Stupid boomers; how is this possible?

Regardless of generation or age, a rather large percentage of people do not understand financial investing nor have any type of plan. It's not taught in schools and what is taught in various avenues is mostly by people looking to earn a 12B-1 fee or something similar. Ask a person what compound interest does for you or give them the "penny a day and double it" quiz and you'll be surprised by the current answers you get.

Unfortunately, quite a few people follow the herd when it comes to their own retirement and end up either working to 70 or worse. Same goes when the market is unsettled. In 2008 I saw half the guys at my day job shift pull their money out when the market tanked. No amount of convincing would change their minds. But while people are fast to point fingers it boils down to the person in the mirror every morning.
 
Last edited:
If I wind up paying “too much” in taxes in retirement, then It will be because I’m doing well enough to pay taxes.

After my father died, my mother didn’t pay taxes anymore because she generally had a negative net income.
 
weilke said:
Make sure that in all of the scenarios you dont lose the forest for the trees and reduce your overall cash available due to the desire to 'save taxes'.
Click to expand...

Yep, that’s exactly what I want to be able to figure out.
 
455 Bravo Uniform said:
Thanks for the benefit of the doubt, lol!

What I was meaning is that by pulling the retirement ripcord sooner, my combined monthly income from SS, pension, and mandatory 401k/IRA withdrawals will not hit the next margin and thus stay at a lower tax when it’s eventually taken out (stays in and continues to grow tax free, and gets taxed at a lower marginal rate because I took SS and pension earlier than normal). I think I can make a couple Excel scenarios, but I need to figure out the various time triggers and subsequently the benefit payment amounts. The pensions (2) and SS will be easy to calculate totals, it’s the 401k and IRAs that I need to study when withdrawals can or need to start.
Click to expand...
you're not better off taking pension and "SS" earlier. It's probably already too late to start taking withdrawals just small enough to keep your tax bracket the same, yet draw down your 401K enough that your mandatory minimum distribution doesn't push you into the next higher bracket. (Un)Fortunately, my IRA passed that mark before I could withdraw money penalty free, so I'm not worried about it. Just remember, paying taxes means you're making money.

I started my financial education with "The Only Other Investment Guide You'll Ever Nee d" . "Ric" Edlemann's The Truth About Money is a great guide,especially if you're just starting out. He has a radio pprogram of the same name. He has a book "The Squirrel Manifesto "for younger children. William Bernstein has a number of books centered around Modern Portfolio Theory, but it turns out the less often you rebalance the better your returns, and the.limit is never.

it should be possible to set up a trust that limits withdrawals to 4%a year.
 
bflynn said:
If I wind up paying “too much” in taxes in retirement, then It will be because I’m doing well enough to pay taxes.
Click to expand...
If I find myself paying too much in taxes in retirement, it means I didn't move out of one of the worst states in the country for taxing retirement income.
 
One of the sayings I got told some years ago was "Pay yourself first." The point is, put away the money that you need for your savings, and then budget from that afterwards. Most people do it the opposite way - spend money and then look at whatever's leftover for saving. If you do that, most never save because "Oh, there's money in the bank account."

I was already doing this but it's a good way of explaining it. My contribution to my 401k and the company ESPP are non-negotiable, those are the first items that come out of my paycheck. I then have what's leftover for the other expenses.

Now, understood, like most people on here I make a good living and there are people in lower brackets for whom saving is really difficult. However, I have some friends who are below the poverty line and they manage to budget and save... and that includes a heafty cigarette and alcohol portion of their budget.
 
Well, I feel better about where we are at. I'm pretty sure my wife and I don't make much compared to most of the people here, but at 29 and 26 years old, we already consistently contribute to a Roth each month, and have done so since we started our big kid jobs. I've always lived by the idea of saving first and spending what's left.

Someone above posted about whether retirees drawing down there accounts would tank the markets. I would think not significantly since most of their nest egg would (hopefully) be out of equities that near to retirement. Whereas at my age, I only invest in equities at this time as I have time to recoup any losses.
 
Ronnie Godfrey said:
Well, I feel better about where we are at. I'm pretty sure my wife and I don't make much compared to most of the people here, but at 29 and 26 years old, we already consistently contribute to a Roth each month, and have done so since we started our big kid jobs. I've always lived by the idea of saving first and spending what's left.
Click to expand...
I suspect you're already way ahead of most of your peers.
 
DaleB said:
I suspect you're already way ahead of most of your peers.
Click to expand...
And, most likely, there will come a time when your annual growth will exceed your contributions. The next milestone will be when the growth excess your an Hal income .I suggest you read The Truth About Mkney. It's very helpful for young couples and debunks some widely held be!let's .
 
Hacker said:
Berkshire Hathaway is in Omaha.
Click to expand...
thatsthejoke.jpg
 
SoonerAviator said:
thatsthejoke.jpg
Click to expand...
Thanks, but not quite a joke.

When I started with Avago, it was a spin-off from HP by way of Lucent Technologies. A year after I started, it went public.
About a year later, the CEO started acquiring companies with complementary products and weak management. He turned those businesses around and grew those companies while growing the core company. About 3-1/4 years ago, Avago bought Broadcom, and changed its name to Broadcom, Ltd.

The acquisitions have been good for the share price. It went public at $10.65 (close) and yesterday closed over $305. I've lost track of all of its acquisitions, and I guess a few companies were sold when they didn't fit with the corporate vision. I was laid off when my division was sold to a Chinese contract manufacturer.

When I started, Avago had a meager selection of funds to choose from, and the 401K brokerage link option. I chose that, and for quite a while that was where I put my 401K
contributions. As they acquired new companies, they brought in those companies' 401K choices until there was a cornucopia of choices, and I started using the 401K funds. I got the same asset classes and no transaction costs. These were institutional funds, so their costs were equivalent to those of the ETFs I bought in the brokerage account.
 
Last edited:
Crashnburn said:
Thanks, but not quite a joke.

When I started with Avago, it was a spin-off from HP by way of Lucent Technologies. A year after I started, it went public.
About a year later, the CEO started acquiring companies with complementary products and weak management. He turned those businesses around and grew those companies while growing the core company. About 3-1/4 years ago, Avago bought Broadcom, and changed its name to Broadcom, Ltd.

The acquisitions have been good for the share price. It went public at $10.65 (close) and yesterday closed over $305. I've lost track of all of its acquisitions, and I guess a few companies were sold when they didn't fit with the corporate vision. I was laid off when my division was sold to a Chinese contract manufacturer.

When I started, Avago had a meager selection of funds to choose from, and the 401K brokerage link option. I chose that, and for quite a while that was where I put my 401K
contributions. As they acquired new companies, they brought in those companies' 401K choices until there was a cornucopia of choices, and I started using the 401K funds. I got the same asset classes and no transaction costs. These were institutional funds, so their costs were equivalent to those of the ETFs I bought in the brokerage account.
Click to expand...

Well, perhaps not a perfect application of the meme. I just meant that you weren't being literal in saying Berkshire Hathaway, it was an analogy.
 
I've skipped most all of these posts because I'm still mulling over the thread title. You know, a lot of people pat themselves on the back, shaming others in less opulent retirement, but think about it. There's plenty of shame to go around. Some of you reap the benefits from unions and their pay scales and retirement plans who've extorted companies with threats of labor strikes. In the end, you are being subsidized by the consumers of your unfairly priced services and products. Most people these days don't work in unions, don't have the skewed leverage you benefit from and have a much harder time finding extra funds for any purpose at all.

Then there's management. They sucker employees in with unwritten promises, i.e., contracts, of retirement plans they offer and formulas for calculating income based on average earnings, etc. All sounds great until the business owners go public, cash in their chips and the Gen X accountants they brought on board and gave stock options to, find out the pension fund premiums were back end loaded. So they cancel the plan leaving the employee with the cash value of the reduced premiums that were paid and possibly terminate your employment in a cost-cutting move to impress the stock holders and increase the value of their options.

So, there "you" are, out of work with pennies on the dollar compared to what you were planning on having at this stage in life. You roll over that into a mutual fund, but guess what? The stocks are all over-priced because now everybody's in a 401K and bidding them up, paycheck after paycheck. That's called a "bubble". Then the bubble bursts, probably when you've exhausted your liquid assets and unemployment compensation, and now you need to start taking early distributions from your IRA, paying the 10% penalty with every withdrawal, and taking a loss on your basis, which doesn't do any good, since you have no income now, but you have to do it to eat and make the house payment.

So, I think it's a bit "holier than thou" to say boomers are "stupid". These issues need to be fixed, should have been fixed long before I ever earned my first paycheck, but will probably never be fixed because most people, deep down, are out for themselves and won't make a commitment to be fair to others.
 
Last edited:
Zeldman said:
You are aware that banks have more cash on hand....
BankRobbers.jpg
Click to expand...

Not like they used to. In talking with one of the bank managers, I said something about "what if I needed $100,000 in cash today?" And I was told it would take a couple days to get that much cash on hand. This was a National bank, not a local.
 
dtuuri said:
You know, a lot of people pat themselves on the back, shaming others in less opulent retirement
Click to expand...

I think that is a bit of a strawman argument. The critique I see in this thread is that many people (from all generations) lacked the common sense to save for their future. When I was a kid and I first learned about the idea of a pension, the first thought that came to mind was, "so, if they fire you after 19 years, you get nothing? That sounds like a bad deal." I don't expect SS to be able to make any payments to my generation, and certainly not to anyone with any kind of self funded retirement options. Just not enough of us to keep paying once all the baby boomers licked the plate clean. Thank goodness for the 401k. My first year in my career job, I earned only 38k. I maxed out my contributions as soon as possible, and never missed those funds. I know of another person who worked as a electrician for a local theater company that made almost nothing, and had a wife and kid. He still put money aside for their retirement. I get it that bad things happen to people through no fault of their own. But people still should look out for themselves.

The thing that scares me is some politician will get the bright idea to nationalize all private retirement funds. It's happened in other countries already. There have already been such proposals in the US that, fortunately, didn't get traction.
 
PPC1052 said:
I don't expect SS to be able to make any payments to my generation, and certainly not to anyone with any kind of self funded retirement options.
Click to expand...

If the economy is so bad that SS is truly insolvent, all your investments used to fund private retirement are going to be in the toilet. SS won't be able to sustain the hardcoded growth in benefits, but as retirement benefits go it is as good or bad as the alternatives.


The thing that scares me is some politician will get the bright idea to nationalize all private retirement funds. It's happened in other countries already. There have already been such proposals in the US that, fortunately, didn't get traction.
Click to expand...

When the people talking about 'cadillac health plans' get back in control, I fully expect a tax on 'excessive retirement savings'. You know, so everyone 'pays their fair share'.
 
EdFred said:
Not like they used to. In talking with one of the bank managers, I said something about "what if I needed $100,000 in cash today?" And I was told it would take a couple days to get that much cash on hand. This was a National bank, not a local.
Click to expand...

Correct, with direct deposit, credit cards and online bill paying, cash on hand is diminishing. Most banks won't usually have 100K laying around waiting for someone to request that amount for withdrawal. Cash will be there for a reason such as payday.

The locally owned bank here will have a very large amount of cash on hand for when the Indians cash their monthly government checks. But that money will be used to cash checks, not for very large (legal) withdrawals. Unless planned ahead.

There are plenty of pawn shops in town. They have a good amount of cash for paydays as well. Pawn broking was the earliest banking industry in this country. There are still a lot of old natives that use pawn shops for banking. A friend of mine owns one of the biggest pawn shops in town, and he took me into his vault once and showed me some valuable native artifacts, some of them more than 150 years old, that has been passed down from generation to generation. The native owners want a trusted person to keep the items safe for them, and he is trusted among the natives. Some of those items have to be absolutely priceless by now. Lots and lots and lots of silver and turquoise. And a few old Winchesters that may have been used against or stolen from white men back in the old west days. It was fascinating trip in history to walk through his vault.
 
EdFred said:
Not like they used to. In talking with one of the bank managers, I said something about "what if I needed $100,000 in cash today?" And I was told it would take a couple days to get that much cash on hand. This was a National bank, not a local.
Click to expand...

I could concur with that, for the most part. I worked as a teller for a fairly decent-sized bank (not BoA or Chase, but still multi-state) and the two branches I worked in never had more than about $100K on-hand in the safe. I forget what the on-hand levels were regulated at, but the Brinks guys would show up and offload our cash once every week or so to exchange the large bills and re-stock the smaller bills/coinage. $500 Boxes of quarters get heavy after carrying a dozen of them back to the safe, plus the dimes/nickels/pennies. I believe if someone needed a large amount of cash (six-figures) and couldn't wait for the cash to be brought over to that branch, they had a central location that had that higher cash on-hand to accommodate.
 
Zeldman said:
Correct, with direct deposit, credit cards and online bill paying, cash on hand is diminishing. Most banks won't usually have 100K laying around waiting for someone to request that amount for withdrawal. Cash will be there for a reason such as payday.

The locally owned bank here will have a very large amount of cash on hand for when the Indians cash their monthly government checks. But that money will be used to cash checks, not for very large (legal) withdrawals. Unless planned ahead.

There are plenty of pawn shops in town. They have a good amount of cash for paydays as well. Pawn broking was the earliest banking industry in this country. There are still a lot of old natives that use pawn shops for banking. A friend of mine owns one of the biggest pawn shops in town, and he took me into his vault once and showed me some valuable native artifacts, some of them more than 150 years old, that has been passed down from generation to generation. The native owners want a trusted person to keep the items safe for them, and he is trusted among the natives. Some of those items have to be absolutely priceless by now. Lots and lots and lots of silver and turquoise. And a few old Winchesters that may have been used against or stolen from white men back in the old west days. It was fascinating trip in history to walk through his vault.
Click to expand...
Knocking off a pawn shop to fund retirement is a good way to have a short retirement.
 
dtuuri said:
I've skipped most all of these posts because I'm still mulling over the thread title. You know, a lot of people pat themselves on the back, shaming others in less opulent retirement, but think about it. There's plenty of shame to go around. Some of you reap the benefits from unions and their pay scales and retirement plans who've extorted companies with threats of labor strikes. In the end, you are being subsidized by the consumers of your unfairly priced services and products. Most people these days don't work in unions, don't have the skewed leverage you benefit from and have a much harder time finding extra funds for any purpose at all.

Then there's management. They sucker employees in with unwritten promises, i.e., contracts, of retirement plans they offer and formulas for calculating income based on average earnings, etc. All sounds great until the business owners go public, cash in their chips and the Gen X accountants they brought on board and gave stock options to, find out the pension fund premiums were back end loaded. So they cancel the plan leaving the employee with the cash value of the reduced premiums that were paid and possibly terminate your employment in a cost-cutting move to impress the stock holders and increase the value of their options.

So, there "you" are, out of work with pennies on the dollar compared to what you were planning on having at this stage in life. You roll over that into a mutual fund, but guess what? The stocks are all over-priced because now everybody's in a 401K and bidding them up, paycheck after paycheck. That's called a "bubble". Then the bubble bursts, probably when you've exhausted your liquid assets and unemployment compensation, and now you need to start taking early distributions from your IRA, paying the 10% penalty with every withdrawal, and taking a loss on your basis, which doesn't do any good, since you have no income now, but you have to do it to eat and make the house payment.

So, I think it's a bit "holier than thou" to say boomers are "stupid". These issues need to be fixed, should have been fixed long before I ever earned my first paycheck, but will probably never be fixed because most people, deep down, are out for themselves and won't make a commitment to be fair to others.
Click to expand...

It's not always somebody else's fault. Ric Edelmann says that people usually have two modes of living. Live large when you're working, and hunker down when you're not. He says you should always be in the hunker down mode. Maybe not like when you're between jobs, but definitely don't live paycheck to paycheck.

It's been said before, on this thread, and way more places that you need to pay yourself first. A 401K is a great place to pay yourself to; but doesn't have to be the only place. In fact, Ric says we should save at least 25% of our salaries. An employer match counts toward that 25%, too.

He also says, don't depend on your pension, if you have one. If it pays off, you're golden. If not, you're still good. I've never depended on receiving one red cent from SS, and I don't/won't have a pension.

And don't expect people to be fair to you. Does Caveat Emptor mean anything to you? There are a myriad of laws to protect people against crooks, as well as a ton of financial educational material, and yet, people still let themselves get taken. And, of course, sometimes **** happens, and there's nothing you could have done differently that would have made any difference, but I think those cases are rare.

H3ll, I got taken many years ago, and lost most of my life savings. But, instead of blaming someone else, I took the blame, and started educating myself. Now, my wife calls me a Money Whisperer.

Finally, you're never too young, nor too old, to start saving and investing; in fact the best time to start (if you aren't already) is today!
 
weilke said:
If the economy is so bad that SS is truly insolvent, all your investments used to fund private retirement are going to be in the toilet. SS won't be able to sustain the hardcoded growth in benefits, but as retirement benefits go it is as good or bad as the alternatives.
Click to expand...

There are no SS funds anywhere. All there are are treasury notes-- in other words, IOUs. That means that SS is essentially pay we go. that works when there are 10 employees for every one retiree. But the demographics are such that that ratio will be coming down. Here is a chart showing the dramatic reduction in the worker to beneficiary ratio: https://www.ssa.gov/history/ratios.html Once there are not enough funds taken in in any given year, because there are not enough employees per beneficiary, to meet payment obligations, then congress is going to have to use tax payments to make up the difference. When that happens, all bets are off. Means testing, and significant reductions in benefits are inevitable.

And, no, the retirement benefits are no where near as good as I could have done if I had invested in my own account. It's not even close.
 
Last edited:
Crashnburn said:
It's not always somebody else's fault. Ric Edelmann says that people usually have two modes of living. Live large when you're working, and hunker down when you're not. He says you should always be in the hunker down mode. Maybe not like when you're between jobs, but definitely don't live paycheck to paycheck.

It's been said before, on this thread, and way more places that you need to pay yourself first. A 401K is a great place to pay yourself to; but doesn't have to be the only place. In fact, Ric says we should save at least 25% of our salaries. An employer match counts toward that 25%, too.

He also says, don't depend on your pension, if you have one. If it pays off, you're golden. If not, you're still good. I've never depended on receiving one red cent from SS, and I don't/won't have a pension.

And don't expect people to be fair to you. Does Caveat Emptor mean anything to you? There are a myriad of laws to protect people against crooks, as well as a ton of financial educational material, and yet, people still let themselves get taken. And, of course, sometimes **** happens, and there's nothing you could have done differently that would have made any difference, but I think those cases are rare.

H3ll, I got taken many years ago, and lost most of my life savings. But, instead of blaming someone else, I took the blame, and started educating myself. Now, my wife calls me a Money Whisperer.

Finally, you're never too young, nor too old, to start saving and investing; in fact the best time to start (if you aren't already) is today!
Click to expand...
You can spare me your lecturing tone. There are no laws against telling an employee you're gonna take care of him or her when they retire. But there ought to be one that makes sure they follow through when they do. It's only right. According to your logic, the victim bears responsibility for the lie.
 
Last edited:
PPC1052 said:
There are no SS funds anywhere. All there are are treasury notes-- in other words, IOUs. That means that SS is essentially pay we go.
Click to expand...

I never claimed anything otherwise. It's 'pay as you go'. If the economy is strong, the government will have the money to pay the benefit. If the economy is weak, they wont have the money to pay the benefit. If the economy is poor, the stocks, bonds etc. in your private retirement won't be worth the paper theyr are printed on either.

And, no, the retirement benefits are no where near as good as I could have done if I had invested in my own account. It's not even close.
Click to expand...

Probably true in your particular case. Otoh, you would have done really well had you become disabled in quarter 41 of paying in. It certainly has a redistributive aspect, but it also has an insurance component. So its a bit simplistic to say 'I could have done better'.
 
Matthew said:
Knocking off a pawn shop to fund retirement is a good way to have a short retirement.
Click to expand...

Come to Maryland. The place where you get '10 years' for a robbery, but routinely 9 1/2 of it get suspended. For the first 2-3 robberies, there is still a reasonable payback even if you get occasionally caught. Just stay away from anything that 'affects insterstate commerce'.
 
weilke said:
If the economy is weak, they wont have the money to pay the benefit. If the economy is poor, the stocks, bonds etc. in your private retirement won't be worth the paper theyr are printed on either.
Click to expand...

Maybe, but the government's first response is likely to merely print money. In that case, stocks will be a good hedge. At least initially.
 
dtuuri said:
You can spare me your lecturing tone. There are no laws against telling an employee you're gonna take of him or her when they retire. But there ought to be one that makes sure they follow through when they do. It's only right. According to your logic, the victim bears responsibility for the lie.
Click to expand...

No, the victim bears the responsibility to make sure they are OK even if the promises aren't kept. Even too big to fail companies go out of business so you have to watch out for yourself. I'm sure you've heard the phrase "Don't put all your eggs in one basket." You don't put all your money in one stock, or even mutual fund. You don't buy just one bond - you buy a bond fund, or several of them. You don't depend on your employer for both your paycheck and your retirement. Etc. Etc. Etc. Enron screwed a lot of people, and I'm sure a lot of Bear-Sterns people were hurt, too, when they went out of business.

Even now, companies are selling their pensions to insurance companies to get out from under their obligations. That's mostly because they over-promised, and under-funded their pension plans. And, yes, bean counters don't make it any better.

In my investing, I don't try to beat the market, I try to own the market. A few companies might fail, but my loss is limited to however much I put into the fund went to buy the failed company (companies). But, if one or more takes off, my return can be way more than I put into the fund. One of my funds has tripled my investment in it.

Sometimes you miss out on a bonanza (not an airplane). I had 100 shares Microsoft, IPO, at about $22 per share. I sold at about 28. I could probably own a block of prime real estate in Silicon Valley if I had what those 100 shares (after umpteen splits) are worth today.

I'm sorry if you, or someone you are close to got hurt financially. I know it hurts, but it doesn't do any good to dwell in the past. I know; I've been there, done that. I got laid off years ago because the company replaced all of it's American citizen engineers with H1-B Visa workers, with no warning. I carried that anger for years until I started my A&P training, and somewhere along the way, I started looking to the future, and not worrying about the past. I got a lot happier, and started doing better on job interviews. And, if I hadn't gotten laid off, I would have never met my wife. (Mixed blessing, but mostly good).
 
PPC1052 said:
Maybe, but the government's first response is likely to merely print money. In that case, stocks will be a good hedge. At least initially.
Click to expand...
And gold miners. I don't like the GLD ETN. As far as I know, they've sold 3 times as much gold as they actually own, and they charge a maintenance fee. Gold miners actually pay a dividend, and you can't sell more assets than you own, at least for very long.
 
weilke said:
Come to Maryland. The place where you get '10 years' for a robbery, but routinely 9 1/2 of it get suspended. For the first 2-3 robberies, there is still a reasonable payback even if you get occasionally caught. Just stay away from anything that 'affects insterstate commerce'.
Click to expand...
Some pawn shops in these parts would prefer to handle robberies “in house”. Fewer repeat offenders that way.
 
PaulS said:
Rule of thumb, take the amount of money you need per year, divide it by 4% and that is how much you should have in a portfolio balanced for your risk level, which at retirement or near should be low. This is all I have.

So if you need $100,000 per year all in, divide by 4% or $100,000/.04 = $2,500,000 . With 2.5 million supposedly you will be able to withdraw 100k without draining your capital.
Click to expand...

A corrolary of the 4% Rule: Starting at a typical retirement age, if each year you remove a dollar amount equal to 4% of the balance of that year's retirement funds, those monies will typically last 30-35 years. For the vast majority of us, that will cover our lifspan. (yes,although it is a mathmatical construct, and there will be variations for each individual, the premise holds true).That annual "payment" to yourself + Social Security = yearly your allowable living expenses.

There is another approach that was told to me a few years ago:

Live Well
Die broke
Let the last check written by your estate be to the undertaker
And
Let it bounce.
 
You must log in or register to reply here.
Back
Top