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what you have to remember is when you retire you have an idea of what you need to withdraw from your nest egg. you also need to be able to take a 3% raise every year to account for inflation.
depending on the amount you need most folks who survive off their nest eggs and have no pension cant do it unless they invest their money that they wont need for 10 or 15 years..
if they dont they will be broke anyway so they might as well take the very slight chance we will be a japan.
remember also that for folks who retired in 2000 drawing the typical inflation adjusted safe withdrawl rate they have already spend down 80% of their savings and will be broke in just 8 years. thats because there were no market gains unless you were diversified. thats why the market gains on your long term money is still so important even at retirement.
Some poeple advise that it's good to put most of your money in the stock of the company you work for (IOW, b/c you work there, you are desirous for them to do well).
So Funny. That's how my brother-in-law lost 90% of his 401K when the company he worked for filed for bankruptcy. He was laid off about a year later. At 60. His job prospects are negligible and retirement looks like it's going to be pretty much poverty level but hey, go for it. Maybe it'll work for you.
The big issue is not whether the boomers retire or continue working, either way they will cut their spending dramatically from when they were in their 30s & 40's with their expensive kids and new technology to buy.
The days of the debt fueled boomer spending spree are over, we now need to rely on the 30 and 40 something Gen-X to spend 120% of their income on consumerism. Unfortunately they can't borrow the other 20% and the government will have a larger take of the remaining 100%, plus there is just not as many of them as there were the boomers.
The boomers don't need to stop working, there is not a fixed number of jobs in the economy. The only issue here is that often the boomers take up the top positions in companies and by not retiring they prevent younger workers from getting promoted. The younger workers need to stop complaining though and show that they can perform better than the geezers.
Also, its not like boomers don't have problems either. The boomer cohort is finding it the most difficult to get jobs right now. So, although the employed boomers may be sitting pretty their unemployed counterparts have it real bad. Generally, businesses don't want to hire geezers.
Bad suggestion..putting all your nest egg money in your company.
It's ok to buy company stock on the side through an employee purchase plan.
I've done that..stock at 85% of the market price and then sell later on when you are allowed or let accumulate if your company is doing well.
But I've never put my 401K money into stock of my company..never.
Hindsight2020 good post as always you made good points. See the issue is we are not going back. Things are not going back to the way they were. Everyone has too much debt it will take years to pay off. The Fed has so much bad debt it will never pay it off. Add in local and state debt they are all broke. Washington will bail them out at some point. Adding even more to the picture. There will be growth it just will not be in the US. We cost too much in the eyes of business. They could less about the US worker. Why pay some guy in the US 100k to be a engineer. Do the work in India for 25k. They are bringing tons of H1Bs in and killing IT. They are bringing H1B pharmacists as well. Sending legal work to India. So if high level jobs can be sent overseas or bring someone over. Then why would anybody think things are going to come around? Most boomers have very little in the way of a nest egg. Most were counting on their homes to bail them out. That is not going to happen. I read not too long ago a neat fact. Those 55 to 64 on average had less then 70k in their 401k. Retirement forgot about that most will be working till they are dead.
This is probably not going to last much longer. If you look at Reagan's first term, his poll #s were in the dumps also due to the economy, in his 2nd yr in office. But then the economy turned around and we all know what happened--the economic miracle.
Last edited by stars99; 08-29-2010 at 05:49 AM..
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