Retirement - Gripes 'n Complaints

Rancher Will said:

In many, if not most cases, even buying "Investments" in the Stock Market are not Investments. They are only transfers of capital unless the intrinsic value of the business owned by the stock increases in value greater than the rate of inflation. For example, compare the Stock Markets today with 10, 20, 30, 50, 70 etc., years ago with the rate of inflation dover the same period of time. Today the DOW is close to 12,000. When I started in business 50+ years aago the DOW was less than 1,000. When Inflation is compared the DOW should be over 20,000 today compared to 50 years ago. Compare the inflation rate from 1950 to 2010 and you will note that there has been over 2,000 percent inflation, mostly since 1970.

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Hi Will...

Are you saying that the US stock market has not kept up with inflation over the past 70 years?

Also, it seems you're implying that money put into the stock market isn't an investment unless it increases.  Some investments do lose money.

Rick

We have a bit of a different story.  My DH was laid off in jan of 2009, (he is 55) so in jan 2010 I pulled his entire 401k $$ out, paid the feds their portion, sold the home, the 2 cars (cars paid off, home was not upside down, thank goodness) sold the 1965 mustang fastback, sold EVERYTHING. Purchased our 2008 allergo for cash, hit the road with all our OWN money, and now workcamp, boondock and all around enjoying life. Will our money last, I don't really know, we live as cheaply as possible, but we have no health ins, and I am going through the process w/the fed govt to get disability. Since we have paid cash for all large purchases but the old home, we have s**t for credit, that is a real thing w/me, cuz we were good, we have no credit     I had to fight w/state farm to keep our ins down, cuz they were going to base it on our credit rating, ohhhhhh noooooooo.  I WILL NOT use a credit card, I had my problems w/them in my 20's and swore I would never do that again.

phxmtngirl said:

I WILL NOT use a credit card, I had my problems w/them in my 20's and swore I would never do that again.

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I know some folks think that credit cards are evil. I had problems with them myself at one time. Then I got smart. I have various credit cards and carry no balances. I traded my old cards in on "cash back" cards that charge no annual fees. I just charge all of the stuff that I have to buy anyway, like fuel, groceries, occasional eating out, and repairs. I picked cards that gave bonuses for certain categories, like fuel and restaurants. 3% cash back every time I use a card for one of these expenses. Another card for 2% back on groceries. And then they give me 1% on every other purchase, like campgrounds. I pay the cards in full every month, because we are big believers in not spending what we don't have. Then this year just before Christmas I had them send me the rewards. Made just over $1000 for doing nothing other than living. Any my credit rating is great, so I get good rates on loans or insurance. 

Use credit for your advantage and not let it use you. If you like to fly, get a card that gives you good airline miles. Part of a successful retirement is taking advantage of what is available to you, as long as it fits into YOUR life style. 

Just my .02 cents, but it works great for us.

Sarge

Well said Sarge.  We use one credit card and one debit card.  We get cash draws from the debit card and virtually everything else we spend goes through our Mileage Pluss Visa so the DW can fly to see the grandbabies when we've been on the road more than a few months.  Always paid in full each month though.  Funny thing is I understand that the credit card companies call us "dead beats".  ;D

Rick

Maybe so Rick, but they can choke on my 800 credit score!

Orick; My comments are kept to  minimum due to the limits of space one this site. To try to answer your question;

Many prices of stocks on the markets have not kept up with inflation. Many have exceeded inflation. Remember that there are more than 25,000 stocks on the various exchanges, just in the U.S. The DOW only includes about 32 stocks although perhaps most people believe the DOW indicates the market since it is the one most commonly reported. The DOW does not reflect the daily true value of the whole Market.

My point was that value can be measured in a number of ways. We normally use Dollars as a measurment in the U.S. as a convenience. Since the Dollar value is determined by the value of the Dollar, it is somewhat misleading to believe that an increase in the Dollar price of any stock automatically means that the true value of that stock has increased unless the Dollar price exceeds the rate of inflation for the same period of time. Remember that the actual true value of a Dollar is determined by what Commodity, measure of Service, Asset, or Liability that it will buy. That value will always be determined by the Fiscal and Monetary Policy of the government that issues the number of Dollars in circulation in relation the the GNP.

No one ownes all of the stocks on any market. It is convenient to report the daily "Market advance or decrease" in Dollars. But, in reality each investor should consider individual stocks that apply to that investor's ownership to determine any profit or loss compared to Inflation or Deflation. And, in determining the profit or loss of specific investments, the Dollar price should be compared to the rate of inflation for the period of stock ownership.

Remember that the price of any stock is set by investors as the perceived value per share of that business, measured in Dollars. When the value of each Dollar changes, then the price of any stock measured in Dollars also changes, even if the value of the stock in real terms does not change. This also applies to all othe commodities. Assets, and Liablilities in a Capitalistic Society where the Monetary policy and Fiscal policy is set by the Government.

Now, if I may let use a personal example to illustrate my above points.

In the 1950's-1960's, Choice and Fancy Feeder Cattle, (kind I raise and sell) sold on the market for 18 to 20 cents per pound. Those same Feeder Cattle today sell for 90 Cents to perhaps One Dollar per pound. Does anyone believe that the true beef value of those cattle are different today or is is just that the Dollar is worth less?

The Price of cattle has not kept up with inflation although the Dollar price of producing those cattle has kept up and in some ways exceeded inflation. For Example, I bought a new Farmall Super MTA tractor in 1955 for $950. I still own that tractor but in the past 50 years I have bought 8 more tractors as needed. The last tractor that I bought for ranch use cost $85,000. The inflated Dollars make up a great amount of the difference.

In 1960 Fuel for my tractors and vehicle cost 16 to 29 cents per gallon. Does anyone believe that without inflation of the Dollar that same fuel increased it's true value to close to $4.00 per gallon today?

I hope this explains my point without writing a book on the subject.

Rancher Will:

I am not an expert in the economy, and, your "accounts" no pun intended, are off mark to this post....... IMHO.
I want to understand what you are saying but my head hurts thinking that way.....
Inflation is a factor, and if one put his money in the mattress, he really was hurt in accumulating wealth, that is all I know.

The accumulation of wealth, as a result of our work (endeavours), gives us the ability to stop working and enjoy life in retirement (no more work, no income). Some of us planned and thought about the arrival of this day more than others.
Circumstances influenced this wealth accumulation process also, some being luckier than others. Here are some of the things that helped one to accumulate wealth. 
1) Continued our education to get better paying jobs.
2) Enrolled in a savings program and tried our best  not to touch these savings.
3) Sought employment in Company,s with good pension programs.
4) Put effort in understanding what "entities" (stocks, Mutual Funds, Bond Funds, Real estate, etc., etc.) to invest in.
5) Minimized cost of borrowing those large purchases.
This list continues I'm sure......

Most of us started with no wealth, so we take pride in accumulating some, but, our Capitalistic system gave us the power to accomplish this task. Our Capitalistic System is changing....., and the young are going to have a harder time in the future. That is where prayers are needed..... God Bless America.
 
 

Back again!
The discussion of the Stock Market returns ignore dividends; overall returns for the S&P 500 are pretty well accepted to be about 11% per year. This is well above inflation. Obviously there is risk here, but its mostly people chasing returns rather than a rational investment program that lose money.
For example: I went to largely to cash before the crash, but still had about 50% of liquid assets in the market. At one point I had a paper loss of nearly 25% on those assets, but today the same assets are worth about 10% more than I started with (in those specific investments). The secret? I did nothing with them when the market was down; they were good investments and I kept the dividends over the three years it took them to come back.
How many people sold at the lows and even today swear they will never go back into stocks? Now they are in bonds and will take a similar haircut over the next few years if they should try to sell those!
Ernie

Rancher Will said:

I hope this explains my point without writing a book on the subject.

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Thanks for expanding on your thoughts Will.  I was wrestling with your use of the word "investment" I guess.  We can agree to disagree on the definition but I agree that inflation is a big factor for us all.

Rick

Well next Wednesday I will retire for the third time. This time I am ready and looking forward to a cross country trip with some of the grand kids and there Mon, my Katie. Diane and I never gave much thought to retiring as I felt every day in the office was where I wanted to be, that said we have been fortunate in that our business prospered and we were able to squirrel away enough to be comfortable.
Not owing anyone does make everything else less worrysome. Hope I last long enough to finally say I did retire.
Jim

Just my two cents worth from a forensic/legal standpoint being a medical examiner:    if you ever need to shoot someone in self-defense, make sure it is on their frontside or have a witness to corroborate your self-defense.  If you shoot them and they are fleeing, i.e., you shoot them in the back, it is not self-defense anymore because they were trying to get away.  Just some advice if the situtation ever becomes necessary and I hope it never does.  Shooting someone changes your life forever!!!  Good luck on your decision.  I like the spray idea much better.

R

rdpath ~~ what? ~ post# ~ date was your 2? refering to??  Sorta lost me.

Does no one full time on a shoestring as we do.  We travel to a place and stay for a month till our next money comes in.  Then we do the same again.  We had two companies go bankrupt at the same time and used all the IRA's and 401 k's to payoff our employees.  The bankruptcy court said we didn't have to do that, but we like to sleep at night.  Couldn't do that knowing we had cheated the people that helped us in our companies.  Not their fault that we messed up.  So, we do what we can, when we can, and wait in the interim and still have fun.

rcpath said:

Just my two cents worth from a forensic/legal standpoint being a medical examiner:    if you ever need to shoot someone in self-defense, make sure it is on their frontside or have a witness to corroborate your self-defense.  If you shoot them and they are fleeing, i.e., you shoot them in the back, it is not self-defense anymore because they were trying to get away.  Just some advice if the situtation ever becomes necessary and I hope it never does.  Shooting someone changes your life forever!!!  Good luck on your decision.  I like the spray idea much better.

R

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maddog348 said:

rdpath ~~ what? ~ post# ~ date was your 2? refering to??  Sorta lost me.

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Pretty sure he got confused and meant that for the 'Violence towards RV'ers'  thread.  Tom locked that thread cause folks started taking shots.....pun intended ;D

Ernie n Tara said:

Back again!
The discussion of the Stock Market returns ignore dividends; overall returns for the S&P 500 are pretty well accepted to be about 11% per year. This is well above inflation. Obviously there is risk here, but its mostly people chasing returns rather than a rational investment program that lose money.

Ernie

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I know a ton of folks got burned in the last two "crashes".... however, just don't make much sense to sell everything while it's low, I can't understand that.  Right around it's worst, I doubled (max'd) out buying on the 401k, figured it was not going to last forever, unless your in the camp that everything is going to end... Anyway, I frankly love when the stuff is looking grim, the shares are cheap, can buy more volume....  right now, the price has come back pretty good, all those "cheap" shares in the 401k that we were jamming are worth a few more $'s each.... looking pretty good actually.  Of course one can't stay around the international stuff and the S funds the closer it get's to needing to draw, that's the time to move closer to the G type.  That word diversification is good advise, or for us (me) simple folks.. don't keep all the eggs in the same basket, specially a risky one.  Anyway, best of luck to all in the RV world!  Love the credit advise "pay it off"... maybe take a few months but no more...  Having an almost 800 credit score has come in handy at times.

Marsha/CA said:

My husband was a president of an environmental consulting company for several years before he took an early retirement.  The employees of the company were mostly younger workers; most college educated and career driven.  The company offered them 401 plans where the company would match the worker's contribution.  You would be surprised how few employees participated; or if they did participate didn't put in the full amount they were offered.

Marsha~

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Marsha:

I know what you mean.  Some people simply WILL not take free money when it is offered to them.  Oh, well.  They are likely to be among those who inhabit the AARP web site and spend most of their free time moaning about Social Security not covering ALL of their retirement needs.  It was never ever intended as such but that doesn't seem to register with some folks.  I guess that they missed that day at school when the words "supplement" and "supplemental" were discussed.

A good friend of mine owns a metal working shop.  He also has offered his employees a very nice 401k plan but over half of them won't sign up for it.  Not sure if he can continue the plan or not.  There used to be and may still be a percentage of employees requirement to maintain a legit plan.  As with your experience, some folks just won't take free money when it is offered.  Oh, well.  :-/

Ed

Lots of great comments in this thread about the stock market, inflation, etc.  My thought is... I wonder what the stock market level and return would be if it were priced in gold and not in dollars?  Anyone know or know of a web site that delves into this?  Just curious.

Ed

SteelHeadR said:

spend most of their free time moaning about Social Security not covering ALL of their retirement needs.  It was never ever intended as such but that doesn't seem to register with some folks.  I guess that they missed that day at school when the words "supplement" and "supplemental" were discussed.

A good friend of mine owns a metal working shop.  He also has offered his employees a very nice 401k plan but over half of them won't sign up for it.  Ed

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And another "Amen"...  I remember being a new 23 year old technician at HP in Silicon Valley in 1973 and thinking that "I couldn't afford" to participate in the employee stock purchase program. Another tech about 10 years older than I really read me the riot act about the "free money" thing and offered to front me the payroll deduction I was so dreading if I gave him the stock.  I wasn't the sharpest tool in the shed, even then, but I could figure out that this was probably something I should be doing.  It sure paid off and I think of that guy often. 

Rick

Again!,
As noted above SS wasn't intended to pay for all of your retirement. That said; it would cover my NEEDS, but WANTS are another story. Many people mix up the two. Needs are for food, and some kind of shelter (medical is a different category of coverage). The rest reduces to WANTS; meat - nice, but you can live w/o., Air Cond. - same thing, transportation - see public or walk, etc., etc. I'm so sick of people thinking they are Entitled to anything, particularly when anything is more than I enjoy despite my ability, unlike them, to pay for it if I wanted it! Incidentally, I'm not just talking about those in "poverty", whatever that is, but those who demand to live beyond any reasonable definition of their means; $50,000 income, $300,000 house, etc.
Another $0.02,
Ernie