payments, let alone any inflation adjusted or average return amount. But that's how it has to work if those that don't contribute are also paid benefits. I just think it's grossly unfair that those that take responsibility for their financial welfare are limited to the same returns as those that do not. And that those in charge seem to think it's OK to keep moving the carrot farther away every year I get closer to claiming my piece of the pie. But what choice to our elected officials have? If they don't vote bread and circuses for the masses, they don't get reelected. And most have no qualms voting pay raises for themselves, just as most of the electorate happily vote to spend money the government doesn't have, especially if it furthers their favorite cause or helps line their pockets at other's expense. Yep, we've got the best government money can buy...

 

[RedNeckGeek]

Without SS, many of these people would be on some other government dole, paid for by us.

Maybe if people weren't given a false sense of security by having Social Security, they'd have better prepared for their retirement years?

 

[Duwop]

I worked with a lot of scientists, too. Some were so smart the Lab had to get a crossing guard at noon to keep people safe on their way to the cafeteria. That's a long winded way of saying that just because someone is smart doesn't mean they're equipped with the skills and knowledge needed to manage their money. After all, personal money management is still not taught in high school! Life has a way of not working out as planned. All a person can do is try to prepare for the worst and hope for the best. But a lot of people don't prepare, don't even give that kind if thing any thought at all. And even those who do will need a healthy dose of luck to come out OK in the end.

When I was a kid, gasoline was $0.25/gallon, and during gas wars could be had for a dime. Last year, 43 years later, I paid over $4.00/gallon, sixteen times as much. I'm planning to live at least another 30 years; how am I going to afford gasoline at $36.00/gallon living on a fixed income? Think my savings will compound as fast as gasoline? Think Social Security will make up the difference? I'm betting it won't even survive the next fifteen years, at least not as we know it now.

The way I understand it, Social Security has grown far beyond the original intention, and in my opinion left any kind of sound financial basis in the dust many years ago. I've never counted on it, and have resented every penny I've been forced to contribute. It's very likely I'll never collect enough even to match my payments, let alone any inflation adjusted or average return amount. But that's how it has to work if those that don't contribute are also paid benefits. I just think it's grossly unfair that those that take responsibility for their financial welfare are limited to the same returns as those that do not. And that those in charge seem to think it's OK to keep moving the carrot farther away every year I get closer to claiming my piece of the pie. But what choice to our elected officials have? If they don't vote bread and circuses for the masses, they don't get reelected. And most have no qualms voting pay raises for themselves, just as most of the electorate happily vote to spend money the government doesn't have, especially if it furthers their favorite cause or helps line their pockets at other's expense. Yep, we've got the best government money can buy...

When I was younger say 20s-30s I too resented having those dollars removed from my pay thinking of all the lazy, sorry people who draw SSI. I never thought it would be there when I retired and as most I never made enough to set aside a nest egg for retirement. When they use to send out the SSI statements I would calculate my life's earnings and payments to SSI and the last time I looked at one several years ago, if memory serves me I think my contribution was somewhere in the range of 30-40K dollars without knowing how it's compounded with the investments made I thought heck I'll never be able to survive on that. Well now in my 50s and some severe accidents related to my chosen profession (Roofing) I am disabled. If not for SSDI and W/C insurance I would be one of the people I hear many people complain about the broke looking for handout, food from the food bank living on the dole. I proudly collect my SSDI and comp benefits ( due until death because of laws in place at the time of accident) and am not broke and on the dole.
You may resent paying in now, I assume your in good physical condition and healthy, but what if your life came crashing down today? It can happen you instantly become disabled you may be surprised at what you will need and where it will have to come from. I have been disabled for 5 years and feel I have collected my share minus what ever the compound interest earned on my contributions. To know many look down there noses at us on the dole without knowing our story is a shame. I would give my eye teeth to be able to return to work and gladly pay into a system that would benefit you if you needed to collect. That is how it was created. I can tell you if all I collected was the SSDI benefits I could survive but not as comfortably as I do today. I try to teach my children to save something even 10 bucks a week it adds up. Get serious about saving for retirement you will need it. SS may change some in the future but it has been an evolving program since inception, it will always be there short some societal crash. What would happen to all the elderly and disabled people if it were gone. What would happen to you?

 

[Ken]

I grew up in a world being cautioned not to trust Lawyers or Bankers The reason my Grand Father had borrowed money to purchase a farm and during the depression failed the payments .My Father borrowed from same banker to help his Father. the amount of $1200 dollars in errors the lawyers called it when banker called the note and took both farms.
So remember my Father working for the WPA system until could restart farming that grew into a Dairy and things
were improving financially and after WW11 the city of Denver expanded its city limits and grand fathered the farmers. EXCEPT until some one complained then notice to shut down farm and dairy. New Housing area was being built the taxes of home owners was more than farmers.

He moved with small amount of funds and bought a farm in Ark. not rich in standards of today but able to enjoy a life with income to be able enjoy a normal live. Soc. Sec at age of 65 was $13 bucks.
Covered the utilities and taxes of that period.

I now live on same farm and the annual taxes and cost of utilities is in excess of $600 a month.

I worked for a Natural Gas company that had their plans ruined by Pres. Carters Mid Night Summer dream of
going to be out of gas in couple of years. and shut down the pipelines.
No pipe line no need for employees so took my savings from company and returned to Ark.

Worked for Elec. power company again saving funds for retirement. then the economy caused company to offer a early buy out of for those age 55 above so at 59 had only reliable funds of what I had saved and started to enjoy the retirement living.

Now after 20 years retired have more funds and pay more taxes on my income than when working.

The value of dollars is less every time the Pres./ Congress meets and agrees to give away or spend on useless projects designed to return to there pockets funds rather than decrease the debit and return this country on a path of financial soundness.

Trust nothing on promises and watch where you place your money. only hogs look into a bucket on what is remaining rather that enjoy the food in the trough.
And above all never trust a family member to return a loan even if a Lawyer made a iron clad contract.
Federal Gov. by Chapter 7 bankruptcy will over ride all agreements.
And the IRS will take the frosting off the cake first.

such is life
ken

 

[wmonroe]

Just for clarification ... SS has NOT ONE PENNY in the bank. Taxes flow into the general fund and right back out again. The concept of a separate funded SS system ended when politicians violated the trust of the people and raided the account to fund their pet projects. If the government was held accountable to the law, the same as businesses and individuals, most of our politicians would be in prison.

Very true! I meant there is "supposed" to be money in the SS account.

 

[Spindifferent]

Something I haven't seen mentioned here yet is the Boeing Study, a correlation between retirement age and age at death.

Thanks for sharing this. My financial philosophy and practice are very similar to yours. I'm 50 now, and planning on early retirement at 55 if all goes according to my plan.

Regarding the Boeing Study, perhaps this will shed some light:

http://www.boeing.com/companyoffices/empinfo/benefits/pension/seminars/Rumor.pdf

 

[ultrarunner]

Never trusted paper... so the markets are something I have very little direct exposure.

I do like income property... not because it is easy... but because it is a way to leverage and also have some inflation protection.

As I get older... I've exchanged into some commercial property with long term leases... so far so good.

One of the best financial moves I've made was buying distressed homes, moving in, renovating and then moving to the next... keeping the one I just moved from as a rental...

Plan was one home every 18 to 24 months... worked well for 10 years and then I succumbed to accepting a job at the community Hospital with all the big company benefits... still have rentals and still have the job... the only thing that has changed is the almost all the big company benefits are long gone... including the pension plan...

 

[RedNeckGeek]

Thanks for sharing this. My financial philosophy and practice are very similar to yours. I'm 50 now, and planning on early retirement at 55 if all goes according to my plan.

Regarding the Boeing Study, perhaps this will shed some light:

http://www.boeing.com/companyoffices/empinfo/benefits/pension/seminars/Rumor.pdf

Mark Twain is often quoted as saying "There are lies, **** lies, and statistics."

If one googles for the actual study (“Actuarial study of life span vs. retirement age” by Ephrem Cheng), there are lots of papers that comment on the study, but I was unable to find the study itself. That struck me as odd for such a highly studied study. Without reading Cheng's article, it's not possible to understand what factors might have been at play in the population of Boeing employees he studied. But for me the take away was that negative factors in the work place can have a strong impact on one's health, and when that started happening in my own life, exposure to the idea espoused in the Boeing Study helped me appreciate the correlation and take action. Two employees at my workplace actually died at their desk during my career, further reinforcing my desire to make my retirement years as long as possible by starting them as soon as I was able. That led to not only focusing on understanding how my money was being spent (a major enabler of early retirement), but on how healthy I was (a huge quality of life factor) and how that healthy condition was maintained. Conditions at work deteriorated to the point where I no longer had time to exercise, cook healthy meals, and deal with work related stress issues, and I realized I had a choice of either staying on the downward spiral or making a change. Because I'd lived within my means and had learned some money management skills, early retirement was a possibility. My last two yearly physical exams were a nightmare of high blood pressure, overweight, cholesterol, and poor physical condition, issues I'd never had to deal with before but that I could correlate to my move to working longer hours and accepting more responsibility. Bottom line? When the writing on the wall told me it was time to retire, a history of good financial planning and management, along with a good dose of luck, enabled me to do so. For me at least that was the lesson I learned from the Boeing Study, and it really doesn't matter if the study conclusions are real or not.

 

[doxford jim]

Having been burnt and taken advantage of by both the banks and so-called advisors, I would not trust either of the afore mention completely. Guaranteed they are after one thing - your money, period. Sure listen to them and learn and also research as much as possible beforehand. Once money is lost using either "advisors or banks" there is no refunds for poor service - they don't give a ship.
Sorry if I sound jaded, but it is what it is.

My advice is don't believe anyone where your money is concerned - doubt and ask questions as needed and don't be afraid to offend the people/companies concerned. Remember, it is your money they are after and you will pay handsomely to let them handle it (10% - 20% etc.).

 

[ultrarunner]

Mark Twain is often quoted as saying "There are lies, **** lies, and statistics."

If one googles for the actual study (“Actuarial study of life span vs. retirement age” by Ephrem Cheng), there are lots of papers that comment on the study, but I was unable to find the study itself. That struck me as odd for such a highly studied study. Without reading Cheng's article, it's not possible to understand what factors might have been at play in the population of Boeing employees he studied. But for me the take away was that negative factors in the work place can have a strong impact on one's health, and when that started happening in my own life, exposure to the idea espoused in the Boeing Study helped me appreciate the correlation and take action. Two employees at my workplace actually died at their desk during my career, further reinforcing my desire to make my retirement years as long as possible by starting them as soon as I was able. That led to not only focusing on understanding how my money was being spent (a major enabler of early retirement), but on how healthy I was (a huge quality of life factor) and how that healthy condition was maintained. Conditions at work deteriorated to the point where I no longer had time to exercise, cook healthy meals, and deal with work related stress issues, and I realized I had a choice of either staying on the downward spiral or making a change. Because I'd lived within my means and had learned some money management skills, early retirement was a possibility. My last two yearly physical exams were a nightmare of high blood pressure, overweight, cholesterol, and poor physical condition, issues I'd never had to deal with before but that I could correlate to my move to working longer hours and accepting more responsibility. Bottom line? When the writing on the wall told me it was time to retire, a history of good financial planning and management, along with a good dose of luck, enabled me to do so. For me at least that was the lesson I learned from the Boeing Study, and it really doesn't matter if the study conclusions are real or not.

My friends at the lab experienced the same... quite a change going from loving your job go counting the days...

 

[newbury]

My friends at the lab experienced the same... quite a change going from loving your job go counting the days...

At our lab most of the senior staff experienced the KMAG syndrome after which life immediately looked better.
KMAG was achieved when all the retirement wickets were conquered, time in service, age, etc. That was the point we could turn to our bosses and say Kiss My A Goodbye.

You could tell us apart bye the inner peace we felt.

 

[NY_Yankees_Fan]

At our lab most of the senior staff experienced the KMAG syndrome after which life immediately looked better. KMAG was achieved when all the retirement wickets were conquered, time in service, age, etc. That was the point we could turn to our bosses and say Kiss My A Goodbye. You could tell us apart bye the inner peace we felt.

177days until I can say KMAG, how do I remain motivated in those remaining days is my problem....

 

[ultrarunner]

At our lab most of the senior staff experienced the KMAG syndrome after which life immediately looked better.
KMAG was achieved when all the retirement wickets were conquered, time in service, age, etc. That was the point we could turn to our bosses and say Kiss My A Goodbye.

You could tell us apart bye the inner peace we felt.

No longer having a company match to the 401k has led me to do my own calculations and arrive at the same point of inner peace.

I've been averaging 250 hours per month for the last 4 months with only Thanksgiving Day off... the corporate CEO sent a memo stating I had to the end of the year to personally do some facility painting that would require after hours and weekends... my response is I've already put in 600 hours of unpaid overtime this year and asked if I should start packing... I'm the Director of Engineering and just completed a very complicated Tenant Improvement for a new Imaging center... and I'm salaried.

CEO said I am defiant when I asked if painting is his number one priority for me... no heated exchanges, all very civil... you just get to a point where the line has been crossed.

I did run my Social Security Calculator and if I left today and never worked another day... in 7 years I would start receiving $1400 per month...

If I continued to work the next 13 years I would start receiving $2400 per month.

If I continued to work the next 30 years I would receive $3400 per month... (All numbers rounded)

So... now I know where I stand on retirement dollars and Social Security

The last several years have been trying... many of my colleagues have simply left... even Directors and Department Heads... without so much as saying goodbye... no longer even a pot luck or party... they just say they are done and leave.

I think I number 2 in terms of years with the Hospital... I would say seniority but we no longer use the term.

 

[RedNeckGeek]

Good point, newbury. I reached KMAG status a good two years before I pulled the plug, and was very open with management about what they could expect of me and the kind of assignments I would be happy in. It was a great comfort when things started going sideways.

One thing I don't think I've mentioned with respect to 401K plans, is that it is possible to roll over something like 50% of the funds in a 401K into an IRA, and you can do this long before you reach age 62. I think I was in my early 50s when I did it. There was no cost or penalty involved, and after it was done I was able to have a much broader variety of funds, ETFs, REITs, and even individual stocks in which I could invest. Most company sponsored 401K plans only offer a small selection of mutual funds, most with performance figures that rarely meet the average for their peer group. When I did retire, the balance of my 401K went into the same IRA.

Another thing, one that I'm pretty sure that I did mention, is that nobody cares about your money as much as you do. Every so called "advisor" I've worked with was never satisfied until all of my money was invested in mutual funds offered by his company. That's how they make their commissions. But that's not a very good strategy for surviving the inevitable downturns in the stock market. Keep in mind that the mutual fund managers make money no matter which way the market goes, so their main motivation is to have as many of your dollars under their management as possible.

Those managers will also insist you have so much of your money in bonds as well, usually in another of their funds. I'm here to tell you I've lost money in those bond funds, just in the last year or so when the Fed started hinting it was going to taper Quantitative Easing. I also lost when shares of individual corporate bonds became worthless when the company that issued them went bankrupt. All of those investments were counciled by the so called advisers, and it didn't take many experiences like that to make me realize I'd be much better off making my own mistakes than following the party line of "buy and hold" and "bonds are a safety net".

 

[RedNeckGeek]

Wow, ultra, I feel your pain. My last manager was infamous for selling the world to outside customers, and only after the promises were made telling staff they'd have to make the deliverable. That meant at least 20 hours/week of uncompensated overtime, none of which we were supposed to work unless he had obtained specific authorization from upper management. It was a clear case of his management incompetence causing undue stress on his employees, but nobody had the spine to call him on it. In my case it was easier to walk away, and just the motivator I needed to start retirement. I can't imagine any situation calling for management level employees to perform manual labor during unpaid overtime hours, unless the goal is to motivate them to quit or otherwise leave the company so as to save paying their elevated salaries. At the very least it's a sign of incompetence. Even though salaried, I think there are state labor laws that limit the number of overtime hours worked, so you might do some googling or consult with a knowledgeable attorney about your situation.

Good luck!

 

[doxford jim]

I am convinced that more than 60% of managerial promotions are nothing more than promoting incompetence, that the yes people have somewhere to go - never mind being good at the job or better. I sure have seen my share.
I also will say the same for the so called "financial advisors" too - as sjmarbu so eloquently describes above.

 

[NY_Yankees_Fan]

Every so called "advisor" I've worked with was never satisfied until all of my money was invested in mutual funds offered by his company. That's how they make their commissions. But that's not a very good strategy for surviving the inevitable downturns in the stock market. Keep in mind that the mutual fund managers make money no matter which way the market goes, so their main motivation is to have as many of your dollars under their management as possible. Those managers will also insist you have so much of your money in bonds as well, usually in another of their funds. I'm here to tell you I've lost money in those bond funds, just in the last year or so when the Fed started hinting it was going to taper Quantitative Easing. I also lost when shares of individual corporate bonds became worthless when the company that issued them went bankrupt. All of those investments were counciled by the so called advisers, and it didn't take many experiences like that to make me realize I'd be much better off making my own mistakes than following the party line of "buy and hold" and "bonds are a safety net".

If you do not pay for financial advise how do you expect the person to make $$$$????

That is why I have used a "pay for advisor" they have no interest in how much THEY will make on the advise they give you. If you use a company such as Vanguard they have the lowest fund cost. Use a pay for advisor and use Vanguard funds is the way to do it. If the advisor does not ask for $$ for his advise, run away, he has His interest first, yours second.

 

[ultrarunner]

Wow, ultra, I feel your pain. My last manager was infamous for selling the world to outside customers, and only after the promises were made telling staff they'd have to make the deliverable. That meant at least 20 hours/week of uncompensated overtime, none of which we were supposed to work unless he had obtained specific authorization from upper management. It was a clear case of his management incompetence causing undue stress on his employees, but nobody had the spine to call him on it. In my case it was easier to walk away, and just the motivator I needed to start retirement. I can't imagine any situation calling for management level employees to perform manual labor during unpaid overtime hours, unless the goal is to motivate them to quit or otherwise leave the company so as to save paying their elevated salaries. At the very least it's a sign of incompetence. Even though salaried, I think there are state labor laws that limit the number of overtime hours worked, so you might do some googling or consult with a knowledgeable attorney about your situation.

Good luck!

Not sure how it will ultimately play out... hours worked are all documented to the letter.

Benefits started to disappear as early as 1998 and then again a big push in 2008...

The current push is to cut cost and defer maintenance to get operating numbers way down to increase shareholder value in contemplation of sale...

A very good friend of mine shared some advice... he said never do anything rash over a bad day at work... his rule was he had to leave work pissed off 3 consecutive days before leaving for good.

I've shared this with others who found it helpful.

There is another whole element that comes into the picture and that is family... working late is one thing... coming home and hearing about it from a spouse is another... or the kids when you're a no show at their activities...

 

[Ken]

Not sure how it will ultimately play out... hours worked are all documented to the letter.

Benefits started to disappear as early as 1998 and then again a big push in 2008...

The current push is to cut cost and defer maintenance to get operating numbers way down to increase shareholder value in contemplation of sale...

A very good friend of mine shared some advice... he said never do anything rash over a bad day at work... his rule was he had to leave work pissed off 3 consecutive days before leaving for good.

I've shared this with others who found it helpful.

There is another whole element that comes into the picture and that is family... working late is one thing... coming home and hearing about it from a spouse is another... or the kids when you're a no show at their activities...

Ulrarunner
Always remember no matter how much you are valued at work. the day you leave they say cannot do with out you.
And six months later it is old what his name used to work here.

ken

 

[Steppenwolfe]

Not sure how it will ultimately play out... hours worked are all documented to the letter.

Benefits started to disappear as early as 1998 and then again a big push in 2008...

The current push is to cut cost and defer maintenance to get operating numbers way down to increase shareholder value in contemplation of sale...

A very good friend of mine shared some advice... he said never do anything rash over a bad day at work... his rule was he had to leave work pissed off 3 consecutive days before leaving for good.

I've shared this with others who found it helpful.

There is another whole element that comes into the picture and that is family... working late is one thing... coming home and hearing about it from a spouse is another... or the kids when you're a no show at their activities...

Ah... There in lays the rub, the Quality of life vs the Quantity of the dollars to be gathered, How do any of us know the correct percentage ?