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(Forbes)   This just in: If you're relying solely on your 401k and SS for your retirement, you're screwed   (forbes.com) divider line 249
    More: Obvious, real estate investment trusts, retirement, interest rate risk, Betamax, structured product  
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4761 clicks; posted to Business » on 18 Jul 2013 at 9:45 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



249 Comments   (+0 »)
   
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2013-07-18 08:46:15 AM  
Article summary: low interest rates result in low bond yields.


we are faced with more, expensive choices on out-of-pocket health care, a college tuition explosion and inflation-ravaged salaries.

Inflation doesn't work that way. They're just flat out paying less.
 
2013-07-18 08:55:27 AM  
if we are screwed anyway, let's get rid of Social Security then.
 
2013-07-18 09:02:07 AM  
Almost makes the destruction of pensions look like a bad idea, doesn't it?
 
2013-07-18 09:02:47 AM  
I plan on dying in the salt mine.
 
2013-07-18 09:48:17 AM  
Thanks Bernake for keeping interest rates under 1%!
 
2013-07-18 09:49:39 AM  
1/3 to rent
1/3 to taxes
1/3 to retirement

where is food in this equation?
 
2013-07-18 09:51:21 AM  
If you're relying on SS for your retirement, you're going to be a very poor moran.
 
2013-07-18 09:52:51 AM  

brainscab: 1/3 to rent
1/3 to taxes
1/3 to retirement

where is food in this equation?


0bummer will cancel elections and be named dictator for life and issue everyone EBT cards and 0bongo phones.  He will force mass abortions and mass membership in trade unions.  Welcome to the United Bolshevik States of America!!
 
2013-07-18 09:54:33 AM  
This just in: if you're relying on retirement, you're screwed.
 
2013-07-18 09:54:48 AM  

SlothB77: if we are screwed anyway, let's get rid of Social Security then.


newsletter please!
 
2013-07-18 09:55:26 AM  

FarkedOver: brainscab: 1/3 to rent
1/3 to taxes
1/3 to retirement

where is food in this equation?

0bummer will cancel elections and be named dictator for life and issue everyone EBT cards and 0bongo phones.  He will force mass abortions and mass membership in trade unions.  Welcome to the United Bolshevik States of America!!


You forgot the forced gay marriage to an illegal alien. History's greatest monster.
 
2013-07-18 09:55:52 AM  

buzzcut73: FarkedOver: brainscab: 1/3 to rent
1/3 to taxes
1/3 to retirement

where is food in this equation?

0bummer will cancel elections and be named dictator for life and issue everyone EBT cards and 0bongo phones.  He will force mass abortions and mass membership in trade unions.  Welcome to the United Bolshevik States of America!!

You forgot the forced gay marriage to an illegal alien. History's greatest monster.


FEMA CAMPS!
 
2013-07-18 09:57:54 AM  
No big deal, I'll just take out a reverse mortgage.
 
2013-07-18 09:58:43 AM  

SlothB77: if we are screwed anyway, let's get rid of Social Security then.


RaiderFanMikeP: SlothB77: if we are screwed anyway, let's get rid of Social Security then.

newsletter please!


Can we end the fed too!?
 
2013-07-18 09:59:26 AM  
It's one of the worst times to retire in recent history.

What does this sentence even mean?
 
2013-07-18 10:00:01 AM  
I plan on funding my retirement through an esoteric brand of law called "squater's rights"
 
2013-07-18 10:00:10 AM  

sigdiamond2000: It's one of the worst times to retire in recent history.

What does this sentence even mean?


It means get back to work!
 
2013-07-18 10:00:25 AM  
So my investment in porn entertainment is a good diversification?

//Seriously, though, you should never invest in free stuff.
 
2013-07-18 10:01:38 AM  

sigdiamond2000: It's one of the worst times to retire in recent history.

What does this sentence even mean?


It means that after gutting the entire social structure, the boomers are whining again that they have to face the consequences now.
 
2013-07-18 10:02:25 AM  
401k + Social Security + part time job + cat food + living in part of town where I carry a gun = RETIREMENT!
 
2013-07-18 10:02:50 AM  

pkellmey: So my investment in porn entertainment is a good diversification?

//Seriously, though, you should never invest in free stuff.


Only if it's interracial.
 
2013-07-18 10:03:24 AM  

FarkedOver: sigdiamond2000: It's one of the worst times to retire in recent history.

What does this sentence even mean?

It means get back to work!


Funnied because a Farker telling another Farker to get back to work at 10AM on a weekday is just the height of hilarity.
 
2013-07-18 10:05:42 AM  

FarkedOver: SlothB77: if we are screwed anyway, let's get rid of Social Security then.

RaiderFanMikeP: SlothB77: if we are screwed anyway, let's get rid of Social Security then.

newsletter please!

Can we end the fed too!?


A real brain trust right here.
 
2013-07-18 10:06:19 AM  

Arkanaut: FarkedOver: sigdiamond2000: It's one of the worst times to retire in recent history.

What does this sentence even mean?

It means get back to work!

Funnied because a Farker telling another Farker to get back to work at 10AM on a weekday is just the height of hilarity.


I wasn't telling him to get back to work, I was merely pointing out that, that is what the sentence meant.
 
2013-07-18 10:06:56 AM  

impaler: A real brain trust right here.


Well, I wasn't serious.  Those two jabronies probably were.
 
2013-07-18 10:07:38 AM  
Too lazy to find the Nick Cage "you don't say?" picture but it is exactly what comes to mind.  Was considering investing in beach property to partly enjoy and partly rent for vacations.  Other ideas?
 
2013-07-18 10:08:08 AM  
This is why you should marry younger than you. You retire while they still work.
 
2013-07-18 10:08:55 AM  

RoyHobbs22: Too lazy to find the Nick Cage "you don't say?" picture but it is exactly what comes to mind.  Was considering investing in beach property to partly enjoy and partly rent for vacations.  Other ideas?


Join a radical leftist group and incite workers revolution?
 
2013-07-18 10:09:49 AM  
I'm planning on whoring myself out to college age women when I reach retirement age.
 
2013-07-18 10:10:04 AM  

SlothB77: if we are screwed anyway, let's get rid of Social Security then.


Things are bad.  Let's make them worse!
 
hej
2013-07-18 10:11:59 AM  
So for the financial rubes here, if dumping money into a 401k isn't good enough, what is?
 
2013-07-18 10:12:09 AM  
Hmmm, low inflation yields low returns..... ya dont say.

Though I wonder why tuition increases factor into your ability to retire.....  I know when I retire I will not be going back to school to be that one guy that always sits in the front row asking the most assinine questions in a 100 level class.
 
2013-07-18 10:12:31 AM  

hej: So for the financial rubes here, if dumping money into a 401k isn't good enough, what is?


GOLDLINE! GLENN BECK!
 
2013-07-18 10:15:24 AM  

hej: So for the financial rubes here, if dumping money into a 401k isn't good enough, what is?


You might want to begin your solicitation of advice by something other than implying that those that will be providing it are 'financial rubes'.

My advice to you, besides pulling your head from between your butt cheeks, is to learn to cook... or develop a taste for cat food (they have it in lots of varieties).
 
2013-07-18 10:15:24 AM  
I honestly don't know how anyone that's firmly in the "middle class" can ever hope to retire.

I was working for a company that contributes a total of 0.9% to their employees' 401k's.  So if you make $40k/yr, they're going to contribute exactly $30/mo to your retirement account.  Gosh thanks!  And they didn't pay very well, so it was extremely hard to put away much on your own.  I changed jobs about a year ago, and while there were a few reasons to jump ship, the fantastic benefits at my new company were a huge draw.

Even if you max out your 401k, right now you'll just watch your investments get eaten by inflation if you choose the "safe" options.

If you're young (<40), get into 100% stocks right now.  Diversify by putting a chunk in small caps, a chunk in mid caps, a chunk in large caps and another chunk overseas.  Find funds with as low fees as possible, and have faith that the market will beat bond interest over the next 20+ years.  Our retirement accounts are up ~18% YTD.  Of course, we have bad years too, but the overall average has been pretty good.

If you're closer to retirement (~50's) and you haven't already socked away a big pile of cash, it seems pretty dire.  About all you can do to prepare for retirement is get your expenses and expectations whittled down to the bone so that you can live on the pittance Social Security is likely to give you.
 
2013-07-18 10:16:17 AM  

Aarontology: Almost makes the destruction of pensions look like a bad idea, doesn't it?


Pensions are a crap idea anyway.  I would much rather have a slightly higher salary upfront and be responsible for my own savings.

Great_Milenko: SlothB77: if we are screwed anyway, let's get rid of Social Security then.

Things are bad.  Let's make them worse!



Same thing with social security.

Also, I am baffled by people who rely on either of these for retirement.  Seriously, people have been saying how dumb these programs are for years now.  It's nice to be ideological every once in a while, but you would bet your starvation on it?  It's like ND Tyson said about science.  "It's true no matter what people think or say" Same thing with social security.  It's a fundamentaly bad system no matter what people think.  Don't rely on it and start saving now in an IRA or regular ol' taxable account (once you've maxed your IRA contributions).
 
hej
2013-07-18 10:16:35 AM  

NostroZ: hej: So for the financial rubes here, if dumping money into a 401k isn't good enough, what is?

You might want to begin your solicitation of advice by something other than implying that those that will be providing it are 'financial rubes'.

My advice to you, besides pulling your head from between your butt cheeks, is to learn to cook... or develop a taste for cat food (they have it in lots of varieties).


No, I was implying that the advice was for the rubes (i.e. me), not coming from it.

And I am learning to cook.
 
hej
2013-07-18 10:17:12 AM  

hej: NostroZ: hej: So for the financial rubes here, if dumping money into a 401k isn't good enough, what is?

You might want to begin your solicitation of advice by something other than implying that those that will be providing it are 'financial rubes'.

My advice to you, besides pulling your head from between your butt cheeks, is to learn to cook... or develop a taste for cat food (they have it in lots of varieties).

No, I was implying that the advice was for the rubes (i.e. me), not coming from it.

And I am learning to cook.


it=them
 
2013-07-18 10:17:46 AM  
This just in: if you think as a non 1% you are going to ever be allowed to retire, think again.
 
2013-07-18 10:18:11 AM  

hej: So for the financial rubes here, if dumping money into a 401k isn't good enough, what is?


A 401k and an IRA.... followed by a 401k and an IRA and a non sheltered portfolio, followed by golddigging.
 
2013-07-18 10:20:44 AM  

brainscab: 1/3 to rent
1/3 to taxes
1/3 to retirement

where is food in this equation?


Hmmm... If your tax rate is 33% after socking away 33% for retirement, your rent is too high. Solved.

/'Twas a lie, I know.
 
2013-07-18 10:22:53 AM  

Aarontology: Almost makes the destruction of pensions look like a bad idea, doesn't it?


Yea, I know I for one would prefer to put all my eggs in one basket in the hopes that a company not only continues to exist 30-60 years from now but is still profitable and doesn't try to bully their way out of pension obligations.

/Seems to be working out well for soooo many of our elderly already...
 
2013-07-18 10:23:57 AM  
It could be depleted even faster if inflation and interest rates rise as they did from the 1960s to the early 1980s

This needs to be more fleshed out.  If they made no money on savings because of low interest rates, then they would make more money if (and when) interest rates rise.
 
2013-07-18 10:24:47 AM  

hej: No, I was implying that the advice was for the rubes (i.e. me), not coming from it.


Oh, my bad, self-deprecation is so rare online, it caught me off-guard.

Well... learning to cook is a good start, you've got the idea down... lower your expenses as much as you can.  Make your own coffee / eggs.  Find hobbies that are free (biking, hiking, city architecture, botany, etc.).

Second, you want to increase your ability to earn an income.  Learn a trade that you can do when you are old.  Anything that does not require heavy physical labor and you can be a simple clerk at (old people are often discriminated against, so you'll have to have a lower totem pole job in your old age, despite your years of experience).

Finally, your investments.  Your family, make sure they are not dicks and will forget about you in your old age.  If you know they will be dicks, connect them not throwing you in a dilapidated nursing home as a contingent in your will.  As far as where to sock away your money, just make sure you're not paying high 4b1 fees or other 'management' fees above .5% on any fund.  The rest, I'm sure other Farkers will help you with (diversification, local & foreign index funds, proper mix for your age, etc.)
 
2013-07-18 10:25:21 AM  
I'm funding my retirement through Kickstarter!

/no, actually i plan on working till i expire
 
2013-07-18 10:27:01 AM  
The rate of inflation for the past 80 years has averaged about 5%.  So in order to really retire, or have a shot at it, you'll need to get a rate of return greater than 5% on your investments.  I've known people who knew how to super inflate their Universal Life Insurance policies and pull it off.  I knew people in Primerica who claimed 10 to 12% rates of return.  New York Life only promised me 8% and said that it was realistic.

Banks aren't great at investing, given that a CD is less than 3%.  So you'll actually lose money compared to inflation.  A 3% matching 401k still doesn't work due to inflation, which is why I've always turned down 401k options (also, if you need your money from a 401k before retirement you get hit with double taxes and double penalties).

Stuffing your money under your mattress or in a coffee can means you don't lose money, but you also don't gain interest.

Social Security has a negative rate of return.  We're supposed to pay into it today so we can retire on it, but we get less money back than we pay in.  We'd be better off with ANY other form of retirement planning.  Hell, I'd be better off taking the money I pay into Social Security, taking it to the casino and playing roulette with it. At least that way I could possibly see some gain with it.
 
2013-07-18 10:27:04 AM  

Saiga410: I wonder why tuition increases factor into your ability to retire


Many parents either help with tuition costs or pay them outright. The money they spend on tuition is money they are not saving for retirement.

Even if they don't help with tuition, higher student loan payments means their adult children will, at best, not be helping them too much financially and, at worst, will be coming home to ask for financial assistance.

My parents sure are glad I got that scholarship right now. Mom's been retired since her mid-40s and Dad's planning on making his exit at 61. If I had taken the help they offered, they'd be in a much different situation.
 
2013-07-18 10:27:45 AM  

Saiga410: Hmmm, low inflation yields low returns..... ya dont say.

Though I wonder why tuition increases factor into your ability to retire.....  I know when I retire I will not be going back to school to be that one guy that always sits in the front row asking the most assinine questions in a 100 level class.


Yeah, there was all kinds of shiat wrong with TFA. Not only am I not paying my grandkids' tuition, but I'm not retaining this 5 bedroom house much longer. Nor do I expect to spend like I did while in my peak earning years. The kids are gone and with them their expenses. Bonds are worthless in the Japan-style deflation we're likely to be locked in for the foreseeable future, so I don't own any and don't envision ever doing so. The keys to a successful retirement are the same as always: get out of debt as quickly as possible, then invest that same amount in IRAs, 401(k)s and other investment vehicles over the life of your working career.
 
2013-07-18 10:31:59 AM  

Great Janitor: A 3% matching 401k still doesn't work due to inflation, which is why I've always turned down 401k options


I'm not convinced you know what a 401k or an employer match is....

Great Janitor: Stuffing your money under your mattress or in a coffee can means you don't lose money


Wait, I thought I was losing money to inflation in my 401k. How am I not losing money to inflation in my coffee can?
 
2013-07-18 10:32:23 AM  

RoyHobbs22: Was considering investing in beach property to partly enjoy and partly rent for vacations.


NotSureIfSerious.jpg

/Rich farmland (i.e. flyover country) is likely a significantly better property investment.
 
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