OT: will this be you in your "golden" years?

OK, call me stupid, but why does one need 20 annual incomes in savings, to retire? I understand why "investment professionals" would like to manage more money, but there is a little bit of exaggeration involved.

Retired people get social security, medicare, etc, can downsize on real estate if they do not get real estate tax breaks, etc. They do not drive to work etc, can eat at home, major savings from not working and not being busy.

I have seen several older people who live on SSI and are happy and even save some money every month.

The article sounds like the typicle BS put out by investment scammers. They always forget to mention your 401k could easily be wiped out if the market crashes, but they still get thier management fees either way up or down. Living beyond ones means is the main cause of poverty in retirement. That article is a very clever infomercial, first you scare the hell out of your audiance then you sell them salvation for a small price just like insurance.

Best Regards Tom.

It ought to be You're on your own.

But saving $500,000 to $1,000,000 on a median wage is not all that hard. You just have to realize that you are on your own and start saving when you are young. No waiting until you are fifty to start saving. And since you are starting in your twenties, you can take some long shots that you might not want to take when you are in your fifties.

Read A Random Walk Down Wall Street by Burton G. Malkiel. It is the best b ook on investing that I know of.

Another book worth reading is The Richest Man In Babylon ? George S. Clason

Read that when you think you can not save.

Dan

I get mail from investment professionals on a regular basis inviting me to a free seminar. Being retired i know that most of the information i hear at those seminars is misleading and designed to scare people.

Best Regards Tom.

Free seminars are designed for one thing only, to separate you from your money via "hard sell".

Cynical, but true. There is not enough waterfront real estate in Florida for every retired person. Some will retire rich, but not all. But it is not that important to be rich in retirement. Just to have enough money for a pleasant lifestyle, however defined. Having a well kept house, a good car, and good food is enough for me personally. Everything beyond does not enhance retirement.

I found them useful to practice polite but firm disagreement.

jsw

Because the rate of return on savings is so low. When inflation and tax effect is included the return is negative. This means you are dissipating capital.

The key qualifier is maintaining an equivalent life style in retirement. They don't want to stay home and eat dog food, they want to continue going out and take a occasional vacation/trip.

Were they living in a rented trailer?

Yep, thats what i planed for and achieved. No debt, new house, new car, small shop in the garage makes me a happy camper. Social security covers all my regular bills with some left over.

Best Regards Tom.

The rate of return depends in what you have invested. If you are not willing to do a little research and just put your money in a bank savings account, then you are right.But no one forces you to put your money in a bank savings account.

In the last year the S & P 500 has gone from 1450 to 1700. That is a 17% return. Somewhat better than the rate of inflation.

Dan

Couple of years back, all that stock money that was invested just evaporated.

I can happen again.

The way I see it, right now you can invest in a stock index fund and withdraw approximately 5 percent of what you invested every year. ($100 buys a little more than $5 of earnings).

That's not a bad return and stock price fluctuations are not of great importance.

No, in section 8 apartments. They are dead by now, but they did not feel bad about their financial situation and left their kids some little cash inheritances. The point is that they felt they were doing fine.

The easiest way to think about buying stocks is how much earnings you are buying. Right now, $100 buys you in excess of $5 in earnings if you buy an index fund. That is a number that one could be comfortable spending, as corporate earnings should not drop by too much and usually they grow a bit. Stocks will change in price every year, sometimes up and sometimes down, but spending your share of earnings should work out OK.

So, say, if you have $1,000,000 in stocks, you can withdraw about 50k per year, which is a very cool amount.

There you go.

It's only a return if you convert back to cash. Then you have to pick/guess the next best thing to invest in, and hope you're not wrong. Try doing that every year until you retire, and hope you never get wiped out.

That's not investing, that's speculating by riding a bubble.

How many jobs were created? How many domestic factories were erected? How many new/improved products were developed as a result of this bubble? The bubble "investors" still expect to be taxed at capital gains rates rather than the unearned income rates and thus be subsidized by the normal taxpayers.

willing to do a little research and just put your money in a bank savings account, then you are right.But no one forces you to put your money in a bank savings account.

a 17% return. Somewhat better than the rate of inflation.

No, it did not "just evaporate"

Now you see it - now you don't.

What do YOU think happened to it?

Let's say that you owned a certain percentage of the 500 largest American corporations, through an index fund, from 2007 to 2013. And let's further say that you did not make any purchases and did not sell anything.

Then, throughout that period, you owned the same percentage of the same companies, with very minor variations related to corporate share repurchases. Your ownership did not change. Your dividends did not change much year to year. The earnings that accrued to your ownership changed year to year, but not greatly.

The drama was mostly about what other people were willing to pay for your share of ownership. In 2007, it was high, in 2009, it was low, then it went up again. That drama is not very important, if you do not plan on selling.

I loaded my family up with stocks in 2009, to about 90% of my net worth besides the home. I did it because I thought that I could buy a whole lot of dividends for every $1,000 invested.

I had a realization that if I buy stocks, I would get paid so much in dividends, that it will not even matter if they keep going down. As it happened, they did not go down, but if they kept going down, I would still be happy.