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Old 04-29-2014, 06:50 AM
 
Location: Central Massachusetts
4,800 posts, read 4,855,118 times
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http://www.pekintimes.com/article/20...429905/-1/news

Pretty decent article here. No great insight, no magic, no revelations, just a bit of sound advice. A bit of note here. The author is in Illinois and has information in the article for those that work in Ill.

Quote:
Earlier this month, the Illinois Senate voted for something similar, called the Illinois Secure Choice Savings Plan. It would allow participation by workers at companies with more than 25 employees that do not offer a retirement plan.
“This does not cost an employer anything other than to do a little bit of paperwork,” says state Sen. David Koehler. “It’s right there for working middle class people.”
Anyway I had posted on the forum about the president's version but this could be an even better option if people in Illinois go with it.

In another thread someone posted that anyone making 20k a year should not be saving anything. I disagree and my point here is every little be helps. Yes they said that they should focus on trying to get ahead in a better career. But in the meantime start. A sum of 3500 in an index fund left to grow could end up being worth near to 200k or more. Yes that takes time but time is what is the key factor.

Just remember George Banks in "Mary Poppins".

Last edited by oldsoldier1976; 04-29-2014 at 06:59 AM.. Reason: left out my comments.
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Old 04-29-2014, 07:42 AM
 
Location: Tennessee
23,650 posts, read 17,615,071 times
Reputation: 27728
This is what is really alarming.

Last summer, the National Institute on Retirement Savings issued “The Retirement Savings Crisis: Is it Worse than We Think?” and answered its own question with a resounding yes. Almost one-third of households from 55 to 64 years of age have no retirement savings; those who do have a median of just $12,000 saved. Include all working households from 25 to 64 years of age and 45 percent have no retirement savings; those who do have a median $3,000 saved.

If a third have no savings at all, that's frightening. Did they simply put off planning? Were they so financially strapped they couldn't save? It would logically follow that these people may have other forms of debt lingering and probably don't have a great income anyway. These people have little to no time to catch up - the ship has already sailed for them. IMO, the best they can do is keep working, try and keep their incomes as high as they can, and continue working and proceeding as normally as possible during their retirement years. These people are going to die at their desks.

This here also has me scratching my head.

She may not be able to predict the next 20 years, but she can offer an example from the last 20. Baecker knows a teacher who had saved $3,500 in an account at a former employer. Rather than cash it in, the teacher invested the money when she moved on to other jobs. “That $3,500, over time, has amassed to about $170,000,” she says.

Turning $3,500 into $170k is amazing. Look at the S&P 500 valuation from 1994.

1994 S&P 500 Historical Prices / Charts (CME) - Historical Commodity Futures Charts

This morning the S&P is at 1877.

That's roughly a four times gain, but this person apparently had a 48.5x gain. Had this person invested $17.5k, they would have $850k, assuming pro rata gains.

I don't buy this.

And...

Even being a millionaire isn’t what it used to be. A small pension and $1 million in the bank would put you way ahead of most Baby Boomers, but may not be enough.

When a third have nothing saved, why are we even concerned that a "pension and a million" may not be enough? According to the below, little more than 1% of Americans are millionaires when the primary residence is excluded. Someone with a "pension and a million" is a 1%er. If the 1% don't have enough, what will be enough?

https://www.worldwealthreport.com/re...th_america/usa
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Old 04-29-2014, 08:50 AM
 
Location: Glenbogle
730 posts, read 1,028,761 times
Reputation: 1046
Quote:
Originally Posted by Emigrations View Post
When a third have nothing saved, why are we even concerned that a "pension and a million" may not be enough?
Exactly!

So what these articles are saying is, essentially, that if you are not currently in a position to sock away what is GUARANTEED (ha!!) to evolve into several million dollars by the time you retire, you will probably have a miserable old age.

Charming.

Last edited by Never2L8; 04-29-2014 at 09:10 AM..
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Old 04-29-2014, 09:01 AM
 
Location: Central Massachusetts
4,800 posts, read 4,855,118 times
Reputation: 6379
Interesting points.

Let's take them one at a time. If someone is just starting to save and they are in their 50's they are in trouble. Someone in their 40's can make it given a lifestyle change. Someone in their 30's needs to start now. Lastly someone in their 20's should begin to plan. So your first point if they haven't started they need to work forever is valid and probably will happen but if they dont do anything they will still be left with zero. In my book something is always better then nothing.


Second you are not taking into account the length of time. Sure they didn't specify a time frame but money invested in say 1976 and kept until now would be quite a nice tidy sum in the S&P index just as an example. Your growth of 4 times is misleading.

Last point I do agree. It is very scary and most people will not have 1 milion saved and if the next generation doesn't consider this important they will be in even worse shape. That is why we need to talk to our kids and help them learn. Let's not just throw our hands up in the air and say nothing can be done. Something always can be done. Do not have a defeatist attitude as the closing line in the article I posted said.
Quote:
“‘Failing to plan is planning to fail’.”
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Old 04-29-2014, 09:14 AM
 
Location: Glenbogle
730 posts, read 1,028,761 times
Reputation: 1046
Also, I notice that the first quote specifies that "working households" were surveyed.

What about all the households where the person is currently unemployed as a result of the economy?

I'd like to see the same survey done by including both "working" and "currently non-working" households. I bet that 33% would be a lot higher under those circumstances and be more reflective of reality.
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Old 04-29-2014, 09:27 AM
 
Location: Central Massachusetts
4,800 posts, read 4,855,118 times
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Quote:
Originally Posted by StressedOutNYer View Post
Also, I notice that the first quote specifies that "working households" were surveyed.

What about all the households where the person is currently unemployed as a result of the economy?

I'd like to see the same survey done by including both "working" and "currently non-working" households. I bet that 33% would be a lot higher under those circumstances and be more reflective of reality.
Not sure but your point is taken. Still why just throw in the towel. But I will not. I beleive that things do have to get better. If not for this generation but the next. If not that one then the next. It is not my nature to give up. Even to the last breath I will not give up. The message needs to go out that you can make a difference. I firmly believe that.

PS your comments made me take a look. Here is an extreme example using real returns. Picking perfectly a different company each day from the S&P 500 individually would net more money then you can possibly imagine. http://qz.com/157404/how-you-could-h...500-this-year/ Of course you would have had to pick perfectly and investing in individual stocks is not a good idea. The example though shows that the investment can grow.

Last edited by oldsoldier1976; 04-29-2014 at 09:42 AM.. Reason: adding a link
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Old 04-29-2014, 09:33 AM
 
Location: Tennessee
23,650 posts, read 17,615,071 times
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Quote:
Originally Posted by golfingduo View Post
Interesting points.

Let's take them one at a time. If someone is just starting to save and they are in their 50's they are in trouble. Someone in their 40's can make it given a lifestyle change. Someone in their 30's needs to start now. Lastly someone in their 20's should begin to plan. So your first point if they haven't started they need to work forever is valid and probably will happen but if they dont do anything they will still be left with zero. In my book something is always better then nothing.


Second you are not taking into account the length of time. Sure they didn't specify a time frame but money invested in say 1976 and kept until now would be quite a nice tidy sum in the S&P index just as an example. Your growth of 4 times is misleading.

Last point I do agree. It is very scary and most people will not have 1 milion saved and if the next generation doesn't consider this important they will be in even worse shape. That is why we need to talk to our kids and help them learn. Let's not just throw our hands up in the air and say nothing can be done. Something always can be done. Do not have a defeatist attitude as the closing line in the article I posted said.
After rereading the $3,500 to $170,000 deal, it looks like this was just an example the person saw over the last twenty years, and not the length of time required to make that kind of gain.

I was making assumptions on the financial health of the people, but we don't know this. Some of them probably are debt-free and can live on just SS or part-time work. Even as a single guy, if I was debt free, I could easily live on $2k/month - which I could probably round up with PT work and SS. If you have a man and a wife going into their 60s debt-free and they have reasonably frugal tastes, they won't need a million, or probably anywhere near it.

My dad's parents were always reasonably low income, but have been debt-free for years. They drive a 1998 300 series Chrysler gifted to them by my uncle. They don't have expensive travel tastes. They don't golf. He's had an appliance repair business for years and still makes a little money on the side. She's worked in in-home health care and still does that occasionally. They don't have a lot, but they aren't hurting. If you looked at traditional retirement planning scenarios, FPs would say they are in a "crisis," but they really aren't because their expectations are not lofty. They've been doing the same things they've done for years, and I'd say their financial situation has improved since he got sober a few years back.

People spill lots of ink and brainpower over retirement planning, but the goal is really quite simple - have enough money to live how you want. Whether people get there through personal savings, SS, continuing to work, etc, any combination thereof will do the trick as long as more is coming in than is going out.
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Old 04-29-2014, 10:02 AM
 
Location: Florida -
8,767 posts, read 10,859,665 times
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Everyone will eventually stop working (retire) at some point, due to either choice or necessity. At that point, Everyone will either learn or continue to live 'with their means' or based on whatever savings or income they have. Retirement planning is simply an attempt to mitigate the uncertainty of one's retirement finances ... at a time when it can still be changed.

"Retirement Planners" don't need a crystal ball, because they only tell people what they know, but, have been ignoring/avoiding: "You must stop spending everything and save toward retirement while you can" ... and "Invested money earns more than money buried in the backyard." The charts and graphs only illustrate the obvious and help Advisers 'sell' their financial advice and products.

I'm all for both Financial and Retirement Planning, but, it's not the 'magic bullet' or 'rocket science' that many imagine. -- It's like being overweight! ... The answer is always: "You must stop over-eating and get some exercise."

Last edited by jghorton; 04-29-2014 at 10:12 AM..
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Old 04-29-2014, 10:05 AM
 
741 posts, read 642,319 times
Reputation: 576
Quote:
Originally Posted by jghorton View Post
All of the charts and graphs only emphasize the obvious and help them 'sell' their financial products or solutions.
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Old 04-29-2014, 10:15 AM
 
Location: Central Massachusetts
4,800 posts, read 4,855,118 times
Reputation: 6379
Quote:
Originally Posted by jghorton View Post
Everyone will eventually stop working (retire) at some point, due to either choice or necessity. At that point, Everyone will either learn or continue to live 'with their means' or based on whatever savings or income they have. Retirement planning is simply an attempt to mitigate the uncertainty of one's retirement finances ... at a time when it can still be changed.

"Retirement Planners" don't need a crystal ball, because they only tell people what they know, but, have been ignoring/avoiding: "You must stop spending everything and save toward retirement while you can" ... and "Invested money earns more than money buried in the backyard." The charts and graphs only illustrate the problem and help Advisers 'sell' financial advice and products.

I'm all for both Financial and Retirement Planning, but, it's not the 'magic bullet' or 'rocket science' that many imagine. -- It's like being overweight! ... The answer is always: "You must stop over-eating and get some exercise."
I completely agree that it is not the magic bullet nor is it rocket science. I disagree that in the articles that are posted here that someone is trying to sell anything. In fact the only thing I see from them is

start early
pay yourself first
enjoy life but dont forget to plan
and that last line I put in on my post Failing to plan is planning to fail.
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