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(The Street)   More and more Americans retiring early. Then running out of money   (thestreet.com) divider line 118
    More: Dumbass  
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3005 clicks; posted to Business » on 11 Nov 2013 at 2:15 PM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-11-11 02:15:21 PM  
That's why I'm never going to retire AND I'm going to run out of money. Best of both worlds.

/ FML
 
2013-11-11 02:19:32 PM  
If you retire too early you're missing out on decades of exploiting the fears of consumers
 
2013-11-11 02:26:12 PM  
No surprise. People are living longer and health care costs only rise with age.
 
2013-11-11 02:28:08 PM  

miss diminutive: No surprise. People are living longer and health care costs only rise with age.


Umm, I have it from very reliable sources that health care is free.
 
2013-11-11 02:30:14 PM  
I DNRTFA, but I think we need to re-examine the age of 65 for retirement.

Back in the 50's and 60's when life expectancy was 68 or 69, it was EASY to plan and save for retirement, and pensions were a cheap thing for companies to offer employees. The average worker would only have 5 years or less in which to be a non-earner.

These days, life expectancy is around 80. That means company pensions are cost-prohibitive. Personal savings for retirement, too, are stupidly more difficult to do for the simple fact that people have so much longer to save for.

The average 65 year old isn't a worn-down old waif that a strong fart could knock over these days. They're healthy, able, and experienced. Push the age back to 70 or so, and maybe more people could afford to retire one day.
 
2013-11-11 02:30:58 PM  

Fark_Guy_Rob: miss diminutive: No surprise. People are living longer and health care costs only rise with age.

Umm, I have it from very reliable sources that health care is free.


Odd. My pharmacist doesn't seem to be pleased when I offer to pay him in hugs and friendship dollars.
 
2013-11-11 02:34:53 PM  

Gortex: I DNRTFA, but I think we need to re-examine the age of 65 for retirement.

Back in the 50's and 60's when life expectancy was 68 or 69, it was EASY to plan and save for retirement, and pensions were a cheap thing for companies to offer employees. The average worker would only have 5 years or less in which to be a non-earner.

These days, life expectancy is around 80. That means company pensions are cost-prohibitive. Personal savings for retirement, too, are stupidly more difficult to do for the simple fact that people have so much longer to save for.

The average 65 year old isn't a worn-down old waif that a strong fart could knock over these days. They're healthy, able, and experienced. Push the age back to 70 or so, and maybe more people could afford to retire one day.


I want to be young enough to really enjoy my retirement. I'm shooting for retirement as soon as my youngest child finishes college.

Of course, "retirement" for me means, hopefully, doing some part-time consulting/training and such and therefore still having some small income on top of my investments.
 
2013-11-11 02:38:27 PM  
I want to die and go broke.
Or go broke and die.
But I want them both to happen on the same day.
 
2013-11-11 02:45:22 PM  
My retirement plan:
2guystalkingmetsbaseball.com
 
2013-11-11 02:45:33 PM  

Gortex: I DNRTFA, but I think we need to re-examine the age of 65 for retirement.

Back in the 50's and 60's when life expectancy was 68 or 69, it was EASY to plan and save for retirement, and pensions were a cheap thing for companies to offer employees. The average worker would only have 5 years or less in which to be a non-earner.

These days, life expectancy is around 80. That means company pensions are cost-prohibitive. Personal savings for retirement, too, are stupidly more difficult to do for the simple fact that people have so much longer to save for.

The average 65 year old isn't a worn-down old waif that a strong fart could knock over these days. They're healthy, able, and experienced. Push the age back to 70 or so, and maybe more people could afford to retire one day.


Thanks to Bernake, CDs are paying .25% interest. Add in inflation running 5-7% and that is what is killing retirees.

On $1 million, that only $25k in interest*.

*before taxes
 
2013-11-11 02:45:37 PM  
The Genworth data reveals that 52% of pre-retirees expect their living expenses to decrease in retirement, but actually, 65% of retirees saw their costs rise in retirement. Genworth says healtchare costs are the main culprit, along with real estate and money spent on dependents.

While I'm sure people want to blame it all on outside forces, I wonder how much people have just flat out over-consumed in accordance to a lifestyle with new creature comforts they've grown acclimated to.   My babyboomer parents could both probably retire today, but they have to keep working because they keep buying new cars, bigger TVs, more lavish vacations, etc.   When we were growing up we didn't have cable, now they have 3 TVs in house with 2 people with a full package satellite TV hooked up to each one.  This to go along with smart phones, data plans, high speed internet and an untold number of things they had never planned on "needing" when they were planning what they would need for their retirement.
 
2013-11-11 02:47:18 PM  
If you sit down and use 'median' numbers; it's pretty easy to see why everyone is bankrupt.

Spend ~20+ years getting expensive (mostly free) education at ~175k
Work for 30-40 years - earn 2 million (pretax USD)
Retire at 61 (median retirement age)
Die at 80 (life expectancy in US)
Lifetime medical expenses: 316k (post-tax USD)

Take out income tax and you've got something like 1.7 million (optimistically).  Minus education and healthcare....and you've got 1.2 million.
Divide that by 80 years, and you've got $15,000 per year to spend on food, clothing, houses, cars, entertainment, cell phones, computers, and everything else.

The numbers just don't work.
 
2013-11-11 02:48:28 PM  

mcreadyblue: Add in inflation running 5-7%


Inflation is closer to 2%.
 
2013-11-11 02:51:00 PM  

mcreadyblue: Gortex: I DNRTFA, but I think we need to re-examine the age of 65 for retirement.

Back in the 50's and 60's when life expectancy was 68 or 69, it was EASY to plan and save for retirement, and pensions were a cheap thing for companies to offer employees. The average worker would only have 5 years or less in which to be a non-earner.

These days, life expectancy is around 80. That means company pensions are cost-prohibitive. Personal savings for retirement, too, are stupidly more difficult to do for the simple fact that people have so much longer to save for.

The average 65 year old isn't a worn-down old waif that a strong fart could knock over these days. They're healthy, able, and experienced. Push the age back to 70 or so, and maybe more people could afford to retire one day.

Thanks to Bernake, CDs are paying .25% interest. Add in inflation running 5-7% and that is what is killing retirees.

On $1 million, that only $25k in interest*.

*before taxes


I would love to find a cd that pays 25% interest.  Or did you mean to say $2,500?
 
2013-11-11 02:55:20 PM  

Ima_Lurker: mcreadyblue: Gortex: I DNRTFA, but I think we need to re-examine the age of 65 for retirement.

Back in the 50's and 60's when life expectancy was 68 or 69, it was EASY to plan and save for retirement, and pensions were a cheap thing for companies to offer employees. The average worker would only have 5 years or less in which to be a non-earner.

These days, life expectancy is around 80. That means company pensions are cost-prohibitive. Personal savings for retirement, too, are stupidly more difficult to do for the simple fact that people have so much longer to save for.

The average 65 year old isn't a worn-down old waif that a strong fart could knock over these days. They're healthy, able, and experienced. Push the age back to 70 or so, and maybe more people could afford to retire one day.

Thanks to Bernake, CDs are paying .25% interest. Add in inflation running 5-7% and that is what is killing retirees.

On $1 million, that only $25k in interest*.

*before taxes

I would love to find a cd that pays 2.5% interest.  Or did you mean to say $2,500?


Math is hard
 
2013-11-11 02:55:27 PM  

Ima_Lurker: mcreadyblue: Gortex:
Thanks to Bernake, CDs are paying .25% interest. Add in inflation running 5-7% and that is what is killing retirees.

On $1 million, that only $25k in interest*.

*before taxes

I would love to find a cd that pays 25% interest.  Or did you mean to say $2,500?


I'll settle for 2.5% interest.

And the official inflation statistics are defiantly being manipulated to keep payouts load.  For Jane and Joe middle-class, it's been more than 2% necessary belt-tightening per year lately.
 
2013-11-11 02:56:26 PM  

Fark_Guy_Rob: If you sit down and use 'median' numbers; it's pretty easy to see why everyone is bankrupt.

Spend ~20+ years getting expensive (mostly free) education at ~175k
Work for 30-40 years - earn 2 million (pretax USD)
Retire at 61 (median retirement age)
Die at 80 (life expectancy in US)
Lifetime medical expenses: 316k (post-tax USD)

Take out income tax and you've got something like 1.7 million (optimistically).  Minus education and healthcare....and you've got 1.2 million.
Divide that by 80 years, and you've got $15,000 per year to spend on food, clothing, houses, cars, entertainment, cell phones, computers, and everything else.

The numbers just don't work.


That post made too much sense...in a depressing, I need to rob a bank tomorrow, kind of way.
 
2013-11-11 02:56:56 PM  

Ima_Lurker: mcreadyblue: Gortex: I DNRTFA, but I think we need to re-examine the age of 65 for retirement.

Back in the 50's and 60's when life expectancy was 68 or 69, it was EASY to plan and save for retirement, and pensions were a cheap thing for companies to offer employees. The average worker would only have 5 years or less in which to be a non-earner.

These days, life expectancy is around 80. That means company pensions are cost-prohibitive. Personal savings for retirement, too, are stupidly more difficult to do for the simple fact that people have so much longer to save for.

The average 65 year old isn't a worn-down old waif that a strong fart could knock over these days. They're healthy, able, and experienced. Push the age back to 70 or so, and maybe more people could afford to retire one day.

Thanks to Bernake, CDs are paying .25% interest. Add in inflation running 5-7% and that is what is killing retirees.

On $1 million, that only $25k in interest*.

*before taxes

I would love to find a cd that pays 25% interest.  Or did you mean to say $2,500?


Your correct. I was trying to type $2.5k.
 
2013-11-11 02:58:47 PM  

impaler: mcreadyblue: Add in inflation running 5-7%

Inflation is closer to 2%.


Unless you're buying this thing called food.
 
2013-11-11 02:58:58 PM  

Spaceman Spiffed: Ima_Lurker: mcreadyblue: Gortex:
Thanks to Bernake, CDs are paying .25% interest. Add in inflation running 5-7% and that is what is killing retirees.

On $1 million, that only $25k in interest*.

*before taxes

I would love to find a cd that pays 25% interest.  Or did you mean to say $2,500?

I'll settle for 2.5% interest.

And the official inflation statistics are defiantly being manipulated to keep payouts load.  For Jane and Joe middle-class, it's been more than 2% necessary belt-tightening per year lately.


I would too.  If I give my credit union $100,000 for the next 5 years, they will give me 1.51%.  I wonder if they have ever sold any of those, and if I can get the names and addresses of those people.

/guess it still beats the rate of return for my investment in a home, which is closer to -2% over the last 10 years
 
2013-11-11 03:00:14 PM  

mcreadyblue: Ima_Lurker: mcreadyblue: Gortex: I DNRTFA, but I think we need to re-examine the age of 65 for retirement.

Back in the 50's and 60's when life expectancy was 68 or 69, it was EASY to plan and save for retirement, and pensions were a cheap thing for companies to offer employees. The average worker would only have 5 years or less in which to be a non-earner.

These days, life expectancy is around 80. That means company pensions are cost-prohibitive. Personal savings for retirement, too, are stupidly more difficult to do for the simple fact that people have so much longer to save for.

The average 65 year old isn't a worn-down old waif that a strong fart could knock over these days. They're healthy, able, and experienced. Push the age back to 70 or so, and maybe more people could afford to retire one day.

Thanks to Bernake, CDs are paying .25% interest. Add in inflation running 5-7% and that is what is killing retirees.

On $1 million, that only $25k in interest*.

*before taxes

I would love to find a cd that pays 25% interest.  Or did you mean to say $2,500?

Your correct. I was trying to type $2.5k.


The decimal got me too.
 
2013-11-11 03:00:57 PM  

Spaceman Spiffed: And the official inflation statistics are defiantly being manipulated to keep payouts load.


No they're not.
 
2013-11-11 03:01:37 PM  

Smeggy Smurf: impaler: mcreadyblue: Add in inflation running 5-7%

Inflation is closer to 2%.

Unless you're buying this thing called food.


Doesn't matter what you're buying. Inflation is 2%.
 
2013-11-11 03:02:20 PM  

Ima_Lurker: Or did you mean to say $2,500?



I think he was complaining that unemployment was too low, and he was hoping the Fed would tighten before the economy had reached capacity.
 
2013-11-11 03:05:54 PM  

mcreadyblue: Thanks to Bernake, CDs are paying .25% interest. Add in inflation running 5-7% and that is what is killing retirees.


If you are 65, retiring, and your entire cash hoard is in CDs - fire your financial advisor.
 
2013-11-11 03:09:45 PM  
Retirement isn't always a choice.  If you've worked one job for 30 years and lost that job because it's obsolete, you're washed up at 50.  My sympathy for someone who figures they're entitled to coast for that long has its limits, but there are enough people in these sorts of situations that it collectively becomes a serious social problem.
 
2013-11-11 03:19:48 PM  

gingerjet: mcreadyblue: Thanks to Bernake, CDs are paying .25% interest. Add in inflation running 5-7% and that is what is killing retirees.

If you are 65, retiring, and your entire cash hoard is in CDs - fire your financial advisor.


Fool, that is guaranteed money!
 
2013-11-11 03:23:54 PM  

impaler: Doesn't matter what you're buying. Inflation is 2%.


Actually, it does.  If what you are buying in retirment has an effective inflation rate of 5% but the CPI says it is 2%, which one are you going to plan on using for your finances?
 
2013-11-11 03:25:03 PM  
i40.tinypic.com
 
2013-11-11 03:25:57 PM  
i44.tinypic.com
 
2013-11-11 03:27:42 PM  
Early retirement is great! Just plan on moving far away from the big city. Cheaper housing and you don't have to worry about medical bills. I'll be dead by the time the ambulance finds my house!
 
2013-11-11 03:27:50 PM  

impaler: Smeggy Smurf: impaler: mcreadyblue: Add in inflation running 5-7%

Inflation is closer to 2%.

Unless you're buying this thing called food.

Doesn't matter what you're buying. Inflation is 2%.



I thought "inflation" was a number cobbled together from the rates of change of prices of various categories, one of which is food, meant to simulate a "typical" American family's purchases.
 
2013-11-11 03:28:40 PM  

mjjt: [i40.tinypic.com image 591x762]


^^this^^

mjjt: [i44.tinypic.com image 850x290]


lol
 
2013-11-11 03:34:55 PM  

impaler: Smeggy Smurf: impaler: mcreadyblue: Add in inflation running 5-7%

Inflation is closer to 2%.

Unless you're buying this thing called food.

Doesn't matter what you're buying. Inflation is 2%.


Since 2000

Corn up 258%
Wheat up 195%
Soy up 195%
Cattle up 75%
Hogs up 48%
Gas up 140%
Healthcare up 125%


Yeah but inflation is 2% (or 35% since 2000)
 
2013-11-11 03:35:45 PM  
Yeah, it's a numbers issue.

Start at $1.15/hour back in 1960.
Slowly rise up to $400K/year over the next 40 years  (And this is usually exponential, so your income is back-loaded)
Want to retire as though you were still making your last level of income and then live on that for 20 years.
Fail because that would require more income than you made in your entire life.

You want to retire for 4-5 years, that's totally doable (especially since your expenses are just lower once the house is paid off and the kids are gone).  You want to retire for 20, that's not happening.

Or of course, the new version:

* Go to college until 22
* Have $30K in student loan debt (And that's the average amongst people who actually have student loan debt). * Slowly spend the next 5-10 years running around your crap jobs (because everyone has crap jobs in their 20's) paying them off with the $30/month that isn't going to rent and board.
* Get married, buy a house (albatross), have kids
* Now your parents show up and start asking for money because they're out.
* Oh, and the kids need $120K for tuition and board at the public state school.
* Ok, you're 60, the house is almost paid off, the kids are FINALLY out of school, time to start saving for retirement.  Oh fark, it's time to retire and I haven't saved a dime because I dumped it all into taxes, parents, children, and the house (Or I'm living in a major city and could never afford to own a house).
* Become a bitter old person on social security.
 
2013-11-11 03:35:48 PM  

HeadLever: Actually, it does.  If what you are buying in retirment has an effective inflation rate of 5% but the CPI says it is 2%, which one are you going to plan on using for your finances?


Of course what you spend your money on matters, but I don't get to say "inflation is really NEGATIVE 22%!" because I've spent half my money buying gold the past year.

PS: corn, soybeans, and wheat prices are lower than they were a year ago. Food is deflating not inflating if you want to go that route. But don't let facts get in the way of derp.
 
2013-11-11 03:41:10 PM  

impaler: Food is deflating not inflating if you want to go that route.


Depends upon your basis of timeframe.

upload.wikimedia.org
 
2013-11-11 03:41:15 PM  
I thought full retirement age in the private sector was already boosted to 69/70 for GenX? Don't bring in the State/Federal employees. They get way too good of a deal.
 
2013-11-11 03:41:19 PM  

impaler: Smeggy Smurf: impaler: mcreadyblue: Add in inflation running 5-7%

Inflation is closer to 2%.

Unless you're buying this thing called food.

Doesn't matter what you're buying. Inflation is 2%.


newshour.s3.amazonaws.com
 
2013-11-11 03:42:58 PM  

impaler: S: corn, soybeans, and wheat prices are lower than they were a year ago. Food is deflating not inflating if you want to go that route. But don't let facts get in the way of derp.


Corn has gone down in the past two months.

The price the price in Jan, Feb, Mar, Apr, May, Jun, Jul, Aug & Sept was higher than the average of 2012, which was almost double the price in 2010
 
2013-11-11 03:43:34 PM  
Impaler: Doesn't matter what you're buying. Inflation is 2%.

Impaler: Of course what you spend your money on matters


Would the real imaler please stand up?
 
2013-11-11 03:43:39 PM  

madgonad: I thought full retirement age in the private sector was already boosted to 69/70 for GenX? Don't bring in the State/Federal employees. They get way too good of a deal.


SS age is 67 if you were born after 1960.
 
2013-11-11 03:44:26 PM  

NuclearPenguins: My retirement plan:
[2guystalkingmetsbaseball.com image 650x453]


I prefer a slower method *lights up another Marlboro* but I'm right there with ya.
 
2013-11-11 03:46:59 PM  

HeadLever: Impaler: Doesn't matter what you're buying. Inflation is 2%.

Impaler: Of course what you spend your money on matters

Would the real imaler please stand up?


Is English parsing that hard for you? Inflation rate doesn't matter why YOU buy. But what YOU buy is important to you.

Also, I thought this went without saying, commodity prices are volatile.
 
2013-11-11 03:49:18 PM  

impaler: HeadLever: Impaler: Doesn't matter what you're buying. Inflation is 2%.

Impaler: Of course what you spend your money on matters

Would the real imaler please stand up?

Is English parsing that hard for you? Inflation rate doesn't matter why YOU buy. But what YOU buy is important to you.

Also, I thought this went without saying, commodity prices are volatile.


Farm subsidies remove the volatility from commodities.

LOL!
 
2013-11-11 03:50:44 PM  
mcreadyblue:
img.fark.net


The SGS alternative! DERP!

3.bp.blogspot.com

Here's what historical housing prices look like when discounted by the Shadow Stats SGS Alternate measure of inflation:

4.bp.blogspot.com

When housing prices outpace inflation, real (i.e. inflation-adjusted) home prices rise. When inflation outpaces housing prices, real home prices fall. Shadow Stats claims some pretty high inflation numbers, so it's hard for housing prices to keep up-even in good times. That's why we see the long-term decline in real housing prices shown in the second graph.

Now you can believe there was a housing bubble, or you can believe that Shadow Stats is trustworthy, but if you believe both you're delusional.
Link
 
2013-11-11 03:52:07 PM  

MugzyBrown: The price the price in Jan, Feb, Mar, Apr, May, Jun, Jul, Aug & Sept was higher than the average of 2012, which was almost double the price in 2010


And they're cheaper now than 2008. Their volatility isn't from inflation.
 
2013-11-11 03:53:00 PM  
This should piss some people off:

My dad is 78 and this is what he brings in each month"
Retired O-6 w/ 30+ years - $6,400/mo
Retired State pension - $5,300/mo
Social Security - $2,500/mo
64 hours as civilian contractor for the DoD - $8,300/mo

Plus he has a pile of money in 401k, IRA, and regular investment accounts and absolutely no debt. Well over a quarter million in income every year - which he doesn't spend - most of it from the government. He still works because he enjoys it (but only two days a week). If you work hard your whole life and don't slack-off you will be fine unless you sunk your whole nest egg in Beannie Baby futures.
 
2013-11-11 03:53:38 PM  
This article brought to you based on a study commissioned by an insurance company that sells over-priced retirement products. No thanks.
//Save more with us, just ignore our fees.
 
2013-11-11 03:53:55 PM  

HeadLever: Depends upon your basis of timeframe.


In 1993 it was 105. Now it's 210.

That comes out to an average of less than 4% annual inflation.
 
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