Thoughts on retirement savings in the US

[CharlesInCharge]

@CharlesInCharge it sounds like you have had numerous hurdles to deal with you in your life. I wish you luck and keep on keeping on.
In my case, I will agree that I had luck. That luck was being in Silicon Valley.
I had plenty of chances in my life and turned my back on every one of them.
I started drinking regularly at 13 and had destroyed my mind, body and spirit by 22. Years of homlessness.
By 29 I was a broken man. Many friends had done joint time, died, became wheelchair bound from accidents. All tied to alcohol and drugs.
I started back at night school one more time. Cut back on the stuff and a friend got me a minimum wage job in the shipping and receiving department of his company. I lost that job due to cutbacks but they liked me and sent me to another job where I made $5 an hour.
Somehow I stayed in school; sometimes failing sometimes doing great. Took some computer programming lessons along with business classes.
One day I asked "Who runs the computer dept and where is it?" I went over and introduced myself, long ponytail, scruffy clothes and all.
The next thing I know I was being offered like $7 an hour to work grave, do backups, data entry and distribute reports. Did this for years while continuing school in the mornings.
At 33 I got yet another DUI, even though I was living better than I had in many years. I was so low, so defeated, so done.
Among other things, the judge sent me to 2 meetings of AA.
A few years later I bought a cheap condo with the $5,500 I saved up. 10% loan. Incredible. Impossible dream.
Long story short, I ended up in a growing SEMI company writing custom business software for operations, corporate forecast and more.
The executive staff declared my work mission critical and gave me golden handcuffs. I got to meet and work with some of the leaders in the Valley.

I believe if I lived anywhere else I would likely been relagated to a rougher life due to my actions, mistakes, life choices and alcoholism.
I tell people, if you can't make it in Silicon Valley, with this boundless opportunity and schools, you can't make it anywhere.

I never wanted to pay rent again as long as I lived. I drove and fixed used Hondas and Toyota pickups. I maxed out 401K and took advantage of stock purchase programs. No vacations. I also helped my parents on weekends as they dealt with health and other issues.

Am I lucky? You bet I am. Left to my own devices I should have been dead a long time ago.

Bingo, there you have it. We don't always agree on things but you clearly get it. Luck played a huge role in your timing, a judge who gave you a break, your location, etc. You worked hard, but luck had a massive role in it. Different time, or different location, and you'd be dead in a gutter.

 

[PWMDMD]

Sure bud.

The postmortem is surprisingly simple isn’t it?

The most important decision in my life was who I married and I set the bar high. Not just anyone. Not just the first person who told me they loved me. Not the first person I knocked up. If I didn’t meet that person I wasn’t going to get married.

You failed to follow basic investing logic and got burned. Go figure…

That’s not bad luck…those are bad decisions.

 

[JeffKeryk]

Bingo, there you have it. We don't always agree on things but you clearly get it. Luck played a huge role in your timing, a judge who gave you a break, your location, etc. You worked hard, but luck had a massive role in it. Different time, or different location, and you'd be dead in a gutter.

Education is key. I got my 1st degree at 40. DeAnza Community College and San Jose State gave me a life beyond my wildest dreams.
Today I take my grand nieces to the local schools and walk the campuses. When we walked through DeAnza earlier this summer, I was reduced to tears, remembering where I came from and what this wonderful school gave me.

 

[Wolf359]

$50 per month x 12 months x 20 years is $12,000 principle. The example shows a $26,000 total. If over 20 years at 7% you manage only $26,000, that's far from an impressive return. It barely beats inflation in normal years. And, if you did that example from 2000 to 2020, in 2021 our current real 25% inflation would have eaten away most of a 20 year investment... so it's not impressive at all. Because, like I've mentioned, the government pencil necks do stupid things that can instantly destroy decades of work and sacrifices.

Yeah, you didn't get my point. That was a bad example because the numbers are wrong. The S&P 500 gets mentioned a lot and I actually bought shares in Vanguard Index 500 back in the 90's which I still have so that advice has been around a long time. Over 20 years, you end up with 44.7k not 26k. So your whole point is moot. And just for the record, inflation isn't 25% although it may feel like it to you. Officially only 6.8%. I only want to say officially because we tend to use that number to compare it to different eras so just to stay consistent, you use to same numbers because even if the methodology or basket is wrong, it's also wrong across the entire time period.

 

[CharlesInCharge]

Yeah, you didn't get my point. That was a bad example because the numbers are wrong. The S&P 500 gets mentioned a lot and I actually bought shares in Vanguard Index 500 back in the 90's which I still have so that advice has been around a long time. Over 20 years, you end up with 44.7k not 26k. So your whole point is moot. And just for the record, inflation isn't 25% although it may feel like it to you. Officially only 6.8%. I only want to say officially because we tend to use that number to compare it to different eras so just to stay consistent, you use to same numbers because even if the methodology or basket is wrong, it's also wrong across the entire time period.

Schwab essentially started low fee online trading, around the mid-late 1990s. Until then you needed ACCESS and MONEY to open a brokerage account, and there were only a few players. The barriers for a poor kid with "fifty dollars" would have been probably insurmountable even if one wanted to invest; I doubt it would have been possible to do it. So even if you had the money, I doubt there was a mechanism.

IOW, if you went to ML with $50 to open an account and buy some Vanguard, I'd guess they'd laugh and hang up or see you to the door. Most brokerage accounts required significant (e.g. $1000, $5000, etc.) account minimums. In that era, also, buying cost commissions which would have probably been nearly the entire principle. In the pre-internet era, investing was for wealthy adults. None of my peers had or even knew much about stock trading nor had their own active accounts not set up by their parents and controlled by a broker on commissions.

So I look at this as a theoretical 7% but not something that a poor person could have realistically accessed in the pre-internet era, which is what we are supposedly discussing.

The real world was a bank book from the local bank, which I had. I think the interest was about 1/2 of 1%, so a total waste of time. It's no surprise money was spent on items of urgency, not sitting losing money at 1/2 of 1% interest, IOW losing 4% to inflation every year.

Also, now, real inflation is actually about 20 to 25% across the board, with shortages. Housing market inflation, mixed with supply/demand, is close to 50% or higher in much of the nation. The 6% figure is total propaganda to try to keep the panic down. It does not reflect a comprehensive basket of goods that it once did.

 

[Pablo]

My mom used to say "We make our own breaks". I say if you don't even try you've already failed. It's not just luck to have the smarts to keep at something.

Let's say it's genetics just for sake of discussion. Inherited ability to stay at a task. Is that luck? Or fate?

Fate, luck, God.....

It's Christmas Eve. I believe.

 

[Wolf359]

"Do what successful people do..." Okay.
I bought a beautiful house in a great area. The government screwed it up and I lost money.
I invested in solid companies, but the government screwed that up with the scam-demic and I lost a mountain of money when the market collapsed and I got out so I didn't lose everything, only for market manipulators to scam the entire stock market.

Successful people don't blame others for their problems. They learn from their mistakes or other peoples mistakes and try not to repeat them.

Investing in individual companies is riskier than investing in mutual funds like the S&P 500 which gets mentioned a lot because it's one of the safer investments out there and pretty easy to invest in. Your other mistake was getting out when the market was down. Sounds like you did buy high, sell low, that always loses money. Maybe you should focus on not panicking when things are down. And again you blame market manipulators when the market is up. You're playing the blame game. Be more disciplined in your investing and try not to blame everything on luck or whatever evil you see lurking out there.

 

[PWMDMD]

Bingo, there you have it. We don't always agree on things but you clearly get it. Luck played a huge role in your timing, a judge who gave you a break, your location, etc. You worked hard, but luck had a massive role in it. Different time, or different location, and you'd be dead in a gutter.

Of course, everyone needs some luck but your reliance on luck in this discussion seems disproportionally off. So you and I are both lucky because a giant comet hasn’t fallen from the sky and snuffed us out - the difference between us is in my mind this simply allowed me to go on making my good decisions and working hard towards a successful life and I’m still mostly responsible for the outcome of my life. In your mind, that luck (of not getting hit by the comet) is the reason I have a successful life and the comet not hitting earth is mostly responsible for the outcome of my life.

I can’t predict the future and sure something bad could happen I could end up a drug addict or with a terrible disease. I can assure you my life has been anything but easy and while some luck has been involved I don’t believe it’s anymore luck than anyone else and I can remember literally thousands of really good major decision that leads me to right now. Here’s a crazy concept - luck and bad luck aren’t equal and opposite. I could make all the right decisions and if a comet lands on me due to bad luck there's little I can do. But just because there’s been a lack of bad luck (in this case the comet hasn’t fallen on me) it doesn’t mean my lack of bad luck is responsible for all the good in my life. My life is not simply the product of not having a comet fall on me. You are trying to argue, essentially, I’m only successful because I haven’t really tasted the biter pain of really bad luck and then you’re calling that good luck. First, I’ve tasted the pain. Secondly, that’s just not how it works.

 

[PWMDMD]

Comical. You should author books on how to "work ethic to meet your perfect illness free spouse."

And you know nothing about me. How do you know my spouse doesn’t have stage 4 breast cancer and in the middle of chemo and radiation? We ALL have our problems - some of us just don’t ***** and moan about them. Some of us don’t blame outside things like luck. We accept them and focus on one of the only things we have control over - our choices.

 

[CharlesInCharge]

Successful people don't blame others for their problems. They learn from their mistakes or other peoples mistakes and try not to repeat them.

Investing in individual companies is riskier than investing in mutual funds like the S&P 500 which gets mentioned a lot because it's one of the safer investments out there and pretty easy to invest in. Your other mistake was getting out when the market was down. Sounds like you did buy high, sell low, that always loses money. Maybe you should focus on not panicking when things are down. And again you blame market manipulators when the market is up. You're playing the blame game. Be more disciplined in your investing and try not to blame everything on luck or whatever evil you see lurking out there.

Another concept wealthy people don't grasp. There is nobody to bail you out so if you lose it all then you are homeless.

Wealthy people just "go get more money" so they don't understand "losing it all" or the risks involved.

But when you watch the government and market manipulators drop your value by 50% and with no end in sight, you panic and save yourself from losing it all which means being homeless. Yeah, it's easy to say that was a mistake. It could have been genius if it went to 0%. And it could have, as it's done it before with many companies that no longer exist. Locking in loses is the risk.

I do blame the fraudsters in the government and public and private sectors who manipulate markets. They are corrupt to the core and hurt a lot of people. Look at Boeing as one example. Total fraud going on with that stock and company and people should be in prison for it. Insider buy backs, withheld data, and other manipulations up, down, up again. Again, it's luck, fighting against sophisticated machines, insider trading, corrupt business practices, etc..

 

[Wolf359]

Schwab essentially started low fee online trading, around the mid-late 1990s. Until then you needed ACCESS and MONEY to open a brokerage account, and there were only a few players. The barriers for a poor kid with "fifty dollars" would have been probably insurmountable even if one wanted to invest; I doubt it would have been possible to do it. So even if you had the money, I doubt there was a mechanism.

IOW, if you went to ML with $50 to open an account and buy some Vanguard, I'd guess they'd laugh and hang up or see you to the door. Most brokerage accounts required significant (e.g. $1000, $5000, etc.) account minimums. In that era, also, buying cost commissions which would have probably been nearly the entire principle. In the pre-internet era, investing was for wealthy adults. None of my peers had or even knew much about stock trading nor had their own active accounts not set up by their parents and controlled by a broker on commissions.

So I look at this as a theoretical 7% but not something that a poor person could have realistically accessed in the pre-internet era, which is what we are supposedly discussing.

The real world was a bank book from the local bank, which I had. I think the interest was about 1/2 of 1%, so a total waste of time. It's no surprise money was spent on items of urgency, not sitting losing money at 1/2 of 1% interest, IOW losing 4% to inflation every year.

Also, now, real inflation is actually about 20 to 25% across the board, with shortages. Housing market inflation, mixed with supply/demand, is close to 50% or higher in much of the nation. The 6% figure is total propaganda to try to keep the panic down. It does not reflect a comprehensive basket of goods that it once did.

Sorry but you're wrong. Back in that era, they had no minimums when you opened an IRA and when I started my Vanguard account I believe back then the minimum was either $100 or $500 but I think they waived that minimum if you did automatic monthly investing. Back then I invested directly with various mutual funds, Janus, 20th Century, etc. Years later Fidelity and many others came along that let you consolidate all your accounts into one statement and I've been using Fidelity ever since and they hold my Vanguard shares. Also no load shares existed back then which is why I bought the index 500, no 12b-1 fees. There were other mutual funds that charged fees and also several others that didn't.

Again, let's just agree to agree that we are using different metrics. I'm just going with the official one. You offer nothing to back up your number. Did your rent/housing costs go up by 20-25%? Did taxes, insurance, water? Did you health insurance increase 20-25%? Did you switch to a more expense phone plan so that it's now 20-25% more? Did you car payment/insurance increase 20-25?

 

[CharlesInCharge]

Of course, everyone needs some luck but your reliance on luck in this discussion seems disproportionally off. So you and I are both lucky because a giant comet hasn’t fallen from the sky and snuffed us out - the difference between us is in my mind this simply allowed me to go on making my good decisions and working hard towards a successful life and I’m still mostly responsible for the outcome of my life. In your mind, that luck (of not getting hit by the comet) is the reason I have a successful life and the comet not hitting earth is mostly responsible for the outcome of my life.

I can’t predict the future and sure something bad could happen I could end up a drug addict or with a terrible disease. I can assure you my life has been anything but easy and while some luck has been involved I don’t believe it’s anymore luck than anyone else and I can remember literally thousands of really good major decision that leads me to right now. Here’s a crazy concept - luck and bad luck aren’t equal and opposite. I could make all the right decisions and if a comet lands on me due to bad luck theirs little I can do. But just because there’s been a lack of bad luck (in this case the comet hasn’t fallen on me) it doesn’t mean my lack of bad luck is responsible for all the good in my life. My life is not simply the product of not having a comet fall on me. You are trying to argue, essentially, I’m only successful because I haven’t really tasted the biter pain of really bad luck and then you’re calling that good luck. First, I’ve tasted the pain. Secondly, that’s just not how it works.

You remind me of one of my college friends. He has worked hard, true. But due to MY advice and encouragement, he moved from a horrible region and ended a terrible relationship, to a great city to start fresh. He took zero risk b/c I was there with an established very deep social network where he was instantly integrated and met people. In my immediate network, he met and married his wife, and had 2 wonderful healthy kids. I also taught him how to do a sport, that is now a healthy life long passion of his.

If you ask him, he'd claim it's all his hard work that lead to success. He'd overlook the fact that unlike me, his parents paid for his college but I have student loans. He'd overlook the fact that he had a brand new European car all thru college but I had no car until a $300 hunk of rust in my last semester. And of course it was his hard work, NOT the luck of having a dedicated friend to help him out of a bad relationship in a bad region to move to a great city and be practically given his wife on a silver platter and taught a great sport ... that's all his "hard work," right?

Get real. That dude was/is lucky that he had a great friend in myself. But for me he'd be an overweight unhappy guy married to some turd of a woman (probably divorced). But in his mind, he thinks it's all his hard work.

 

[CharlesInCharge]

Sorry but you're wrong. Back in that era, they had no minimums when you opened an IRA and when I started my Vanguard account I believe back then the minimum was either $100 or $500 but I think they waived that minimum if you did automatic monthly investing. Back then I invested directly with various mutual funds, Janus, 20th Century, etc. Years later Fidelity and many others came along that let you consolidate all your accounts into one statement and I've been using Fidelity ever since and they hold my Vanguard shares. Also no load shares existed back then which is why I bought the index 500, no 12b-1 fees. There were other mutual funds that charged fees and also several others that didn't.

Again, let's just agree to agree that we are using different metrics. I'm just going with the official one. You offer nothing to back up your number. Did your rent/housing costs go up by 20-25%? Did taxes, insurance, water? Did you health insurance increase 20-25%? Did you switch to a more expense phone plan so that it's now 20-25% more? Did you car payment/insurance increase 20-25?

You're missing the point where I was poor, worked through college, had to borrow money for living expenses and to eat. "Investing" in Janus with a Merrill Lynch account is not something a poor kid borrowing money for living expenses and working to eat is realistically able to manage.

Accept the fact that you do not know what poverty is. That's okay, just stop pretending you do. Poverty does not look like Janus funds and No Load Index funds. Okay.

 

[Wolf359]

You're missing the point where I was poor, worked through college, had to borrow money for living expenses and to eat. "Investing" in Janus with a Merrill Lynch account is not something a poor kid borrowing money for living expenses and working to eat is realistically able to manage.

Accept the fact that you do not know what poverty is. That's okay, just stop pretending you do. Poverty does not look like Janus funds and No Load Index funds. Okay.

Sorry, you're wrong again. Janus was a mutual fund company. There was no Merrill Lynch account. You sent them the money directly and they were a no load mutual fund company. You ended up getting individual statements from each mutual fund company until Fidelity and others came along and consolidated them all in one statement without a fee. I didn't start investing til I got out of college. I wouldn't have called myself a kid at that point. And I never said poverty was easy or that I knew it.

And let's just say that you should also learn from your mistakes. It's true that most people here just tout their successes. One of my other failures was trusting a stock broker early on, I think he ended up losing almost half of my investment before I finally came to my senses and got rid of him. Gave up on stocks after that and just did mutual funds. I already mentioned dumping bonds a long time ago.

 

[Dave Hess]

I know a woman and her 28 year old sister died from a very aggressive brain cancer.
Her illness wiped out the family’s savings and retirement.

This type of situation is understandable and I do feel bad that it lead the parents into bankruptcy.

 

[PWMDMD]

Another concept wealthy people don't grasp. There is nobody to bail you out so if you lose it all then you are homeless.

Wealthy people just "go get more money" so they don't understand "losing it all" or the risks involved.

But when you watch the government and market manipulators drop your value by 50% and with no end in sight, you panic and save yourself from losing it all which means being homeless. Yeah, it's easy to say that was a mistake. It could have been genius if it went to 0%. And it could have, as it's done it before with many companies that no longer exist. Locking in loses is the risk.

I do blame the fraudsters in the government and public and private sectors who manipulate markets. They are corrupt to the core and hurt a lot of people. Look at Boeing as one example. Total fraud going on with that stock and company and people should be in prison for it. Insider buy backs, withheld data, and other manipulations up, down, up again. Again, it's luck, fighting against sophisticated machines, insider trading, corrupt business practices, etc..

JC...you're like talking to a self-indulgent 16-year-old who can only think about himself, who has a warped sense of reality and won't admit the reason he didn't do well on the test is he didn't study, "But Dad, it wasn't my fault. The teacher is a terrible teacher and didn't teach this stuff." To which I'd reply, "If anyone in your class did well, then your teacher taught it well enough for someone to do well and that means you could've (with hard work and good decisions) done well too!"

WHO bails me out? Where do I just go and "get more money"? I cashed in all my chips and started over at 35 because I couldn't stand to see the surviving parents and siblings on 9 Sandy Hook victims - that was a very successful business. I started over and in a completely new area borrowing money again and it is again a very successful business. Why? I just got lucky twice? No, I get it with your rationale, I got lucky because the building didn't burn down and so the success has nothing to do with me and I'm just lucky. Here's the thing. For either business, I didn't just throw a dart at a map and hope it worked out. I did my homework with demographics and locations, I had to analyze which insurances to go in-network with, I had to come up with an advertising plan, and here is the kicker - people had to like me and I actually had to perform my job duties and a very high-level day in and day out. Yes, I know but a gas-main leak didn't blow up my practice and so I'm just lucky.

Do you think CV-19 has been kind to non-CV-19-centered health care? I had to shut down for 3-months in 2020 and see ZERO patients. I have a $140K per month payroll. My partner and I were smart though and paid off all our debt by taking significantly less salary and opened a very large LOC just in case - we never needed it. As soon as the pandemic hit we made ourselves as small as possible and we held onto every dollar we could and squirreled it away. I had to figure out how to keep 26 people employed because they all depend on me for their livelihoods. I've had to "pivot" and reinvent the wheel as far as staffing, patent flow, scheduling, implementing new procedures, dealing with constantly changing and new CV-19 guidelines, HR laws/rules, etc, etc, etc, etc. PPP loans and ERC calculations and then PPP forgiveness and other federal compliance issues. We are short-staffed because there is a lack of people willing to work, we have three key people out on maternity, and every day is a roller coast of ****, but I don't complain about my bad luck, I don't complain about CV-19, I just get back at it, figure **** out, and get **** done. Two years later, we've still laid off no one and we've bounced back.

I did as much work as one can do to leave as little to chance as possible, and yes, I'll give you that I was "lucky" that the zombie apocalypse has not happened (yet). In your examples of "bad luck," you just made bad decisions. I get it...life can be tough and choices hard. It certainly hasn't been easy for me but I also don't go around minimizing other people's successes by claiming it was all good luck and over-emphasizing the role of "bad luck" in my life. That's a demented and self-limiting way to look at the world and it is a total copout to taking any responsibility for someone's choices and the ultimate outcome of their life. My wife can get sick and die. My child could be killed in a car crash. The zombie apocalypse could happen. All of those things would be devastating but life goes on. I'll live my life doing all I can to minimize those potentials, however little it's possible, and while no one is insulated from true bad luck, if any of those things happen in my life, I will critically assess my choices and their role in those outcomes and adjust and keep moving. Why do I engage with you here - because *** are you to question my backbreaking hard work and good decisions making to try and minimize it?! It's especially egregious since it's now obvious it only serves to make you feel better about your bad decisions and life. I'm not here to piss on your life but that doesn't give you any right to piss on mine!

I want to end with an example of doing all you can to minimize bad luck in a still bad luck situation. I could get sick tomorrow and be told I have a week or a month to live. That is by definition bad luck and the people around me will be sad and I will be gone BUT my family will set for life because I've done the leg-work and they will be $4.5 wealthier. Compare that to someone who is in the same exact situation but never gets the life insurance policy and it financially ruins their family and limits their abilities. I know you're probably going to reply with but I was lucky enough to be able to afford life insurance - not the point. In every aspect of my life, I have left as little to chance as possible. I have insulated my life from chance as much as possible. I have experienced "bad luck" and "setbacks", it just wasn't devastating to my life because I was careful and thoughtful and used all the available methods to minimize the risk exposure. In your investing example, you did the equivalent of "betting the ponies", you put it all on Seabiscuit's third cousin twice removed, and you got burned. That sucks, but stop pretending it wasn't just bad decisions making, pick yourself up, and move on - or don't, keep blaming people like me as just lucky and people like you as just unlucky and see how that works out for you.

Merry Christmas!

 

[Boomer]

I was always amazed by the number of technicians where I worked (those guys usually had a high school diploma and had gone through a training program at R&D when they were hired) who retired with 10-20 years left on a mortgage. Many would buy a car or vehicle (more payments) and find very quickly that they really could not afford the payments. It was always sad to see these people when reality caught up to them in retirement. During their working years, many would go on expensive annual vacations as well.

 

[PimTac]

Yeah, you didn't get my point. That was a bad example because the numbers are wrong. The S&P 500 gets mentioned a lot and I actually bought shares in Vanguard Index 500 back in the 90's which I still have so that advice has been around a long time. Over 20 years, you end up with 44.7k not 26k. So your whole point is moot. And just for the record, inflation isn't 25% although it may feel like it to you. Officially only 6.8%. I only want to say officially because we tend to use that number to compare it to different eras so just to stay consistent, you use to same numbers because even if the methodology or basket is wrong, it's also wrong across the entire time period.

My point on that example was to use a low number and a small time frame as a example of how money compounds and especially how that occurs by showing that graph. Most regular investors do not put in $10,000 and watch it jump to $100,000. My example was simple but conservative.

I started out with $25 a month back in the day. Over time that contribution increased many times. I was not wealthy or educated. I worked hard and put in tons of overtime. Living simply gave me the opportunity to invest and to learn.

 

[javacontour]

$50 per month x 12 months x 20 years is $12,000 principle. The example shows a $26,000 total. If over 20 years at 7% you manage only $26,000, that's far from an impressive return. It barely beats inflation in normal years. And, if you did that example from 2000 to 2020, in 2021 our current real 25% inflation would have eaten away most of a 20 year investment... so it's not impressive at all. Because, like I've mentioned, the government pencil necks do stupid things that can instantly destroy decades of work and sacrifices.

Point #2, you and that other guy from Massachusetts do not really know what poverty looks like. If you can save $50 per month in your youth, then you have no concept of what poverty is. That is a class of person who pretends to be in poverty to impress his friends about how he is "self made," but poor people cannot manage to save $50 per month b/c we are putting gas in our car, and eating, and paying unexpected bills to survive and not be homeless.

I vividly remember when I was in college, I had a small notebook to track expenses and my DAILY food expenditures had to be under $2. Daily. If I splurged on Monday for $5, then I had to not eat Tuesday and Wednesday. So do you think I had $50 extra per month laying around to invest for some time in the future?

And, also, this assumes I had access to some mythical stock market 7% return. Show me where, in the 1980s and early 1990s, a poor kid has access to invest in 7% returns in money markets or mutual funds without broker accounts and fees, which tend to have expenses and minimums of many thousands of dollars principle. So it's just more of how some of you are just totally out of touch with reality. Poor kids in that era did not have Ameritrade accounts or Reddit or Robinhood. You had to have a Merrill Lynch account, probably $5k minimum to invest, and a portfolio manager charging a % to put you in various vehicles to get 7%. No chance a poor kid living on $2 food money daily is going to have access to such things in that era. Ya'll are out of touch and did not grow up poor as you claim.

As I've mentioned, I've faced 3 foreclosures, and had to repeatedly liquidate any savings and IRAs and 401ks due to extreme financial hardships. Was this a game do you think? Do you think I just had this big piggy bank of money sitting around collecting interest while I was facing economic ruin and crisis, foreclosure, destroyed credit?

Wealthy entitled people who did not grow up poor, do not understand poverty. It's very hard to escape without some LUCKY breaks.

Put your 12.4% FICA Social Security contributions into that for a 35 to 40 year span of your career and compare what you would have had it been invested in that vs in the federal "lock box."

If you are self employed, you had to pay the 12.4% yourself. If you are a wage worker, your employer had to kick in half on your behalf.

A median wage worker starting in 1980 and retiring at the end of 2019 would have on order of $1.4 to $1.6 million. That worker could easily take 4% or $64k/year which is right in line with the median wage in 2019 and likely never touch the principle.

Cost basis of that nest egg is just under $200k That is an average of just over $400/month. Less in the early years and more in the latter year.

How many people are toys or house rich and have nothing put back for tomorrow? I see folks with newer cars. Heck, my neighbors who just moved, a young family about a generation behind me had two new vehicles. He got a 2020 RAM and she had a 2019 Nissan Armada or whatever their big SUV thing is. I think he was the only 9-5 as she stayed home and also did some out of the home day care.

I hope they are set. The house is still for sale, and they moved to the new one almost a month ago now. So we shall see.

I grew up relatively poor, so I know the value of money. ROTC scholarship for school. I sent money home to mom. I picked up money tutoring as well as a work study job. I had summer jobs too to make my living expenses since the scholarship was tuition, books and $100/month stipend.

oilBabe and I are both degreed professionals. I make a 6 figure living on my own and she is close even though she works 9 months a year. She has a pretty good pension as Missouri teachers run their own system. (That's a whole different topic, how sound is your pension, ultimately she chose to NOT work here in Illinois partly on the pension issue.) But we are in the Midwest outside of STL, where one can get a nice home for $100/square foot. We pay less for our home than our daughter and Son in Law (gotta get used to saying that) pay for their half of a duplex that might be 1/3rd the size of our home, no garage, etc. Our daughter CHOSE to move there, and not for a tech job, she's a teacher. It's hard to hear her say things are stacked against her with respect to housing as again, she CHOSE to move there. Now don't get me wrong, the guy she met and married is a great guy, so I'm happy for her.

I do believe circumstance plays some part in things. Some start further behind for sure. Health issues, etc. But citing things like addiction, no one HAS to take drugs or alcohol. We were given the warnings NOT to abuse these things when growing up. At what point do you stop blaming the thing when the person chose to NOT heed the warnings? Same for people who get overextended on credit because they have to have the latest ____________. Is my former neighbor making payments on two relatively new vehicles, or did they inherit some money have one or no car loans? I don't know. But I suspect if they did, they are in the minority as most we encounter are just making the payments.

But as far as knowledge or good advice, people carry more computing power in their pocket or purse than we used to go to the moon. Not to mention it's also connected to the sum of all human knowledge. If someone was concerned about checking to see if some course of action was advisable. (I.E. should I buy this 10 year old German luxury car that has 100k miles for $15k if I'm a shift manager at a fast food restaurant making $30k/year.) But many don't. They look and see what the payment is, ohh, only $300/month for 60 months, that's one week's pay, I can afford this.

Sorry so long on Christmas morning. I don't even know what I started this rant on.

I do believe some do start behind the curve. The question is, do they make choices to improve or worsen their circumstance.


Also, it's not like the Braintrust in DC follows good practice, had the money in Social Security been used wisely, it could pay 100% of a worker's typical wage AND provide the disability coverage the program claims to cover.

Instead, it's used to "make the payments" on all the things and your benefits will come from tomorrows contributions.

I hope everyone has a Merry Christmas, Happy New Year and anything else you may celebrate.

 

[Astro14]

I get very angry reading posts from people who seemingly grew up with every advantage possible, talking about how easy it is to save money and retire wealthy.

Let me tell you, when you grow up poor, single parent, and have to work and borrow to survive like I have for most of my youth, and then carry the burdens of debts for decades and cannot effectively "invest" because you're still focused on repaying loans, it's not that simple.

At least three times in my life, I've had to liquidate all my substantial savings to survive a unexpected job loss, downturn in the markets, or other crummy situations. I've 3 times had to make radical changes and sell homes, once at break even after owning it for 8 years, to avoid foreclosures.

So, what I read here is a lot of people who totally lack perspective. It's a heck of a lot easier to "just save money" or "just invest money" when you have a LOT of luck, and start off way ahead with wealth and good parents.

I've done nearly everything "right." I've worked harder than probably most people I've met in my life. I never had a family vacation; correction. We had exactly 1 short road trip which was ended prematurely because our car broke down. I started work when I was 15 and have had a job every day since then. Every dime I earned went directly to survival until I was probably in my early 30s. Saving? Give me a break. When I've invested in the markets, the timing was almost always against me and I've managed to lose a lot of money. Because market manipulations. I've invested in housing and of the 3 houses, I did great (doubled my money) on one (8 years, great market), marginally beat inflation on another (6 years, minimal return), and lost a bundle on the 3rd after 8 years of ownership. Every government program is geared toward the classes of persons I am not so I have rarely gotten any handouts that everyone else seems to soak up.

You can work your *** off, but you cannot outwork horrible economics, soaring college costs, soaring inflation, government picking winners and losers (if you're a attractive woman, or certain minority or single mom the world is handed to you on a platter and everything is free, basically), horrible government leadership, and market manipulators, and bad life events, and starting way behind... no amount of 1% or 5% ROI is going to make up for the first 2+ decades, formative years of having almost nothing until you're in your late 20s.

I get very angry reading posts where people assume that I've had it easy. Those posts lack perspective.

Not one person said it was easy. NOT ONE. You stereotype those of us that worked hard. You ignore the reality behind the success. You assume that success was gifted, not earned.

I assure you, it was earned.

I got my first job at 12. Saved my money (see the lesson there?) and bought my first motorcycle at 13. Cash.

Where were you when I was fixing my 1970 Ford Fairlane station wagon (a 23 year old heap at the time, with no AC, no power steering, AM radio) in the rain, by flashlight, at 1 AM so that I could get to work the next day? That was the price of avoiding a car payment when I had a child, and my wife stayed at home.

No poor person today would touch such a car. No AC in the Virginia summer heat? Crank windows? No bluetooth? Tailgate hinge rusted off and unusable? Totally beneath them. I read about rationalizations in this and other forums all the time about how people "need" a new car. Yeah, right. They're entitled. Not one story about "needing a new car" on the pages of BITOG are anywhere close to what I had with the Fairlane. A broken Oddysey needing a timing belt and a couple door actuators seems like unimaginable luxury compared with my old Fairlane. It would be an unacceptable car for most people these days who simply don't realize that staying on budget means going without. You cannot have it all and be in budget.

I started saving for retirement when I was 28. That was 30 years ago.

Same age you are talking about. Late start? Sure, but not so late that I can wallow in excuses for why I didn't get started. My first two decades weren't any easier than you describe.

Even the market hasn't been easy in those 30 years. The same things you describe as setting you back set us back just as much.

NASDAQ crash in April 2000? Lose 50% on some investments? That happened. Summer of 2008, when stocks lost nearly 50%. Yep, saw that, too.

How about buying a house in the summer of 2007? Yep, timed that one well. It still isn't worth what we paid for it.

How about the 50% pay cut I took in 1997, while supporting a family of four on one income?

How about the 65% pay cut, and liquidation of my pension, during my employer's bankruptcy in 2003? Wiped me out completely. Couldn't pay the mortgage. Well, I mean, I could either pay the mortgage, or I could buy food and pay the rest of the bills. Not both.

How about the devaluation and liquidation of my company stock, at one time valued around $105,000, for $872 during the same bankruptcy? Of course, they took withholding out, so the check was closer to $600. A couple weeks of groceries when I couldn't pay the mortgage.

How about working two jobs for 19 years?

For two decades, I worked nights and weekends. But that was easy, right? Because now, you look at my promotions, my pension, and think it was handed to me on a silver platter instead of earned through decades, yes decades, of hard work.

How about driving a 20 year old car, and taking the money saved on car payments to pay for your kids' college? Can't have a new car and do the right thing, so, we sacrificed. Staying on budget, as I said, means going without.

You read stories of success and assume they had it easy.

That's a false assumption, and that falsehood doesn't mean we lack perspective.

On the contrary, it's your post that lacks perspective.