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Math, mutual funds are often comprised of stocks which can be risky principal investments for fixed income retirees. Take a look at Japan's stock market index over the last 25 years. It has lost 70% of its value since the peak in 1989 to today. I don't have time to elaborate on parallels and differences in Japanese and current US fiscal policy.
If you feel comfortable, so be it. I was trying to explain a Boomer's reasoning for working longer than expected in response to the original post.
Then there is inflation. We don't know what the next 20 years will hold for us but let's take the 20 year period between 1870 and 1990.
What cost $1.00 in 1970 would cost $3.37 in 1990. Also, if you were to buy exactly the same products in 1990 and 1970, they would cost you $1.00 and $0.30 respectively.
Budgeting a withdrawal rate of $1,000/mo to make up the gap between SS and what you need might start our right but what if that $1,000 is only worth $300 down the road?
What if you had half a million saved with the plan of "living" on the interest. @ 5% you would withdraw $2,000/mo but in 20 years that $2,000 might be worth only $600 while the half million you saved would have a worth of only $147,614.54. Not the big nest egg you thought it was. And what happens if you live 30 years into your 90's?
We have to work the financial future is to uncertain to make 20 year plans in my opinion. Even if you started retirement with a cool million (let's admit it, most of us never will) given the 30 year history between 1970 and 2000 that cool million would have a purchasing power of $220,436.15. Not hardly the cool million it once was.
On top of all this you want to take a guess at what inflation will be over the next 10 or 20 years?
Nicet4 always enjoy your posts. You make some good points. I think inflation will be a real issue over the next 20 years. Add to that most people have nowhere near a million saved, Say bye bye to retiree health benefits for most medicare has real funding issues. We had the S&L and junk bond thing in the 1980's. Then the dot com bust and our current issues. Lots of people lost a good part of their nest egg. The return for many in the stock market has been poor over the haul. Lots of pensions are way unfunded. With medical cost going nowhere but up. Most boomers just are not going to retire. And like an old prof told me in college some years ago. A million bucks is not what it use to be.
Putting all your money in investments is hardly "putting all your eggs in one basket." That's why you diversify the TYPE of investments/mutual funds/etc you have.
it's still putting them in one basket...diversified or not it's still in teh stock market. I much prefer a combination of stocks and CD's then hidden cash in a hidden fireproof box. I would never the stock market to keep all my money in ..hence, "all my eggs in one basket".
not necessarily, there are enough asset classes that dont move together that you can buy in funds or etfs that the diversification moves opposite equities.
i can give you 2 funds that actually turned a 45% loss in 2008 into a 5% gain and they arent funds that go against the market. they are just funds that invest in different asset classes......
Why not just replace federal tax and ss tax with a 401k type investment that can't be closed or borrowed against? And have a min % rate people can contribute?
As it is now SS tax doesn't cover anything and federal tax is a waste.
I get a smile reading how people expect to be working seniors because they haven't saved enough for a retirement with more than 20-30% of their income. The day will come for all of us, some may be in their 50s or more likely just after we reach 60. You will get called down to HR where the nice young 30 something HR person and in some cases a corporate executive (I merited the Senior VP for Technology) will say they are sorry you don't meet the expectations company has for an employee in your position and that it is time to end your relationship with the company. So sorry. In the few remaining minutes of your career you will sign the termination agreement, other legal documents, get whatever the company sees fit to give you and leave the premises. You are now retired.
I get a smile reading how people expect to be working seniors because they haven't saved enough for a retirement with more than 20-30% of their income. The day will come for all of us, some may be in their 50s or more likely just after we reach 60. You will get called down to HR where the nice young 30 something HR person and in some cases a corporate executive (I merited the Senior VP for Technology) will say they are sorry you don't meet the expectations company has for an employee in your position and that it is time to end your relationship with the company. So sorry. In the few remaining minutes of your career you will sign the termination agreement, other legal documents, get whatever the company sees fit to give you and leave the premises. You are now retired.
Nope, just canned. Luckily our benevolent coporations have provided a way for seniors to survive the above mentioned scenario:
working them til they are dead saves alota retirement money.
its a grime group of managers that think this stuff up.
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reading how people expect to be working seniors because they haven't saved enough for a retirement with more than 20-30% of their income. The day will come for all of us, some may be in their 50s or more likely just after we reach 60. You will get called down to HR where the nice young 30 something HR person and in some cases a corporate executive (I merited the Senior VP for Technology) will say they are sorry you don't meet the expectations company has for an employee in your position and that it is time to end your relationship with the company. So sorry. In the few remaining minutes of your career you will sign the termination agreement, other legal documents, get whatever the company sees fit to give you and leave the premises. You are now retired. 
