Too Much To Ask For?
Readers suggested a topic on retirement. “I would like to see a topic on retirement planning for those of us who are younger, (22-35 or 22-40). The Plan B post had a few comments that touched on this but I would like to see more on this subject. Personally I’m in my early 30s and have managed to acquire a decent amount of retirement assets. I still will have to save more over the next few decades and even then I have no way of knowing if it will be enough. The reason I have been able to save as much as I have is because I am not married and don’t have kids. It seems like the choice is between a secure retirement and having a family. I’m curious to see what everyone else has to say on the subject.”
One said, “I would be interested in the discussion of buying a house FOR RETIREMENT. Watching my sick and elderly father bounce from sublet to sublet on a fixed income (and sometimes ending up on one of his kid’s couches) after being evicted from his apartment got me thinking that owning your residence (not being mortgaged up the wazoo) IS a good retirement plan. And it is forced savings.”
“When you are old, you have 3 basic needs: housing, food, and medical care. OK, 4 - you need family or community, human connection. Many of my generation (genx) and class (middle/lower middle) have been priced out of housing in the past decade. Unless we work for yahoo or google, we are looking at raising our kids AND retiring in rentals. Honestly, I want to grow old and relax in my PAID OFF home. Is that too much to ask for??”
“And yes, we might have been able to afford a house if we were a childless couple. But cute as they are, them little ‘uns are costly.”
A reply, “My human connection with my neighbors is answering questions on fixing their cars/refrigerators/lawnmovers/motorcycles, and getting my expensive tools back when I’ve loaned them out.”
“My dream home will be situated about 50 miles west of Lubbock, on the Llano Estacado.”
Another said, “I know people who ended up moving almost at a rate of once a year because of landlords having financial problems. None of them are elderly and it’s annoying enough for them. I can’t imagine having to move between rentals at that rate as an elderly person.”
“Being financially secure for retirement is one thing but what about security in general? My parents are getting up there in years and things like power of attorney falls on me because I’m their only child and they’re both only children. That works for them but what about when I’m old? Being financially secure won’t help if/when I get dementia.”
“The problem for someone who is my age is that I have to pick financial security in retirement or family and children. You can’t have both.”
My Fox Twin Cities. “The FOX 9 Investigators followed Jeff and Kathy Richardson through one of the most difficult days of their lives. On this day, they were racing to pack their life’s possessions before the sheriff showed up to evict them from their home. ‘Hanging in there. It’s kind of sad,’ said Jeff while walking through the house he bought right out of college.”
“After 30 hours of packing boxes and moving their possessions to storage and their temporary home, the couple had some choices to make. ‘What (are) the most valuable things that we can not live without — and we loaded those first so that if the Sheriff came before that, we would go, ‘Okay Fine.’ We can live without those other things or we can replace them, so that’s hard,’ said Kathy.”
“The Lakeville couple spent months trying to get a mortgage modification and save their house from foreclosure. It’s important to note that this couple didn’t deliberately get in over their head. ‘My mom called up and said she went in (to the hospital) and hospice told her she had two months to live,’ Jeff said.”
“Jeff, who is self employed, said he lost several clients — and incurred extra expenses — because driving back and forth to Montana to take care of his dying mother. In the process, he and Kathy got behind about $5,000 on their mortgage. What made the whole situation such a big mess, according to Jeff, is when the bank representative told him he would not face foreclosure while trying to get a modification.”
“‘This guy said, ‘If you give me the paperwork, we won’t foreclose on you as long as you’re in the process,’ recalled Jeff.”
“The bank did foreclose on the Richardsons, taking the home, the equity and the couple’s peace of mind.”
The Courier-Journal. “When Eamon and Mary Margaret Mulvihill moved into their condo in Audubon Woods in 2008, they were the second family to call the development home. Three years later, they’re among the investors hoping the economic climate has improved enough to attract some new neighbors. The upscale five-story building has 40 total units that range from about 1,700 square feet to 2,500 square feet, but its original developer, Louisville-based Renaissance Development, sold less than half of them and couldn’t get additional loans to finish construction.”
“‘Hopefully, we’re on a move in the right direction now,’ said Mary Margaret Mulvihill, a former Louisville alderwoman who retired in 1997 as administrator of the city’s human services department.”
“Audubon Woods got its financing through Patten Sales and Marketing, which is now working aggressively to sell the condos, doing everything from dropping prices to taking out full-page newspaper ads. Patten has purchased full-page ads in The Courier-Journal to promote the development and to draw attention to a two-bedroom unit the developer planned to sell April 30 for $200,000. A similar unit recently sold for $352,540.”
“The Mulvihills paid a pre-construction price of $315,000 in 2008. But she said she understood because the recession was causing problems for developers in the nation. ‘I like to go out there to read on a nice, sunny day,’ said Eamon Mulvihill, 69, who retired as controller of the Kentucky State Fair Board in 1995 after being diagnosed with multiple sclerosis.”
“Their spacious condo gives Eamon Mulvihill plenty of room to move around in his wheelchair. The couple moved there from Greenleaf Drive, which is just north of Audubon Park. Mary Margaret Mulvihill said she hopes more Audubon area residents will move to the condos as they get older, calling it ‘fabulous living’ that requires much less property maintenance.”
“‘It’s like living at a resort,’ she said.”
“while walking through the house he bought right out of college.”
Well now, THERE’S the problem…
Children aren’t so expensive unless you drink the koolaid of modern parenting that says you’ve got to get braces for their baby teeth for that perfect smile, take them to Disneyworld, send them to a private school, pay for all kinds of expensive riding lessons, ballet lessons, voice training, and all that. Then they need a safe SUV when they’re 16, then private college with the car, a credit card, and maybe a semester or two abroad thrown in for good measure. If they play sports, follow them to every game so they’ll know you care. If they make varsity, fly to distant cities to watch the little darlings play. Send them off to Europe or Israel for the summers, etc. Do it that way and it’s costly.
Dress them adequately and feed them home cooked meals. Send them to public school. Do not provide a car and make them get a summer job when they’re old enough. Have them do a “proof of concept” 2 year stint in community college and then transfer to state university where they can make do without a car. After all, you’re already helping them with college and they don’t actually need the car; it’s a luxury. They don’t need you cheering on the sidelines if they play basketball; they’re young adults for heavens sake. Insist they get summer jobs while in college. If you do it that way it doesn’t cost so much and they will get the fringe benefit of growing up with a semblance of character and grit. They may even have the ambition to get a real job after they graduate.
Doing it this way will require you to live somewhere they can get to school easily when they’re young, so you may have to forgo that meadow mansion out in the countryside…
My parents raised 6 kids that way and every one got through college in good order and none had trouble making it successfully in the world. None of us had access to a car until we could buy it ourselves, nor any of the other “essentials” of modern “helicopter parenting”. I have friends who did it the indulgent way and some are still subsidizing their 40 year old kids, some even raising their grandchildren because their feckless offspring have no character.
Blah blah blah
In my days we used to walk 5 miles to school barefoot and uphill, each way! These parents and kids nowadays, wantingg to anything other than chores around the farm. Hogwash, now that’s a good afterschool activity. Who needs a semester abroad when all you need to know about the world is right there in front of your face, on cable teevee! And this private school d, the public school, with the high dropout rates, half the school not speakin english, and the polotical correctness everywhere, who needs private religious schools? Hogwaash I tell you, hogwash.
Yeah, these whippersnappers nowadays.
How dare they ask for store-bought clothes, when we used to make ours out of burlap feed bags, and cloth from Mr Haney’s General Store.
And girls, what do they need cars for? That’s what boyfriends are for. And if they have to “put out” a little, (voluntarily or not) to get where they need to go, hey, that’s a small price to pay.
And who needs entertainment, or X-Boxes, or Nintendo 64s, when you can sit around the radio with the family and listen to Rush Limbaugh.
“My parents raised 6 kids that way and every one got through college”
When was that? College tuition has outpaced inflation every year since I was in school. And it is just getting worse with state budget cutbacks. I know people who have been diligently saving for their kids’ college education who are now worried that they won’t have enough when it is needed in 4-6 years.
I agree that cars are luxuries, for the most part. We bought an old, dented Camry for my son when he got his first job in high school and he used it through his first 2 years of community college, until it died. It was probably a break even proposition on the car vs what he brought in from the job, but a job is an education as well. And it was not commutable by bike or on foot, especially after dark on 2 lane roads with no bike lane or shoulder.
I wouldn’t have missed my son’s soccer games, but that was as much for me as it was for him. I do think too many people spend too much money on select sports and dreams of college sports careers. If your child is not a super athlete by 7th grade, you can probably forget it.
Agreed, It is still possible with sacrifice to do this. I’ll be sending my third off to college this year.
I do make about twice median for my county, but I started out well below that and it was the first 10 years that made the biggest difference. The #1 key to me has been, get out of debt. I know, I know, not a “savvy” thing to do.
Yes, I agree, although we all have our own ideas about what is important, when it comes to kids.
For us, swimming lessons are crucial: drowning is the 2nd most common cause of children’s deaths (after car accidents).
Maybe I’m coming off as elitist - but music is a priority for us. So, yes, music lessons.
But honestly, the biggest expense with kids is FOOD and HOUSING. We cook all our own meals (almost, all) but food is expensive. And even though the kids share a room, the bump up in rent from a one-bedroom to a two-bedroom is substantial.
My friends without kids live a very different lifestyle. Not that I would trade with them…but no matter how you slice it, parenting ‘aint cheap.
Children aren’t so expensive unless you drink the koolaid of modern parenting that says you’ve got to get braces for their baby teeth for that perfect smile, take them to Disneyworld, send them to a private school, pay for all kinds of expensive riding lessons, ballet lessons, voice training, and all that.
Oh yeah, and I forgot: health insurance!
Without kids I would pay $30 month.
With kids: I pay $675 month.
Add life insurance to that ($40 month).
Ahh, sh*t, don’t get me started with adding things up.
Shoes. Why are kid’s shoes so expensive?
I have BC Anthem and 2 kids, pay less than $200 a month, never use it.
Do you have a million-dollar deductible?
$5k, 4 people on policy.
male 45 - $126 mo
female -42 - $107 mo
male 9 -$48 mo
female 6- $54
Sorry $335 mo. on Blue Cross Anthem, $5k deduct.
it sucks, but if employers got deals like this, the state would not be so poor.
“male 45 - $126 mo
female -42 - $107 mo”
That’s the least expensive private coverage I’ve heard of.
Do not forget day care expense, if both parents work. It costs $1000/month before kids reaches 6. Even after that, after school cost $500/month, even all kids are in public school. So children are not cheap anyway. I can easily afford a BMW if I do not have two kids and stick with a minivan.
WTF? I’m starting a daycare!
“Maybe I’m coming off as elitist - but music is a priority for us. So, yes, music lessons.”
We are definitely elitist in the same way.
But I agree wholeheartedly with your main point: You have to wisely pick the menu of activities that work for your kids and fit your budget, while ignoring the temptation to blow all your disposable income on trying to purchase everything that money can buy for them.
It’s also important (though sometimes impossible) to agree with your spouse on what major child-related expenditures to fund, and which to not. For instance, we own several electronic toys (Apple products, WII system, etc) which I view as expensive time drains, paid for not only by current financial outlays, but also in terms of lost scholarships and college admission prospects. But I had no part in the decision to purchase these toys, and my suggestion that they be strictly regulated has so far been met with mixed agreement and follow-through action.
If your ultimate goal isn’t that your offspring end up better prepared than you were, why even have children.
Music, sports, education; it’s all part of creating a well rounded individual.
You can’t put a price on children, I should know I have two.
But if you’re looking to buy a couple I could come up with a $$number$$.
(Pictures of Belushi & Akroyd in Blues Brothers “How much for the children?”)
I think it would be a great idea to “adopt” an adult heir - after knowing them for, say, ten years, so that you can trust them to be sure you get 24/7 care when you are too old/weak to care for yourself.
Heheh thinking about it eh Bill? I am sure there will be no shortage of younger people willing to care for your assets.
Actually I was in the spot myself when I was younger. Not a bad deal. The key is you subhire nurses if you are the power of attorney. Unlike the humor batted around here, an heir does not have to change some sick benefactors undies to get the fortune. I put my aunt in an assisted living home and paid her insurance and other bills while she got 24/7 care until she died.
I think it would be great to have a steward for wealth. I would elect someone with a security clearance who I know for at least ten years. The government does the background check for me. Someone with solid work for ten years like that would have the character.
Be nice to your children, they pick out the
nursing home.
Very true Rancher.
My cousin and I looked for a few days for an assisted living home for our 78 year old aunt. One place had all sorts of great social activities but there was something we did not like about it. The place we chose was in a home converted to assisted living. My aunt’s room was bright, had three large windows and a door to the outside as well as a door into the hall. A great view of the Catalina Mountains too. We furnished it with some of my aunts favorite things. My aunt was bipolar and in and out of lucidity but she seemed to accept things as they were and took it well. She had a nurse visit several times a week as well as the care at the assisted home.
I was able to work full time at a Fortune 500 company, travel back and forth to California to visit my dad (he had a terminal illness and also was getting 24/7 care) and maintain a relationship with my girlfriend those days. Caring for an elderly relative does not mean you put your life on hold.
Bill,
My wife and I chose to live in a mixed
neighborhood. We have retired, middle age
folk, young’uns with kids. Plus a bicycle/
walking path that runs into our street. We have a catholic mix of different folks who give
us a nice flavor of friends and acquaintances.
We didn’t want to be surrounded by old
fogies like myself. Is that the right spelling?
Sheeeeesh…
I’d be the same way. As long as you are able to care for yourself or have 24/7 care at your own home in the mixed neighborhood, why go where some of the residents are waiting to die? Sorry didn’t mean to sound depressing.
Young people keep you young. It’s like that at work too. I cannot imagine retiring - I don’t even look old enough to retire (still a full head of healthy longish brown hair at nearly 52). I’d be out of place among the white-hairs.
$1,000 a month? Try$ 1,500 a month unless you want your child’s friends to be the children of welfare parents who get their daycare subsidized by the state.
We were on the waiting list at our current daycare for one year. Price for infants is $265/wk. They have no openings and are still on waitlist. A couple friend of ours gave up hope and mommy quit teaching to SAHM.
Several years ago, the SF Chronicle did a three part series on families with both parents working.
It took a young couple from hip Mill Valley and
did a forensic audit of their finances, really going into every penny this young couple spent.
Third day conclusion: They were better off with
the SAHM taking care of the kids. The couple
would have to forgo some peer related goodies, but they ended up with more money in their savings account and she got to be a real time
mom to their kids.
This was a real break for the Chronicle as it was
and is a shill for the radical feminists. The readers comment section was a great read for a week after the final section was printed.
There are situations where keeping one spouse at home to take care of the kids works out. And there are others where it doesn’t.
When my children were in preschool, I figured it would pencil out to stay home if I had a 3rd in daycare. We never had the 3rd and it turned out for the best. When my youngest was 8, my husband had a cardiac arrest and I became sole support for the family. If I had not been mid-career with a job in hand, we would have been in dire straits in short order.
You can denigrate “radical” feminists, but I am really glad to live in a time when I have options. In earlier generations, I would not have had the opportunity to pursue the highest paying and highest prestige jobs. I would have been stuck as a secretary or nurse or teacher or maid. There is nothing wrong with pursuing any of those careers and I respect the people that do them. But as long as they were for women only, the culture disrespected them. Now that women have options, SAHMs get more respect, too.
“she got to be a real time mom to their kids”
Perhaps what you meant was a full time mom.
Thanks for the correction….and FYI, I support women in the workplace, I just don’t
like “in your face” radical women. To me there should be no glass ceiling; equal pay +
equal responsibility.
Glad to hear it, Rancher. And I don’t like “in your face” anyone, including radical women.
Private preschool is about $700 mo in CA on the coast.
My wife and I (32 & 34) have about $30k in our retirement accounts. We are not in the pension plan because we never intended to stay here long-term. Before kids we were able to save $2,000-$2,500/mo.
Now, we are living month-to-month. When daycare was most, we were paying $440/wk. In any month with five Mondays, that’s $2,200. Now it’s down to $330/wk., but gas and food are killing us.
We haven’t had to make any “hard” choices yet, but we’re getting close.
Run the numbers on what it “costs” to generate that second income. After paying expenses, that second income may not even pay minimum wage.
The (ex) wife decided to stay home with the babies until they got into school
(actually she said she wanted to stay at home with the kids, until she did it for four months, and decided to go back to college for her RN degree, but I digress……).
Our lifestyle took a hit, but not as bad as you would think a 40% drop in household income would cause.
Great time for one of you to change careers. But you do have to consider the impact of dropping out of the labor market for 5-6 years if he/she plans on staying in the same field.
$1,000 a month for child care means the second spouse must gross about $1,400 a month or $17,000 per year just to break even. And that doesn’t cover all the costs, including the second spouse’s commuting costs and some additional clothing costs. Oh yeah, the second income might put you in a higher tax bracket. So maybe it’s more like $2,000 per month or $24,000 per year just to break even. In other words, the second spouse is working for nothing at $24K, and working for minimum wage if he or she grosses $38K per year.
Bill, go up a few posts and see mine…
“But you do have to consider the impact of dropping out of the labor market for 5-6 years if he/she plans on staying in the same field.’
We’re both teachers and really enjoy our setup, so nothing would change their. There are only two things that really matter here:
1. daycare (only two more years of both, and one additional year of one kid)
2. Housing
When frickin’ prices adjust and I can own a 3/2 at about $1k/mo. life will be fine. Dammit.
Lol, their = there.
You will be “poor” until Kindergarten, just tough it out. Check out college kids as sitters too, they love it with infants as they can do their home work while kids sleep.
Is it too much to ask?
Yes, it is too much too ask.
Pay off your loans before getting married or starting family.
No reason to suffer with kids’ expenses, mortgage, auto loans, student loans all at the same time.
Very good advice. My sense is that too many American households are overly fixated on the asset column of their balance sheet (e.g. “Haveta own a home rather than throwing away money on rent”) while oblivious to the liability side (”How will I ever pay off that $X00,000 mortgage?”).
Again, it’s about having been born at a certain time and a certain place. There is little chance that anyone in their 30’s or 40’s now could have paid off a house BEFORE having had children. Unless they started as trust fundies.
If you waited until you were earning a decent salary in your career, you’d both be infertile and old by the time you had your finances together.
Bad timing for those of us who came of age in the 90’s.
Pay off your loans before getting married or starting family.
No reason to suffer with kids’ expenses, mortgage, auto loans, student loans all at the same time.
Yup, the “back in my day” comments get old.
And I really feel bad for the kids younger than me. When I got my BA in the 90’s, it was expensive but doable. Now a college education and a house mean a lifetime (maybe multiple lifetimes) of debt.
“There is little chance that anyone in their 30’s or 40’s now could have paid off a house BEFORE having had children.”
Reality check: My folks borrowed their down payment from her father to get their mortgage. At that point, they had 3 kids under 6. They did not pay off the mortgage until after all of us had graduated high school. I think this was fairly common with their peers in the 1950s. I don’t think it is realistic to expect to have a paid off house before having children - then or now.
It was fairly easy to have no college debt in that era, with the GI Bill supplying a lot of the funding. For those who went to college in the 60s-80s, it was also fairly easy to graduate with no debt. Tuitions were more reasonable - practically free in California. And summer jobs and part time work could provide a significant percentage of expenses.
I think the biggest difference for those who came of age in the 90s is that both college and mortgage debt have increased more than incomes. And I think new cars are more expensive relative to incomes. (It’s been a long time since I’ve had a new car.
) So it is more difficult to start a family without significant debt.
“Pay off your loans before getting married or starting family. ”
Now Playing: Idiocracy
Re: retired living.
By all means move to a retirement community, or one that is predominantly retirees. Do you really want to be alone in your neighborhood all day from Monday through Friday? You need human contact, and others who are also retired can best provide it. The support we have and offer to each other here is tremendous, with the result that we know a number of widows, and one widower, who continue to live here long after their spouse has died.
By all means buy into a community where you can afford to pay cash for your house. Having done so, our income needs are modest. Taking the standard deduction, we just break the threshold into the 15% federal tax bracket.
“Personally I’m in my early 30s and have managed to acquire a decent amount of retirement assets.”
Two long-term suggestions:
1) Keep doing what you are doing (continue funding your retirement on a consistent, ongoing basis);
2) Diversify, diversify, diversify — particularly against currency risk.
“I still will have to save more over the next few decades and even then I have no way of knowing if it will be enough.
Ten times your anticipated annual retirement expenditures in a diversified portfolio is a rough rule of thumb, though more is better.
“The reason I have been able to save as much as I have is because I am not married and don’t have kids.”
That has to help, though admittedly I probably work more than I would if I had no kids creating extra financial pressure.
“It seems like the choice is between a secure retirement and having a family. I’m curious to see what everyone else has to say on the subject.”
It’ not an either-or choice. Here are some intermediate options:
1. Marry later after you have built savings (I did so, and you are on track to do so yourself if you get married).
2. Marry a spouse who has earnings potential and find a balance between income-generating activities and child care that works for your family.
3. Choose a location where the cost of living is relatively more affordable relative to incomes (e.g., live inland from the coasts, not San Diego).
4. Make sure at least one of you and your spouse either has a high paying job or lots of family wealth to back them up; for example, almost everyone we personally know in San Diego who bought a house since we moved here is either a trust fund baby or has at least one wealthy parent who helped them afford a home purchase.
5. Be willing to adjust your pattern of major expenditures to avoid accidentally blowing a huge share of your net worth on falling-knife investments (anyone who had the opportunity to buy a home in California during the 2005-2007 period but didn’t exemplifies this principle).
6. Carefully plan your family size to fit your long-term budget limit (e.g. most families of my parents generation had four kids, while two is more common in the current generation).
2. Marry a spouse who has earnings potential and find a balance between income-generating activities and child care that works for your family.
4. Make sure at least one of you and your spouse either has a high paying job or lots of family wealth to back them up; for example, almost everyone we personally know in San Diego who bought a house since we moved here is either a trust fund baby or has at least one wealthy parent who helped them afford a home purchase.
So, if poor, be a gold digger. If wealthy, enjoy the trophy wife until she takes you for half your net worth in the inevitable divorce.
goes both ways, bub. There’s plenty of male gold diggers out there… Have several friends who’ve been soaked by their ne’er-do-well (now ex) husbands.
Do women with money really marry down like that?
I don’t know where to begin. Female movie stars come to mind….
“So, if poor, be a gold digger. If wealthy, enjoy the trophy wife until she takes you for half your net worth in the inevitable divorce.”
7. Try your best to be neither too rich nor too poor, and don’t marry so far out of your class that gold digger or trophy wife issues pose a risk.
Class?
I think the conventional wisdom for those in their 30’s and below is that there won’t be any social security or other such entitlements left to cushion our retirements, because the boomers are going to burn through it all and leave us squat. So we will have to work until we die.
The thing about conventional wisdom is - sometimes it is wrong. The work ’til you die thing is an easy attitude to take when you are young, but the reality is that most people aren’t going to be in any shape to still be working when they are 75, and most companies are going to want to hire them anyway.
It’s going to be ugly because the only solution is one that makes everybody unhappy - higher retirement ages, lowered benefits, means testing, and higher taxes. No gold-plated retirements on the one hand, but hopefully no leaving the olds to die in the street on the other. Somewhere between those two extremes, which nobody will like.
For the average person with no rich parents to cushion the collapsed economy, it just means that you are going to be working longer and end up with less to show for it. The only solution, really, is to find some sort of work that you enjoy so that you won’t be miserable when you end up doing it long into your geezer years. If you can find a career that doesn’t wreck you physically, and that provides some mental stimulation and a sense of accomplishment, hold onto it as long as possible. But too bad for you if you love doing something that is hard on your body. Of course this is easier said than done - look at how many established industries have been destroyed by changing technological and economic trends in the last few decades.
All I know is, my parents both worked hard and were smart with their money, and they are STILL working well into their geezer years. I can only expect to be worse off because haven’t been as smart or as lucky as they were in their career and financial dealings, and they had the good fortune to have spent most of their working careers in an era of rising rather than shrinking economic prosperity.
There is a 70 year old guy in my group, a consultant, who is doing software and systems work. I admire him for doing it. He’s not feeble like you youngsters picture. He is certainly no cripple and can do the work. And yes, of course he and his wife are collecting social security. I assume they have a lot of money. He commutes between Atlanta and Tampa in his corvette.
I hate driving long distances. I cannot imagine me driving like he does at 70. He probably likes it.
My situation is pretty good. The end of my career is not in sight at all. So much fun stuff to do and money to make. I love it still. I don’t doubt that I will be working in Tampa in 2012 and Washington D.C. / Baltimore after that.
“I assume they have a lot of money.
Why would you assume that? He is still working.
“He commutes between Atlanta and Tampa in his corvette.”
I suspect a paid off house in Atlanta. The corvette probably makes the commute tolerable.
“I think the conventional wisdom for those in their 30’s and below is that there won’t be any social security or other such entitlements left to cushion our retirements, because the boomers are going to burn through it all and leave us squat. So we will have to work until we die.”
I think the boomers are going to get stiffed at an age when they can’t recover. I think social security will be inflated away. So I expect to work until I die.
“they had the good fortune to have spent most of their working careers in an era of rising rather than shrinking economic prosperity”
The era of rising economic prosperity ended in the 70s. I have spent all of my working career in an era of shrinking economic prosperity.
“If you can find a career that doesn’t wreck you physically, and that provides some mental stimulation and a sense of accomplishment, hold onto it as long as possible.”
This is the key. And be prepared to acquire new skills along the way.
“there won’t be any social security ”
Ahh, the continuing myth that social security is unaffordable.
Slatedotcom
The Social Security crisis you sometimes hear about is essentially a myth. The trust fund will run out in 2037, “at which point tax income would be sufficient to pay about 75 percent of scheduled benefits through 2084.” Full Social Security solvency would require only about 0.7 percent of GDP, which you can get to by exposing income above $107,000 to the payroll tax.
Retirement planning for 22 to 35 year olds: First I recommend delay marriage and family until around 30ish. Preferably 40ish. Live with your ten to fifteen college friends like on MTV (post music television) - by now you all should be used to that prospect. You split the rent and invest as much as you can in your 401k in stock mutual funds, and also a Roth IRA if you are maxxed on your 401k.
You should by your late 30s have no fears of your job being outsourced.
For 30 to 40 year olds with families, I came from a family of six. There was only one landline phone. That’s a phone that is not hooked to internet! We had no handheld phones as kids but we let our parents know where we were at all times. No need to pay several hundred bucks per month on phones. We had one black and white TV. We had one family car. Our vacations were day trips. All cooking was home cooking and occasional take outs.
The big expenses you cannot do much about are the medical costs and insurance. But your kid does not need to go on an ocean cruise in high school. I was shocked when I first heard of those things in the 1990s.
You would be the most boring family in America if you lived without the smartphone, flat panel TVs, internet, cable TV, and airplane trips, but that was the common way to live in the 1960s.
That’s decent advice, Bill. We’re about halfway to what you suggest… I wanted to ditch the cellies and have one landline, but the wifey won’t have it. We have RR lite and the tiny cable package (8 channels?). I would like to ditch a car soon. I might be able to pull this off depending on where I end up.
One thing I haven’t been able to jettison is my wine habit (yeah, it’s a habit now). That would save me about $250/mo.
The economic pressures are having a positive effect: I am spec’ing in the creative arts market again. I have 5 kid’s books in the works, a novel started and I am kicking around a kid’s record idea (but nobody buys music anymore, so I may not pursue that).
Retirement planning for 22 to 35 year olds: First I recommend delay marriage and family until around 30ish. Preferably 40ish. Live with your ten to fifteen college friends like on MTV (post music television) - by now you all should be used to that prospect.
Nature designed humans to have children in their teens and early 20s. Waiting to have offspring until both parents are in their 30s means a greater risk of health issues for the children. We’ve also seen the visible result of cretins breeding like rabits while the most intelligent strata of society has either one or two kids, or increasingly, none at all.
The ultimate social security isn’t an IRA or government program: it’s a close-knit extended family. Any 22 year old who thinks they’re going to get the same retirement deal the Boomers voted for themselves is sadly deluded. They may be praying for death panels by the time they reach their “golden years.”
“Nature designed humans to have children in their teens and early 20s. Waiting to have offspring until both parents are in their 30s means a greater risk of health issues for the children.”
Agreed.
“We’ve also seen the visible result of cretins breeding like rabits while the most intelligent strata of society has either one or two kids”
Are you confusing education and good nutrition with intelligence? How many of the “cretins” actually lack impulse control?
“The ultimate social security isn’t an IRA or government program: it’s a close-knit extended family.”
Agreed. Be good to the people around you, especially your relations.
“Any 22 year old who thinks they’re going to get the same retirement deal the Boomers voted for themselves is sadly deluded.”
Any boomer who thinks they are going to get the retirement deal they “voted for” is deluded. The truth is the only people who voted for Social Security and Medicare are those who were in Congress when the bills were introduced. The rest of us just voted for someone we thought might (possibly, maybe) look after our best interest better than the other guy.
I know of several people who became parents in their 40s and 50s. A woman friend of mine became a mother at 39 or 40. The boy is a healthy 13 year old now. Another guy I knew from high school became a dad for the first time at 50. And another two guys I knew became fathers in their late 40s.
Design shmeezine. I think mainly it depends on how old a person is at the time of becoming a parent. You both probably in your early 20s.
My dad was 38 when I was born.
I was 35 when my last was born. My grandmother had her only child at 37. My mother-in-law had her last child at close to 40. All are healthy. Not saying it can’t be done, but the risks increase.
Female fertility declines dramatically in the 30s. Older parents are more likely to produce offspring with Downs syndrome. When I was 50, my doctor gave me odds of 1 in 100 of being able to conceive and 1 in 200 of producing a healthy child. 1 in 100 is pretty close to the failure rate for the most relaible birth control methods.
The risks to the mother’s health increase with age. The older we get the more at risk we are for cardiovascular disease, diabetes, autoimmune disorders, cancer, etc. Any pregnancy in which the mother is over 35 is considered high risk.
The sweet spot for maternal fertility and health is about 18-30.
Nature designed humans to have children in their teens and early 20s. Waiting to have offspring until both parents are in their 30s means a greater risk of health issues for the children. We’ve also seen the visible result of cretins breeding like rabits while the most intelligent strata of society has either one or two kids, or increasingly, none at all.
This is true and part of the problem. For instance, I’m 33, and I don’t have a girlfriend right now. If I were to meet a woman tomorrow the earliest I could be having a child (assuming no oops pregnancies) is around 37 (give or take). And that’s assuming it doesn’t take longer for me to meet the right woman.
My age is one thing but what about her age? The longer it takes for me to find the right woman, the the greater the age difference between me and her has to be to have any children at all.
The ultimate social security isn’t an IRA or government program: it’s a close-knit extended family.
This is right. One of the things I’m looking at as I (or more specifically my parents get older right now) is the lack of an extended family in my case. I’m an only child, and my parents are only children. Knowing that real social security is a close knit extended family makes my situation a bit unnerving.
We’ve also seen the visible result of cretins breeding like rabits while the most intelligent strata of society has either one or two kids, or increasingly, none at all.
The movie, Idiocracy, seems to get more true every day.
There will be poetic justice when the sheep who voted for Establishment Republicrats (and by extension sanctioned the Federal Reserve - Wall Street - corporate cartel looting syndicate) see their retirement accounts decimated by hyperinflation caused by Ben Bernanke’s deranged money-printing and endless bailouts to cover the banksters’ reckless speculation.
In my view, the reason why retirement isn’t working is because industry decided it would rip everyone off on price-fixing costs . For instance, if medical costs were 50% less as they should be ,than couples could save more money . If housing /rent costs were in keeping with proper ratios than more money is free for the family .
Under normal capitalism ,people would reject bogus cost increases . Only when you have comparable wage increase to cost increases do the ratios remain workable . In other words, industry is demanding higher profit margins while at the same time giving less to the employee and using outsourcing as the big “take it or leave it ” ax over peoples head .
When the balance of power goes to to much money going to to few hands upward, at the expense of the working class and the system functioning ,than you have the situation of people being put in a impossible situation financially .
25 % of your income should go to housing per month not 60% . 7 to 10% of your income should go to health care monthly when you healthy,not 25 % of your monthly net . Food costs should be under 10% and on and on . Who do you think is pocking the extra doe when wages aren’t increases ,yet prices go up . Price-fixing monopolies .
What is this BS that industry gets a build in price increase ability,but the consumer doesn’t get a built in wage increase .
Industry use to know just how much they could extract from your typical
family budget . Now they expect you to borrow to make up for their greed or go into a low standard of living with nothing left for savings . Under normal capitalism principals peoples rejection would put a cap on price increase if their wages had not gone up by similar amounts .
Our tax base and cash flow in this Country is getting creamed by outsourcing and out-manufacturing, faulty trade policies and tariffs and about 45 million jobs lost to globalism and we wonder what the problem is . We are subjected to price-fixing monopolies as well as Fed policies that screw huge sectors of the population .
I don’t know exactly when the ratios started going into disconnect from
the forces that use to keep ratios in balance so the middle class could grow ,rather than go into abject poverty ,but this is what is happening . .
As I watch you people try to think of way of adjusting to this robbery ,
I feel like screaming . The new robbery will even make it impossible for young families to set up households in normal time spans . The check and balance of free market capitalism isn’t in force now .
We ,the people are acting like third world Country people who are subjected to this sort of rigged and stacked decks with a attitude that nothing can be done about it because corruption rules .
Go ahead and just accept it until they make it impossible for you to even eat .let alone save for retirement . Sure ,there are problems ,but if you come from the premise that it means that the people are the stuck compromisers at the mercy of the GREED machine ,than you are not looking at this situation the way I do . And no, I don’t think the answer lie in killing people at 65 ,or denying having children because people can no longer afford even that most basic desire . If anything ,the check and balance of true capitalism needs to be more operatives as well as proper wage ratios .
HW,
Thanks for spelling this out. I agree completely although I don’t begrudge anyone figuring out how they are going to survive until the power is wrestled away from those that have tipped the deck. It’s gonna be a while.
The most difficult aspect about planning your retirement was over one’s lifetime the rules kept changing. The industries that were hot in your twenties are shaking out in your fifties. The pension you thought was your salvation is now at risk of not being fully funded. (Not my story but I’ve witnessed) that guy you married because he was going to be a great provider has turned into an alcoholic w/another chick at his secret apt in town. Life can be a minefield. You’ve gotta go in with a good plan and stay alert to the big picture. It’s not easy and much of it is out of your control.
As others have mentioned above I think the best advice I’m giving my kids is keep learning, have a network, make few enemies. Do not so commit yourself to a lifestyle (through debt) that you can’t reverse and change direction. Be open to change. Look for and cultivate opportunity.
And my Gosh, have some fun. I’ve looked at numbers of late that suggest I could be gone w/in the next decade. I cannot tell you how happy I am that I didn’t just sit around saving money. I LIVED.
You are a smart women CarrieAnn . I do agree that people have to adjust to the trends simply to survive ,but in my view always with the idea that things will be changed ,and must be changed . You have to be smart in the coming cycles ,but also never give up on sanity coming back .
I also feel like saying ,”MY GOD your have to live ,life is to be lived ,it’s not all about the last 20 years and retirement . Your best asset is having your wits about you and being open as you suggested to your kids .Learn from the mistakes of other generations ,but don’t let that stop you from living life ,isn’t that what it’s all about ? Power struggles go on all the time and unjust cycles or stupid economic cycles can
make our lives compromised ,but they can be corrected also with time . Corruption can be corrected with time .
Anyway ,never give in to insanity ,keep fighting it on any level you can ,but live life ,don’t let these mad-hatters take that away from you .
When I was a professional employed by industry I had started my practise after work to help pay the added costs of my wife and children. Almost all of my clients (professionals and business owners) drove big fancy cars (all thru a lease or bank loans). I always drove a cheap old car and changed the oil often. Their monthly payments were often over $2,000 a month - mine was zero.
When I started making as much as my clients (now practising full time) I still drove an old car - and purchased a new car for each of my kids when they went off to university so that they could drive back and forth to school daily (cheaper than residence).
Along the way I was investing small amounts in some of my better client’s businesses. They would tease me about getting a better car (they drove Mercedes, etc) so I went to the police auction and purchased a two year old cruiser for $3,000 which lasted five years. A $50 spoiler, $30 hubcats, and a $125 roof paint repair job and it didnt look like a cruiser.
I took a lot of financial risks buying all kinds of real estate (until about 1989) and continuing to buy into more businesses (always had real estate). I couldnt afford a new car for myself because of huge tuition fees for my kids (who are now lawyers and accountants).
Although I envied some of my business partners and client’s beautiful cars (I often figured that my tuition load was much more than their monthly payments) I still couldn’t (or wouldn’t) spend money that way.
Holidays ! What are they? After my kids mostly grew up - no more holidays for me. Too busy.
Those businesses? Yup, I pretty much own all of them now. Real estate? Been selling that stuff off but looking at “farmland in the middle of the city” LOL (really farms ultra close to the city).
What kind of car do I own? Several - RR, Vette, MB - but still drive an ex cruiser!
My kids never had student loans, and never worked as they did three semester years.
A recent family loss has now made me stop to smell the roses. This winter I will be taking my family (grand kids too) on a cruise - my first holiday in 25 years.
After university, I took creative risks, worked long and hard, and never looked over my shoulder at what had been accomplished. I only saw the problems and opportunities in front of me. I failed often.
This summer I am going back to university on a refresher to my MBA and next fall will be doing the In Depth Tax course (been 33 years since I first did it).
Each of my old cars were all given the same name - Termight.
They were terribly unreliable and only with my might did they stay going.
I agree that a paid off residence is a key to a retirement that can maintain any semblance of the standard of living enjoyed in the years of max earnings.
You can buy young, sacrifice, and have the house paid off by 50-55 like my plan; or you can save, save, save, and save until you can buy cash in your retirement destination of choice. I picked the choice that had built in discipline. My ADD requires that.
There won’t be retirement in the traditional sense. Get used to it. The “financial services” companies are bleeding everyone dry using the false promise of “retirement”.