Thoughts on retirement savings in the US

People look at successful people and see only the success, not the hard work, not the years of sacrifice, not the losses, not the risk, and none of the challenges it took to achieve the success.

It‘s an easy trap to fall into.

It’s happened in this thread.

Don‘t fall into that trap.

It’s important to avoid it because it allows you to rationalize giving up. Falling into the trap of that thinking allows you to take the easy path, that spirals down into debt and failure, instead of continuing to work hard and overcoming the inevitable failures and setbacks that every successful person faces.

My favorite story, from a bro (former fighter pilot, now business owner) who was struggling to put his real estate business together at the same time he was getting out of the Navy.

“Joe” was living in a cheap condo, having rented his house to save money because their cash flow was tight. His wife was in the hospital, undergoing surgery for a brain tumor.

He had several properties that were between tenants. Mortgages were due.

He was about to default because he didn’t have the cash.

While she was still hospitalized, he sold his wife’s brand new Jeep Cherokee (they had paid cash), took the cash, covered the mortgages, and bought a crappy, used sky blue Ford Taurus with 100,000 miles on it so they would have a car.

When he picked up his wife at the hospital, through the drugs, confusion of brain surgery, and the pain, she looked up at him from her wheelchair and asked, “Honey, where’s my Jeep?”


That was 26 years ago. Joe and his wife still have that house. It’s been rented again, because they have a multi million dollar house in an exclusive area of South Carolina, a condo in Miami, and several successful businesses.

It’s easy to look at their success and be envious.

Unless you know just what risks, and sacrifices, they made to get there.

Don’t be envious.

It’s a poison that blocks your own path to success.
IMO this is actually a very risky move, "Joe" could have easily end up not having the Jeep or the house. Very often people praise success stories like this without factoring the risk they took and what those risk could have ended up if the coin flipped the other way.
 
Morons running the government. Morons over-building the area. Terrible tenants that were screened and seemed reliable, but were not, and that cost me a year worth of losses between their 5 months of non-payments, and the subsequent vacancy off-season. In 10 years from 2009-2019 that house did not appreciate $1. Because of the idiots in government and the idiot builders. In the 2 years since I've sold it it's probably doubled in price, again due to the macro economic effects I cannot control. I cannot control the macro-economics of other idiots decisions that nearly bankrupted me. Or that made the new owners rich due to my bad timing and their great timing. Other than a longer time-line, there's no way to have known or predicted or profited from this, other than just being the lucky (versus unlucky) parties.

I did everything as best I could. BAD LUCK intervened. One example, yes, but just proving a point that some of you who never seem to have BAD LUCK just do not understand what it is like when no matter how hard you try, how smart you try to plan, the best decisions you can make, and BAD LUCK laughs and you land on Boardwalk with hotels and are wiped out.
The only thing you can count on is when there's money there's thieves, morons will run the top management in every sectors eventually (Peter's principle), and since your home is such a good deal others will overbuild there to make the money instead of leaving it on the table.

This, my friend, is the reason why old homes in old good neighborhood with nowhere else to build, is a better long term "investment". There's only one Jackson Hole Wyoming and that's why all the Hollywood stars are buying there. There's also so much land in Texas everyone can buy a new home for $400k that would have been 4M in California, but it will never be 4M in Texas because there is so much land, and houses there are like cars you used and depreciate over time, then sell to a lower income family than they are and start over.
 
About 20 years ago, I was doing well with my airline job (this was just before the bankruptcy and 65% pay cut, pension liquidation, etc that was still a year or two in the future) and lived in a nice neighborhood in Colorado.

Getting the kids ready for school, I was buckling them into their car seats in the back of a 16 year old Volvo wagon when a neighbor drove by in a brand new Mercedes. Another drove by in a new convertible. And another in a new SUV.

My (now ex) wife remarked, looking at those cars and then at the old Volvo, “I can’t believe all these people make more money than you.”

”They don’t. They just spend more.” Was my reply.
Young guys from my field went to another field and make way more money than me all the time. This is the nature of our industry. At some points you have to make peace with your income and your luck. I was lucky that I bought my home earlier than the young guys, they are lucky that they are making way more money than my wife and I can. There is nothing you can do about it other than keeping your own blood pressure low.
 
CharlesInCharge talks about good luck and bad luck. There is a bit more to go with that.

There is plenty of evidence of rigging in the financial system and anything that involves big bucks, such as buying/selling real estate, vehicles, expensive computers, and so forth. Much of the rigging seems deliberately designed to harm those at the bottom economically. That's not the same as bad luck, as luck has nothing to do with it. There was a famous book in the 1970s that described some of this: The Screwing of the Average Man by David Hapgood. Hapgood described how the big dogs on Wall Street tell "little guy" jokes just as people then told silly ethnic jokes—with "little guy" referring to the small investor, that is, you and me.

Even Del Walmsley, who advocates buying and selling class A rental housing as a scheme for building wealth, has admitted on his show that much of what he was able to do to build his own wealth when he started in real estate in the 1990s is no longer possible. The elites changed the rules. You can't do now some of what he did then.

Also, people at the lower end are often misinformed or just plain kept (again I think deliberately) in the dark about a lot of major things in life. My working-class parents weren't thinking in the 1960s and 1970s of their own kids going to university, partly because they never had the opportunity or money to go themselves. They thought kids who did really well in K–12 would get scholarships to pay their way. No one was pulling them, or parents like them, aside to tell them the realities, even though I was an honors student in gifted programs.

My parents were shocked when they discovered late in the game that they were expected to foot most of their kids' uni costs. Let me repeat: no one was telling them this until I was in high school. Later I couldn't get even a Stafford loan because even that was limited based on parental income. There is a lot more to this story, but the recession of the early 1980s played a big role. Plenty of other parents were in the same boat. A lot of people could not afford to go to uni in the first place, or (like me) left well before completing a bachelor's.

Part of the rigging there was in not adjusting the federal financial-aid tables to account for the roaring inflation of the 1970s–early 1980s. My parents both had to work and in 1982 had on paper an income that looked really nice by 1967 standards, when those charts were created. The reality was that they were just scraping by in 10+% inflation. Loads of others were in the same boat.

And then you have to factor sleazy employers who underpay their employees or otherwise don't treat well the people who help make their CEOs rich. Many people are stuck in such jobs. But that's a subject for another time and place.

At different times I have had to leave jobs and liquidate retirement accounts to survive, most recently when I left a career in corrections (state government) in 2006 to take care of my mother and stepfather. It can happen to almost anybody. That kind of event will set back most people. The thing is, at age 58 I'm only now making the kind of money I hoped to be making 30 years ago, and yes, I have a 401(k) with the maximum employer match. But it's hard to bounce back from the past or make up for it.

So I know where CIC is coming from. My input is that the luck argument is just a little simplistic. You have to add rigging, keeping people ignorant, and suffering setbacks beyond one's control.

Interesting that most states have resisted adding a financial-literacy requirement to the public-school curricula, almost as if they want to perpetuate the ignorance...
Come on, this happens way before we have Wall Streets.

Back then we had monarchies doing this to the commoners, the religious organizations doing this to the monarchies, etc. It is pretty much a guarantee that the house always win, and real investing is to buy something stable and hold (doesn't have to be stock, even your own home to live in is an investment) instead of speculation with the big guys thinking it is a fair trade with them.
 
IMO this is actually a very risky move, "Joe" could have easily end up not having the Jeep or the house. Very often people praise success stories like this without factoring the risk they took and what those risk could have ended up if the coin flipped the other way.
Extraordinarily risky. That was my point. The coin DID flip. Joe was caught. Joe got called on his risk and had to sell the Jeep. That day. That hurt. Joe‘s path to success included risk, loss, sacrifice.
 
Young guys from my field went to another field and make way more money than me all the time. This is the nature of our industry. At some points you have to make peace with your income and your luck. I was lucky that I bought my home earlier than the young guys, they are lucky that they are making way more money than my wife and I can. There is nothing you can do about it other than keeping your own blood pressure low.
I think you completely missed my point. It’s not that other people were making more.

They weren’t...

They were spending more.
 
About 23 years ago I knew a guy that was injured on the job and sued his employer and Workers Compensation for a combined $1M. WC offered ___ amount of money, but he got 3X with help from lawyer. That’s $1M after his lawyer’s cut.

The guy hurt his neck in a forklift accident and had to wear a Halo for 3 months. At first they didn’t know if he was paralyzed but luckily he wasn’t and eventually recovered.

Back then we talked about investing money on the stock market and I warned him to be VERY careful with the money because it can easily grow 2X or 3X if wisely invested. It can also be lost quickly if he makes dumb decisions. Hopefully he didn’t squander the cash and retired early.



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