Everyday Yahoo Finance has a fresh article that pertains to retirement planning, retirement investing or other relevant topic. Yesterday's article was particularly interesting and might tie in with past concepts covered here.
The basic premise of yesterday's article, in the context of retirement planning, was that you will be a much different person when you retire. Your interests, health, risk tolerances and whatever else will be much different twenty years from now. Here is a great quote from the article;
Richard Posner, a judge and law professor, has written that aging changes us so dramatically that we should imagine different people "time-sharing" our bodies. And the earlier tenants often leave messes for the next one to clean up.
Good stuff.
One bit of philosophy from our friend Bill that pertains to the mess to be cleaned up; Bill says you can figure it out now or you can figure it out later but the sooner you figure it out the happier you'll be.
How many times have you plugged your numbers into a retirement calculator and it tells you that you'll have a gajillion dollars left over? Then you go to another one and you're way short? Not being a financial planner (portfolio manager is a much different job) I come at these things from my own biases and other personal distortions.
My take on not knowing what you'll be like in the future is simply to just save as much as you can, hopefully as much as you can is more than you think you'll need, while we're at it I'll throw in live below your means. The article notes that someone in their 40s or 50s may want to work as long as they can but then come their mid-60s they may not view working the same way in terms of choice and of course there could be health issues the prevent someone from continuing to work.
The reason to save as much as you can is maybe better thought of as you never know what will happen in the future. With due respect to the article I'm sure there are plenty of people who make a plan at 30 and their life goes as planned, plenty of other people's lives take all sorts of turns (good and bad) and as the article notes we can't know where we fit in and we can't know what will happen.
Whatever life throws at us it is unlikely that more money will make things worse. Save as much as you can.
16 comments:
Just venting, but one thing that has been been upsetting is how those of us who have saved, lived below our means, paid our taxes etc. are now forced to bailout everyone who didn't. I tried teaching my children that we can't spend money we don't have for fancy vacations, toys, large houses etc. while families of their friends did. Yes, they're hurting, some, but they certainly had fun while the music was playing. For the most part, they've just walked away from their debts and are seemingly living normal lives, at least those with jobs anyway.
If I am reading between the lines correctly, I think Obama will figure out a way to subject investment earnings to new taxes, especially payroll type taxes. I can foresee the day where I am triple taxed on my income.
So yes, in theory you're right Roger, but it seems us leveled headed guys are being "chumped" by everyone else.
End of rant.
there will be means testing for social security and medicare someday. for those who saved accumulating a sizable nest egg (relavtive to everyone who didn't) you can forget about getting those monthly checks and medicare benefits. that's the way income redistribution works. savers will be no better off than everyone else.
gimme a break, a little sarcasm here.
6:44, i don't disagree with your assessment but you won't like my answer. the situation is beyond our control. i try not to worry about things beyond my control.
6:57, that is a great example of what i mean. no one in gov't (i think i have that right) thinks SS will go away but how can it possibly survive as we now know it?
Anon 6:44's complaint is simply that - a complaint. It's nothing new. It's not something brought about by the current financial crisis. If you've honestly come this far in life and not seen people take advantage of bankruptcy law, well, you're most likely just not seeing it, 'cause it's there.
If you're not having fun while the music is playing, then change your plan.
Social Security is actually on pretty solid financial ground. It has been included in political scare tactics since Mr. Bush's dog and pony show to "privatize" it. It is a longrange problem that must be addressed after we take care of real priority items like Medicare and the national debt and deficit, as well as the current financial crisis. Further, the solutions to the Social Security "problem" are fairly straightforward and at hand - for example, raising the cap on income subject to the SS tax, advancing the eligibility age, increasing penalties for early receipt of benefits, etc. I think Social Security has a high probability to survive as we know it. Regardless, it should come at the tail end of any discussion of impending financial and economic problems that we face.
Anon 6:44, if you want to make yourself feel a bit better, go offer those folks pennies on the dollar for their toys. OK, that's mean. But maybe go buy an investment property for 1/2 of what someone paid a couple of years ago. Your patience and discipline has paid off and the time to take advantage of that is now (or at least sometime around now).
When charting a course for thirty years of retirement, it was bad enough trying to comprehend the impact of Boomers cashing in their chips for social security and medicare, which no one has a handle on. But now to tack-on this spending on nothing bill, plus a "Son of TARP", etc. WOW...wish someone could pont to a Hoover Dam or its ilk as to where the spending is going.
Dealing with what we can control is good advice, but that is only within the context of having to adapt to the current events and their impact on our and our children's long-term financial security. Most people think linear and IMHO we are at an inflection point that will make such thinking a big mistake.
If you've saved and lived frugaly but you're not doing as well as someone who's taken all sorts of chances and been profitable - a business owner, for example - then, surely, they have a right to be rewarded for what they've done?
And if that same guy went bankrupt because of this credit crunch and walked away, who's to say it's his fault and he should pay for the rest of his life?
Yes, some regulating over who gets credit is essential, going forward. But without the recent 'good times' the BRIC countries - business wise - would still be stuck in the Dark Ages.
And it is them which will pull the World out of this hole, eventually.
Thanks Roger, interesting as always
any advice for married couples
investing? Example: one huge
risk taker other conservative
(or has to be because of risk
taker). Just wondering, do you
do all the investing or does your
wife invest separately with her
own ideas?
Joellyn gives me the benefit of the doubt.
As more and more people start to understand the US is looking into an abyss, the markets will continue to drop. A scenario of gradual declines in the index over the next 3-4 years is not unreasonable. We will wake up in 3-4 years and see the DOW at 4500.
The march towards socialism will hurt all savers. We will lose our social security benefits and face substantial taxes.
However, unlike Roger, I do think there is something we can do. We can vote libertarian or Constitution party. If enough folks start to do so, it will have an impact.
Another thing we can do is inundate our elected "leaders" with letters and calls. They do track the responses they get. It may not have a huge impact, but it can water down some of the questionable legislation that comes out of DC.
Kirk, you have an activist spirit that I lack. admirable quality.
Interesting piece by Ray Dalio of Bridgewater.... Says we will see a buying opportunity of this century in late 2009/2010.
http://www.invivoanalytics.com/wp-content/downloads/DALIO_PMPT2007update.pdf
A moment's rant:
Life is not fair, nor should it be.
If you resent those who've 'made hay while the sun shines', well, Mr Industrious Ant, seems like you're kidding yourself. You either don't realize that you're programmed to "be good" (to wit: you have no choice and your resentment is misplaced since you couldn't help BUT live as you did/do), or that the struggle you feel to not resent the "free rider" is evidence that you're not exactly holier than thou.
If anything, this economic disaster is going to be the outgoing tide that shows us all to be swimming naked in the game of life: the false distinctions of who has money/who doesn't, who is "wicked smart"/who isn't, who is a "level headed guy"/who is a stressed out unemployed midlevel manager at a finance house with no prospects 2 kids and no health insurance, will all disappear.
Turn toward, not against, your fellow travelers. We all get off in about four score years.
Rant off.
R in NY
Was complaining to my brother the other day that greedy people got us into this mess. He must of thought about it some and this link appeared in my email. Its Milton Friedman smacking Phil Donahue around over the subject of greed. Very interesting indeed. Enjoy.
http://www.youtube.com/watch?v=RWsx1X8PV_A
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