Less False Optimism
Readers suggested a topic on house buying attitudes. “Did the bursting of the housing bubble scare off an entire generation of potential U.S. home owners? So far, I am ’scared off,’ but lower (more affordable) home prices could go far towards alleviating my fears.”
A reply, “I think there are still quite a few who would get back into housing AND stocks if they didn’t appear to be so manipulated.”
One said, “From my own experience house hunting, I definitely think that the market is absolutely owned by the infestor class right now. Where I’m at it’s mostly hot money flowing out of the SF Bay area. I’ve had 3 properties snaked out from under me by cash buyers who appear to be wanting to use them as rentals. If I had to guess right now, I’d say non owner-occupier buyers in my local market would be near 50%. (based on some data I’m seeing at work).”
“The question remains, what happens to rents when the market is absolutely flooded with these properties and job/income numbers are declining or stagnant?”
And another. “Here in Tucson, it seems like it takes about three years for in-VEST-ment properties to run into trouble. By ‘trouble,’ I mean: 1. Rents aren’t covering the mortgage payments, and the appreciation fairy is nowhere to be seen. 2. Tenants are trashing the houses, not paying rent, and causing all sorts of trouble with the neighbors. And said neighbors are finding your contact info in the county assessor database and using it to send you sternly worded letters with attorneys mentioned on the cc: line.”
“3. You finally boot the bad tenants out, and then you’ve got quite the repair job. In the meantime, the house is vacant. A lot of these houses end up back on the resale market. Or the in-VEST-ors just say ‘F— it!’ and let the houses go back to the bank. They remind of the sort who would be dazzled by the guys and gals who present those weekend real estate seminars.”
And finally, “So far it’s working on me and my friends — but ’scare off’ may not be the best description. I’d say ‘price out’ and/or ‘ransom.’ Here’s another: who will give Boomers the health care they think they’ve got coming to them? There are a few other generational whipsaws dancing around the fire.”
The Pittsburg Post Gazette. “Elected officials are adept at kicking cans down the road as far as they can, so why should the people who put them in office be any different?”
“The Employee Benefit Research Institute reports the percentage of workers confident they will have enough money for retirement remains at an all-time low and many of them are too strapped to do anything about it for the time being. Their fallback plan is cramming retirement savings into their final years on the job and working longer than they expected.”
“The Washington, D.C., research group reported last week only 14 percent of the workers it surveyed in January are very confident about having enough money to live comfortably when they retire. That’s about the same percentage as a year ago, but roughly half of the 27 percent who were very confident in 2007.”
“The 27 percent confidence level was recorded before the Great Recession shook workers and retirees out of a confidence — hubris is probably a better word — that did not allow for the market meltdown that ensued. ‘There’s less false optimism in 2011 and 2012 than there had been in past years,’ said Jack VanDerhei, the institute’s research director and co-author of the report.”
“According to the survey, more than 40 percent said job security is the most pressing financial concern facing Americans today. Other concerns include making ends meet, paying down debt, paying their mortgage and having enough money for medical expenses. Those immediate concerns are so overwhelming that more than half of the workers polled haven’t even bothered to try to figure out how much they’ll need to retire comfortably. ‘Many workers have more immediate worries than saving for retirement,’ Mr. VanDerhei said.”
“Mathew Greenwald, president of the Washington, D.C., market research firm, said a quarter of workers reported they had adjusted their expected retirement age in the past year. More than a third now expect to retire after reaching 65 versus only 11 percent in 1991. ‘It’s an acceptance of the cost of not saving enough now,’ he said. ‘Workers are falling further behind, and they know it.’”
“There may be a hitch in the plans of those resigned to working longer and thinking they will get religion about saving for retirement sometime down the road. Almost half of the retirees surveyed said they retired earlier than they expected to for reasons beyond their control, Mr. Greenwald said. Those reasons include losing their job and not being able to find another one, as well as health problems such as disability.”
From the Pittburgh Post article;
“According to the survey, more than 40 percent said job security is the most pressing financial concern facing Americans today. Other concerns include making ends meet, paying down debt, paying their mortgage and having enough money for medical expenses.
I know I’m oversimplifying but there is a solution…… don’t borrow money. And of course this precisely is what the Federal Reserve MoneyChangers don’t want. They want you neck deep and strung out on their drug. You must admit…. they’ve been successful beyond all measure. Through the media and the Housing Crime Syndicate, they compelled tens of millions of dumbos to take on massive, crushing debt on rapidly depreciating assets…. in this case, houses.
Further, their paid proxies on the net, in the media and on TV keep a dumb, deluded populace focused on counterfeit topics like birth control, religion, etc.
The deception and distortions can be counted all day. We get the election year message that the economy is doing better. But wasn’t a recovery announced in 2009? Oh, but it is still weak, Bernanke says, giving him cover to do what ever he wants. We can’t stop “stabilizing” the housing market. Nobody in DC even talks about the zombie GSEs any more.
Just consider interest rates; the Fed used to say they didn’t control long term rates. Now they buy treasuries and manipulate to such an extent they say rates will stay low for years into the future! Predictably, people put more savings into stocks. But not because of any fundamental value or return. Just more casino-like herd behaviour. Then they have the nerve to say, look at the stock market, aren’t we doing a great job!
We all learned about compound interest when we were young. The lessons of saving and how over time that would grow. It was a lesson not only of financial prudence and sacrifice, but of allocating capital to those who were putting it to work wisely. Now the Fed hands out trillions left and right. Is it any wonder the big hope is a freaking lottery that you have less chance of winning than having a coke machine kill you?
It’s a bizarre world when we read articles on people not saving enough, only to hear the next day from some establishment economist that we aren’t spending enough. The biggest problem with this is, you can’t catch up when it’s late in the game.
As I keep saying, you sound angry (with good reason, I might add.)
What do you suggest?
Human nature being what it is there will always be someone to prey upon the weak, and there will always be people who are too stupid to understand how these things work.
I’m as enlightenment-minded (in the technical 18th century meaning of the word) as you are but there are limits to what we can do.
“What do you suggest?”
What do you suggest, travel, cooking, cash, correct?
I’ve got it narrowed down for myself:
1. Be a good dad, and a good enough husband
2. Eat well, exercise
3. Save money (when I get to that point)
4. Do more at work than is asked of me, do it quickly, and do it well
“…good enough husband…”
I like it! Wouldn’t want to go overboard in this direction…
As I keep saying, you sound angry (with good reason, I might add.)
Well played….. well played.
You mean they did a number on you, and are laughing all the way too the bank? At least, the smart ones?!?
Yep.
The Fed believes the conceit that it caused/exacerbated the Great Depression, and the follow-on corollary is that it can then prevent a Great Depression/Recession.
As they massively intervene in markets, picking winners and losers, printing money, as long as nothing bad happens, or if things improve, they feel feel they can do it more and more.
It’s being done to boost the FIRE sector. They’re bankers. They have a bank-centric view of the economy. So they choose to believe their industry is somehow better or more important or essential.
Will the system break hard and fast or will it just linger in the doldrums? Their activities are welfare for the FIRE sector. A new form of trickle-down.
We vote for the people who put these people in place. We have an opportunity to change course, or take more of the same. I’m curious to see what happens in November 2012.
“We have an opportunity to change course, or take more of the same. I’m curious to see what happens in November 2012.”
Uh, what? Romney has the Republican nom sewn up. So it’s going to be Romney vs Obama. Where’s the ‘course change’ there, chief? Both choices for chief executive of Corporate America are essentially Wall Street employees. The FIRE sector has had total control of the executive for decades and that control shows zero signs of abating.
The election is already over, as far as Wall Street is concerned: Four more years of bailouts and soft policies aimed to keep the bankers on top while the edifice that supports them becomes more crumbly. And they will make it. They are winning and will continue to win, since our only reasonable political hope (Ron Paul and the Libertarian view of things) is painted as a Nazi organization in our media. We want to be slaves. We enjoy being slaves. The comfort of our delusions is still too strong.
Yeah finance really has become the tail wagging the dog. Instead of funneling money from those with savings into profitable investments in productive companies, we see companies bent and twisted to the whims of Wall Street “dealmakers.” Government policy is so focused on the stock and bond markets that employment and wages are less important. For a majority of Americans we’re still suffering from the effects of the recession, not withstanding the rebound in “productivity” and the return of bonuses to Wall Streets movers and shakers.
Also realize this: people with houses and relatively secure jobs are all for these activities. I think the belief is, “Do what you need to, to keep my home price up.” They don’t understand how these central planning activities deleteriously affect them. They’re not connecting the de facto negative interest rates and the erosion of their buying power with inflation with the Fed’s activities.
The Bureau of Labor Statistics Inflation Calculator.
“Is it any wonder the big hope is a freaking lottery that you have less chance of winning than having a coke machine kill you?”
My wife is giving me a funny look for laughing out loud at this. Even though it is almost midnight, I’m chuckling audibly.
The japes about the 3 year cycle of “investment” properties are right on target. Most “investors” are as stupid as the other people who bought at the peak of the market. They’re paying more for the properties than the fundamentals justify in many cases and they are often clueless about the demographics of their potential tenant pool which often consists of little more than trailer trash. C’mon now. Who’s going to rent your investment property in Phoenix, Vegas, or San Berdoo?. Getting responsible tenants who will pay your exorbitant rent 12 months a year, take care of the place, and adhere to the other lease terms is not always easy, and in this economy you’re likely to get people who will pay some of the rent, and skip out on you when they please leaving months arrearage and a mess for you to clean up. Why wouldn’t they when there are always other places to rent and they can treat yours like a motel room?
I’m not so sure that all these “investors” are truly cash buyers. I have suspicions many of them are still using OPM even if it isn’t a mortgage on
the particular piece of property. I hear people talk about it…
And yet…In some market segments in some metro areas it probably IS possible to buy a house for little enough that rents can provide a decent ROI. Especially for the small time landlord who can do much of his own maintenance work himself on the weekends. IMHO it’s small time landlords that are likely to set the bottom. People who have a good idea of ACTUAL rental rates vacancy rates and expenses. When THEY buy, we’re near bottom. Some people are going to do well for themselves by purchasing property at a low basis, if they’re good at being landlords. OTOH, people who buy hoping that the appreciation fairy will be resussitated and don’t know the ins and outs of being a landlord WILL “fail within three years.”
“The biggest problem with this is, you can’t catch up when it’s late in the game.”
This is the whole key to how American consumption has stayed so high even though wage rates have been falling, generation by generation, for 30 years. Starting with high school drop outs, and moving up the education scale — I expect the future 1 percent won’t even earn as much as the past 1 percent on average, because there is less left to steal.
The first response to falling wages was two spouses in the labor force. Spending increased.
Second, employers took away FUTURE income in retirement rather than current income. That didn’t affect past spending, but it will sure affect future spending as those in the back end of the baby boom and later face old age.
Finally, after 2000, cash income also started to fall right up the income level, but there was a debt binge to make up for it.
And now? Wages are plunging for anyone who has to change jobs, and those new to the labor force. Some of the older boomers are still retiring with pensions, but in five or ten years virtually everyone who retires will not have them..
Excellent points WT…
Ergo, cash is king and will continue to be! (cue: combo)
Welcome to the DEFLATION.
FPSS,
Do you see deflation in your everyday life (outside of housing, of course)? Because I sure as h**l don’t; the only thing I see on a regular basis is inflation of my ongoing costs.
Yes, I do.
I’ll grant you food is going up but here are a random buncha grab-bag items where I’m seeing brutal drops.
[1] Underwear.
Strange place but inspite of rising cotton prices, these are just getting crushed. I see 70% discounts everywhere which tells you how overpriced they must’ve been for the last two decades.
[2] Eyeglasses
Again, brutal margin compression. Everyone’s figuring out that your lens numbers can be shipped to India, etc. and have the glasses show up by Fedex.
[3] Second-hand books
I buy a lot of books, and I’m seeing tons and tons of stuff which I had on my list with “wishing prices” just a few years ago, now trading for a pittance.
You’ve already mentioned housing.
Just like not all stuff inflates at the same rate, you can’t expect everything to fall at the same rate either. But yes, this is unambiguously a deflationary environment.
“[3] Second-hand books
I buy a lot of books, and I’m seeing tons and tons of stuff which I had on my list with “wishing prices” just a few years ago, now trading for a pittance.”
Sounds like a lot of folks downsizing to me.
Sounds like a lot of folks downsizing to me.
Sounds like a desperate demand for cash.
They all come neatly package with little notes about how much they “appreciate my business”. This cutesy stuff gets on my nerves at the best of times. Now, it’s downright annoying.
Once again, evidence of deflation.
Or downsizing to e-readers and iPads. Books are probably not a good indicator for that reason. Better indicators are furniture and lawn/yard equiments.
Or downsizing to e-readers and iPads.
These are not the kinda books that are available in those formats.
Definitely selling for other reasons.
“[3] Second-hand books”
Do I hear $0.01 for this famous treatise on real estate investing?
All Real Estate Is Local: What You Need to Know to Profit in Real Estate - in a Buyer’s and a Seller’s Market [Hardcover]
David Lereah (Author)
2.4 out of 5 stars See all reviews (5 customer reviews) | Like (0)
12 new from $5.35 19 used from $0.01
Amazon Price New from Used from
Kindle Edition – $10.99 –
Hardcover $21.95 $5.35 $0.01
Do I hear $0.01 for this famous treatise on real estate investing?
Gotta admit, I would kinda like to own one as a memento to the insanity…
Wow, WT, great post.
What is the way out of this trap? Here are a some thoughts:
1) Perhaps a QE3 with distribution which circumvented Megabank, Inc could get it done. The problem with Megabank, Inc is that money that goes to them tends to get stuck there forever. But if the money more directly landed on American household balance sheets, we might be able to collectively avoid the society-wide old-age penury trap.
2) Perhaps the rich foreigners from wherever foreigners are still rich could somehow lend a hand to fill America’s collective penury gap.
3) The rules that currently seem designed to reduce American productivity could be changed to increase it, in particular by enriching rewards for innovation which makes us collectively wealthier.
“…but in five or ten years virtually everyone who retires will not have them…”
Who will care for virtually everyone who retires without a pension, and how?
“Who will care for virtually everyone who retires without a pension, and how?”
For Boomers? My guess is nobody.
I’m going to have to make a choice between taking care of my family and helping a bunch of people who ran around naked, smoking pot in the 1960’s, and then decided to go to law school and legislate the fun out of life while ransoming housing and education to the rest of us. They’re the jeanyusses that wanted to privatize everything, you know, because it’s better that way.
Yeah, dude, tell me about Woodstock again.
If the Boomers don’t want to starve to death, they better figure out quick how to unwind some of the chit they wrapped up for us. Look at them already, they go berserk on waitresses just for a refill.
Just wait until the boner pills stop working.
/generational sniping
“and helping a bunch of people who ran around naked, smoking pot in the 1960’s, and then decided to go to law school and legislate the fun out of life while ransoming housing and education to the rest of us.”
The folks who ran around naked, smoking pot in the 60s may not be the same people who went to law school and legislated the fun out of life. I was born in 1952 and missed the run around naked in the 60s part as did anyone who was born later than me. The run-around-naked-in-the-60s group was mostly born in the 1940s and a lot of them are not considered boomers.
Santorum is part of the legislate-the-fun-out-of-life group and was born in 1958. Still considered a boomer, but he was 12 years old when the 60s ended.
It is bad enough being lumped in with both groups of boomers, but I suspect that a lot of the folks you see go beserk on a waitress are older than boomers. Most of us are still working, some of us as waitresses. Most of the boomers have been screwed as badly as you think you have been. Most of us missed out on pensions and got screwed by inflation in the 70s, outsourcing, and multiple recessions since. I suspect most of us will eventually be screwed out of the Social Security and Medicare that we have paid into all of our lives.
But go ahead and blame us for all of your troubles. We blamed our parents when we were young. I expect your children will eventually blame you as well.
My understanding about the data is the farther back in the Baby Boom you were, the more screwed you are. Those who came of age early, in the 1960s and early 1970s, got the sweet deal of those immediately before — if they didn’t get screwed by Vietnam.
The deal started getting worse, and just kept going.
“But go ahead and blame us for all of your troubles.”
Not all, just a few…
“Those who came of age early, in the 1960s and early 1970s, got the sweet deal of those immediately before “
It was actually those who came of age in the first couple of years of the boom or earlier who experienced beneficial circumstances. A 1952 birthday places me fairly early in the boom. By the time I graduated from college in 1974, the Arab oil embargo had started the inflationary period of the 70s. Inflation was eating savings faster than they could be accrued. If you were not vested in a pension plan by the mid-80s, you were pretty much out of luck.
The 70s were also a period of sexism. Young women were routinely paid much less than their male peers for the same work. If one were lucky and married early and had a stable job, then pensions and cheap housing were there for the taking. If you took a few years to get established, they were gone.
“For Boomers? My guess is nobody.”
Funny contrast: My guess is everybody.
Yikes, Mugster. We’re mostly all in the same boat as you are. Just wrinklier.
It used to be that a college degree was the borderline between a nice office job with good benefits or working in retail or on the factory floor or a trade. Now a college degree is the borderline between working in retail and being “marginally attached” –fast food wages and fast food hours. Add to this the fact that the cost of a degree has ballooned like a mortgage payment in the last few years. A higher cost to get a cr@ppier job means that wages for 20 something has fallen, not stagnated over the last 10-20 years.
” F… let the banks have it” That was the plan . Banks selling to hedge funds 20 cents on the dollar buying in bulk will wait for the right time and flood the markets with lower rentals then the “smart cash buyer’s now” are doing in trying to rent their houses. Suckers again. Top 1% know the game. They made the plan!
Bidding wars are back! AAAAAaaaaaahhHHHHHH!
Buy now! Buy now! Buy now!
http://www.tampabay.com/news/business/realestate/article1222782.ece
Here too, which means another year of basically sitting on the sidelines and watching the craziness. It feels like 2006 all over again.
“According to the survey, more than 40 percent said job security is the most pressing financial concern facing Americans today. Other concerns include making ends meet, paying down debt, paying their mortgage and having enough money for medical expenses.”
Sorry REIC, the squad will continue to rent at 14% of gross monthly income and not buy the LIE. After being laid off in 2009 and stringing along as a temp/contractor close to Lucky Ducky wages for 17 months before landing a permanent full-time gig with benefits I will never assume any level of job security again. There will be no “household formation” involving a mortgage happening here anytime in the next decade.
And to my loanowner coworkers wasting their weekends at Home Depot and doing yard work, it was almost 85 in Colorado Springs today hiking up Pikes Peak in shorts and running shoes. Tomorrow at Loveland Pass it will be 50 and sunny but you wouldn’t know that since you can’t afford to leave Denver after making that massive mortgage
Way to go Squad. The Liars won’t stop lying until it’s all a smolder $hitpile of unrecoverable disaster.
By the way…. Your new found reality with the permanently unreliable job market was something I experienced in the late 1990’s and I’ve been a contract (or project to project level) employee ever since. We were fortunate that we were able to offload the shack at a gross profit of 35% back then. We count on nothing anymore.
FYI the facebook Realtor® just announced on facebook that he bought a short-sale condo in Avon. The squad remains cordial as it would be nice to have a place to crash if I ski Beaver Creek next year…
Good for the squad. I don’t believe I ever had that option. DC is only place where I’ve had some measure of job security, and the job security of the area comes with appropriately high rents.
After being laid off in 2009 and stringing along as a temp/contractor close to Lucky Ducky wages for 17 months before landing a permanent full-time gig with benefits I will never assume any level of job security again.”
happened to me in 1993 took 5 years to get even wage wise
does something to you that’s for sure
A Realtor® stopped by today to drop off a flyer; his family name is on the flyer. I asked him whether the local market has bottomed out yet, and he candidly answered that he thought market values would keep dropping for a few more years before a bottom was reached, though the current rate of decline is slower than it was a couple of years back.
I thanked him for his candor and told him I would refer anyone I know who is currently looking. I should add that this guy is the only Realtor® I have ever talked with who gave a market assessment I found plausible.
The rent vs. buy equation again rears its ugly head!
Why rears? Why head?
If the quality and income of future renters is diminishing, will sfh prices continue to decline?
For now I think so.
<i.For now I think so.
…. and for decades to come. And realtors will continue lying about it…… for eternity.
Having gone from age 35 to age 45 watching this play out, I may never own a house. I’ll likely be dead before I could pay off a 30 year mortgage.
Optimism is zero at this point. Desire for revenge on the moron masses that made this happen is growing.
“I may never own a house”
Would that be such a bad thing? I do own, and let me tell you, the grass isn’t always greener (well, unless I’m paying someone to keep it that way) on the ownership side of the equation.
Don’t get me wrong, I don’t regret my decision, but, it’s not for everyone. I kind of see it like 2 good items on the menu at a restaurant, both are good and can be enjoyed, it just depends what you’re in the mood for.
Honestly, for me (in S. FL), the biggest advantages to owing a house are the tax advantages (very significant for me) and the stability. I had 3 rentals before I bought, 2 of them wound up with foreclosure notices stuck to the front door. I hate moving, and, even more so, hate paying rent to some deadbeat who’s just pocketing it. So, for me, much of the rent vs. buy calculation I did was predicated on not having to disrupt my life every 12-18 months when my landlord went bust.
And, actually, the first rental, come to think of it, was also a “move out now” experience, it was a condo conversion and I needed to either buy or leave. I’ve never left a rental “when I was ready”, it was always a forced departure.
I’ve never been booted or had a particularly bad time with a landlord, but I’d like a place with some acreage that I can develop to suit myself and put a big honking fence with no trespassing signs around. Being tech minded, there are a lot of things I’d like my house to have that you just can’t find in rentals, and I’m not going to put all that in for the landlord.
Doesn’t look like it’s going to happen though. The government will continue to meddle until the boomers die out, and by that time I’ll be looking for a rest home.
I’ll take comfort in the fact that I never made a commission for a realtor or loan agent.
hello fellow 1966′er.
67 here.
A demographic trend here on the HBB? If so, there is a story behind it.
I’ve heard that age referred to a “tweeners”, not quite genx, but not quite boomers, either. Kind of fits… My wife ismthe same age, but had older parents and was raised as a boomer.
+1.
‘67 here too. Summer of Love, baby.
1967 here!
“Having gone from age 35 to age 45 watching this play out, I may never own a house. I’ll likely be dead before I could pay off a 30 year mortgage.”
25ish -35 here and not feeling much different. I’m wondering if it will make sense for my son to go to college, or if I should just save up and buy him a McDonald’s to manage.
Body armor might be more practical, as our chief export continues to shift to ‘war’.
From what I’ve read you need 300K just to get started with a McDonald’s franchise:
http://franchises.about.com/od/fastfoo1/fr/mcdonalds.htm
I can’t agree about deflation.
Deflation is not simply price destruction; prices drop as a result of business innovation routinely, and they should.
Overseas sourcing, increased mechanization/robotics, and technology are supposed to drive costs down, but that isn’t deflation.
Let me ask this: when has the cost of utilities, automobiles, heavy industrial equipment, air travel, or restaurant meals gone down?
Don’t confuse the multiple-year reallocation of the economy away from an over-investment in construction with deflation.
Unfortunately, by the time inflationary pressures are identified the will almost certainly be deeply-rooted…..
I hate the Boomers. A truly real hatred that you’d feel for a thug who just kidnapped and killed your child, which is what the Boomers did to my country’s future.
“The Washington, D.C., research group reported last week only 14 percent of the workers it surveyed in January are very confident about having enough money to live comfortably when they retire. That’s about the same percentage as a year ago, but roughly half of the 27 percent who were very confident in 2007.”
That’s because you’re not supposed to load up with an expensive lifestyle for your elder years. You’re not supposed to have a mortgage. Without family to tote around, you can get by with one car and a smaller one to boot. On fixed incomes, energy costs will loom, hence a smaller car is necessary. Etc.
Watching the Boomers try to live life in their 60s like they’re in their 30s has driven me insane with hate for the last decade. The hate is justified, but the insanity is been a bit of a bother. LOL!
“[A] quarter of workers reported they had adjusted their expected retirement age in the past year. More than a third now expect to retire after reaching 65 versus only 11 percent in 1991.”
Good. I’m taking SS retirement as soon as possible while these fools still try to compete in this permanently awful job market. They can break themselves in half trying to scrape up as much money as possible to service their huge bills, while I enjoy a well-earned, low-key retirement. I plan on collecting whatever SS I can for about 25 years, knowing full well that the Congress will be zapping my bennies as much as possible over that time.
“Watching the Boomers try to live life in their 60s like they’re in their 30s has driven me insane with hate for the last decade.”
Your hatred is misplaced. Most boomers are not yet in their 60s. The oldest boomers are now 66. So 10 years ago, none of the boomers were in their 60s.
The boomers are as much a victim of demographics as you are. For all of our lives, there have been more of us to compete with for resources of all kinds. My first grade class had 35 kids. I am expecting that by the time I really need Medicare and Social Security in 25 years, they will have been relegated to the dustbin of history.
“[A] quarter of workers reported they had adjusted their expected retirement age in the past year. More than a third now expect to retire after reaching 65 versus only 11 percent in 1991.”
This is a really inane comparison. In 1991, many workers nearing retirement had pensions. Now very few do.
“I plan on collecting whatever SS I can for about 25 years”
SS payouts are currently calculated to break even at age 78. So if you begin collecting retirement benefits at 62, your monthly benefit will be constant (excepting COLA adjustments) for the rest of your life at a lower amount than if you start collecting at 66 (current full retirement age for those retiring in the next few years). If you live 25 years after becoming eligible at 62, you will collect a lower overall benefit than if you wait to start collecting at 66.
The maximum benefit is somewhere around $2400 per month for those retiring at 66 this year. If you take that same maximum benefit and amortize it over 16 years instead of 12, that monthly benefit drops to about $1800. So if you live 25 years after you start collecting at 62, you will collect $64,800 less over your lifetime than if you wait to start collecting at 66.
BTW, Paul Ryan and many of those clamoring to reduce SS and Medicare for those younger than 55 are themselves not boomers. So don’t blame the boomers for this.
Here’s another thing about us end of era boomers. Many of us plan to work much, much longer than 62. Do you think at some point there is a problem here? Some people keep the system moving ever more quickly to collapse by retiring early. (I know many feel they don’t have a choice) They may be collecting for as long as 30 years or longer. Other boomers the same age will not only avoid taking withdrawals for a while but will also still be paying into it.
Here’s something else to consider. Some people keep working whether they need to or not. I know an 84 year old that still goes into the office every day. I’m quite sure it isn’t about any need for money. She just isn’t the type to sit around and watch TV. I know quite a few people in her positon. There’s a retired doctor that now has a business catering to the elderly. There are the developers that can’t step down and let the younger guys take power. Not every older boomer sits around fishing or taking cruises drawing from the system. (Yeah, they paid into it. Inflation pretty much means they’ll collect much more than they ever paid in.)
“Many of us plan to work much, much longer than 62.”
That’s another thing that pisses me off. The system is edging me into working until I die. It’s my frakking life; I refuse to work until I drop. I’m not here to slave away so some capitalism scum can make himself even more rich from my labors.
Nearly everyone should stop working sometime in their 60s. People who do hard labors should stop in their 50s. Lawyers and other physically easy professions can keep going into their 70s. Since I’ve been sentenced to a life of physical labor, I know full well that my lifespan is getting cut short. I won’t be bamboozled by rhetoric like Happy2bHeard’s. I need to stop working ASAP and go on a fixed income. I’d retire now, in my early 40s, if I could get away with it. Certainly employers have seen fit to try to retire me early, from their lockstepped refusal to keep me employed for any length of time.
I’m fighting for the only thing that’s worth fighting for: My life and health. That people pooh-pooh that, drives me into a rage. I won’t be hushed and escorted into my grave by those who benefit from it. I’m gonna fight.
“Your hatred is misplaced.”
Hardly. The Boomers lived lives of ever-extended credit combined with ever-rising incomes and ever-rising taxes in order to fuel their sense of entitlement. 50s, 60s, what does it matter? Their generation has been the most selfish one ever devised. They lived high and are trying to stick the rest of us with the bill. That’s what Obamacare’s real aim is: To force Gen-X and Gen-Y to pay into the insurance system to feed the tsunami of end-of-life costs for the Boomers. Aren’t 80% of lifetime health-care costs incurred in the last few years of life? It’s something like that.
“For all of our lives, there have been more of us to compete with for resources of all kinds.”
For all of your lives, you have lived in the deep security of high American prosperity. You have no cause for economic complaint.
“SS payouts are currently calculated to break even at age 78.”
You seem to willfully misunderstand that I have no expectation of receiving anything from SS, therefore I should logically enter the system ASAP and collect for as long as I can. Period.
This flawlessly logical conclusion is compounded by globalism killing off the domestic job market (globalism due to Boomer demands for cheap products and services despite their ever-rising lifetime incomes), which means I don’t expect to be employed much until my minimum SS-collection age. The sooner I can get the frak out of this job market, the better it is for me as well as my fellow workers. There’s no point in salivating over a bigger SS collection if I have to live like a homeless person for 5 years prior.
Unflawed logic, Happ. Read it and weep.
“For all of your lives, you have lived in the deep security of high American prosperity.”
Wrong, but you refuse to believe it.
“ever-rising lifetime incomes”
Wrong again.
“Since I’ve been sentenced to a life of physical labor, I know full well that my lifespan is getting cut short. I won’t be bamboozled by rhetoric like Happy2bHeard’s. I need to stop working ASAP and go on a fixed income. I’d retire now, in my early 40s, if I could get away with it.”
Your projection of collecting SS for 25 years is what led me to calculate the implications for you. It is your decision what you do with that information. And there is no guarantee that the payout calculation will remain the same over the next 20 years.
Who sentenced you to a life of physical labor? What will you do with your time if you manage to get on your ideal fixed income? It is almost certain that wallowing in your hatred is bad for your health.
Why do greater fool investment fund managers believe hedge fund managers can beat the market?
And how long until the market resoundingly rebuts this conventional wisdom?
Public Worker Pensions Find Riskier Funds Fail to Pay Off
By JULIE CRESWELL
Published: April 1, 2012
Searching for higher returns to bridge looming shortfalls, public workers’ pension funds across the country are increasingly turning to riskier investments in private equity, real estate and hedge funds.
But while their fees have soared, their returns have not. In fact, a number of retirement systems that have stuck with more traditional investments in stocks and bonds have performed better in recent years, for a fraction of the fees.
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