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February 27, 2008

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It shouldn't be all that hard to maintain the same level during retirement if I consider that:

1. I will no longer be making regular contributions to my ROTH or 401K or personal stock account. This is approximately 20% of my income.
2. My pension is approximately 33% of my income.
3. My mortgage will be paid off, which is approximately 15% of my income.
4. Social Security will be around 20% of my income.
5. I will no longer be contributing to my pension (2%).
6. My taxes will be lower since my taxable income is lower (5% savings)

This all adds up to 95% of my income not even including the withdrawals I will be making from my Roth, 401K, and personal stock account.

Based upon the directions of how to calculate your net worth:

"Non-liquid assets: ... Also include any real estate investments including the market value of your home."

This makes the numbers even more scary b/c it would seem that most people would over estimate the value of their home and, secondly, this would have to be considered an uber non-liquid asset today based upon the number of homes that remain unsold.

I'm with you - this is not a surpise at all - we've known this about pre-retirees for some time. What's surprising is that people in the pre-retiree age range (45-60) don't want to talk about it and won't ask for help!

My firm did focus groups with several individuals that planned to retire in the next ten years with $50,000 - $250,000 saved for retirement and most figure that between social security, their home, and the savings they have, "it will just all work out" and they will be able to enjoy "pretty much the same lifestyle."

Denial is a huge factor here. Those that are behind don't want to hear how far behind they are (or how many more years they will have to work), and those who have saved but made poor choices (invested in real estate, maxed out home equity, credit cards, etc), don't want to take responsibility for the bad shape they are in.

I've been saying for some time that things are going to get very ugly for American low-wage workers.

The people who complain about the homeless ain't seen nothing yet.

We are on the cusp of a pretty big turn toward socialism if the democrats are elected. Taxes will go up for higher wage earners, health care will be "universal", and government spending on social programs will increase. I think all of these occurrences will benefit the lower wage workers: lower outlays for health insurance, more unemployment benefits, and "pork" projects to employ displaced manufacturing jobs. My contrarian view is it will be Ok to be a bum with a low income. Maybe the government will make sure everyone is fed, clothed, and sheltered. Yikes!

AAktx

I think what you explained is not even close to socialism. "universal" health care is working rather successfully in many countrys in the world. It is not as bad as people think it is. Unemployment benefits is in need of a reform, but what is wrong with a tax payer who loses his job to collect benefits for awhile. As for the manurfacturing jobs it is the governments fault that these people those their jobs because of bad gov't policies. Some preventitive measures could have been taken in the auto sector for one. I do think that every politician should invest in a basic economic course before they ever suggest anything policy related.

I cannot wait to see some progress in terms of healthcare costs. We pay the most of out any country and we certainly don't have the best quality of care. So much of a health care provider's cost is simply administration. With so many insurance companies, it takes a lot of work and a lot of money to be able to work with so many, understand all their rules, methods, etc. Imagine how much money could be saved if there was just a single payer. If hospitals and clinics weren't so possessive of their patient data, there wouldn't need to be so many repeat vaccinations, x-rays, medical procedures, etc.

I have to disagree with your view that the government never/rarely makes healthcare better. There are a lot of government healthcare programs in place that are very effective. One thing I'm proud of is how with all these electronic health record systems, one of THE BEST was written by government employees, VistA. It beats a whole lot of commercial offerings. If you're in the VA medical system, you can go to any hospital or clinic in the system and they can pull up your electronic health record, labs, x-rays, etc. That's pretty rare out in the world of academic/private hospitals. I am in grad school with quite a number of VA employees. The government is investing in their people, and they're investing in the future of their medical systems.

I do agree that healthcare is a huge retirement problems. If it weren't for high and rising costs of healthcare, I'm sure my retirement would arrive MUCH sooner.

(quote)"universal" health care is working rather successfully in many countrys in the world(quote)

I think you need to look alittle closer at the so called "working" health care in other countries. Your statement simply is not true and I shudder to think we may have it forced upon us. Health care can be fixed very simply but it's a shame that not many are truly interested in doing so until it affects them.

aaktx so your saying that if you have a low paying job your a bum?

Despite conservative protestations that all honest gainful work is honorable, there is a lot of antipathy and hostility toward American low-wage workers.

In Ann Arbor, the Salvation Army wanted to open a rooming house for low-wage employed men who worked downtown (unless they were subsidized - e.g. college students with money from parents or financial aid - they could not afford to live in town and had to commute from elsewhere) and the neighborhood homeowners (led by a little old Republican lady) ran the idea out of town.

No, you are not a bum if you have a low-paying job. I am more concerned about the prevalent political attitude(among a certain political party) that the government is going to take care of us.

I think a lot of younger people (ie, me) forget about the pensions that some (not all) retirees will have.

Though I worry about my parents in retirement, knowing that my dad has a pension through his union comforts me.

If you think health care is expensive now, wait till it's free.

I think Americans are finally seeing through the conservative propaganda about government never making anything better, and the private sector always being superior. Has Social Security not made retirement better? Would we be better off without it? Should we privatize the fire and police departments? Shall we close the public libraries? Is your health insurance company efficient? All human endeavors are flawed, but reducing the profit motive in health care, just as we do for police and fire protection just makes sense except to those who are currently getting rich milking the present inherently corrupt system and to those who are blinded by ideology.

Don,

You forgot to mention the great government controlled schools we have that lag behind almost every other country.

Don --

Simply because something has made something else "better", does that make it a worthwhile investment/effort? For instance, I may go to the scene of a house fire and the house is engulfed in flames. My garden hose may make things "better", but does it really solve the problem? Nope, the house burns down anywhere.

Don't you think we could have better spent the billions (probably trillions) of dollars that have been poured into Social Security over the past decades? If anything, I'd argue that SS has given Americans a false sense of security -- that they feel they don't need to save for retirement because the government's got that covered.

I don't think SS has been a complete failure either, bit I think we could have done/could do a whole lot better.

FMF,

If the house burns down, your garden hose did not make anything better, that should be obvious. With Social Security we don't have to speculate about how things would be without it. There was a time before Social Security when old people lived in abject poverty and died sooner than they needed to. Do we really want to return to that kind of world, or do we want to build on the proven successes of government? The free market works for some things, and it doesn't work for other things. As for our public schools, sure they don't measure up to other countries' schools which are also public, by the way. The answer is not necessarily to privatize them all. If ideologues would occasionally admit that they don't have all the answers, I would have more respect for them, but then they wouldn't be good ideologues, would they?

Don --

Ha! ;-)

I'm not saying SS didn't help some, I'm just saying we might have gotten a better deal if we'd managed the situation differently.

And do you think SS has eliminated poverty or increased lifespans? I don't.

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