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August 29, 2014


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Part-time work and Social Security is an OK retirement plan, especially if fixed expenses (house and car) are low, you're in a low cost of living area and medical health is OK. It's not a life of leisure, but it's not the worst. Many of my older relatives are in this boat and they get by very well and are comfortable.

Not sure that the goal of generating 80% of current income off of financial / RE assets while never touching principal is achievable or even desirable. We intend to spend down our nest egg substantially in our 50s-70s.

I keep hearing about the crisis of social security but have only found a couple good articles that have a lot of facts and numbers in them that discuss the future of the program. Is there anyone out there that can link to good unbiased articles about the future of social security? I understand no one can predict what is going to happen with Social Security, but certainly there is a bit more of consensus about the availability of funding and other issues. I seem to only read horror stories or "everything will be fine" predictions, but no actual facts and math associated with it.

We have saved assiduously and have built up a large nest-egg (for our age).

I worry that, in the next 20-30 years, the government will find it easier to find a way to tax that savings away to fund social security than face down the legions of angry AARP members who want a handout for 30 years.

It's not clear what the answer is. Start hiding gold bullion "off the books" in the basement? Expatriate ASAP?

What was retirement like 200 or 2000 year ago?

I keep reading that the labor participation rate is declining. At some point, it isn't sustainable for the minority to be producers and the majority to be consumers. Since people are living longer, I think the social security eligibility age should be increased slightly in a series of small increments. Furthermore, too many people are drawing disability that are in their prime working years, but that's another story.

Retirement has become a generational problem.

The greatest generation, those that were adults during WWII, and most of whom are now deceased, had a good retirement thanks to their depression era parents instilling good money values into them.

Their children, my generation, had good role models, were savers and are now my age, which is 80 next month. We retired in 1992 and have had and are still enjoying a very comfortable and worry free retirement.

Our children, now 56, 54, and 51 are also savers, have high net worths, minimal debt, will also be our beneficaries, and should have a great retirement.

Now we come to our grandchildren, now 26, 24, 23, and 14.
They are spenders not savers, live for today, and I guarantee that retirement is not something they give much thought to. Hopefully their parents will leave them something when the time comes.

30saver, Its hard to find truely unbiased information. The actuary report from the Social Security administration is probably the closest to raw facts you'll find :
But its dry and not too simple.

Basic points :
* The social security trust funds will be depleted by 2034 based on current assumptions.
* At that point taxes will give enough money to cover about 70% of the expenses.
* If they raise taxes or cut benefits or some combination of both they can make the system solvent for another 75 years.

Note this is all based on projections decades into the future and of course that can all change.

What makes things even more scary is the shortfall in Medicare funding. Many retires are likely to face lower than expected social security benefits as well as much higher healthcare costs, yet have minimal personal savings to offset a much different scenario than what is faced by today's retirees. We have the potential for a "perfect storm".

I envision most of these folks won't live comfortably. Period. That is likely to mean they won't be taking vacations to Europe, they won't be able to golf everyday, they won't be able to buy into a resort community. Instead they will have Social Security and some amount of savings they put together in the decade before they retired. They will likely have a home they will sell, or if they are lucky, are mortgage free and they can pay on or downsize from to live relatively simply. Their vacations will be whenever and wherever their kids choose to take them to, or there will be no significant vacations. They may need to work into retirement. There will certainly be those who can't work because of physical issues. I see many of them getting their acts together later in life and creating some kind of reasonable, if not exciting, way of getting buy. I'm seeing it with sibling-in-laws in their 40's now who suddenly are seeing retirement as something they have to plan for.

I think most people are screwed because they are so busy living for today they are not saving for tomorrow. So many people I know are not only not saving but are saddling themselves with unbelievable amounts of debt. They spend money on kitchen remodels, beach condos, expensive schools for their kids, vacations they can't afford, etc. These are people in their fifties and beyond.

I have to admit that I never did any real retirement planning while I was working, we did however add to our savings every single month and I always put the maximum amount possible into my 401K. My wife worked for the local school district and did likewise for her pension plan.

My decision to retire at age 58 was directly the result of my aerospace company offering a one time "Salaried Incentive Retirement Plan" that in my case amounted to a week's pay for every year of service (32 in my case). They also had a consulting company offer all of us (+ wives) a weekend course that went over lots of valuable information pertaining to retirement.

We used the unexpected lump sum payment to pay off the debt on our home and to be able to retire debt free.

Soon after I retired I subscribed to an investment service that I found out about in the WSJ newspaper that provided a database of funds & indexes, updated daily. They also provided a very comprehensive set of analytical tools. I got up-to speed on their system ASAP and at the urging of other subscribers started generating computer modules that provided analytic functions that the company didn't yet have. Intially I gave my modules away freely to other subscribers but as my own software grew I eventually produced a large program of my own that did many things that the company didn't offer. I then produced a comprehensive, large manual describing its capabilities and eventually sold 1602 copies at a handsome price. Eventually many years later Microsoft changed their operating system and rather than spend at least a year redoing it all I turned it over to the company free of charge. By then I had little use for it myself because I had switched my investment entirely into the purchase of individual bonds.

Thus my retirement worked out exceptionally well for me but it was all unplanned. I just followed my intuition and used the engineering and software design knowledge and experience gained during my career. None of this would have been possible however without the encouragement and support of the owner of the database software who has become a good friend.

As with lots of ventures, timing is everything, and as things transpired the bubble couldn't have come along at a better time.

OldLimey, you keep telling the same story over and over again as if it has a pearl of wisdom for any one else. You got lucky and (accidentally) timed the market very well. The only real wisdom you have to share is that saving aggressively helped, but you always treat that as an afterthought to timing the market. Please stop bragging and actually share things that others can replicate (like going into a well paying career like engineering).

Paul, interesting factoid in this week's Barron's -- only 0.4% of prime working-age (25-54) males collect more than $50K in non-wage passive income per annum. One third of these exceed 100K. The article was trying to explain the drop in emratio over the past half century, and this tidbit was raised to show how little growth in FIRE accounts for it. There's probably an exponential ramp between age cohorts, maybe something like nearly zero for 25-34, 0.2% for 35-44, and 1% for 45-54? If this is right, this small of a percentage this close to full retirement age suggests to me that most Americans won't be retiring as early or as comfortably as they like.

Well, if everbody had plenty of dough then who is going to work?

Why save for retirement when the government is going to step in and bail out everyone who didn't save for it, at the cost of those who did.

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