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She is likely making at least $2,000/month take home to sit around and do nothing. That is what "retirement" is, sitting around and being unproductive. Humans living a "retirement" is a relatively new concept in terms of human history. Decades ago, retirement was something people did because many seemed to have their health decline soon after, if not pass away within years. Social security was set up as a way to keep people feed for about five years of their life. Now the entire system is screwed up, with baby boomers thinking they are owed some grandiose retirement lifestyle, that retired life should be no different than life when they were working: Same amount of vacations, don't worry about not having home paid off, buying new cars every four or so years, etc.. Some folks do get it, but others don't, and are appalled they have to seriously cut back their living expenses or go back to work.
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What is this nonsense? Retirement is not new. It just changes. Do agrarian societies have large numbers of children for fun? Do you think that back in the day a farmer busted his ass in his 60's just like he did in his 30's? Or did his children take over most of the manual work while the older farmer moved into more of a management/consulting position for his children?
Most people are entitled to their retirement. Are they entitled to a certain lifestyle? No.
Pensions, 401k's, and SS aren't freebies for most. These things were all paid for. Either as taxes or as part of compensation packages.
[Are public pensions vastly over-inflated? Yes. However, they were part of the compensation package of the employees. Blame the bureaucrats. ]
I come here and read the forums pretty much on a daily basis. I see people paying off $40K cars, putting money into stocks, roth IRAs, planning to retire at 55 and the like. I just turned 31 which based on the current SS requirement I have 36 more years to work to get my max benefit and will probably be changed to 70, so 39! That's more than my entire life! I can't see retiring at 55, not only financially, but I like to work. Not like to work as in if I won $100 million I would continue to go, but I like the routine of it.
Right now our financial situation is tight. My GF and I live together. We rent. I have a good job, she's struggling to get a decent job. I pay most of the expenses in the house, her income goes to debt, mostly education expenses and some medical (since she doesn't have insurance through her job). We've stayed in Florida where the job market isn't that great for her for my sake, I wanted to get some tenure at my job. Now, she's looking everywhere in Florida and out of state, but we know how the job market is. She just got a job working for a restaurant and the group that owns them is headquartered here, so she will try to get into corporate after being in the restaurant for a few months. If she got a decent paying job with benefits, we could kill out debt in 2 years tops.
Anyway, after rent, bills, car, food and entertainment we have $300 left over each month. I put that in savings because if it's not one thing, it's another. This month alone I needed $400 for an MRI (my insurance deductible) and $400 for new car tires (I've ridden them as far as they can go).
I max out my 401K contribution, I have $20K in savings (cash in a savings account). Since our financial situation is fragile, I don't want to invest that money, I need it in cash right now. I'm thinking of paying off my car in Jan 2014 with $5K savings and I need the other $5K for a medical procedure this year. So I'll be down to $10K, plus whatever I'm able to save this year.
My GF's mom retired and lives on $1600 SS and pension combined, no savings. That's depressing too.
I'm in Finance myself, so I'm not having issues with money management, just the idea that this is going to go on forever, and in the end, I'll collect my $1600 check and ride the bus. I know the key is to stay out of debt, but sometimes you can't help it. Most our debt is education debt. I do have a car, but I need it to get to work. I didn't want to buy used because I had a bad experience and I just wanted to have a car from start to finish. I'm hoping to pay it off in 4 years and drive it for 10 total. I take care of it well. Our other car is used.
I'm just so frustrated with the economic situation and the future outlook. The idiots in Washington don't care and will play with people's money like it's fake monopoly money. Sometimes I just want to quit everything, file bankruptcy and start over. Of course I can't do that because since I work in Finance, I will never be able to find another job. Sigh!
I am 42, but I sympathize. I think the bottom line is you need to have a certain level of detachment so that you can live with 2 different mindsets at the same time. Quite frankly, I wouldn't be surprised to see a complete financial collapse between now and the time I'm supposed to retire. As you say, the politicians in Washington play with our money like it's fake monopoly money.
So...I do the things I know are reasonable and responsible financially...because ultimately being financially stupid doesn't really make anyone happy anyway. And at the same time, I have my eyes and ears open. I know the current paradigm we're living in could totally collapse...and ultimately, despite the horrific pain it would inflict, it might actually be a much healthier option for all in the long run.
We will never get all the goodies that the boomers got and that's all there is to it. They got theirs and now their message to us is "suck it up kid"!
Yep. That's pretty much always been their philosophy (collectively speaking). Divorce? No problem, the kids are resilient and will be happy as long as I am happy (despite plenty of academic evidence to the contrary). Health care costs? Who cares if we're obese oldsters who didn't take care of ourselves...the government has an endless supply of money to spend on health care, etc.
In 2011, the three major entitlement programs -- Medicare, Medicaid and Social Security -- accounted for 44% of non-interest government spending, up from 30% in 1980. According to Credit Suisse estimates, the way things are going, by 2025, spending on these programs, plus interest on the debt, will take up 100% of tax revenues.
It's the cost of medical care for everybody -- not just Medicare and Medicaid recipients -- that threatens to sink the US economy. Pre-Medicare medical insurance is becoming outrageously expensive for employers and employees because hospital and pharmaceutical prices are becoming outrageous. Nothing can or will be done because of the enormous political power of vested commercial interests.
I've known as far back as can remember than SS is not a retirement plan. That is is ONLY a supplement to retirement and to not count on it for full support. Imo, it is less likely to cause a problem if a person doesn't depend on it. I don't live beyond my means. I hear others say they have to have this or that, but, I suspect if we went over what they have to have, they would discover they don't have to have it. I think I have to have cable tv, but, if it strained my budget, I wouldn't have it. I would hate to give up hi-speed internet, but, I could if I didn't have any business having it. I would like to be really wealthy, but, I'm not and I don't think for one minute those who are should share with me. My parents started with zero, but, they were educated and smart and they worked hard all their lives. My dad noticed men often died 2 years after retiring, so he determined not to do that. He kept busy and didn't sit in front of a tv. It worked. I seriously doubt he daydreamed about social security for 2 seconds during his life, nor, did he think all he needed to do is make just so much to go with the wonderful SS in his future.
I've been struggling with this type of stress since my early 20's and no longer care. My savings are diversified, and I have no imminent concerns nor any foreseeable worries. I have plenty of time to meet my financial goals as it is still early in the year.
Find a means of cutting down expenses or create an additional form of income.
OP. Stop worrying so much and selling yourself short. I would try and establish some healthy boundaries between you and the GF's mom. That's her shartstorm, not yours.
You have a good head on your shoulders. Sounds like you could use a little wind in your sails.
What is this nonsense? Retirement is not new. It just changes. Do agrarian societies have large numbers of children for fun? Do you think that back in the day a farmer busted his ass in his 60's just like he did in his 30's? Or did his children take over most of the manual work while the older farmer moved into more of a management/consulting position for his children?
Most people are entitled to their retirement. Are they entitled to a certain lifestyle? No.
Pensions, 401k's, and SS aren't freebies for most. These things were all paid for. Either as taxes or as part of compensation packages.
[Are public pensions vastly over-inflated? Yes. However, they were part of the compensation package of the employees. Blame the bureaucrats. ]
I disagree about retirement, as it is currently defined and thought of today. For many, it is the ability to retire around age 60, live until 80 something under normal conditions, and have nothing but enjoyment and fun for those 20+ years. The enjoyment and fun for many means spending money and have zero lifestyle change. This means an equal amount of vacations as if the person was working, or more. The same number of weekend getaways or more. Spending the same on Christmas gifts for kids and grand kids. Continuing to drive a newer vehicle, and spending the same amount of money on said vehicle.
I think for most of human history, retirement was a time when one was physically unable to work, yet likely could still live a relative functional life. In most cases, family took care of these individuals, but these folks could also watch the grand kids, cook, help with gathering wood, grow food, do some shopping, etc..
The vastly over-inflated public pensions are going to go away. Governments can only tax the productive class so much. Unless the billionaires and upper six-figure millionaires are going to voluntarily given huge % of their net worth to bailout pensions, the bulk of the funding will fall upon the middle and upper middle class. I've seen tax protest and riots. The best way to get the productive class to join the consumption class (ie: Those living on various forms of welfare), is to take more and more of the fruits of their labors. We are already seeing cuts in public pensions, and it is only a start of what is to come.
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