Retirement - Gripes 'n Complaints

Orick said:

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

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Trying to explain the free money thing to some is painful...  I attempted this to some very old friends that I grew up with a couple of years ago.  Basically, the conversation was "how can you think of not contributing at least to the match"... the reply was "who can afford that, we are living paycheck to paycheck".... This was also echoed by another, very good old friends so it was painful.  I felt bad until I later found out that this position was stated while my friend actually pays $40.00 / wk to get her nails done....  Very sad.

Like I used to hear people at work say everyone has a car payment and always will and a house payment.  I said we don't and if we did have a car payment it would only be a year or two at the most, but don't intend to.  Needless to say I didn't make a friend there, oh well..

People nowadays all want instant gratification.  They never heard of saving up to pay cash for something.  Hubby and I enjoy the anticipation of saving and buying it as much as actually getting it.  But we are old fuddy duddies, dinosaurs in todays world.

Carolyn, we are right there with you.  All of our stuff is paid for....everything.  I think when you save for it or take it out of your savings/investments you really think twice about spending the money.  We always ask ourselves: "do we need it; or do we just want it." 

Marsha~

We always ask ourselves: "do we need it; or do we just want it." 

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As we get older, that question gets easier to answer.

Orick said:

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

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Rick, I had a similar situation in my very early career. I had about 2 months on the job when the city came up with this "deferred compensation" plan. No city match, but you could make contributions pre-tax out of your pay. I wasn't going to do it until my training officer threatened to make me walk back to the station from the middle of the projects if I didn't sign up. I caved in and signed up for the minimum, which was $25 every two weeks. Through the years I increased it as I could. When I retired I had a nice little nest egg. Now I buy that guy a beer anytime I run into him! 

I know after Tom retires for good, I will definitely think more about do we really need that before I buy it.  I'm trying to do more of it before then, sometimes I stick to it and sometimes I don't.  But I'm sure once that paycheck is no longer there I will think twice.  And another thing as you get older you start thinking about all the junk you have to dust and mess with.  I've unloaded a lot of stuff and could stand to do more and will.

Orick said:

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

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Good job, Rick.  Doing the right thing isn't always as obvious as it seems later on.  I hesitated for a year before joining my employer's 401k plan.  All I could think about was that the money would be locked up and unavailable in an emergency.  Later on, I found that I could take a loan from it if I had a hardship situation.  I never did that but the fact that it was available to me made the decision to sign up easier.

Ed

jje1960 said:

Trying to explain the free money thing to some is painful...  I attempted this to some very old friends that I grew up with a couple of years ago.  Basically, the conversation was "how can you think of not contributing at least to the match"... the reply was "who can afford that, we are living paycheck to paycheck".... This was also echoed by another, very good old friends so it was painful.  I felt bad until I later found out that this position was stated while my friend actually pays $40.00 / wk to get her nails done....  Very sad.

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Wow, is this ever illustrative of people refusing to find ways to save some money for that rainy day that ALWAYS comes!  I've talked to many people about saving and investing for retirement.  All of the ones who cannot find any money to save are the very same ones who spend their money foolishly.  They can't afford to save for retirement but they can afford: booze, beer, cigarettes, cigars, magazines, movie tickets, shopping at the mall, vacations, eating out, $6 a cup lattes, and much much else that we can all get along without if we have to.  Their problem is often less a lack of funds and more a lack of foresight and desire to prepare for the future.  Sad but, unfortunately, all too often true.

SteelheadR's reply  (as well as others) prompted another response from me:

I guess I did not realize it, but for me, WATCHING MY MOM AT OUR KITCHEN TABLE WORRYING OVER WHAT BILL WAS TO BE PAID FIRST, and I can hear her now saying, "I guess we have to rob Peter to pay Paul."  was a blessing to me.
A lesson as to HOW NOT TO LIVE.
My parents never got it right.... when my Dad died after just turning 62, I had to sign (broke law I'm sure) his first and only SS check so Mom could have money for bills.
Now at this time I was 30 yrs old, making good money, but was not willing to help with finances, they made their bed.....
Not sure how many points I made with "Higher power" but that was how I felt.

I have read this thread with great interest.  I teach a personal finance course for college students.  This is my first time teaching this course live (I have taught it online) and I have been pleasantly surprised by how receptive the students have been when talking about budgeting, living within your means, and saving for retirement. 

As an exercise I gave the class a hypothetical budget for a recent graduate that was heavy on spending with no saving.  The students' task was to suggest changes for the budget to free up money for saving.  It was reassuring that the students pointed out several things that were "wants," but were not needed and not affordable.  I am stressing to the students that, if they will take this to heart and put it into action when they get jobs, they will be very pleased with the long-run results. 

I fear that this class is not representative of the average college student because the course is an elective and the students choose to be in the class, so it is not an unbiased sample of students.  If it were up to me, a personal finance course would be required for all students.

Thanks for the discussion.

I think one thing that could be done is to help our school age children learn about money and budgeting, and long range planning; both in the schools and at home.  I don't know about other states, but here in California in my little corner of the world I don't think our kids get any training on how to budget or plan with their money.  However the first semester of college they are offered a free no charge credit card.  If the new student has had no "learning experience" on how to handle money, they immediately run up the account with no means to pay.

I really failed with my own kids on helping them handle money.  When they were young we did a good job of making them earn their allowance or special money they wanted; but we didn't put any effort on spending their money wisely.

Marsha~

I couldn't agree more Marsha.  Along with teaching how to manage/spend/use money we should teach them clearly that the government isn't here to give you a guarantee of financial security in your old age and it will be their responsibility to prepare for their retirement years.  In my little corner of the world, too many kids grew up thinking you only had to have a job until you turned 65 and then the government sent you SS "pension" checks for the rest of your life.  Now some constantly complain "how do 'they' expect us to live on such small SS checks?"

Rick

If it were up to me, a personal finance course would be required for all students.

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Definitely a course that is very much needed!  We've noticed many young people these days expect to buy a home as soon as they get married that is at least as nice and often better than what their parents have.  Goodness, we didn't get our first home until we'd been married seven years and it was definitely a fixer-upper at a manageable monthly payment.  We did most of the renovation ourselves.  We've also had a budget from the day we got married and it's really paid off in buying only what we could afford and now being able to have a comfortable retirement.  Meanwhile many of our friends who got married around the same time we did kept moving up with new houses every few years and running up huge credit card debt.  Many of those couples ended up in divorce.  They say the number one issue with married couples is money....  Thankfully, we've been in agreement on how we handle our finances and neither of us really wants a lot of fancy "stuff" we can't afford. 

ArdraF

Marsha...

Your experience with kids and money is probably very familiar to many of us on this great web site.  We had a boy and a girl.  DW took care of all of the girl-type training with Dad adding any necessary "tough love".  Daughter was raised to "shop" but not to handle money wisely.  I think that you folks can guess how that turned out.  The boy, OTOH, was trained in boy-type training with emphasis on discipline and money handling.  While son is 3 years younger than daughter and earns less,  he has $40k in his retirement plan while she has zip other than what her employer puts in. 

I agree that having a class in high school would be terrific.  This kind of info would be of WAY more use than learning how to put a condom on a cucumber.  Even if cukes do need safe sex, good financial info is of much greater importance to most people.  Info on earning money, paying taxes, handling checking and savings accounts, getting a loan, buying a house or car, etc. would all be good for high school age kids to know.

Additionally, we have all talked about money and inheritance.  Kids seem much more embarrassed to talk about such things than we are.  My Mom and Step-Dad are in their mid-80s and doing pretty well.  We talk about money and inheritance with them as well and it is always an open and frank discussion.  Both DW and I plus the folks know that death is inevitable.  None of us is cheering it on but are prepared for its financial aspects with wills and trusts to handle all distribution of folks and our estates.  This is the final lap in money management and WAY too many people either ignore it or put it off until it is too late.  Don't do that, guys and gals.  This is a very important step in financial planning and one that is all too easily botched.  Take care of it... and sooner rather than later.

SteelHeadR said:

Marsha...

Additionally, we have all talked about money and inheritance.  Kids seem much more embarrassed to talk about such things than we are.  My Mom and Step-Dad are in their mid-80s and doing pretty well.  We talk about money and inheritance with them as well and it is always an open and frank discussion.  Both DW and I plus the folks know that death is inevitable.  None of us is cheering it on but are prepared for its financial aspects with wills and trusts to handle all distribution of folks and our estates.  This is the final lap in money management and WAY too many people either ignore it or put it off until it is too late.  Don't do that, guys and gals.  This is a very important step in financial planning and one that is all too easily botched.  Take care of it... and sooner rather than later.

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Your advice to make financial plans as we go towards the final lap, as you say, is very good; and I totally agree,  I don't think many people do any preparing.  For one thing, like you mention, it's hard to talk about.  My husband and I have a trust with medical directives, powers of attorney and a will.  (We never talked about this with our parents.)  For me, I didn't want my sons to have to wade through all the mess of figuring things out.  They each have a 3 ring notebook with copies of everything we have done.  However, they really don't want to talk about any of it or even know about it.  (BTW, this discussion reminds me my husband and I need to go over everything to see if it's up to date).

I have an older uncle that just isn't taking care of things.  He has no children, never married and his wealth is close to 3  milliion dollars.  He has no trust, no will and no plans other than he wants it all to go to the University of Alabama.  Now I don't care if UofA gets it all; but they are gonna get a lot less if it all goes through probate and it will be tied up for years.  The state of Alabama will be making some $$$ on him.  I've talked to him about setting up a trust, making plans etc; but he is dragging his feet.  He says "ya...ya...I'll get it done and you can be the executor".  Well, he isn't doing anything about it and I'll probably get a call and have mess to deal with.

Back on to the planning part, I had heard that 75% of the baby boomers have no more than $75,000 saved for retirement which included 401s and retirement plans.

Marsha~

I just  took thinks one step at a time.  And I looked for great deals.  I'm 53 and just got a great deal on a 2004 F-350 diesel with only 38000 miles on it.  So I paid cash in hopes that it's that last vehicle I buy.  A few years earlier I did the same thing with  my 2005 Explorer.  Now I'm looking for the right RV and will pay cash for that as well.  I just sold my house and plan to go to full time RV living for at least a couple of years.  No debt, no worries.

bucks2 said:

So now I hear how lucky I was to have saved money? It wasn't luck, it was hard work.

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"The harder you work, the luckier you get."

That how I like to say it.

One other piece of financial advice a dear friend and supervisor gave me many years ago. It proved to be gold. While sitting around talking one night, the conversation came around to retirement one day, which was still a long way off for me.  He said that he and his wife had a plan. When he got within a few years of retirement they decided to practice living like they were retired. They figured out how much money that they would have when he retired (she didn't work).  They took that amount, and started living on it.  Everything else went into savings. Since they didn't plan on changing their life style upon retirement their expenses were easy to track.

The logic was that if he could live on that amount of money now, he could live on it later. I employed the same technique as I approached retirement. In my case I deposited all the extra funds into me and the wifes retirement accounts.  When we both retired the incoming funds were just the same as they had been the last few years. No major changes other than I didn't have to drive to work every day. And we don't pull from our retirement accounts in order to live day to day as we never got used to having the additional money to live on.

It was simple advice, but it has worked like a charm.

SargeW said:

to practice living like they were retired. They figured out how much money that they would have when he retired (she didn't work).  They took that amount, and started living on it.

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That is very good advice.  One of the problems people face when planning for retirement is trying to decide how much money they will need to live each year.  The rule of thumb is to figure 75% to 85% of the salary in the last working year (or years).  But, that is a wide range and a lot of people will not fall in that range.

Then again, given the low amount of savings by baby boomers (as mentioned previously in this discussion), many people will not be able to retire with an income any where near 75% of their working salary.

I have done some research to try to find reliable numbers for retirement savings for baby boomers and I have not found current numbers that I completely trust.  But, it appears that the number mentioned previously ($75,000) is probably close to correct.  I saw on study that stated the median net worth (assets minus liabilities) of baby boomers is around $125,000.  I assume that included the value of retirement savings and, if so, that number is shocking.

The standard of living in our country is probably going to decline.  Part of the problem is that we have exported (outsourced) too many jobs, but part of the problem is that we have been living at a standard that is beyond our means and have not been saving.  Take a look at the first graph in this site:  http://www.calculatedriskblog.com/2010/02/december-pce-and-saving-rate.html
  You can see that the savings rate as a percent of disposable income has been declining since the early 80's (with a small jump up recently).  Most college students in my classes were born in the middle of this decline and all that have known is an unsustainable, high standard of living. 
Delbert

Marsha/CA said:

I think one thing that could be done is to help our school age children learn about money and budgeting, and long range planning; both in the schools and at home.  I don't know about other states, but here in California in my little corner of the world I don't think our kids get any training on how to budget or plan with their money.  However the first semester of college they are offered a free no charge credit card.  If the new student has had no "learning experience" on how to handle money, they immediately run up the account with no means to pay.

I really failed with my own kids on helping them handle money.  When they were young we did a good job of making them earn their allowance or special money they wanted; but we didn't put any effort on spending their money wisely.

Marsha~

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I live in Ca and back when I was in high school I had a class about finances.  The high school I work at (Ca) also offer a "Personal Finance" class that address the subject as well as their Econ class. 

I think part of the problem is that many people really don't understand how long it takes to make the minimum payment for something or what the end cost is.  Another problem is that people are becoming more disconnected.  I am surprised at how many people have no clue to what the tax rate is (not even a general idea) and many HS students do not know their address or home phone number. 

It starts at home but ends with each person choices.  Students are becoming more disconnected especially with cell phones and texting.  Cell phones are a big problem in schools in general.  It is not uncommon for parents to send texts or even call their student during class time.