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Post by jeffolie on Jul 30, 2007 17:12:37 GMT -6
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Post by blueneck on Aug 1, 2007 5:10:29 GMT -6
Now what exactly is a mid 50's person supposed to do to get educated and engaged toward their retirement???
And with stagnating wages and ever increasing costs, as well as the disincentives to save like low interest rates and taxing interest income on savings, - how can one save in any meaningful way - not to mention the deflationary pressure on money that make the value of your savings even less.
The main problem as I see it is the over-reliance on the 401k for retirement savings. As an example my 401k lost almost half its value during the start of the Bush recession, and took the next 5 years just to catch back up - 5 years that should have been earning. The bottom line is that it was a tool to shift the responsibility for the retirement savings from the companies and give it over to private investors to play with as they choose.
Its too reliant on the economy - if the economy sucks when its time to retire your 401 k loses value , many times you have to postpone the retirement, I can think of at least a half dozen people I know that are in that boat.
Hedrick Smith had a recent PBS program about retirement savings - the conclusion was that people with defined benefit traditional retirement accounts did far better in their retirements than did those on 401ks.
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Post by Grapple on Aug 1, 2007 9:40:56 GMT -6
But what happens if all these boomers started suddenly start saving for their retirement, then personal spending would drop and these same economists would panic because the economy was tanking. And of course if these boomers start doing the right thing and saving and downsizing for their retirement who is going to buy all those $750,000 and up McMansions that the developers have built all over the country.
Personally I have never understood why anyone who was retiring and going on a fixed income would want to buy a expensive Mc Mansion, I would want a nice small 3/2 or 2/1 energy efficient low maintenance, low tax, low price home. However if you look at the RE business and many local governments they seem to be betting on the boomers would upsize not downsize
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Post by whoswho on Aug 1, 2007 12:39:28 GMT -6
Why is all the blame put on the boomers themselves? What about the effects of companies downsizing so many middle aged people?
If you're forced out of a well paying job and can only find lower paid work, is it then possible that you are gonna save as much? 1 + 1 is not equal to 5.
I didn't save as much when I was younger because I couldn't.... and then when I got to the point where I was making decent money, they axed me. You can't get blood out of a turnip.
Also we were forced from defined benefit plans to 401k's. At the time 401k's were introduced into our company, no one told us that they would be our main source of retirement. They were just considered the icing on the cake, and just kind of a nice thing to have in addition to the awesome retirement the company was already going to provide for us. So I did not contribute heavily to mine. I did not see that it was necessary.
Here is an interesting comment I read on a retirement forum:
.............it's too late for an employee who is, say, 45 years old to vote with his feet. Because he can't start over again as a 22 YO employee, and expect to get either the benefits of 401K compounding or another DB plan that maxes out after, say, 40 years. When you are forced to switch horses from a DB plan to a 401K midstream, you get hosed. They're not phasing out the plan by letting "nature take its course." Rather, they're forcing people switch mid-stream, which is highly disadvantageous. The value of a DB plan comes in its few last years, whereas the value of a 401K comes from its first few years. When you switch, you lose both ways.
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Post by unlawflcombatnt on Aug 2, 2007 3:29:50 GMT -6
Now what exactly is a mid 50's person supposed to do to get educated and engaged toward their retirement???.... The main problem as I see it is the over-reliance on the 401k for retirement savings. As an example my 401k lost almost half its value during the start of the Bush recession, and took the next 5 years just to catch back up - 5 years that should have been earning. The bottom line is that it was a tool to shift the responsibility for the retirement savings from the companies and give it over to private investors to play with as they choose. Its too reliant on the economy - if the economy sucks when its time to retire your 401 k loses value , many times you have to postpone the retirement, I can think of at least a half dozen people I know that are in that boat. Hedrick Smith had a recent PBS program about retirement savings - the conclusion was that people with defined benefit traditional retirement accounts did far better in their retirements than did those on 401ks. Absolutely right on the money. Companies don't want to be responsible for delivering on the retirement promises they made to employees, which were made in lieu of wage increases employees did not receive. Since companies never actually had to devote any real money to their phony pension contributions, it was a win-win situation to falsely claim they were putting money into employee retirement plans. (They would have actually had to pay for wage increases, instead of simply claiming they'd put money into pensions and retirement accounts.) My opinion is that 401Ks are a largely a scam. They encourage workers to give part of their paycheck to Wall Street, in exchange for a relatively minuscule tax reduction. And there is no assurance whatsoever that money put into a 401K will be there when they retire. A worker is better off buying gold and putting it in a bank safety deposit box (or burying it in their back yard), than they are giving their money to a bunch of lying, crooked scumbags on Wall Street. 10 years ago it may have been reasonable to trust a broker or pension fund manager. Nowadays, however, such trust would border on insanity.
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Post by whoswho on Aug 2, 2007 7:01:22 GMT -6
Here is what has happened to my income since I was downsized. I drew the chart based on actual numbers taken from my yearly Social Security statement. The big spike is because of the addition of severance pay that year. The dotted line is my estimation of where my salary might have been if I had been allowed to retire in a normal manner. And so I am supposed to save like mad? How?
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Post by jeffolie on Aug 2, 2007 9:38:12 GMT -6
Consider using a Roth IRA. When you withdraw your money, it is tax free.
Income taxes are relatively low now and most likely will be very high to pay for the Boomers' retirement and medical care.
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