WaPo: Dying at your desk is not a retirement plan

[tshile]

4 minutes ago, zoony said:

It doesnt have to be either or.  Just saving 6% of your income before tax, and starting young.

1.  You will never miss that money

2.  You will retire a millionaire

 

as long as you have a debt situation where you can be paid off by the time you're ready to retire.

 

too many of my friends are borrowing too much now, and planning to worry about it later. they wont be able to save enough because they'll never get out from the debt they're creating.

[zoony]

33 minutes ago, tshile said:

@zoony also i am going to be thrilled when all of my "but i want to have a life now" friends make it to their mid-late 50's and start telling me how tax money needs to be given to them so they can retire because the world is "unfair" and it's what they're owed.

 

the idea that they failed to plan and its their fault will be lost on them. I'll have 30+ years of evidence to show them they're wrong because they've made terrible decisions and suck at money, but they won't listen/care.

 

 

Yah, cant wait.  Already seeing it with liberals trying to take away college savings plans and advocate for pensions.

 

Better believe those of us who save will be punished for it.  

[The Evil Genius]

37 minutes ago, tshile said:

@zoony also i am going to be thrilled when all of my "but i want to have a life now" friends make it to their mid-late 50's and start telling me how tax money needs to be given to them so they can retire because the world is "unfair" and it's what they're owed.

 

the idea that they failed to plan and its their fault will be lost on them. I'll have 30+ years of evidence to show them they're wrong because they've made terrible decisions and suck at money, but they won't listen/care.

 

 

You're going to be thrilled when all your friends are working until they are 90 and/or are penniless?

4 minutes ago, zoony said:

 

Yah, cant wait.  Already seeing it with liberals trying to take away college savings plans and advocate for pensions.

 

Better believe those of us who save will be punished for it.  

 

What a ...what's the phrase for it? Oh yeah... condescending and ****ty attitude towards people.

 

[zoony]

14 minutes ago, purbeast said:

My wife (even well before we were married) have always made traveling a priority of ours and continue to do so.  The first time I ever went out of the country was with her when I was 23.  It was the first time I ever saw white sand beaches and clear water and was mesmerized.  Now that's all I want to do and where the majority of our travels revolve around.

 

Even once we had our son we continue to make it a priority.  We have gone both with him and without him to various places, luckily because my mother in law can watch him for extended time when we have traveled a couple times.  But he's already been to more countries in his 3 years than the rest of my immediately family combined lol.

 

And on top of that I'm still saving pretty decently for retirement.  We make pretty good money and are both working, but if my wife was to become a stay at home mom we would definitely have to cut back on the travel a bit.  IMO it is all about having balance.  Going one way or the other to the extreme isn't a good thing.

 

To me there are life pillars.

Financial health

Emotional and mental health

Physical health

Family

 

I dont think favoring any of those at the expense of the other is a good strategy

[tshile]

Just now, The Evil Genius said:

 

You're going to be thrilled when all your friends are working until they are 90 and/or are penniless?

 

No, I'll be thrilled when they tell me how none of it is their fault and that the rest of us need to pay for their terrible living habits.

 

They all make more money than me. They waste it. Everyone's told to save for retirement. They're told to save for emergencies. They're told to plan. Some people choose not to. In the end, for the most part, people get what they deserve. There are people who are the victims of circumstance in one way or another, and I feel terrible for them. My friends are not those people. They've decide to suck at financial planning. 

 

I'm sure they will appreciate you sticking up for them though.

[zoony]

4 minutes ago, The Evil Genius said:

 

You're going to be thrilled when all your friends are working until they are 90 and/or are penniless?

 

What a ...what's the phrase for it? Oh yeah... condescending and ****ty attitude towards people.

 

 

Do you need attention or something?  

 

Sorry if you feel inferior in this converation.  Going forward though please pm me if you want to continue the attention seekingfor the sake of the threae.

4 minutes ago, tshile said:

 

 

I'm sure they will appreciate you sticking up for them though.

 

Equality of outcome brother!  

 

Besides, Youre privileged,  dont you know.   Pay up, chump

[mcsluggo]

17 minutes ago, NoCalMike said:

 

That is probably true for previous generations, but I could see the way the real estate market is so volatile now, bubbles constantly inflated, then pop.  Home values rising so fast then tanking.  There is risk in that too. 

 

I'll never understand the very concept of comparing the returns on a primary residence home purchase, versus potential returns that you COULD"VE had from other potential investments .... 

 

its not the actual tradeoff you are facing (invest in housing versus invest in the market), the choice you are making is "spend $4,000 a month on mortgage payments" versus "spend $4,000 month on rent" .... but at the end of 30 years you have a $800k house that is fully paid off, verses having....well... receipts for rent payments.     

 

if you had to put down 10% on that 800k house...then you ARE forgoing investing $80k in some other venture (the markets?)... if you make 8% a year, at the end of 30 years your $80k would become $745k (a GREAT return story!)..... but this is less than the value of the house, even if it doesn't increase in value AT ALL over the 30 years (doesn't even keep up with inflation).    if the house even just increases at 2%/year  (roughly inflation the last 20 or 30 years?) then at the end of 30 years you have a house worth $1.4 million--- double the amount of the what you COULD'VE received from the $80k downpayment if you invested it elsewhere.  

 

 

because of the leverage (you get to realize returns on an $800k investment while only putting down $80k) you make more on the house only returning 2% even if the "alternative" returns 10% a year.    that is a great investment to get your hands on.... 

[The Evil Genius]

Did you factor in the loss of 2-10k in property taxes each year?

[tshile]

10 minutes ago, mcsluggo said:

its not the actual tradeoff you are facing (invest in housing versus invest in the market), the choice you are making is "spend $4,000 a month on mortgage payments" versus "spend $4,000 month on rent"

 

Even this is not close enough to the truth. Around here a mortgage that gets yous a 3/4 bedroom house with a basement and a garage runs the same monthly payment that a 1200 sqft 2 bed 2 bath 4th floor apartment costs you.

 

If you want to rent a house that actually compares, you're going to be paying 2x what you'd pay in your mortgage.

 

So sure, it's more than just a mortgage. insurance is higher, taxes, and you have to fix things when they break.

 

But compare apples to apples. Don't compare a standard apartment to a house majority of americans would be thrilled to own.

[mcsluggo]

15 minutes ago, The Evil Genius said:

Did you factor in the loss kog 2-10k in property taxes each year?

 

did i factor in the fact that your mortgage payment will stay the same over those 30 years, even if the value of housing goes up? versus the fact that your rent payments increase continuously over the 30 years?   

 

---- the example i gave was a simple one, that i could calculate on a spreadsheet in about 5 minutes...  there could ALWAYS be more variables that you could tweak to get more accurate... but the biggest picture items were captured there---- and bythe way... yes... the mortgage amortization calculators that give you about a $4k monthly payment on a $720k loan DO include property taxes.   I didn't take out any capital gains taxes from the 8% returns on the stock market, however.  (also... my house HAS increased by way more than 2%/year... but i am not counting on it doing so)

[mcsluggo]

i will NEVER forget the WTF moment i had, when my parents happily showed me their last mortgage payment in the 1990s.... 

 

...it was less (on a 4-5 bedroom/3 bath, 2 car garage house in McLean, inside the beltway) than i was paying for the "1 bedroom english basement apartment" i was renting at the time-- renting someones's walkout basement:   No kitchen of my own (had to share it with people upstairs), no windows in the one "bedroom", and we had to accept that people would just randomly come down to our living space to do laundry (we had to share THAT with the people upstairs, also)....    

 

granted, my parents got to cash-in the "inflation check" that hopefully WE will never get    (they bought their house in the 60s, and then got to see their mortgage payment stay constant in the late 70s, early 80s when inflation was 20%/year) .... but ...still.....  

 

 

[Elessar78]

2 hours ago, Riggo-toni said:

l...then again, I am diabetic, ...

your real inheritance

[The Evil Genius]

Tbf, the average home owner moves every 7-8 years right? Had they stayed for all 30 years, they'd likely had paid more than 2x the purchase price (since most don't pay extra towards the principal each installment).

 

As a 2x home owner, I can see both the positives and negatives of home ownership. I don't think it's a one size fits all type of investment.

[Elessar78]

1 hour ago, zoony said:

 

Yah, cant wait.  Already seeing it with liberals trying to take away college savings plans and advocate for pensions.

 

Better believe those of us who save will be punished for it.  

Whoa. I'm a liberal, been saving forever. Why paint broad strokes? I know just as many or more Conservatives than Libs that are way in debt and don't save squat for retirement. Must be something in the Conservative Fear Mongering Talking Points Manual: Liberals trying to take down College Savings Plan. Know a **** ton of liberals who I talk policy with regularly and neither of these have ever even remotely come up. 

[TD_washingtonredskins]

22 minutes ago, The Evil Genius said:

Tbf, the average home owner moves every 7-8 years right? Had they stayed for all 30 years, they'd likely had paid more than 2x the purchase price (since most don't pay extra towards the principal each installment).

 

As a 2x home owner, I can see both the positives and negatives of home ownership. I don't think it's a one size fits all type of investment.

 

I agree with this...especially for those whose lives don't go 100% according to the plan they had at 25. 

 

I'm recently divorced and co-owned a house with the ex from the mid-2000s until last year. As part of splitting our assets she bought me out (giving me less than half to make up for the higher amount of IRA/Annuity I would take). I'm now into my 40s and re-evaluating what to do when it comes to a home....do I want to buy again for what might only be another 8-10 years (until the kids are out of the house) or do I rent and maybe start putting some money toward a post-retirement/vacation-type home? 

 

Anyway, your post just pointed out that many of these "do x, y, and z" plans are just that - plans. Anything that bumps you off course almost certainly eliminates the paint-by-numbers aspect to:

 

Buying a house at 25 and paying it off by 55

Contributing 15% to your 401K from 22

 

I'm still in good shape because I have mostly done the stashing money into a 401K plus I have the equity from the house. I'm not a millionaire, but when I look at the amounts that the average American has saved (even people closer to retirement than I am) it scares me (for them). 

[zoony]

34 minutes ago, Elessar78 said:

Whoa. I'm a liberal, been saving forever. Why paint broad strokes? I know just as many or more Conservatives than Libs that are way in debt and don't save squat for retirement. Must be something in the Conservative Fear Mongering Talking Points Manual: Liberals trying to take down College Savings Plan. Know a **** ton of liberals who I talk policy with regularly and neither of these have ever even remotely come up. 

 

I was referring specifically to the thread on ES.  It was basically me against the entire tailgate.  Every liberal on this board wanted to do away with the tax incentives and fund a more "fair" plan, i.e. government pays.  So not sure i am painting with broad brushes, just based in direct experience

 

There was also a thread on the dissapearance of corporate pensions.  That thread went the same way

[TheGreatBuzz]

LOL at all the people thinking the American dollar will still be good for anything 40 years from now.

[PF Chang]

2 hours ago, mcsluggo said:

 

I'll never understand the very concept of comparing the returns on a primary residence home purchase, versus potential returns that you COULD"VE had from other potential investments .... 

 

its not the actual tradeoff you are facing (invest in housing versus invest in the market), the choice you are making is "spend $4,000 a month on mortgage payments" versus "spend $4,000 month on rent" .... but at the end of 30 years you have a $800k house that is fully paid off, verses having....well... receipts for rent payments.     

 

if you had to put down 10% on that 800k house...then you ARE forgoing investing $80k in some other venture (the markets?)... if you make 8% a year, at the end of 30 years your $80k would become $745k (a GREAT return story!)..... but this is less than the value of the house, even if it doesn't increase in value AT ALL over the 30 years (doesn't even keep up with inflation).    if the house even just increases at 2%/year  (roughly inflation the last 20 or 30 years?) then at the end of 30 years you have a house worth $1.4 million--- double the amount of the what you COULD'VE received from the $80k downpayment if you invested it elsewhere.  

 

 

because of the leverage (you get to realize returns on an $800k investment while only putting down $80k) you make more on the house only returning 2% even if the "alternative" returns 10% a year.    that is a great investment to get your hands on.... 

 

The key here is you're staying in the house for 30 years. I don't disagree with your post - in this scenario the house was the right decision. 

 

The problem is that people think buying is always better than renting, and that home values are always going to increase. They don't consider property taxes/closing costs and don't understand amortization tables. 

 

I think the articles I'm linking below do a good job of showing that the answer to "buy vs rent" is really "it depends."

 

Rent v. Owning Your Home, opportunity cost and running some numbers

 

Why your house is a terrible investment

 

 

[mcsluggo]

5 hours ago, zoony said:

 

I was referring specifically to the thread on ES.  It was basically me against the entire tailgate.  Every liberal on this board wanted to do away with the tax incentives and fund a more "fair" plan, i.e. government pays.  So not sure i am painting with broad brushes, just based in direct experience

 

There was also a thread on the dissapearance of corporate pensions.  That thread went the same way

 

 

I don;t remember this (and may not have participated?).... but If i had to guess, the reason that most of the tailgate was against whatever tax incentives you are referring to, was because tax incentives in general suck as a method of encouraging whatever behavior they purport to encourage.    By their very definition, tax incentives benefit the highest tax bracket individuals the most, and lowest tax bracket individuals the least.... if everyone benefits from them... but they ALSO are focused in areas where the better-off are generally more likely to use them  (savings for 529s and for IRAs, etc... ), and the rich already WOULD be saving for  those  activities, even without the incentives.   

 

it means that the general population gives a subsidy to actions that the rich are most likely to engage in anyhow and skews the payments that even if everyone participates, the subsidies themselves are skewed most heavily to the rich ... it is a very regressive structure, and is almost always sold to the public as a means to encourage MORE access to whatever society wants poor people to be doing more of (saving toward retirement, saving for education, going to college... whatever...)

 

 

I benefit from these programs, because i already save like a mother****er (I'm one of the over-savers that you loathe in this thread) ... but if the policy really IS supposed to be aimed at encouraging those that otherwise aren't saving towards school or retirement... a better (more targeted) incentive would be to do some sort of contributions matching that gradually sunsets-out above certain income levels.   

 

 

 

 

 

 

 

For what it is worth.. this reasoning is ALSO why I am against the Bernie-type proposals to pay for everybody's college.   We have already seen this model (in the UK and other places).     The rich and the upper middle class already send their kids to college in the highest proportions--- under universally paid-for tuitions, those kids STILL go to college, but now everyone else pays for it (including the poor).   In addition, some high achieving poor kids go to college, and they (and we all) benefit a-lot from doing so... but MOST of the subsidy goes to kids that already would've been going to college anyway ... and these proposals are so damned expensive, that they would crowd-out programs that specifically target poor kids that need help MAKING it to college (not just paying for it once they are there) .... IN THIS CASE, it would be much better to target college tuition assistance towards those that need it the most.....  kind like what we do now  (but it could certainly be done BETTER)        

 

[mcsluggo]

19 minutes ago, PF Chang said:

 

The key here is you're staying in the house for 30 years. I don't disagree with your post - in this scenario the house was the right decision. 

 

The problem is that people think buying is always better than renting, and that home values are always going to increase. They don't consider property taxes/closing costs and don't understand amortization tables. 

 

I think the articles I'm linking below do a good job of showing that the answer to "buy vs rent" is really "it depends."

 

Rent v. Owning Your Home, opportunity cost and running some numbers

 

Why your house is a terrible investment

 

 

 

 

the one very very very true item in those articles (and others like them) is  the liquidity argument:  it is expensive to buy/sell/rent a home, if you aren't going to be there long enough, or if you want flexibility, it is a bad idea.

 

on the other hand... most of the other arguments in those links are pure bunk.   Lets assume that if you own a house, you have to pay for utilities, but if you rent, then those will magically be paid for you by somebody else (rather than being passed through to you, either directly or indirectly through higher rent).  lets make the same assumption about all the other home expenses that SOMEBODY has pay for with EVERY property, owned or rented  (because.. you know.. rent is the same in areas where owners have to pay $15k/year in property taxes as it is in places where owners have to pay $1k, right??)   

 

in  THAT case... renting is ****ing aweeeeeee---sooooommmee!!   

 

if your landlord ALSO pays your college tuition and cooks you 5-star dinners, and gives you a hummer every night too....?   well jeez... which would YOU pick???? 

[tshile]

19 minutes ago, mcsluggo said:

IN THIS CASE, it would be much better to target college tuition assistance towards those that need it the most.....  kind like what we do now  (but it could certainly be done BETTER)        

 

Right, the rest of us get nothing but have to pay for it. 

 

Because we “can afford it”

 

 

[mcsluggo]

28 minutes ago, tshile said:

 

Right, the rest of us

 

Because we “can afford it”

 

 

 

what is the objective here?

  ----is it just simply to transfer income/wealth from one group to another....?    because there are much more straightforward ways to do this without muddying the discussion by pretending it has anything to do with education.   if the objective is to get SOME kids that otherwise WOULD'NT, to go to college (which is how society actually BENEFITS, by realizing some potential that otherwise would be lost), then we need to actually target incentives to influence behavior.   

 

 

in ALL the cases we are discussing, somebody gets something that others are paying for.     

 

 

in one case, it is primarily rich and upper middle class kids getting something ....that they were already going to get anyway... but now it is paid for by everybody.   (and this one is very very expensive, because those are most of the kids in college)

 

in the other case it is a much smaller (and thus MUCH cheaper) subset of poor kids getting something paid for by everybody.   

 

 

you might possibly argue for  NO college assistance -   tax breaks or subsidies,----  on the (why should i have to pay for everyone else) grounds....        but that isn;t what you argued.    you complained:   (Why should i pay for them just because i can afford it?  ..AND you are ALSO arguing.... i also want those poor people to pay for ME, dammit... because i ****ing deserve it, even if i CAN afford it....) 

 

 

what you seem to be advocating is that the majority of poor and lower middle class (who don;t send their kids to college):  "get nothing but have to pay for it" (to quote you)... in spite of the fact that they also can NOT afford it (for themselves or anybody else)

 

 

 

 

......but THIS should be a different thread.....

 

 

 

 

(edit)

 

and WHERE and HOW this sort of subsidy "sunsets out" is certainly up for debate.   as a society the objective SHOULD be to encourage people that otherwise wouldn't (or couldn't?) go to college to personally make the calculation whether it would be worthwhiile to change their mind and go   (it should NOT be to make a large wholesale transfer of money/wealth from society to those that already would be going ..... right?)   

 

influencing a change in choice might require a very large subsidy at low income levels, a modest subsidy at middle income levels .. and a little bit of a boost at upper middle incomes....   who knows?    

 

(but in ALL instances... some of the cost has to swallowed by the individuals, to keep it incentive compatible)   

[tshile]

No I said I get nothing and I have to pay for theirs. 

 

The and is a key part 

 

We already went over this in the other thread. You don’t see it my way and I don’t see it yours. 

 

But don’t mistate my opinions when I’ve already posted them. 

[PF Chang]

1 hour ago, mcsluggo said:

 

 

the one very very very true item in those articles (and others like them) is  the liquidity argument:  it is expensive to buy/sell/rent a home, if you aren't going to be there long enough, or if you want flexibility, it is a bad idea.

 

on the other hand... most of the other arguments in those links are pure bunk.   Lets assume that if you own a house, you have to pay for utilities, but if you rent, then those will magically be paid for you by somebody else (rather than being passed through to you, either directly or indirectly through higher rent).  lets make the same assumption about all the other home expenses that SOMEBODY has pay for with EVERY property, owned or rented  (because.. you know.. rent is the same in areas where owners have to pay $15k/year in property taxes as it is in places where owners have to pay $1k, right??)   

 

in  THAT case... renting is ****ing aweeeeeee---sooooommmee!!   

 

if your landlord ALSO pays your college tuition and cooks you 5-star dinners, and gives you a hummer every night too....?   well jeez... which would YOU pick???? 

 

I don't think he's arguing that the costs are magically not passthrough. It's one personal example where renting made more sense, point being that people should actually run the numbers instead of just assuming buying is better Because Equity. 

 

Generally I think if you'll be in the house 5+ years it will be better to buy. 

 

 

[dchogs]

i don't think anyone is saying to make Duke or Stanford not cost anyone anything.  if we make community colleges free nationwide, the lower and middle classes will have access to the low-cost education that they need; and, the upper classes that send their kids directly to liberal arts schools or expensive public options (out of state), keep paying what they're paying. 

 

society pays for the upward mobility of education for the middle and lower classes, and the rich gets theirs.